Opinion
Docket No. DRB 13-225 District Docket No. XIV-2012-0595E
03-25-2014
IN THE MATTER OF JAMES A. BRESLIN, JR. AN ATTORNEY AT LAW
Christina Blunda Kennedy appeared on behalf of the Office of Attorney Ethics. Through counsel, respondent waived appearance for oral argument.
Amended Decision
Christina Blunda Kennedy appeared on behalf of the Office of Attorney Ethics. Through counsel, respondent waived appearance for oral argument.
To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.
This matter was originally before us at our March 21, 2013 session, on a disciplinary stipulation between respondent and the Office of Attorney Ethics (OAE) (Docket No. DRB 12-399). The parties stipulated that respondent's conduct violated RPC 1.1(a) and (b) (gross neglect and pattern of neglect); RPC 1.3 (lack of diligence); RPC 1.15(a) and (b) (failure to safeguard trust funds and to promptly deliver funds that a client or third party is entitled to receive); RPC 1.15(d) and R. 1:21-6 (recordkeeping violations); and RPC 8.1(b) and R. 1:20-3(g)(3) (failure to cooperate with disciplinary authorities).
The OAE had recommended a censure in DRB 12-399. We determined that a reprimand was appropriate, mainly because the stipulation, as worded, did not contain sufficient facts to allow a finding of negligent misappropriation of client funds. In addition, the stipulation did not cite legal support for a finding that an overdraft had occurred in respondent's trust account, as stipulated, given that the bank had honored the checks issued by respondent, despite the lack of corresponding funds in his trust account.
Following the OAE's motion for reconsideration of our findings, and armed with new stipulations of fact regarding both the misappropriation and the overdraft issues, we granted the OAE's motion, made additional findings, and determined that a censure more properly addresses the totality of respondent's conduct. This decision amends our prior decision filed with the Court.
Respondent was admitted to the New Jersey bar in 1968. On March 28, 2002, the Supreme Court censured him for having violated then RPC 1.2(e), redesignated as RPC 1.4(d) (when a lawyer knows that a client expects assistance not permitted by the RPCs or other law, the lawyer shall advise the client of the relevant limitations on the lawyer's conduct). In re Breslin, Jr., 171 N.J. 235 (2002).
There, respondent's former client gave him a manila envelope to pass on to the Director of Public Safety for Lyndhurst for the benefit of the client's son. The Director of Public Safety had the power to hire municipal department employees. When respondent opened the envelope, he discovered that it contained the son's application to the Lyndhurst Police Department and two blank envelopes containing a combined $10,000 in cash. Respondent, at the time a municipal court judge, then met with the Director of Public Safety, with whom he frequently socialized, and posed to him a hypothetical question. Essentially, respondent asked the Director of Public Safety what he would do if someone were to offer him money, in exchange for a favor. Sometime thereafter, the Director of Public Safety reported the matter to law enforcement authorities.
Although the Court concluded that respondent was guilty of unethical conduct, it found no clear and convincing evidence that he had participated in a bribery scheme.
The facts in this disciplinary matter are taken from the formal ethics complaint, which the parties incorporated into the stipulation.
Respondent, a sole practitioner, maintained the following attorney trust and business accounts: a) JP Morgan Chase Bank, N.A. - attorney trust account ending in #2153; b) Capital One Bank - attorney trust account ending in #5049; and c) JP Morgan Chase Bank, N.A. - attorney business account ending in #6809. On December 30, 2010, one of the banks in which respondent maintained a trust account reported to the OAE that respondent had overdrafted his attorney trust account, thereby prompting an ethics investigation and the subsequent filing of a formal ethics complaint against him. The stipulated unethical conduct occurred in connection with respondent's handling of three real estate transactions.
I. The Chen/Soh from Stewart Transaction
On June 28, 2010, respondent represented Liyun Chen and Cheeyong Soh in the purchase of real property from Tybalt and Camille Stewart. Respondent also acted as settlement agent for the transaction.
