Newman v. Silver, s. 927

• Citation: 713 F.2d 14
• Decision Date: 22 July 1983
• Docket Number: Nos. 927,928,D,s. 927
• Parties: Murray NEWMAN and Capitol Motors, Inc., Appellees-Cross-Appellants, v. Murray M. SILVER, Murray M. Silver P.C., and Ralph LiButti a/k/a Robert Presti, Appellants-Cross-Appellees. ockets 82-7789, 82-7813.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 14

713 F.2d 14

Murray NEWMAN and Capitol Motors, Inc., Appellees-Cross-Appellants, v. Murray M. SILVER, Murray M. Silver P.C., and Ralph LiButti a/k/a Robert Presti, Appellants-Cross-Appellees.

Nos. 927, 928, Dockets 82-7789, 82-7813.

United States Court of Appeals, Second Circuit.

Argued April 20, 1983.

Decided July 22, 1983.

Murray M. Silver, P.C., appellant-cross-appellee, pro se.

Michael L. Kingman, Hackensack, N.J. (Joseph C. Woodcock, Jr., Hackensack, N.J., of counsel), for appellant-cross-appellee LiButti.

Robert A. Katz, Gandin, Schotsky & Rappaport, P.C., Melville, N.Y. (Roberto Lebron, Gandin, Schotsky & Rappaport, P.C., Melville, N.Y., of counsel), for appellees-cross-appellants Newman and Capitol Motors, Inc.

Before LUMBARD, OAKES, and PIERCE, Circuit Judges.

OAKES, Circuit Judge:

This case, here on cross-appeals, arises out of a complaint brought by New York clients (Capitol Motors, Inc., an auto dealership, and its president, Murray Newman) against their attorney (Murray Silver, Esq., of Atlanta, Georgia) and the fellow who brought lawyer and client(s) together, Ralph LiButti, also known as Robert Presti. Silver was paid, as the district court put it, the "staggering fee" of $212,000 to represent Newman and his dealership in connection with criminal charges brought in the Southern District of New York for violations of the odometer-fixing statute, wire fraud, and mail fraud. Newman and his corporation pleaded guilty, and, out of the fees paid Silver, the latter ultimately paid the corporation's fine of $28,000 as well as $3,000 in disbursements. The complaint here charged breach of fiduciary duty, malpractice, fraud and conversion on Silver's part and collusion and conversion on the part of LiButti. The United States District Court for the Southern District of New York, Robert J. Sweet, Judge, held in a bench trial that Silver had violated his fiduciary duty and awarded Newman $169,300, the difference between a reasonable fee and the $181,000 net amount (after disbursements and payment of the corporate fine) that Silver received. Newman v. Silver, 553 F.Supp. 485 (S.D.N.Y.1982). The court, however, found no liability on the part of LiButti who, inter alia, delivered briefcases which the court found contained cash to Silver from Newman. We affirm as to the award against Silver substantially on the findings and conclusions of Judge Sweet. ¹ For reasons that we set out below, in the interests of justice and its administration, especially in light of the fact that while this appeal was pending Silver was admitted to the bar of this court, we remand on the cross-appeal for further findings with respect to both Silver and LiButti.

The theory of the case against LiButti was that through his racetrack-oriented friendship with Newman's son, Gary, LiButti had arranged a meeting between Silver and Gary leading to Newman's engaging Silver, for which LiButti was paid by Silver. It is suggested that the whole arrangement be viewed as a confidence game, that is, as a "sting" or "scam" in which the "mark," Newman, is led into parting with his money by the "con artists" who, while seemingly independent, are secretly conniving, one as a "shill" and the other as the "stingman," and who do not hesitate to get the "mark" to do something off-color (if not illegal) to make him, perhaps, unwilling to expose the "con." To support this theory, there was evidence that Silver, after he had already been paid $187,000 and Newman's plea of guilty had been accepted, obtained four $25,000 checks from Newman (only one of which was cashed) so that Newman could "have a seal," i.e., obtain, presumably by bribery of the trial judge or otherwise, assurance that a jail sentence would not have to be served. Newman changed his mind about making this payment and received back three of the four checks, which were delivered by LiButti, but Silver had cashed the fourth and deposited it in his trust account. From that account Silver deposited $12,500 in his personal account and wrote another check for $12,500 to a person whose identity he could not recall at trial. Silver's testimony about the $25,000 check is set out in the margin. ²

In an earlier exchange, Newman had given Silver a check in the amount of $60,000 to offset Silver's income tax liability incurred from receiving part of his fees by way of checks rather than by way of cash. This check was also deposited in Silver's escrow or trustee account, following which Silver transferred $30,000 to his personal account and wrote another $30,000 check to someone whose identity he could not recall at trial. Silver's testimony about the $60,000 check is set out in the margin. ³

While it may be that Silver writes $12,500 and $30,000 checks to so many people that he cannot recall their names, the fact that a client's fees are deposited in an escrow account and only 50% of them are taken out as fees could lead to several inferences, one of which is the inference that Silver was splitting his fees with someone, involving potentially serious breaches of the canons of ethics as well as of fiduciary and agency duties. This possible inference is particularly troublesome because LiButti, who brought the attorney and client together, was playing the role of courier.

The district court said in its footnote 6:

The observant reader may question why these checks were never produced to ascertain the payees that Silver could not remember. Both parties had ample opportunity prior to trial to complete discovery, several extensions having been granted. Toward the conclusion of the trial, counsel for Newman was again given time to attempt to obtain these checks and a subpoena was issued on January 19, 1982 for the bank records. When it was determined on January 25, 1982 that Silver's accountant could not find the records, bank photocopies were obtained. The payee on the checks, however, did not appear on the bank records and counsel for Newman was again given an extension of time to attempt to obtain copies of the checks. Rather than serving a notice to take the deposition of the bank in Georgia, with an attendant subpoena duces tecum, counsel for Newman instituted an action in the Northern District of Georgia and had a subpoena issued for the bank records. The Honorable G. Ernest Tidwell quashed the subpoena and on March 16, 1982 Newman by order to show cause again moved for an extension of time to obtain the records in the proper manner. This request was denied and the trial proceeded the following day. Judge Tidwell's ruling was affirmed on appeal to the Fifth Circuit Court of Appeals and Newman has since filed a petition for a writ of certiorari on this issue.

553 F.Supp. at 491 n. 6.

In the ordinary case this would, of course, end the matter: Newman had the opportunity to obtain the information but did not go about it properly ⁴ and cannot now repair his mistakes; litigation must somewhere come to an end. But because Silver is an attorney at law, indeed now licensed to practice in this court, we believe the matter must be viewed in a different light. If in fact the checks Silver drew were drawn to LiButti or Presti, that would strongly indicate a breach of ethical canons on his part, possibly rendering him subject to restitution in this case of all fees received, as well as in all probability rendering LiButti liable to Newman jointly to the extent of the proceeds of Silver's checks. Since Silver has not posted a supersedeas bond in connection with his appeal, see Fed.R.Civ.P. 62(d); Fed.R.App.P. 8(a), this question of joint liability may well become important. We believe it may be of importance to the bar, to this court, and to the parties to ascertain the identity of the payee(s) of the two checks in question and to permit the taking of further evidence in connection therewith on the cross-appeal against appellees Silver and LiButti.

Judgment of liability against appellant...