North Carolina State Bar v. Gilbert

Decision Date16 July 2002
Docket NumberNo. COA01-769.,COA01-769.
PartiesThe NORTH CAROLINA STATE BAR, Plaintiff, v. Willie D. GILBERT, Attorney Defendant.
CourtNorth Carolina Court of Appeals

The North Carolina State Bar, by Carolin Bakewell, Raleigh, for plaintiff-appellee.

Michaux & Michaux, P.A., by Eric C. Michaux, Durham, and Willie D. Gilbert, II, pro se, for defendant-appellant.

MARTIN, Judge.

Defendant appeals from an order of discipline issued by the Disciplinary Hearing Commission (hereinafter "DHC") of the North Carolina State Bar (hereinafter "State Bar"). In its order filed 1 November 2000, the DHC found defendant guilty of violating the following rules of the North Carolina Revised Rules of Professional Conduct: 1.5 (collecting an illegal or excessive fee); 1.7 (engaging in a conflict of interest); 8.4(b) (engaging in criminal conduct that reflects adversely on his honesty, trustworthiness, or fitness as a lawyer); 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation); 8.4(d) (engaging in conduct prejudicial to the administration of justice); 8.4(g) (intentionally prejudicing his clients); and 1.15-2(h) (failing to disburse funds as directed by client).

The DHC issued an order of discipline suspending defendant's license for five years with the last three years to be stayed provided defendant does not violate any local, state, or federal laws and does not violate any provisions of the Revised Rules of Professional Conduct or the rules and regulations of the State Bar. Prior to seeking reinstatement of his law license at the end of his two year active suspension, defendant is required to: (1) reimburse the Client Security Fund for any amounts disbursed from the Fund as a result of defendant's misconduct; (2) complete twenty hours of continuing legal education (C.L.E.) in the subjects of law office management and trust account requirements in addition to the mandatory C.L.E. requirements regularly imposed by the State Bar; and (3) pay the costs of the disciplinary proceeding.

The State Bar's evidence tended to show that in January 1997, defendant agreed to represent Celeste Pologruto in both a workers' compensation case and a wrongful death claim arising out of her husband's job-related death. Both claims were to be handled on a contingent fee basis.

On 14 October 1998, a settlement agreement was approved in the workers' compensation case. Ms. Pologruto was awarded a $60,000 lump sum payment and monthly payments of $1,455 for 60 months commencing 1 November 1998. Defendant requested the Industrial Commission to approve his retaining $45,000 in attorney's fees from the $60,000 lump sum payment. The Industrial Commission instead approved defendant's retaining $15,000 of the lump sum payment and awarded defendant every fourth monthly payment of $1,455 that Ms. Pologruto would otherwise receive.

On or about 23 October 1998, defendant received two checks in the amounts of $45,000 and $15,000, which represented the $60,000 lump sum settlement in the workers' compensation case. The $15,000 check was made payable to defendant for attorney's fees and the $45,000 check was made payable to Celeste Pologruto, in care of defendant. Defendant never sent the $45,000 check to Ms. Pologruto but instead he or a staff member endorsed her name to the check and retained it. Defendant told Ms. Pologruto that he was retaining $45,000 of the $60,000 lump sum settlement and that she would receive $15,000 and all the monthly annuity payments. Defendant testified that Ms. Pologruto had agreed to pay him the additional $30,000 above his approved fee of $15,000 in order to cover fees and expenses incurred in the pending wrongful death suit. As part of this same agreement, defendant was to forward his every fourth month check of $1,455 on to Ms. Pologruto.

Ms. Pologruto testified that defendant told her that he was retaining $45,000 of the $60,000 lump sum settlement, but he did not send her a copy of the Industrial Commission order which awarded him a lump sum fee of only $15,000 and every fourth month annuity check. According to Ms. Pologruto, defendant told her that he was going to receive all of his fees up front since that is the way it is done and explained that attorneys would never accept workers' compensation cases if they had to wait to collect their fees. Because defendant was collecting his fees up front, Ms. Pologruto testified that he told her he would forward all of the monthly checks for $1,455 to her, including those which the Industrial Commission ordered to be paid to him as a part of the fee award.

On 2 February 1999, defendant received a check for $1,455 representing the first periodic payment of attorney's fees pursuant to the settlement of Ms. Pologruto's workers' compensation claim. As stated earlier, defendant testified that he had agreed to forward every fourth check to Ms. Pologruto. Defendant deposited the check in his attorney trust account and between 4 February 1999 and 23 February 1999, spent $920.22 of the $1,455 by disbursing trust account checks for personal expenses. Defendant did not obtain Ms. Pologruto's permission to use the February annuity check proceeds for his own use and benefit. Prior to 23 February, Ms. Pologruto had called defendant's office inquiring about her check for $1,455. On 23 February, defendant deposited $2,665 of his personal funds into his trust account and issued Ms. Pologruto a check for $1,455. In a letter accompanying the check, defendant communicated that he had "originally intended to deduct approximately $524" from the check for expenses related to the wrongful death suit; he did not disclose that he had actually used $920.22 for his personal expenses.

In June of 1999, after having spoken to several attorneys who advised her that, in their opinion, the monetary value of the wrongful death case was not substantial, Ms. Pologruto discharged defendant. Ms. Pologruto's wrongful death suit was ultimately dismissed with prejudice for failure to prosecute.

