Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

IN THE SUPREME COURT OF FLORIDA (Before a Referee) THE FLORIDA BAR by xld14276

VIEWS: 18 PAGES: 28

colorado-automotive-mechanics-lien-law pdf

More Info
									                   IN THE SUPREME COURT OF FLORIDA
                             (Before a Referee)


THE FLORIDA BAR,

      Complainant,
                                        Case No. SC02-2563
v.
                                        TFB File No. 2000-11,312(12A)
DARYL JAMES BROWN,

     Respondent.
____________________________/




                         REPORT OF THE REFEREE


SUMMARY OF PROCEEDINGS

      Pursuant to the undersigned being duly appointed as referee to conduct

disciplinary proceedings herein according to R. Regulating Fla. Bar 3-7.6, the

following proceedings occurred:

      The Florida Bar filed its Complaint with the Florida Supreme Court on

December 6, 2002. The adjudicatory portion of the disciplinary proceedings was

held over a period of four days, beginning on September 9, 2003. At the request

of the parties, the proceedings were bifurcated, with the penalty portion of the

proceedings thereafter held on October 13, 2003.

                                         1
      All orders, pleadings, responses, relevant correspondence and exhibits

received in evidence constitute the record in this case and are forwarded to the

Supreme Court of Florida along with this Report.

      Jurisdictional Statement. The Respondent, Daryl James Brown, is, and at all

material times was, a member of the Florida Bar subject to the jurisdiction of the

Supreme Court of Florida.

      The Respondent, a member of the Florida Bar for over 30 years, has been

charged by the Florida Bar with violations of Rules 3-4.3 and 4-8.4(c) of the Rules

Regulating the Florida Bar. The salient facts as proven by the Bar by clear and

convincing evidence are as follows:

FINDINGS OF FACT

      1.    At some point in 1995, the Respondent formed Hillview Development

Corporation (“Hillview”). The sole owners of this corporation were the

Respondent and his wife, with each being 50% shareholders.

      2.    At the time Hillview was formed, and at the time of the conduct alleged

in the Bar’s Complaint, the Respondent was a partner and shareholder in a law firm

known as Brown, Clark & Walters, P.A. (“BC&W”). The law firm is now known

as Brown, Clark, Christopher & Demay, P.A.

      3.    The purpose of Hillview Development Corporation was to develop a

piece of property in the resort area of Vail, Colorado. Toward that end, Mr.

                                         2
Brown undertook, on behalf of Hillview, to build a duplex in Vail, and he hired J.L.

Viele Construction Company, Inc. (“Viele”) to build it.

      4.     At some point during the construction of this duplex, a dispute arose

between Viele and Hillview. The contract between Hillview and Viele is not

particularly germane to this proceeding, except insofar as it serves as background

for the underlying Complaint.

      5.     On or about June 9, 1995, Respondent, in his capacity as president of

Hillview, executed an engagement letter prepared by his own law firm for the

representation of Hillview in the course of the duplex construction.

      6.     The duplex contained two parcels, “Parcel A” and “Parcel B.” Parcel

B was sold by Hillview on October 1, 1996. However, according to Hillview, the

construction had not been completed, so Hillview did not pay Viele completely for

its work on the duplex. Then, on or about October 28, 1996, Viele filed a

mechanic’s lien in the amount of $279,700.81 against both “Parcel A” and “Parcel

B.”

      7.     Approximately two weeks later, Hillview filed a lawsuit in Colorado

state court against Viele alleging breach of contract, wrongful filing of a lien and

other claims. Within days of that, Viele filed a lawsuit against Hillview for breach

of contract and foreclosure of its lien. The cases were then consolidated in the




                                          3
District Court for Eagle County, Colorado. The Referee was provided with the

relevant suit papers from that litigation.

      8.     Approximately three months later, Hillview entered into a contract for

the sale of “Parcel A” for $1,440,000 with a closing scheduled for March 28, 1997.

However, Hillview could not sell the property with clear title until Viele’s

mechanic’s lien was discharged.

      9.     Under Colorado law, the owner of property subject to a mechanic’s

lien may substitute a surety bond in its place, thereby clearing title to the property.

