Opinion
No. 92-2530
Submitted April 20, 1993 —
Decided August 11, 1993.
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and Discipline of the Supreme Court, No. 91-18.
In a complaint filed June 24, 1991, relator, Cincinnati Bar Association, charged that respondent, James R. Hartke of Cincinnati, Ohio, Attorney Registration No. 0011584, had violated, inter alia, DR 5-104(A) (entering business transaction with client where the attorney's and the client's interests differ, and client has not consented after full disclosure), 1-102(A)(4) (engaging in conduct involving fraud, deceit, dishonesty or misrepresentation), and 7-102(A)(7) (counseling or assisting client in conduct attorney knows to be illegal or fraudulent). A panel of the Board of Commissioners on Grievances and Discipline of the Supreme Court heard the matter on July 24 and August 27, 1992.
Evidence submitted before the panel established that respondent represented Lorna Mae Voelkel during her divorce in 1975. Voelkel was awarded the marital residence and, in February 1976, she sold this property. Respondent attended the closing, but claims this was only to accept a $20,000 loan from proceeds Voelkel received from the sale, not to represent her. The terms of the loan, as evidenced by written contract, provided that respondent pay thirteen percent interest annually for twenty years, with the entire principal to be repaid in February 1996.
Over the next thirteen years, respondent made interest payments regularly, for the most part, and made up the few he missed. Voelkel kept in touch with respondent during this period, contacting him periodically about a late payment or some minor legal problem.
In 1988, Voelkel was cited in the Hamilton County Municipal Court for maintaining a mobile home in violation of zoning restrictions. Voelkel's appearance had to be secured by arrest, and she was ultimately found incompetent to stand trial. In December 1988, Voelkel was committed to Rollman Psychiatric Institute in Cincinnati ("Rollman"), where she remained until June 1989. In February 1989, the zoning charge against her was dismissed.
While Voelkel was involuntarily hospitalized, respondent did not make any interest payments, purportedly by agreement with Voelkel's mother, Daisy Edwards, because Voelkel owed respondent more than that amount for defending her in the zoning case. Also during this period, respondent received several inquiries from the Ohio Department of Mental Health ("ODMH") about Voelkel's financial ability to reimburse the state for her treatment, which cost approximately $40,000. In one of these letters, ODMH relayed the understanding that respondent would be responsible for representing Voelkel in her financial affairs. He did not respond.
On July 19, 1989, shortly after Voelkel's release from Rollman, respondent met with her and her mother to discuss the interest payments due Voelkel, his legal fees, and the money owed to ODMH. At the meeting, Voelkel and respondent entered into a "compromise" agreement in which Voelkel accepted $2,000 as "full and final settlement of any and all monies owed to her by [respondent] as a result of a loan made to him in 1976, and being due in 1996." Respondent and Voelkel also executed a document titled "Instructions from Lorna Voelkel, Confirmed by her mother, Daisey [ sic] Edwards," which provides that Voelkel "specifically instructs [respondent] to not pay to the Ohio Department of Mental Health, Section of Reimbursement Services, any monies." This document further provides that Voelkel "will personally be liable" for all costs associated with her hospitalization at Rollman. The papers documenting the compromise and instructions were both witnessed by Voelkel's mother and respondent's secretary.
Voelkel signed these papers after respondent warned that he would have to disclose their loan agreement to ODMH if subpoenaed and that he could avoid this only if they settled the debt between himself and Voelkel so that he did not owe Voelkel any money. According to respondent, Voelkel insisted on the compromise agreement because she was upset over her commitment and was determined not to pay for it. She purportedly also wanted to resolve the matter immediately, even though respondent told her he had only $2,000 available to settle the debt and that the arrangement was a poor bargain for her.
Respondent testified that he was acting as Voelkel's debtor, not as her attorney, when he drafted the compromise agreement, but admitted that he did not advise her to seek independent counsel beforehand. Respondent, however, consulted another attorney about the propriety of his agreement with Voelkel after he prepared it. He also testified that since he could not persuade Voelkel to wait until he could offer her more settlement money, he promised to help her if she needed money in the future.
After the meeting with Voelkel and her mother, respondent received a letter from ODMH about the delinquency of payments on Voelkel's account. In a one-sentence reply dated August 12, 1989, respondent wrote that neither he nor his office was holding any funds on behalf of Lorna Voelkel.
In August 1990, Voelkel and her mother contacted respondent again and asked for more money. Respondent explained that he did not legally owe Voelkel any money due to the compromise agreement entered the preceding year. He did, however, give Voelkel a check for $500 to satisfy what he considered a moral obligation to pay.
In December 1990, Voelkel sued respondent seeking to rescind the compromise agreement. Her action was ultimately dismissed, however, after the parties agreed, in essence, (1) to reinstate the terms of the 1976 loan contract, thereby requiring respondent to resume monthly payments and to pay approximately $6,000 in past-due interest, and (2) to credit all payments made by respondent in connection with the compromise agreement against his obligations under the loan agreement.
From this evidence, the panel concluded that when respondent contracted with Voelkel to compromise the 1976 loan, she plainly considered him to be her attorney, which even respondent conceded in response to questioning. The panel also concluded that, in view of Voelkel's recent commitment and their vastly different interests in compromising his debt, respondent could not comply with the full disclosure requirement in DR 5-104(A) without insisting Voelkel receive independent legal advice about the compromise. The panel, therefore, found that respondent had violated DR 5-104(A) by entering a business transaction with his client without sufficiently explaining that he would represent his own, rather than her, interests. The panel also found that respondent violated DR 1-102(A)(4) and 7-102(A)(7) because he knowingly contracted with Voelkel, for his own gain, to assist her in her attempt to defeat ODMH's claim for reimbursement.
In making its recommendation, the panel considered the absence of any prior disciplinary action against respondent, the testimony of character witnesses supporting respondent's honesty and integrity, respondent's claim that he had committed none of the charged disciplinary infractions, and his alternative argument that he agreed to compromise the 1976 loan only because of Voelkel's insistence and his own poor judgment. Implicitly agreeing that respondent's misconduct resulted from extraordinarily poor judgment rather than self-serving ambition, the panel rejected relator's recommendation of an indefinite suspension and recommended that respondent be suspended from practicing law for one year. The board adopted the panel's findings and its recommendation.
Anne E. Krehbiel and D. Michael Poast, for relator.
H. Fred Hoefle, for respondent.
We agree with the board's findings and its recommendation. Accordingly, respondent is hereby suspended from the practice of law in Ohio for a period of one year. Costs taxed to respondent.
Judgment accordingly.
MOYER, C.J., A.W. SWEENEY, DOUGLAS, WRIGHT, RESNICK, F.E. SWEENEY and PFEIFER, JJ., concur.