In 1996, defendant undertook representation of Michelle and Sanjay Munavalli (hereinafter "Munavallis") in a personal injury suit. Defendant settled the case for $65,000 in April 1998. While representing the Munavallis, defendant purchased three CD-ROMs for a total price of $4,627.43. These CD-ROMs, which were set to expire one year from the date of purchase, contained a medical encyclopedia, various forms, briefs, and statutes. Defendant testified that he needed the CD-ROMs to prosecute the Munavallis' case because he had never previously handled a personal injury suit. Defendant did not consult with the Munavallis before purchasing the CD-ROMs. On 28 April 1998, defendant sent the Munavallis an itemized statement of fees and expenses that included the full price of the CD-ROMs. The Munavallis disputed the bill but eventually paid defendant $6,800 in costs, including $4,627.43 for the CD-ROMS.

Between 13 May 1999 and 26 May 1999, defendant issued five checks from his attorney trust account totaling $260. Defendant used the cash proceeds of all five checks for his personal benefit. Due to lack of sufficient personal funds in the trust account to cover the amount of these checks, defendant used a portion of funds belonging to a client named Waller, without the client's knowledge or permission.

I.

Defendant first contends the DHC erred in denying his motion to dismiss the first claim for relief of the State Bar's amended complaint. In its first claim for relief, the State Bar alleged that defendant violated the Revised Rules of Professional Conduct by retaining $45,000 of the $60,000 lump settlement in Ms. Pologruto's workers' compensation case in violation of the 14 October 1998 order of the North Carolina Industrial Commission, in which a deputy commissioner had only authorized defendant to receive $15,000 from the lump sum award. Defendant argues the DHC lacked jurisdiction to decide whether he violated the order. Defendant relies on G.S. § 97-91 to support his argument, which provides:

All questions arising under this Article if not settled by agreements of the parties interested therein, with the approval of the Commission, shall be determined by the Commission....

We conclude that defendant's reading of G.S. § 97-91 is overly broad. The phrase "questions arising under this Article" refers primarily to questions relating to the rights asserted by or on behalf of an injured employee or the employee's dependents. Clark v. Ice Cream Co., 261 N.C. 234, 240-41, 134 S.E.2d 354, 360 (1964). Defendant's alleged violation of the Commission's order authorizing attorney's fees is unrelated to the issue of whether Ms. Pologruto is entitled to compensation for her husband's death. Moreover, our courts have not read G.S. § 97-91 to give the Commission exclusive jurisdiction over every conceivable issue that may arise from a workers' compensation case. For instance, this Court concluded that there was no statutory authority that would extend the Commission's jurisdiction to cover a dispute between the plaintiff's attorneys over the division of attorney's fees. Eller v. J & S Truck Services, Inc., 100 N.C.App. 545, 397 S.E.2d 242 (1990), disc. review denied, 328 N.C. 271, 400 S.E.2d 451 (1991). In the instant case, whether defendant violated the Commission's order does not "arise under" the workers' compensation Article and thus, does not require determination by the Commission. Therefore, the DHC did not err in refusing to grant defendant's motion to dismiss the State Bar's first claim for relief.

II.

Defendant also argues that the DHC erred by failing to order Ms. Pologruto to produce certain personal income tax records from the 1980s. Defendant alleges that these documents would show that Ms. Pologruto fraudulently sought and obtained a federal tax refund. Defendant wished to use this information at the hearing to impeach Ms. Pologruto's credibility and to show the lengths to...

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14 cases
  • Gilbert v. North Carolina State Bar
    • United States
    • U.S. District Court — Eastern District of North Carolina
    • September 14, 2009
    ...See id. at 72, 678 S.E.2d at 604. On July 16, 2002, the North Carolina Court of Appeals affirmed the DHC order. N.C. State Bar v. Gilbert, 151 N.C.App. 299, 566 S.E.2d 685 (2002). On October 2, 2003, the North Carolina Supreme Court affirmed the North Carolina Court of Appeals. N.C. State B......
  • Gilbert v. North Carolina State Bar
    • United States
    • North Carolina Supreme Court
    • March 20, 2009
    ...upon enumerated conditions. The North Carolina Court of Appeals affirmed the DHC Order of Discipline, N.C. State Bar v. Gilbert, 151 N.C.App. 299, 566 S.E.2d 685 (2002) (unpublished), and this Court affirmed the Court of Appeals in a per curiam opinion, 357 N.C. 502, 586 S.E.2d 89 Defendant......
  • In re Bristol
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    ...Poole, 156 Wash.2d 196, 125 P.3d 954, 959 (2006); In re Alia, 288 Wis.2d 299, 709 N.W.2d 399, 413-14 (2006); N.C. State Bar v. Gilbert, 151 N.C.App. 299, 566 S.E.2d 685, 690 (2002). {16} Because the hearing committee is the entity responsible for taking evidence in disciplinary proceedings,......
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    ...a disciplinary action brought before the North Carolina State Bar Disciplinary Hearing Commission ("DHC"). See N.C. State Bar v. Gilbert, 151 N.C.App. 299, 566 S.E.2d 685 (2002), aff'd, 357 N.C. 502, 586 S.E.2d 89 (2003) (first action referred to as "Gilbert I"). Here, in its second action ......
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