People v. Barbieri, No. 99PDJ008.
| Decision Date | 06 July 2000 |
| Docket Number | No. 99PDJ008. |
| Citation | 61 P.3d 488 |
| Parties | The PEOPLE of the State of Colorado, Complainant, v. Victor John BARBIERI, Respondent. |
| Court | Colorado Supreme Court |
This matter was heard on January 7, 2000, before the Presiding Disciplinary Judge ("PDJ") and two hearing Board members, Gudrun J. Rice, and Frances L. Winston. Luain T. Hensel, assistant attorney regulation counsel, represented the People of the state of Colorado (the "People"). Respondent did not appear either in person or by counsel. The People's exhibits 1 through 4 were admitted into evidence. The PDJ and Hearing Board heard testimony from the People's witnesses Nancy Shapiro Adam. The PDJ and Hearing Board considered the exhibits admitted into evidence, the facts set forth in the Complaint and deemed admitted by the entry of default, assessed the credibility of the witness and made the following findings of fact which were established by clear and convincing evidence:
I. FINDINGS OF FACT
Victor John Barbieri has taken and subscribed the oath of admission, was admitted to the bar of the Supreme Court of the State of Colorado on October 17, 1977, and is registered upon the official records of the Supreme Court, registration No. 08193. Barbieri is subject to the jurisdiction of this court pursuant to C.R.C.P. 251.1(b).
The People filed the Complaint in Case No. 99PDJ008 on January 7, 1999. Barbieri filed an Answer on March 11, 1999. The People filed the Complaint in Case No. 99PDJ061 on April 20, 1999. Although Barbieri requested and received an extension of time to Answer, no Answer to the Complaint was filed. The People sought consolidation of the two cases on April 23, 1999. Barbieri did not oppose the request for consolidation and the two matters were consolidated on May 18, 1999. On June 28, 1999, the People filed a Motion for Default in Case No. 99PDJ061 pursuant to C.R.C.P. 251.15(b). Barbieri did not respond to the Motion for Default and on September 3, 1999 default was entered against him in Case No. 99PDJ061. On November 26, 1999, the People filed a Motion to Compel and a Motion for Sanctions in the consolidated cases alleging that Barbieri had failed to respond to written discovery and had failed to appear at his properly noticed deposition. Barbieri did not respond to the motions. The PDJ entered an order compelling Barbieri to submit written responses to the discovery and to appear for a deposition and denied the Motion for Sanctions at that time. Barbieri, notwithstanding the orders entered, neither submitted written responses to the discovery nor appeared for his deposition.
In or about December 1991, Nancy Shapiro Adam retained Barbieri to assist her in a dissolution of marriage proceeding. At the same time Ms. Adam was also represented in the dissolution proceeding by Langdon Jorgensen, a lawyer licensed to practice law in the state of Colorado, and was also receiving legal advice from Byron Delman, a Chicago attorney and longtime family friend and adviser. On April 27, 1993, a decree of dissolution was entered terminating the marriage, resulting in the receipt of substantial assets by Ms. Adam. Barbieri remained as counsel of record in the dissolution action and continued to represent Ms. Adam until she discharged him on February 25, 1994. During the time that Barbieri represented Ms. Adam, she was emotionally vulnerable and relied heavily upon Barbieri for both professional and personal support.
During the period of time Barbieri represented Ms. Adam, he was the majority shareholder and chief executive officer of Moroso, Inc. ("Moroso"), a company engaged in the business of excavation and construction. On or about May 14, 1993, Barbieri, knowing of her receipt of substantial assets, asked Ms. Adam to loan Moroso the sum of $150,000 for construction of a commercial building to be known as the "Titan Road Project." Barbieri prepared a note and deed of trust.
On May 24, 1993, ten days later, Barbieri went to Ms. Adam's home to discuss the requested loan. Barbieri told Ms. Adam that he estimated that the Titan Road Project would be completed in ninety days within which time permanent financing would be in place and the $150,000 loan would be repaid. Initially, Ms. Adam rejected Barbieri's proposal. Barbieri was insistent: he refused to leave Ms. Adam's home until she agreed to the loan. Once Ms. Adam reluctantly agreed to the loan, Barbieri instructed her on how to make a wire transfer of funds. Ms. Adam wired $150,000 from her brokerage account to the Moroso operating account. Barbieri personally guaranteed the loan.