The basic terms of the transaction were summarized in the OAE's forensic reconstruction: the purchase price was $490,000; cash due from the borrower was $151,337.78; cash due from the seller was $73,526.34; and respondent's fee was $800. Respondent was also entitled to a reimbursement of $750 for expenses. The HUD-1 was not made a part of the record. The reconstructed client ledger for the Chen/Soh transaction is depicted in paragraph five of the complaint.
Because the Stewarts had a negative equity of $24,526.34, they were required to bring funds to the closing.
Respondent disbursed trust account check #4827 to himself, in the amount of $800, and six additional trust account checks, totaling $755, for various expenses listed on the HUD-1. He also issued trust account check #4833 payable to "Clerk, Bergen County" for $1,882, representing the realty transfer fee, but then marked it "VOID." That check was never negotiated. Because respondent had failed to collect all of the requisite settlement funds from Chen and Soh, his trust account held only $10.92 on the closing date.
According to the Bergen County Clerk's Office, the deed for the Stewart to Chen/Soh real estate transaction was not recorded until February 22, 2011, some eight months after the closing, when the county received respondent's trust account check #5207 for the $1,882 realty transfer fees, along with a $206 business account check (#7089) for recording fees.
Footnote 3 of the complaint states that check #5207 was a business account check, not a trust account check, and referred to check #7089 as "7289."
At paragraphs five and ten, the complaint mistakenly referred to the year of checks #5207 and #7089 as 2010. The correct year appears to be 2011.
II. The Rucker from Hardy Real Estate Transaction
On May 21, 2010, Nicole Rucker contracted to purchase real property from Brooke and Alice Hardy. Respondent represented Rucker and acted as settlement agent for the transaction.
The closing was held at respondent's office, on July 27, 2010. The sale price was $315,000; cash due from the borrower was $46,510.51; cash due to the seller was $271,748.59; and respondent's fee was $1,200. The HUD-1 showed that respondent was also entitled to a $1,300 reimbursement for expenses associated with the transaction.
On the closing date, July 27, 2010, respondent took his $1,200 fee, by trust account check #4842, and also wrote eight additional trust account checks to himself, totaling $2,585, for a grand total of $3,785. The reconstructed client ledger for Rucker is depicted at paragraph eighteen of the complaint.
Respondent stipulated that the eight additional disbursements to himself caused an overdraft in his trust account and "an overall shortage . . . of <$1,288.27>, of which $1,309.19 was attributed to Rucker."
Despite the lack of sufficient funds in respondent's trust account, the bank honored the checks. Subsequently, the OAE demanded that respondent "replenish his trust account to make up the $1,288.27 shortfall," which, the complaint states, was owed to his bank. Respondent had not done so as of the date of the stipulation.
At page one of the July 30, 2013 letter amending the original stipulation, the parties agreed to amend the stipulation to include the following language:
(1) The Respondent cannot dispute the OAE's contention in its letter of May 20, 2013 that R. 1:21-6(b) specifically recognizes that honored instruments are still considered to be overdrafts. Therefore, both parties agree and so stipulate consistent with that Rule that irrespective of the bank's improper honoring of the checks, an overdraft occurred in Respondent's trust account.
(2) The Respondent agrees that in the original Stipulation he stipulated that there was a negligent misappropriation of trust funds. This stipulation specifically applied to Rucker's funds and he cannot dispute that the Rucker ledger, as contained in paragraph 18 of the Complaint, which was made part of the original Stipulation, demonstrates that the $50.81 balance being held for Rucker on December 21, 2010 was misappropriated.
III. The Chen/Soh from Hill, Thompson, Magid & Co., Inc. Transaction
On July 29, 2010, respondent represented Chen/Soh, the buyer of real property from Hill, Thompson, Magid & Co., Inc. (HTM). Respondent was also the settlement agent.
On July 29, 2010, respondent held the closing at his office. The basic terms of the transaction were as follows: a $160,000 sale price; $148,106.22 in cash due from the borrower; $135,339.49 due to the seller; and a $750 fee to respondent. The OAE' s reconstruction of the ledger card for this transaction is found at paragraph twenty-six of the ethics complaint.
