Opinion
D.D. No. 82-27
Decided December 22, 1982
Attorneys at law — Misconduct — Indefinite suspension — Neglect of matter entrusted to attorney — Employment presenting clear conflict of interest — Previous public reprimand — Gov. R. V(7).
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline.
This cause arises from a complaint filed with the Board of Commissioners on Grievances and Discipline, on September 30, 1981, by the relator, Stark County Bar Association, charging respondent, John W. Ergazos, with various violations of the Code of Professional Responsibility. Specifically, the evidence adduced at the hearing before the board follows:
In December 1979, respondent represented Joseph Quintella in the sale of Quintella's business, a tavern, to Kimeth F. Henderson. As a part of this transaction respondent filed certain security financing statements on behalf of Quintella and against Henderson. Shortly after completion of the sale Henderson began defaulting on his payment obligations and Quintella threatened to foreclose. In order to avoid this foreclosure Henderson contacted Sigmund Sabo who agreed to buy Henderson's interest in the tavern, now called the "Regal Begal," and assume Henderson's debt to Quintella. When Henderson and Sabo approached Quintella for his consent to the proposed sale, Quintella suggested that Henderson and Sabo contact respondent to have him prepare the paperwork necessary to consummate the sale since respondent "knew everything about this particular bar."
In August 1980, respondent assumed representation of both Henderson and Sabo in regard to the sale of the Regal Begal from Henderson to Sabo. Due to Henderson's precarious financial condition Sabo wanted assurance that he would not be responsible for any of Henderson's debts other than the debt to Quintella. At this time respondent gave Sabo such an assurance and incorporated the business venture as "Sabo Enterprises, Inc."
Henderson and Sabo met at respondent's office on or about September 8, 1980 in order to execute a purchase agreement relating to the Regal Begal. While the purchase agreement referred to Exhibit "A" as the affidavit required under the Bulk Sales Act, in actuality, Exhibit "A" was merely a list of equipment included in the sale.
R.C. 1306.03, dealing with bulk transfers, provides in part:
"(A) Except as provided in section 1306.06 of the Revised Code, with respect to auction sales, a bulk transfer subject to sections 1306.01 to 1306.09, inclusive, of the Revised Code, is ineffective against any creditor of the transferor unless:
"(1) The transferee requires the transferor to furnish a list of his existing creditors prepared as stated in this section; and
"(2) The parties prepare a schedule of the property transferred sufficient to identify it; and
"(3) The transferee preserves the list and schedule for six months next following the transfer and permits inspection of either or both and copying therefrom at all reasonable hours by any creditor of the transferor, or files the list and schedule with the county recorder in the county in which the goods are located.
"(B) The list of creditors must be signed and sworn to or affirmed by the transferor or his agent. It must contain the names and business addresses of all creditors of the transferor, with the amounts when known, and also the names of all persons who are known to the transferor to assert claims against him even though such claims are disputed. If the transferor is the obligor of an outstanding issue of bonds, debentures, or the like as to which there is an indenture trustee, the list of creditors need include only the name and address of the indenture trustee and the aggregate outstanding principal amount of the issue.
"(C) Responsibility for the completeness and accuracy of the list of creditors rests on the transferor, and the transfer is not rendered ineffective by errors or omissions therein unless the transferee is shown to have had knowledge. * * *"
Shortly thereafter, in October 1980, one of Henderson's creditors, McQueen Sign Lighting, Inc., attached the checking account of "Sabo Enterprises, Inc., d.b.a. Regal Begal." Respondent satisfied this claim by paying the sum of $500 from his personal funds. During respondent's negotiations with the attorney for McQueen Sign Lighting, respondent stated he had an affidavit under the Bulk Sales Act dealing with the sale of the Regal Begal; however, it had been misfiled.
In December 1980, a receiver was appointed for the Regal Begal. In discussions with the receiver and Sabo's attorney, respondent again represented he had a Bulk Sales Affidavit relating to the Regal Begal which had been misfiled. In order to terminate this receivership respondent paid $3,000 from his personal funds.
