Napolitano v. Bd. of Prof'l Responsibility
| Decision Date | 24 May 2017 |
| Docket Number | No. M2016-00869-SC-R3-BP,M2016-00869-SC-R3-BP |
| Citation | 535 S.W.3d 481 |
| Parties | Peter M. NAPOLITANO v. BOARD OF PROFESSIONAL RESPONSIBILITY |
| Court | Tennessee Supreme Court |
Brian S. Faughnan, Memphis, Tennessee, for the appellant, Peter M. Napolitano.
A. Russell Willis, Brentwood, Tennessee, for the appellee, Board of Professional Responsibility.
This matter initially originated from a fee dispute between attorney Peter M. Napolitano ("Attorney") and his client Gayle Connelly ("Client"). Client filed a complaint with the Tennessee Board of Professional Responsibility ("the Board") regarding the fee dispute in 2008. The Board dismissed this complaint in 2010 without imposing any sanctions. Client sued Attorney over the fee dispute and, after Attorney was deposed in conjunction with the lawsuit, Client filed a second complaint with the Board in 2012. This second complaint alleged that Attorney had mishandled funds in his trust account and lied under oath. The Board prosecuted this second complaint, resulting in a hearing before a hearing panel ("the Panel"). The Panel determined that Attorney had committed ethical violations related to his trust account and by lying under oath. Accordingly, the Panel imposed sanctions against Attorney, including a five-year suspension of Attorney's law license, with one year of active suspension. Attorney and the Board both sought review in circuit court. The circuit court modified the Panel's sanctions in part but affirmed the five-year suspension.1 Both Attorney and the Board sought review by this Court, with Attorney seeking a lesser punishment and the Board seeking disbarment. Additionally, both parties disagree with the Panel's order of $7,500 in restitution to Client. We hold that the five-year suspension is appropriate and that the Panel did not err in ordering $7,500 in restitution. Accordingly, we affirm the circuit court's judgment but modify it by adding the requirement of a practice monitor during Attorney's probationary period.
Client hired Attorney in 2005 to represent her in an employment claim against the Department of the Army ("the Litigation").
Client and Attorney entered into a written fee agreement concerning this representation, and Client paid $22,000 to Attorney pursuant to this agreement. In September 2007, the parties settled the Litigation for $75,000, and this sum was paid into Attorney's trust account ("the Litigation Proceeds"). Client and Attorney entered into an agreement regarding the split of the Litigation Proceeds, with Attorney to pay Client $40,000 and Attorney to retain the $35,000 balance in full satisfaction of his remaining fees and expenses ("the 2007 Fee Agreement").
Shortly after entering into the 2007 Fee Agreement, Attorney contacted Client and stated that he had miscalculated his expenses by approximately $1,800. Attorney asked Client to accept less than the $40,000 previously agreed upon in order to compensate him for this omitted expense. Client refused to modify the 2007 Fee Agreement. Attorney then refused to pay Client the agreed-upon $40,000.
A few days later, Client wrote the administrative law judge who had overseen the Litigation in an effort to rescind the settlement. Client was unsuccessful in this effort. Eventually, in April 2008, she filed a complaint with the Board ("the First Complaint"). Client asserted the following in the First Complaint:
I was awarded $75,000 in a settlement agreement with the U.S. Army at Fort Campbell, Ky. That amount was deposited in my attorney's trust account. The agreement was that Attorney would retain $35,000 and forward $40,000 of the settlement to me. Attorney continues to refuse to pay me my portion. He claims I moved without giving him a forwarding address. I have written to him numerous times to request the settlement and my records. I went to his office on Mar. 28 and he refused to see me and ordered his secretary not to release my files.2
(Parenthetical references to enclosures omitted). In due course, Attorney responded to the First Complaint and, eventually, one of the Board's disciplinary counsel told Attorney that he owed Client $16,715.50. The calculations resulting in this perplexing amount are not in the record.
By this time, Client had retained another lawyer. After being told by the Board how much it suggested he owed Client, Attorney sent Client's new lawyer a check in the recommended amount along with the explanation that the negotiation of the check would constitute a waiver of all of Client's claims against Attorney. Client refused the check and sought additional action from the Board on the First Complaint. On August 25, 2010, the Board responded to Client as follows:
Client appealed to the Board. On November 3, 2010, the Board responded as follows:
In March 2011, Client filed a lawsuit against Attorney in an attempt to recover the money she claimed she was due. Pursuant to the lawsuit, Client's new lawyer deposed Attorney in September 2012. During the deposition, and while under oath, Attorney stated that none of the Litigation Proceeds remained in his trust account. Attorney also made statements while under oath regarding previous ethical violations, previous bankruptcies, and IRS liens. Convinced that Attorney had (1) mishandled his trust account with regard to the Litigation Proceeds and (2) lied under oath during the deposition, Client's new lawyer filed a second complaint with the Board on behalf of Client in November 2012 ("the Second Complaint").
Following its investigation of the Second Complaint, the Board filed its petition for discipline in November 2013 ("the Petition"). The Petition alleged that Attorney violated Tennessee Supreme Court Rule 8, Rule of Professional Conduct ("RPC") 1.15 by his handling of the Litigation Proceeds; RPC 3.3 and 4.1 by testifying falsely during his deposition; and RPC 8.4 by engaging in professional misconduct.
In August 2014, prior to the hearing on the Petition, Client and Attorney entered into a written settlement agreement disposing of the lawsuit that Client filed against Attorney in 2011 ("the Fee Dispute Settlement"). Pursuant to the Fee Dispute Settlement, Attorney was to pay Client $18,500 on or before August 12, 2014, followed by ten periodic payments of $750 each.3 The payment of these latter sums was to be postponed if Attorney was suspended, "until six (6) months have passed from when his law license is reinstated and if it is not reinstated, no additional payments shall be due."
At the hearing before the Panel, Attorney testified and conceded that he had made errors with respect to his trust account concerning the Litigation Proceeds. However, when questioned about removing the Litigation Proceeds from his trust account, Attorney testified,
During the hearing, the Board established that the following questions and answers took place during Attorney's deposition:
Related to this testimony, the Board established during the hearing that Attorney's license to practice law in the State of New York had been suspended for a period of five years commencing in January 1994 for misappropriating funds from an escrow fund in a real estate transaction and for giving false testimony under oath in connection with the ensuing investigation; that Attorney had filed for personal bankruptcy protection in 1993 and again in 2003; and that the IRS had filed liens against two parcels of real estate that Attorney owned in Montgomery County, Tennessee. Attorney had referenced the debt secured by one of these liens in one of the schedules that he filed in conjunction with his first bankruptcy.
When questioned during the hearing about his answers to these questions, Attorney explained that he thought Client's attorney already knew about the New York suspension. As to the bankruptcies, Attorney stated that he thought he was being asked only about business, as opposed to personal, bankruptcies. Attorney maintained that he had never received notice of the IRS liens.
Attorney called several witnesses to testify on his behalf. Judge John H. Gasaway, III, a circuit judge in the judicial district in which Attorney practiced, testified about his experience with Attorney's conduct in his court. Judge Gasaway testified that Attorney's demeanor was appropriate, he came to court prepared, he adduced and objected to evidence appropriately, and...
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