However, Colorado Statute § 38-22-131(2) expressly states the following:

             Such bond or undertaking plus costs allowed to date
             shall be in an amount equal to one and one-half times the
             amount of the lien plus costs allowed to date and shall be
             approved by a judge of the district court with which such
             bond or undertaking is filed.

      10.    Pursuant to the express provisions of Colorado law, the very act of

securing a mechanic’s lien discharge bond confers jurisdiction upon the District

Court over the parties until the obligation has been satisfied.

      11.    On or about March 6, 1997, the Respondent sought a mechanic’s lien

discharge bond pursuant to the cited statute. Apparently the only company Mr.

Brown contacted was Pioneer General Insurance Company (“Pioneer”), a licensed

surety company in Denver, Colorado. The Respondent spoke with the president of

the company and identified himself as an attorney from Florida.

                                             4
        12.   After discussing the matter with the president of Pioneer General

Insurance Company, Bob Warburton, the Respondent reduced to writing the nature

of the obligation that Pioneer would undertake on behalf of Hillview.

        13.   The resulting letter dated March 6, 1997 from the Respondent to

Pioneer confirmed the relationship between Hillview and Pioneer, and specifically

makes reference to a “Mechanic’s Lien Transfer Bond/J.L. Viele Construction,

Inc.”

        14.   On page two of that letter, which was received in evidence as the

Bar’s Exhibit 1, the Respondent expressly states the following:

              . . . my intent is to purchase a certificate of deposit or the
              equivalent at First Bank of Vail in the approximate
              amount of $420,000.00, so that the bank will, in turn,
              pledge the certificate of deposit or otherwise obligate
              itself directly to Pioneer General, as full cash collateral to
              Pioneer General for issuing the proposed bond in the
              amount of $420,000.00. [Emphasis supplied by the
              Referee.]


        15.   In reliance upon the representations of Respondent, Pioneer General

Insurance Company issued a bond to cover the mechanic’s lien. The application

for bond signed by the Respondent as president of Hillview Development

Corporation was received in evidence as the Bar’s Exhibit 2. It contains an

indemnity agreement which provides, in pertinent part, the following:




                                            5
            (4) The Surety shall have the sole right, for itself and for
            the Undersigned, to determine whether any claim,
            demand, suit or judgement [sic] shall be paid, settled,
            defended or appealed, which determination shall be
            binding upon the Undersigned.


      16.   The “Undersigned” was Daryl J. Brown. He signed the application on

March 28, 1997 as president of Hillview Development Corporation. On the same

date, the Respondent signed a discharge of mechanic lien drafted by Pioneer

General Insurance Company and signed on its behalf by Bruce H. Lowdermilk.

The amount of the bond was $419,551.21 to discharge the lien under Colorado law

(representing one and one half times the amount of the lien).

      17.   On the same date, March 28, 1997, Hillview filed an “Uncontested

Motion for Substitution of Bond and Release of Lis Pendens,” with the District

Court in Eagle County, Colorado. The Colorado state court granted this

Uncontested Motion and entered an Order for Substitution of Bond and Release of

Lis Pendens. All of this occurred on the same date, March 28, 1997.

      18.   Hillview simultaneously sold Parcel A and a portion of the proceeds

were used to purchase a Certificate of Deposit in the amount of $420,000 from

First Bank of Vail. This was the CD that was used to secure the bond.

      19.   At all times material to these transactions, it is plain to the Referee that

Pioneer General Insurance Company issued the bond based solely upon


                                          6
Respondent’s unequivocal representation that the CD would serve as “full cash

collateral” for the bond. The testimony presented by the principals of Pioneer to

this transaction makes it equally obvious to the Referee that Pioneer would not have

issued the discharge bond had the CD not served as “full cash collateral.”

      20.    One week later, on April 4, 1997, the Respondent, on behalf of

Hillview, executed a security agreement for the benefit of his law firm, BC&W,

pledging the very same Certificate of Deposit that he had previously pledged to

Pioneer as full cash collateral.