According to the stipulation, respondent neglected to collect the required funds from Chen/Soh at the "June 28, 2010 closing." When he issued trust account check #5207 and business account check #7089 to complete the transaction, a $2,288.27 shortfall occurred in his trust account. As of the date of the stipulation, respondent had not "replenished the account," despite the OAE's demand that he reimburse the bank for having honored the checks.
The date cited in the stipulation is inaccurate.
Although the stipulated facts in this paragraph appear in the stipulation's description of the Chen/Soh from HTM transaction, they actually pertain to the earlier transaction (Chen/Soh from Stewart).
As indicated previously, respondent stipulated that his conduct in the above three transactions violated RPC 1.1(a) and (b), RPC 1.3, and RPC 1.15(a) and (b).
Count two of the complaint charged respondent with recordkeeping violations (RPC 1.15(d) and R. 1:21-6)) and failure to cooperate with ethics authorities (RPC 8.1(b)). Respondent stipulated to having violated these rules.
Specifically, during a March 22, 2011 OAE demand audit that covered the period from September 1, 2010 through March 31, 2011, the OAE found "grossly negligent recordkeeping deficiencies" related to respondent's trust account, violations of RPC 1.15(d) and R. 1:21-6. In particular, receipts or disbursements journals were not maintained; client trust ledger cards were not fully descriptive; there was no trust ledger card for recording attorney bank charges; no monthly three-way reconciliations of the trust account were conducted; trust account deposit slips lacked sufficient detail; client identifier information was missing from trust account checks; and personal and business funds were commingled in the trust account.
In an apparent effort to bring his recordkeeping into compliance, on June 30, 2011, respondent sent to the OAE reconstructed three-way monthly reconciliations, client trust ledger sheets, and trust receipts and disbursement journals for the audit period (September 1, 2010 through March 31, 2011). He failed, however, to provide the OAE with a trust account ledger card tracking the personal funds maintained in his attorney trust account for bank charges and with proof that he had disbursed all old fees from the trust account to his business account. Respondent's failure to produce the requested information formed the basis for the charge of a violation of RPC 8.1(b), which respondent stipulated.
The OAE took the position that a reprimand is the appropriate sanction for respondent's violations, but contended that it should be enhanced to a censure because of respondent's prior discipline (a censure).
Following a de novo review of the record, we are satisfied that the stipulation clearly and convincingly establishes that respondent's conduct was unethical.
As to the charges in count one of the complaint, respondent stipulated that he lacked diligence, grossly neglected, and engaged in a pattern of neglect in three real estate transactions for two clients, Chen/Soh and Rucker. We find clear and convincing evidence of some, but not all of the stipulated violations.
Unquestionably, respondent violated RPC 1.1(a) and RPC 1.3 in the Chen/Soh from Stewart matter, when he failed to collect the necessary funds for the closing and when, for more than eight months after the closing, he failed to pay the realty transfer fee and to record the deed. As indicated previously, at the June 28, 2010 closing, respondent wrote a $1,882 check to the county clerk for the realty transfer fee. Before it was negotiated, however, he voided it, presumably because he knew that his trust account held only $10.92. Had he not voided the check, he might have invaded other client funds. There is no indication that he did so.
In the Chen/Soh from HTM matter, respondent stipulated that, with regard to the "June 28, 2010 real estate closing," he neglected to collect the required funds from his client. The complaint/stipulation goes on to state that, when respondent issued trust account check #5207 and business account check #7089 to complete the transaction, he caused a $2,288.27 shortfall in his trust account. As mentioned earlier, however, these facts pertain to the Chen/Soh from Stewart matter, not the HTM transaction. Those check numbers, amounts, and dates all relate to the Chen/Soh-Stewart matter, which closed on June 28, 2010. The Chen/Soh from HTM matter closed a month later, on July 29, 2010. No other facts in the complaint/stipulation suggest any wrongdoing by respondent in connection with the Chen/Soh from HTM matter. We, therefore, dismiss the charges related to the Chen/Soh from HTM matter.
