Recent Developments in Disciplinary Case Law

In 2013-2014, the New York appellate courts handed down a number of noteworthy disciplinary decisions. The following is a summary and brief commentary with respect to several of those cases that, in the author’s view, deserve to be highlighted.

Registration Requirement

New York Judiciary Law §468-a (Biennial Registration of Attorneys) provides that attorneys admitted to practice in this state shall file a biennial registration statement with the administrative office of the courts. The biennial registration fee shall be $375. Generally speaking, lawyers who do not adhere to the registration and related requirements for several biennial periods will be suspended.

The case of Stanley L. Chin, however, was unusual. Chin, an 80-year-old lawyer, admittedly failed to register, pay his biennial registration fee, and earn the requisite CLE credits, for more than 30 years.1 In light of those undisputed facts, and Chin’s default in responding to the Departmental Disciplinary Committee’s (DDC) motion, on April 29, 2014, the First Department granted the motion, pursuant to Judiciary Law sections 90(2) and 468-a, and 22 NYCRR §1500.24,2 and suspended Chin indefinitely (“until further order of the Court”).

Heretofore, when New York attorneys practicing in the First Department disregarded their biennial registration obligations (and the CLE certifications that go with them), the court adopted a practice of periodic mass “administrative” suspensions with notice by publication.3 Frequently, the delinquent respondents are lawyers who have retired, moved out of state, become ill, or for whatever reason failed to notify the Office of Court Administration (OCA) of their change in status or location (and often mail is not forwarded).

Any such “administratively” suspended lawyers who wished to be reinstated could do so simply by re-registering with OCA, paying all past due biennial registration fees, completing CLE requirements, and then making a motion to the court accompanied by proof of re-registration, with an appropriate affidavit containing an explanation and/or an apology.

By contrast, Chin appears to constitute a suspension that will require—if he ever reapplies—a full-blown reinstatement proceeding in accordance with 22 NYCRR §603.14.

Misconduct and Defalcation

Two recent Second Department cases are noteworthy for their leniency with respect to conduct which that court had traditionally treated far more harshly. Matter of Alfred C. Jones5 involved 10 charges of professional misconduct, all of which were sustained. They included, inter alia: misappropriation of escrow funds; false representation to the Grievance Committee; failure to maintain proper accounting records and render appropriate accounts; neglect; engaging in a conflict of interest; and, improperly soliciting loans from a client. Alfred Jones was suspended for two years, a disciplinary sanction that, as noted, is historically quite lenient for such extensive misconduct.5

Matter of Samuel A. Ehrenfeld6 is also unusual in light of earlier Second Department conversion cases.7 Samuel Ehrenfeld concededly converted approximately $25,000 in client funds (entrusted to him as a real estate down payment) via a series of defalcations over a three-month period. The court considered “substantial mitigating factors” and, notwithstanding the seriousness of the misconduct and a prior Letter of Caution, imposed only a public censure.8

Even if Jones and Ehrenfeld are exceptions to the generally severe results of misappropriation cases, lawyers should nonetheless be reminded that the failure to maintain escrow funds intact and to properly account, even if a result of sloppy bookkeeping or negligence, can result in a substantial suspension in other Departments, and perhaps in future Second Department cases.

Collateral Estoppel

The Third Department imposed a public censure based upon a U.S. District Court’s prior determination that Jill Dunn made false declarations about the existence of a private annuity agreement which was critical to issues before the court.9 The Magistrate Judge had sanctioned Dunn pursuant to F.R.C.P. Rule 11, 28 U.S.C. §1927, and the court’s inherent power. When Dunn sought to appeal from the district court’s order imposing sanctions, the U.S. Court of Appeals for the Second Circuit dismissed her appeal as “premature.”

Subsequently, the matter was referred to the Third Department’s Committee on Professional Standards (COPS). When COPS asserted the doctrine of collateral estoppel, Dunn argued that COPS could not satisfy the “full and fair opportunity to litigate” prong of the collateral estoppel test because only final orders or judgments may be given collateral estoppel effect in subsequent proceedings, and that orders or judgments which cannot be appealed do not have preclusive effect.

Although the Third Department rejected that contention, the New York Court of Appeals granted leave to appeal by order dated Feb. 18, 2014.10 Thus, for the first time, the Court of Appeals will have an opportunity to broadly consider the doctrine of collateral estoppel in a disciplinary context.

Among other issues, the Court of Appeals may address whether the doctrine should apply at all to attorney disciplinary cases—given that collateral estoppel with respect to prior civil adjudications is not mentioned in the disciplinary procedural rules of any of the four Departments.11 As noted, the Court of Appeals will also decide more specifically whether the requirement of “full and fair opportunity to litigate” is satisfied where, as here, the lawyer was not afforded an opportunity to appeal from sanctions ordered in the earlier case (because the order was non-final) prior to the imposition of discipline. Stay tuned.