      21.    In the security agreement, which is 11 pages long, it is expressly and

repeatedly stated that “HILLVIEW intends that this security interest of BC & W in

the CD have priority over all other claims or interests to the CD by any other

creditors of HILLVIEW whatsoever.” The security agreement was received in

evidence as subpart “B” of the Bar’s Exhibit 23.

      22.    In addition to establishing a priority interest in the CD for the benefit

of his own law firm, the Respondent expressly stated in paragraph 20 of the

security agreement the following:

             The person executing this Security Agreement on behalf
             of HILLVIEW hereby personally represents and warrants
             to BC & W that he is authorized to do so and that this
             Security Agreement is fully enforceable against
             HILLVIEW. Further, the undersigned officer hereby
             personally represents and warrants that HILLVIEW is the
             sole owner of the CD and that HILLVIEW has good and

                                          7
              marketable title to the CD free and clear of any claims,
              liens and encumbrances except liens and encumbrances
              granted to BC & W. For breach of this warranty,
              HILLVIEW shall be liable to BC & W for all losses,
              damages and costs of collection of the same, including
              but not limited to attorneys’ and legal assistants’ fees and
              legal expenses. [Emphasis supplied by the Referee.]


      23.     At several points during the testimony presented in this disciplinary

proceeding, the Respondent and his partners, Mr. Christopher and Mr. Clark,

testified that this security agreement was an “internal document” that was not

designed to do anything except protect the law firm in the event of Mr. Brown’s

“untimely demise.” They further testified that the security agreement was generated

by a law clerk working at the firm and prepared using boilerplate provisions.

      24.     In essence, the Respondent and his partners suggested that this

security agreement is an ordinary commercial document and that the multiple

references to BC&W having the priority interest in the CD and the express

representations and warranty of Hillview as the sole owner of the CD were

inadvertently produced provisions in a document signed by Mr. Brown without first

reading it.

      25.     Indeed, that is precisely what the Respondent testified to at the

disciplinary hearing. He expressly stated that he did not read the security agreement

before he signed it. He stated under oath that in retrospect he might do things


                                           8
differently today, and further that he regrets not having read it before signing it.

The Referee finds this testimony incredible and unworthy of belief.

      26.    In particular, on page two, paragraph three, the security agreement

specifically recognizes the following:

             This security interest is given to secure payment and
             performance for the full amount of all legal services
             rendered and to be rendered in the future, as billed, or as
             accumulated and not billed, and all costs advanced and to
             be advanced, to HILLVIEW, in connection with BC &
             W’s representation of HILLVIEW on the project and in
             the litigation (The “indebtedness”).

      There is no recognition within this security agreement that it was intended in

any way to protect the firm in the event of Mr. Brown’s untimely demise.

      27.    If, in fact, Respondent and his partners intended to merely protect the

firm’s interests, there are myriad other ways to do so (as by will or partnership

agreement amendment) without subjugating Pioneer’s interests.

      28.    In essence, the Respondent pledged to Pioneer General Insurance

Company as “full cash collateral” a certificate of deposit in the amount of $420,000

as security for the discharge of a mechanic’s lien, and then seven days later turned

around and pledged this very same certificate of deposit to his own law firm as

security for its legal fees for representing the Respondent and his alter ego, Hillview

Development Corporation.




                                           9
       29.   At no time did Respondent ever advise Pioneer General Insurance

Company that he had pledged the same security to another party for a different

obligation, notwithstanding his representation to the president of Pioneer General

that the CD served as “full cash collateral.”

       30.   Respondent knew that his conduct was contrary to honesty and

justice.

       31.   In June 1998, the consolidated case of Hillview v. Viele was tried in

Colorado state court. It resulted in a jury verdict for Viele in the amount of

$147,000, but this was only for breach of contract. The jury verdict did not

dispose of Viele’s claims on the mechanic’s lien and for attorney’s fees under the

contract or Hillview’s claims for statutory breach of trust and excessive lien.

       32.   On or about August 12, 1998, Hillview filed for bankruptcy, claiming

the certificate of deposit held by First Bank as its sole asset. The bankruptcy

created an automatic stay of the state court action.