In the Rucker from Hardy transaction, although respondent was entitled to receive $2,500 ($1,200 in legal fees and $1,300 for reimbursement of expenses), he disbursed an additional $1,225 to himself, through a series of eight trust account checks. Altogether, respondent received $3,785 from the transaction, instead of $2,500. According to the complaint/stipulation, these excess disbursements caused an overdraft in respondent's trust account, notwithstanding that the bank honored the checks. Indeed, in the amended stipulation, the parties cited R. 1:21-6(b), which provides that, when instruments that are presented against insufficient funds are honored, an overdraft occurs nevertheless.
The complaint did not charge respondent with the knowing misappropriation of the excess funds. Presumably, the OAE was satisfied that there was no clear and convincing evidence of knowing misappropriation.
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The complaint/stipulation also states that the above disbursements left "an overall shortage in respondent's trust account of <$1,288.27>, of which $1,309.19 was attributed to Rucker." Here, we are unable to find that a negligent misappropriation took place, as respondent stipulated. Despite the insufficiency of funds in his trust account to cover the checks, his bank honored them.
At oral argument before us, when then-Chair Pashman asked the OAE presenter whether there was an actual negligent misappropriation of client funds, the presenter replied that, had the bank not covered the checks, "[i]t would have impacted client funds." We cannot find negligent misappropriation when, but for an intervening, fortuitous event, an invasion of client funds would have occurred. Simply stated, we cannot find that respondent's disbursements produced an invasion of other client funds, when the bank willingly, but improperly, honored the checks.
According to the letter amending the original stipulation, however, respondent "cannot dispute that the Rucker ledger, as contained in paragraph 18 of the complaint, which was made part of the original Stipulation, demonstrates that the $50.81 balance being held for Rucker on December 21, 2010 was misappropriated," a violation of RPC 1.15(a).
In sum, the complaint/stipulation establishes that respondent was guilty of gross neglect and lack of diligence in the Chen/Soh from Stewart matter, negligent misappropriation in the Rucker matter, commingling personal funds and client funds in the trust account, recordkeeping violations, and failure to cooperate with the OAE, violations of RPC 1.1(a), RPC 1.3, RPC 1.15(a), RPC 1.15(d), and RPC 8.1(b).
We find no violation of RPC 1.15(b) because the stipulated facts do not support a finding that respondent did not promptly disburse funds that a client or third party was entitled to receive. Likewise, we find no violation of RPC 1.1(b). For a finding of a pattern of neglect at least three instances of neglect are required. In the Matter of Donald M. Rohan, DRB 05-062 (June 8, 2005) (slip op. at 12-16). Here, respondent displayed only one instance of neglect — in the Chen/Soh from Stewart matter.
Generally, a reprimand is imposed for recordkeeping deficiencies and negligent misappropriation of client funds. See, e.g., In re Deitch. 209 N.J. 423 (2012) (as a result of attorney's failure to supervise his paralegal-wife and also poor recordkeeping practices, $14,000 in client or third-party funds was invaded; the paralegal-wife stole the funds by negotiating thirty-eight checks made out to herself by either forging the attorney's signature or using a signature stamp; no prior discipline); In re Arrechea, 208 N.J. 430 (2011) (negligent misappropriation of client funds; the attorney also failed to promptly deliver funds that a client was entitled to receive and ran afoul of the recordkeeping rules by writing trust account checks to himself and making cash withdrawals from his trust account, practices prohibited by R. 1:21-6; although the baseline discipline for negligent misappropriation is a reprimand and, in a default matter, the otherwise appropriate level of discipline is enhanced, a reprimand was viewed as adequate in this case because of the attorney's unblemished professional record of thirty-six years and his cardiac and serious cognitive problems (mild dementia)); In re Gleason, 206 N.J. 139 (2011) (attorney negligently misappropriated clients' funds by disbursing more than what he had collected in five real estate transactions; the excess disbursements, which were the result of the attorney's poor recordkeeping practices, were solely for the benefit of the client; the attorney also failed to memorialize the basis or rate of his fee); In re Macchiaverna, 203 N.J. 584 (2010) (minor negligent misappropriation of $43.55 occurred in attorney trust account, as the result of a bank charge for trust account replacement checks; the attorney was also guilty of recordkeeping irregularities); In re Clemens, 202 N.J. 139 (2010) (as a result of poor recordkeeping practices, attorney overdisbursed trust funds in three instances, causing a $17,000 shortage in his trust account; an audit conducted seventeen years earlier had revealed virtually the same recordkeeping deficiencies; the attorney was not disciplined for those irregularities; the above aggravating factor was offset by the attorney's clean disciplinary record of forty years); In re Mac Duffie, 202 N.J. 138 (2010) (negligent misappropriation of client's funds caused by poor recordkeeping practices; some of the recordkeeping problems were the same as those identified in two prior OAE audits; the attorney had received a reprimand for a conflict of interest); and In re Fox, 202 N.J. 136 (2010) (motion for discipline by consent; attorney ran afoul of the recordkeeping rules, causing the negligent misappropriation of client funds on three occasions; the attorney also commingled personal and trust funds).