After the appointment of the receiver in December 1980, respondent contacted Henderson and advised him it was necessary for respondent to speak to Henderson alone. A meeting followed at which respondent obtained Henderson's signature on the affidavit under the Bulk Sales Act which had purportedly been signed on September 8, 1980, when the purchase agreement had been executed. Furthermore, at this meeting respondent gave or loaned Henderson the sum of $1,000 without any promise being made by Henderson that he would repay it.
On February 9, 1981, respondent filed a complaint on behalf of Quintella against Henderson and Sabo. In this action Quintella sued upon the obligation of Henderson to Quintella arising from the sale of the Regal Begal and Sabo's subsequent assumption of this debt.
In view of the above, relator asserts respondent has violated the following sections of the Code of Professional Responsibility:
(1) DR 6-101(A)(3) — respondent neglected a matter entrusted to him by failing to secure a proper affidavit under the Bulk Sales Act for Sabo at the time the purchase agreement was executed;
(2) DR 5-101(A) and (B) — respondent accepted employment which presented a clear conflict of interest by representing Sabo, Henderson and Quintella; and
(3) DR 1-102(A)(4) — respondent committed an act of dishonesty, fraud, deceit, or misrepresentation in not securing an affidavit under the Bulk Sales Act at the time claimed by respondent.
From the evidence the board found respondent guilty of violating DR 6-101(A)(3) and DR 5-105(A) and (B).
Concerning respondent's alleged violation of DR 1-102(A)(4), the board determined the evidence to be of such a conflicting nature that the burden of proof had not been sustained. Accordingly, this final charge was dismissed.
Upon consideration of respondent's previous public reprimand for violating DR 1-102(A)(4) and (5), respondent's failure to fully cooperate with the Investigating Committe of the Stark County Bar Association and its findings of misconduct herein, the board recommended respondent be indefinitely suspended from the practice of law.
The journal entry reflecting respondent's previous public reprimand, filed September 27, 1979, provides in part:
"It appearing to the court that the Board of Commissioners on Grievances and Discipline filed its final report in this court on July 25, 1979, recommending that the respondent, John W. Ergazos, be publicly reprimanded pursuant to Section 6(c) of Rule V of the Supreme Court Rules for the Government of the Bar of Ohio; and it further appearing that replies to the order to show cause were filed, this cause was submitted to the court for consideration. On consideration thereof, it is ordered and adjudged by the court that the final report of the Board of Commissioners on Grievances and Discipline be, and the same hereby is, confirmed and this entry shall constitute the public reprimand provided, however, that should the respondent, John W. Ergazos, be found guilty of subsequent misconduct, he shall be suspended for an indefinite period from the practice of law or permanently disbarred, depending upon the seriousness of such misconduct. * * *"
Respondent contends relator failed to meet its burden of proof, and therefore, the charges against respondent should be dismissed.
Mr. Allen Schulman, Jr., Mr. John B. Lindamood and Mr. William C. Jaeck, for relator.
Buckingham, Doolittle Burroughs Co., L.P.A., Mr. Gary A. Banas, Scanlon Gearinger Co., L.P.A., and Mr. Tim F. Scanlon, for respondent.
Upon examination of the record and the findings of the board of commissioners, we conclude there are sufficient facts to justify the board's finding that respondent violated DR 6-101(A)(3) and DR 5-105(A) and (B).
Accordingly, based upon respondent's previous public reprimand and pursuant to Gov. R. V(7), we accept the recommendation of the board and indefinitely suspend respondent from the practice of law.
Gov. R. V(7) provides in relevant part:
"* * * A person who has been suspended for a period of one year from the practice of law or who has been publicly reprimanded for misconduct, upon being found guilty of subsequent misconduct, shall be suspended for an indefinite period from the practice of law or permanently disbarred, depending upon the seriousness of such misconduct." (Emphasis added.)
Judgment accordingly.
CELEBREZZE, C.J., W. BROWN, SWEENEY, LOCHER, HOLMES, C. BROWN and KRUPANSKY, JJ., concur.