       33.   In August 1998, the Respondent received statements for legal services

from his own law firm totaling $198,688.62 for legal services provided to Hillview.

       34.   After Hillview filed for bankruptcy and the state court action was

automatically stayed, the federal court allowed the state court claim to proceed in

rem.




                                          10
      35.    Once the stay was lifted and the state court proceeding involving

Hillview and Viele was allowed to proceed, the Colorado state trial court judge

issued a ruling on the remaining issues in that case. This ultimately resulted in the

entry of a Final Judgment on all claims against Hillview in the amount $353,336.11.

This judgment was entered on February 17, 1999. The Court also awarded Viele

$198,234.95 for attorneys fees, $2,300 for expert witness fees, and costs in the

amount of $19,116.75.

      36.    The judgment against Hillview specifically ordered Pioneer to pay the

judgment. Pioneer thereafter paid $375,374.30 in satisfaction of the judgment

against Hillview. The arguments of counsel notwithstanding, pursuant to

paragraph (4) of the indemnity agreement signed by Respondent as president of

Hillview Development Corporation, Pioneer had the absolute legal right to do that

which it did, and that was to pay the judgment.

      37.    Put another way, for the purposes of this proceeding, it matters not

that Hillview could have, should have, or did appeal the judgment. It also matters

not that Hillview might have succeeded in the appeal. The right of Pioneer to do

what it did was absolute, and guaranteed by the document Respondent himself

signed as President of Hillview.

      38.    Much has been made throughout this proceeding of the fact that Daryl

Brown never anticipated that a judgment might be rendered against Hillview in an

                                         11
amount that would consume the entire certificate of deposit. The Referee finds that

the Respondent believed at one time that the certificate of deposit was large enough

to pay Viele after the conclusion of the lawsuit, as well as attorneys’ fees and costs

to BC&W.

      39.    However, this also matters not, for Mr. Brown pledged the CD to

Pioneer as “full cash collateral.” Afforded its common meaning, that term plainly

means that the CD, for all intents and purposes, belonged to Pioneer, for it had

been pledged as the sole and only collateral for the release of a mechanic’s lien

which had been placed upon property previously owned by Hillview.

      40.    Throughout the bankruptcy proceeding, the sole asset of Hillview was

the CD. This may account for the fact that the federal court allowed the state court

lawsuit between Hillview and Viele to proceed as it did. However, the Referee

specifically finds that that it is likewise not germane to this disciplinary proceeding.

      41.    Although alleged in paragraph 42 of the Complaint against the

Respondent, it was never demonstrated to the Referee that Pioneer filed and/or

recorded a UCC-1 financing statement with the Colorado Secretary of State on

April 29, 1999 against the proceeds of the certificate of deposit held by First Bank.

      42.    However, it was demonstrated that BC&W filed and recorded a UCC-

1 financing statement with the Colorado Secretary of State on or about May 7,

1999 against the proceeds of the certificate of deposit held by First Bank. This

                                          12
financing statement and the security agreement are what ostensibly provided

BC&W with a priority interest in the proceeds of the CD.

      43.    Because Pioneer, Viele and BC&W were asserting competing claims

against the certificate of deposit, the parties agreed to deposit the funds into the

registry of the court in Colorado. A short while thereafter, following settlement

negotiations, the Respondent (acting in his capacity as president of Hillview),

executed a settlement agreement and mutual release of claims on October 18, 1999.

      44.    Pursuant to the settlement agreement, BC&W received $100,000 in

proceeds from the certificate of deposit, $227,254.98 went to Pioneer and the

remainder to Viele and First Bank. The settlement agreement was received in

evidence as the Bar’s Exhibit 24 in the disciplinary proceeding.

      45.    The Bar essentially charges Respondent with rule violations as set

forth above through his pledging of the certificate of deposit proceeds twice: first

to Pioneer General Insurance Company as full cash collateral for a debt or potential

debt up to the amount of the CD, and second to his law firm seven days thereafter

as security for legal fees for representing Hillview in the very dispute which caused

the filing of the mechanic’s lien and litigation in the first place.