Gross neglect for failure to complete post-closing steps, such as to record a deed or discharge a mortgage, even when found alongside other, non-serious infractions, will typically result in an admonition. See, e.g., In the Matter of Thomas S. Capron, DRB 04-294 (October 25, 2004); In the Matter of Diane K. Murray, DRB 98-342 (September 26, 2000); and In the Matter of Charles Deubel. III, DRB 95-051 (May 16, 1995).
So, too, failure to cooperate with ethics authorities will result in an admonition, if the attorney does not have a disciplinary record. See, e.g., In the Matter of Marvin Blakely, DRB 10-325 (January 28, 2011); In re Ventura, 183 N.J. 226 (2005); In the Matter of Kevin R. Shannon, DRB 04-152 (June 22, 2004); and In the Matter of Keith O. D. Moses, DRB 02-248 (October 23, 2002).
When we originally assessed the appropriate sanction in this matter, at the time without the negligent misappropriation finding, we enhanced it from an admonition to a reprimand, based on respondent's prior censure. With the inclusion of the negligent misappropriation finding, four members of this Board determine that a censure is the suitable degree of discipline for the aggregate of respondent's infractions. Chair Frost and Vice-Chair Baugh agreed with the majority's findings of unethical conduct, but voted for a reprimand. Member Gallipoli recused himself.
We further determine to require respondent to reimburse the Disciplinary Oversight Committee for administrative costs and actual expenses incurred in the prosecution of this matter, as provided in R. 1:20-17.
Disciplinary Review Board
Bonnie C. Frost, Chair
By:__________
Isabel Frank
Acting Chief Counsel
D-48
073726
IN THE MATTER OF
JAMES A. BRESLIN, JR.,
AN ATTORNEY AT LAW
(Attorney No. 224151968)
ORDER
The Disciplinary Review Board having filed with the Court its decision in DRB 13-225, concluding that JAMES A. BRESLIN, JR. of LYNDHURST, who was admitted to the bar of this State in 1968, should be censured for violating RPC 1.1(a)(gross neglect), RPC 1.3(lack of diligence), RPC 1.15(a)(failure to safeguard trust funds), RPC 1.15(d) and Rule 1:21-6 (recordkeeping violations); and RPC 8.1(b) and Rule 1:20-3(g)(3)(failure to cooperate with disciplinary authorities)), and good cause appearing;
It is ORDERED that JAMES A. BRESLIN, JR. is hereby censured; and it is further
ORDERED that the entire record of this matter be made a permanent part of respondent's file as an attorney at law of this State; and it is further
ORDERED that respondent reimburse the Disciplinary Oversight Committee for appropriate administrative costs and actual expenses incurred in the prosecution of this matter, as provided in Rule 1:20-17.
WITNESS, the Honorable Stuart Rabner, Chief Justice, Trenton, this 25th day of March, 2014.
CLERK OF THE SUPREME COURT