 

Reprinted with permission from the November 10, 2014 edition of the New York Law Journal ©2014 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 – reprints@alm.com or visit www.almreprints.com.

Endnotes:

1. Matter of Chin, 118. A.D.3d 61 (1st Dept. 2014).

2. New York Judiciary Law §90(2) provides in pertinent part:

2. The supreme court shall have power and control over attorneys and counsellors-at-law and all persons practicing or assuming to practice law, and the appellate division of the supreme court in each department is authorized to censure, suspend from practice or remove from office any attorney and counsellor-at-law admitted to practice who is guilty of professional misconduct, malpractice, fraud, deceit, crime or misdemeanor, or any conduct prejudicial to the administration of justice; and the appellate division of the supreme court is hereby authorized to revoke such admission for any misrepresentation or suppression of any information in connection with the application for admission to practice.

New York Judiciary Law §468-a (Biennial Registration of Attorneys provides:

5. Noncompliance by an attorney with the provisions of this section and the rules promulgated hereunder shall constitute conduct prejudicial to the administration of justice and shall be referred to the appropriate appellate division of the supreme court for disciplinary action.

NYCRR §1500.23 (Reporting Requirements) provides:

(a) Attorney obligations. Each attorney subject to New York’s continuing legal education requirements shall retain the certificate of attendance or other documentation required by the board for each approved education course, program or activity for at least four years from the date of the course, program or activity.

(b) Certification. Except as otherwise authorized by this Part, each attorney subject to New York’s continuing legal education requirements is required to certify along with the submission of his or her biennial attorney registration statement that the attorney has satisfactorily completed 24 credit hours of continuing legal education for the current biennial reporting cycle and that the attorney has retained the certificates of attendance or other documentation required by the CLE board for the accredited courses, programs or activities.

3. See, e.g., Matter of Attorneys in Violation of Judiciary Law §468-a, 64 A.D.3d 187 (1st Dept. 2009); see also Matter of Attorneys in Violation of Judiciary Law §468-a, 230 A.D.2d 366 (1st Dept. 1997); 240 A.D.2d 106 (1st Dept. 1998); 247 A.D.2d 158 (1st Dept. 1998); 257 A.D.2d 127 (1st Dept. 1999); 36 A.D.3d 34 (1st Dept. 2006); 51 A.D.3d 1 (1st Dept. 2008). The description of these suspensions as “administrative” in nature is the author’s. Technically, the aforesaid matters describe a “disciplinary” proceeding, but, as noted infra, the reinstatement process is perfunctory and there is no requirement of which the columnist is aware requiring any such suspension be reported as “discipline.”

4. Matter of Jones, 118 A.D.3d 41 (2d Dept. 2014).

5. Matter of Jones, 118 A.D.3d at 42-46.

6. Matter of Ehrenfeld, 992 N.Y.S.2d 569 (2d Dept. 2014).

7. See, e.g., Matter of Dobkin, 21 A.D.3d 23 (2d Dept. 2005) (five-year suspension for not preserving escrow funds in two real estate transactions, notwithstanding that no client suffered financially).

8. Matter of Ehrenfeld, 992 N.Y.S.2d at 570.

9. Matter of Dunn, 111 A.D.3d 1019 (3d Dept. 2013).

10. Matter of Dunn, 22 N.Y.3d 861 (2014).

11. However, “collateral estoppel” as a general concept is broadly applied in other attorney disciplinary contexts, namely, where a lawyer is convicted of a crime [see 22 NYCRR §603.12 (1st Dept.); 22 NYCRR §691.7 (2d Dept.); 22 NYCRR § 806.7 (3d Dept.); 22 NYCRR §1022.21 (4th Dept.)] or has engaged in parallel misconduct in a foreign jurisdiction, i.e., reciprocal discipline [see 22 NYCRR §603.3 (1st Dept.); 22 NYCRR §691.3 (2d Dept.); 22 NYCRR §806.19 (3d Dept.); 22 NYCRR §1022.22 (4th Dept.)]. Collateral estoppel in the attorney disciplinary context with respect to prior civil adjudications has evolved in three of the four Departments, to varying degrees, as a result of case law. See, e.g., Matter of Slater, 156 A.D.2d 89 (1st Dept. 1990); Matter of Ryan, 189 A.D.2d 96 (1st Dept. 1993); Matter of Klarer, 66 A.D.3d 247 (2d Dept. 2009); Matter of Duffy, 117 A.D.3d 124 (2d Dept. 2014); Matter of Babigian, 247 A.D.2d 189 (3d Dept. 1998); Matter of Capoccia, 32 A.D.3d 189 (3d Dept. 2000).

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