      46.    Because the Respondent pledged the certificate of deposit proceeds

twice, (something the Bar aptly describes as a “double pledge”), Pioneer lost




                                           13
substantial sums of money, and the Respondent’s law firm received $100,000 at

Pioneer’s expense.

      47.    Specifically, as was proven at the disciplinary hearing, Pioneer

suffered a net loss of $148,119.32 on the judgment rendered against it, and further

suffered legal expenses in the amount of $34,485.90.

      48.    As a result of the foregoing, the Bar charged the Respondent with

violating Rule 3-4.3 entitled “Misconduct and minor misconduct,” and Rule 4-

8.4(c) regarding dishonesty, fraud, deceit or misrepresentation.

      49.    Rule 3-4.3 is a general provision which proscribes any act by a lawyer

that is “unlawful or contrary to honesty and justice, whether the act is committed in

the course of the attorney’s relations as an attorney or otherwise, whether

committed within or outside the state of Florida, and whether or not the act is a

felony or misdemeanor. . . .” Rule 4-8.4(c) specifically proscribes any conduct

which involves dishonesty, fraud, deceit or misrepresentation.

      50.    The Referee finds violations of both rules.

      51.    The Respondent presented the testimony of Dr. Anthony V. Alfieri in

an effort to demonstrate that the Respondent committed no ethical violations. Dr.

Alfieri testified that although he basically knows little about the commercial

transactions which serve as the underlying basis for the charges leveled against the

Respondent by the Bar, this does not prevent him from rendering an opinion to the

                                         14
effect that the Respondent did not intend to do that which the Bar has clearly

proven he did.

      52.     The arguments advanced by Dr. Alfieri are a non sequitur. If he is

not an expert in the underlying transactions or in commercial law, it is impossible

for him to render the opinions he did without first concluding that Mr. Brown was

telling the truth. That is a credibility determination more appropriate for the Referee

to render.

      53.    On the issue of the credibility of the Respondent, this Referee is not

the first judge to evaluate Mr. Brown’s credibility. In that regard, in the order

rendered by the District Court for Eagle County, Colorado (received in evidence as

the Bar’s Exhibit 17), the Court made the following observations:

             11. The testimony revealed that Brown made and
             directed numerous framing changes and then claimed that
             he never approved these numerous changes in writing and
             therefore did not have to pay for them. The Court got a
             flavor for Mr. Brown during the jury instruction
             conference when Brown agreed off the record to the
             slander of title instruction and then, after the jury had
             been charged and it was impossible to work out the issue,
             voiced his objection to the instruction. Brown did the
             same thing repeatedly on this project - he would order
             changes to be done immediately and then would deny
             doing so after the work had been accomplished.
             [Emphasis supplied by the Referee.]

      54.    Although not specifically charged, the Bar argues that the affidavit

submitted by the Respondent in opposition to the Motion for Summary Judgment

                                         15
in the adversary bankruptcy proceeding involving Hillview Development

Corporation contains misrepresentations by the Respondent. Because this has not

been charged, the Referee may only look to this in evaluating the Respondent’s

credibility before the Referee.

      55.    This affidavit was received in evidence as the Florida Bar’s Exhibit 25.

In that document, the Respondent, as president of Hillview Development

Corporation, states on numerous occasions that Pioneer General Insurance

Company did not specifically agree to require an actual security interest in the funds

on deposit with the First Bank of Vail. That was clearly not the case and the

Respondent’s assertions to the contrary adversely reflect upon his credibility

before the Referee.

                      DISCIPLINARY CONSIDERATIONS

      In its filings with the Referee and argument presented at the disciplinary

hearing, the Bar urges the Referee to recommend a two-year suspension from the

practice of law. The bases for this argument are the Respondent’s prior

disciplinary record (see Florida Bar v. Brown, 790 So. 2d 1081 (Fla. 2001)) and the

fact that the same rule violation is at issue here once again.

      The Respondent, while not conceding that he has done anything wrong,

argues instead for a maximum penalty of a public reprimand like that which the



                                          16
Referee recommended in the case cited above. The Florida Supreme Court

rejected the recommendation and instead imposed a 90-day suspension.