Prior to the time that the loan funds were advanced, Barbieri did not provide Ms. Adam with any financial information about either himself or Moroso, did not advise Ms. Adam in writing of any conflict of interest, nor did he advise Ms. Adam to seek independent legal advice concerning the business transaction. Neither Moroso nor Barbieri had any substantial experience in the construction industry. Neither Moroso nor Barbieri had obtained bids from subcontractors regarding the project, nor had they obtained any necessary building permits.
By October 1993, the $150,000 loan was in default. In need of additional funds, Barbieri solicited another loan from Ms. Adam in the amount of $15,000. Barbieri told Ms. Adam that Moroso had secured contracts to remove snow and needed to purchase snow removal equipment. Ms. Adam agreed to loan the $15,000 to Moroso. Barbieri obtained the loan funds by means of a charge to one of Ms. Adam's credit cards which was in the possession of Barbieri's law office. Barbieri prepared a handwritten promissory note evidencing the $15,000 loan to Moroso. Barbieri did not sign the note as an officer of Moroso until February 1994, nearly four months after funds were received. The promissory note which Barbieri prepared provided no security for the $15,000 loan. As with the first loan, Barbieri failed to provide Ms. Adam with any financial information about himself or Moroso and did not advise Ms. Adam to seek independent legal advice concerning the business transaction. Barbieri did not provide copies of the snow removal contracts for Ms. Adam's review.
By December 1993, Ms. Adam had received no cash payments on either the $150,000 loan or the $15,000 loan. She had become concerned about the repayment of the two loans. When she expressed her concerns to Barbieri, he offered to have Moroso construct a building in Avon, Colorado at cost, and convert the $165,000 debt into an equity position in Moroso. The Avon building was to be constructed of colored cinder block. Barbieri informed Ms. Adam that to insure the concrete block's timely availability, it would be necessary to place a $45,000 deposit with the concrete block company. In an effort to salvage her earlier advances of funds, Ms. Adam agreed to provide the $45,000 deposit. Barbieri prepared no documentation pertaining to the third advance of funds; there was no correspondence from Barbieri to Ms. Adam discussing the terms of the agreement or any conflict of interest, and Barbieri did not advise Ms. Adam to seek independent legal advice before entering into the business transaction. Contrary to his representations to Ms. Adam, Barbieri did not deposit the $45,000 with the concrete block company. Ms. Adam later discovered that Barbieri had used those funds to buy trucks and land in Nebraska and a vehicle for himself.
Barbieri defaulted on both of the first two loans and failed to repay any portion of the third $45,000 deposit for cinder block,1 and did not transfer any equity interest in Moroso to Ms. Adam. In an effort to contain her losses, Ms. Adam redeemed the Titan Road Project out of foreclosure, completed construction of the project after foreclosure, and satisfied all mechanic's liens against the property. In April 1994, Ms. Adam commenced a lawsuit against Barbieri in Arapahoe County District Court, Case No. 94 CV 753. Immediately prior to trial, Ms. Adam and Barbieri reached a settlement and the case was dismissed. Barbieri made no payments under the settlement agreement. Rather, he challenged the amount due and avoided judgment upon his breach of the settlement agreement for over nine months. Eventually, after significant litigation, judgment was obtained by Ms. Adam against Barbieri in the amount of $168,553.10 plus interest.
On August 12, 1996, Barbieri filed for relief under chapter 7 of the Bankruptcy Code. Ms. Adam retained counsel and challenged Barbieri's discharge in United States Bankruptcy Court. Ms. Adam incurred $71,000 in legal fees and $5000 in expenses seeking to block Barbieri's bankruptcy discharge. Eventually, the United States District Court for the District of Colorado approved a discharge of Barbieri's indebtedness to Ms. Adam.
In February 1997, Robert Burnett hired Barbieri to represent him in connection with Mr. Burnett's ex-wife's attempts to enforce a foreign decree of dissolution and maintenance order. Approximately one month later, Barbieri filed a Verified Motion to Modify Maintenance and a Response to the Petitioner's Request for Relief. Counsel for the ex-wife filed a response and a Motion to Dismiss challenging the jurisdiction of the court to modify the foreign decree. Barbieri did not respond to the Motion to Dismiss or otherwise address the jurisdictional challenge advanced in the ex-wife's pleadings. In addition, Barbieri did not inform his client that the ex-wife had challenged the jurisdiction of the court to consider the maintenance modification request submitted earlier by Barbieri.
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