Toledo Bar Assn. v. Hales

• Decision Date: 04 December 2008
• Docket Number: No. 2008-0819.,2008-0819.
• Citation: 120 Ohio St.3d 340,2008 Ohio 6201,899 N.E.2d 130
• Parties: TOLEDO BAR ASSOCIATION v. HALES.
• Court: Ohio Supreme Court

899 N.E.2d 130

120 Ohio St.3d 340

2008-Ohio-6201

TOLEDO BAR ASSOCIATION v. HALES.

No. 2008-0819.

Supreme Court of Ohio.

Submitted July 22, 2008.

Decided December 4, 2008.

Jonathan B. Cherry, Bar Counsel; Gregory L. Arnold, Toledo; and Spengler Nathanson, P.L.L., and James P. Silk Jr., Toledo, for relator.

George Gernot III, Toledo, for respondent.

PER CURIAM.

{¶ 1} We must decide in this case the appropriate sanction for a lawyer who (1) mishandled and consequently lost a client's case because of his inexperience, (2) failed to notify his insurance carrier of the client's legal-malpractice claim against him, prompting the insurer to deny coverage, and (3) declared bankruptcy, preventing his client from collecting on the legal-malpractice judgment that she obtained. Finding that these acts violated the Code of Professional Responsibility, the Board of Commissioners on Grievances and Discipline has recommended that we suspend the lawyer's license for two years and stay the last year on conditions, including monitored probation of his practice. We accept the board's findings of misconduct; however, because a shorter period of actual suspension and a longer monitored probation will provide more remedial instruction to the lawyer without undue risk to the public, we order a two-year suspension and conditionally stay the last 18 months.

{¶ 2} Respondent, Steven C. Hales of Toledo, Ohio, Attorney Registration No. 0071285, was admitted to the practice of law in Ohio in 1999. Relator, Toledo Bar Association, charged respondent in a two-count complaint with five Disciplinary Rule violations, all for ethical breaches toward a single client. A panel of the board heard the case, including the parties' extensive stipulations, found the charged misconduct, and recommended a two-year suspension with 18 months stayed under conditions, including monitored probation. The board adopted the panel's findings of misconduct, but recommended the two-year suspension with a conditional stay of only the last year.

{¶ 3} Respondent concedes his misconduct, but objects to the board's recommended sanction. He insists that the board weighed against him nonexistent aggravating factors, mainly misinterpreting his embarrassment for lack of remorse. Respondent claims that the board's recommended sanction is too severe, given the mitigating evidence and the fact that his violations resulted from his making honest mistakes at a time when he was a recent admittee to the bar. We accept that respondent acted out of inexperience rather than ill-will; however, to ensure that he does not do so again, we order a two-year suspension and stay the last 18 months on conditions of monitored probation and no further misconduct.

I. Misconduct

{¶ 4} While working as a project manager in the commercial-credit division of a large corporation, respondent went to law school, graduated, and, at 39 years old, passed the Ohio bar. He then worked for two and a half years with a law firm that handled insurance defense and subrogation claims, but he had only minor responsibilities. In 2002, he entered an office-sharing arrangement with the law firm of Lydy and Moan, L.L.C., and started a general litigation practice while also accepting a few bankruptcy cases. In October 2004, respondent stopped sharing office space with Lydy and Moan.

A. Respondent's Mishandling of the Oehlers Case

{¶ 5} Respondent met Bonnie Oehlers in August 2003 through his son's friendship with her daughter. At the time, Oehlers was pursuing a medical-malpractice action against multiple defendants for negligence in the postoperative care that she alleged had led to her mother's death. John B. Fisher, an experienced practitioner in medical malpractice, had already worked extensively on the case. In anticipation of trial, Fisher had obtained experts to testify against all defendants except the named nursing home, taken multiple depositions, advanced approximately $10,000 in expenses, and negotiated a high-low settlement agreement with the nursing home.

{¶ 6} Oehlers asked respondent to review the high-low settlement agreement before she signed it. The agreement guaranteed the nursing home's immediate payment to Oehlers of $30,000 and provided for a possible additional payment to her of up to $30,000, depending on the outcome of the litigation. Respondent discussed the agreement, Oehlers's malpractice complaint, and a nurse practitioner's evaluation of the decedent's medical records with Jeffrey Lydy of Lydy and Moan.

{¶ 7} Respondent later told Oehlers that the nursing home should be willing to pay more than the amounts specified in the high-low settlement agreement. Oehlers took respondent's advice not to sign the agreement and decided to hire him; she then retrieved her files from Fisher's office and gave them to respondent. Respondent had never litigated a medical-malpractice claim before, and upon accepting Oehlers's case, asked Lydy to serve as co-counsel. Lydy declined, but offered to help respondent with any advice he needed.

{¶ 8} Respondent entered an appearance in the Oehlers case in mid-September 2003, and Fisher withdrew as counsel. Respondent could find no experienced lawyer to share responsibility for pursuing Oehlers's claim, and in the months after entering an appearance as counsel, he did not conduct any discovery. The trial court's pretrial order set a deadline of late December 2003 for plaintiff to disclose her expert witnesses, but respondent did not file notice of his expert witnesses on time.

{¶ 9} In February 2004, the nursing home moved for summary judgment, arguing that respondent had failed to disclose the expert witnesses who were necessary to sustain the plaintiff's burden of proving that defendants' negligent medical care had caused the decedent's death. By the end of March 2004, all other defendants had similarly moved for summary judgment. Respondent filed three successive motions to extend the deadline for his response to these motions, all of which were granted, giving him until May 15, 2004, to file his response in opposition.

{¶ 10} In the meantime, respondent had asked Fisher for the names of the experts that Fisher had anticipated using to prove the defendants' liability. Fisher, who had claimed a lien for the value of his work and expenses in the case, provided the names of two doctors. Fisher had planned to call a director of a surgical critical-care unit to establish defendants' breaches of the applicable standards of care and a pathologist to testify to causation. But because the director had recently retired, Fisher also warned respondent that this doctor no longer qualified as an expert under evidentiary rules.

{¶ 11} Respondent was not able to obtain an expert to testify against the nursing home, nor was he able to find a replacement expert for the retired doctor. Respondent explained to the hearing panel that neither he nor his client had had the money to pay doctors to review the medical evidence necessary to render an expert opinion. Respondent did, however, advance somewhere between $600 and $1,000 to obtain an affidavit from the pathologist regarding causation and standard of care, which he filed with his response to the motions for summary judgment.

{¶ 12} Respondent responded to all the motions for summary judgment in one filing on May 25, 2004, ten days after the extended deadline. In July 2004, the trial court granted summary judgment in favor of all defendants. The court determined that respondent's expert lacked the qualifications to testify to the various standards of care at issue and that the plaintiff therefore could not sustain her burden of proof.

{¶ 13} Respondent advised Oehlers of the court's ruling and then tried to arrange a meeting with her and Fisher to explore Oehlers's options. He never scheduled the meeting or spoke to Oehlers about the malpractice case again. Respondent told the hearing panel that Oehlers later called him to discuss a different legal matter, and he understood her call to mean that "she had put [the] whole entire episode to bed."

B. Respondent's Bankruptcy Case

{¶ 14} In February 2005, respondent filed a Chapter 7 bankruptcy petition for discharge of his personal debts. He did not list the possibility of a lawsuit by Oehlers for his legal malpractice, but because the bankruptcy court treated the filing as a "no-asset" case, the failure to list did not prevent the discharge of the debt. See In re Madaj (C.A.6, 1998), 149 F.3d 467.¹ The bankruptcy court granted respondent a discharge of all indebtedness in mid-May 2005.

{¶ 15} Oehlers sued respondent for malpractice in June 2005. After the certified mail containing the complaint had been returned "unclaimed," Oehlers served respondent with notice of her suit by regular mail. Respondent at some point also filed for Chapter 13 bankruptcy protection after defaulting on his mortgage. He accurately listed Oehlers's malpractice claim in his petition as a pending action.

{¶ 16} Respondent did not file an answer in the legal-malpractice action, and after the bankruptcy court granted Oehlers relief from the automatic stay, the common pleas judge granted her motion for default judgment. The court later awarded Oehlers $280,000 in damages. Respondent had malpractice insurance, but because he never gave his insurer notice of Oehlers's pending malpractice claim, his carrier denied coverage. Oehlers has not been able to recover from respondent because of the discharge in bankruptcy, and she is unable to recover from his insurer because respondent's failure to disclose her claim removed the insurer's liability.

{¶ 17} The parties stipulated that respondent's discharge in bankruptcy did not release his insurer from liability, but respondent did not realize this fact at the time. Respondent testified that he thought his Chapter 7 discharge wiped out even his insurer's contractual obligation to indemnify others for losses caused by his professional...