      There is both substantial aggravation and mitigation of the Respondent’s

conduct. The potential aggravators that the Referee may consider before imposing

lawyer sanctions are as follows:

AGGRAVATING FACTORS

      1.    Prior disciplinary offenses
      2.    Dishonest or selfish motive
      3.    A pattern of misconduct
      4.    Multiple offenses
      5.    Bad faith obstruction of the disciplinary proceeding
      6.    Submission of false statements or submission of false evidence
      7.    Refusal to accept responsibility
      8.    Vulnerability of victim
      9.    Substantial experience in the practice of law
      10.   Indifference to making restitution

      The Referee finds that five of these aggravators are present here. There is a

prior disciplinary history as set forth above. The conduct with which the

Respondent is charged and which the Bar has proven evinces a selfish motive. The

Respondent and his wife owned Hillview Development Corporation, and his “deal”

with his law firm was less than an arms-length transaction. The security agreement

that he signed selfishly placed the interests of his own law firm above the bonding

company. He did this even though it was the bonding company that accepted the

Respondent’s representations regarding “full cash collateral,” and thereafter stuck


                                        17
its neck out by issuing the mechanic’s lien discharge bond, a bond that

automatically subjected it to the jurisdiction of a court of law in Colorado.

       That Respondent thought his obligations were fully satisfied at the time of the

double pledge is of no consequence to this Referee, for it is the signing of the

security agreement with his own law firm and the nondisclosure to Pioneer that was

dishonest and selfish, and not the subsequent court order that made it so.

       Throughout this proceeding, the Respondent has refused to accept

responsibility for anything other than not reading the security agreement. Of course

not reading the security agreement flies in the face of substantial so-called

“mitigation” testimony from the Respondent’s partners, clients, and a circuit court

judge to the effect that the Respondent is a “detail man” and one who is always

prepared. In short, failing to read something before he signed it is contrary to the

Respondent’s nature and the Referee affords all the testimony that seems to ignore

that fact very little weight.

       There is also a great deal of evidence before the Referee to support the fact

that the Respondent has substantial experience in the practice of law. But the

Referee will go one step further, and state unequivocally that the “substantial

experience” was garnered in this very area of law, i.e., construction litigation.

According to Respondent’s own witness, Charles Bartlett, Esq., he is considered

“one of the top litigators in Sarasota.”

                                           18
      In addition, the Respondent has, through his actions and the argument of his

counsel during this proceeding, expressed some indifference to making restitution.

In that regard, when counsel continually argues that Pioneer’s payment of the

judgment was “voluntary,” or when the argument is made to the effect that “we

would have won on appeal,” or “Pioneer deprived us of the opportunity to win on

appeal,” or any species of similar argument, this flies in the face of the document

that the Respondent himself signed in order to obtain the mechanic’s lien discharge

bond in the first place.

      The bottom line is simply this: the application for bond specifically gives

Pioneer the sole discretion to settle or pay any claim or judgment that is rendered

against it or Hillview. That experienced counsel would ignore that provision leads

to the conclusion that he is indifferent to making restitution.

MITIGATING FACTORS


      1.     Absence of prior disciplinary record
      2.     Absence of dishonest or selfish motive
      3.     Personal emotional problems
      4.     Timely good faith effort to make restitution or rectify misconduct
      5.     Full and free disclosure to disciplinary agency or cooperative attitude
             in disciplinary proceedings
      6.     Inexperience in the practice of law
      7.     Character or reputation
      8.     Physical or mental disability or impairment
      9.     Unreasonable delay in the disciplinary proceedings not caused by the
             Respondent
      10.    Interim rehabilitation

                                          19
      11.    Imposition of other penalties or sanctions
      12.    Remorse
      13.    Remoteness of prior offenses


      Among the mitigators that the Referee should and must consider are those

listed above. Upon close examination of the testimonial and documentary evidence

presented at this disciplinary hearing, the Referee finds that only one of these

mitigators has been demonstrated. That mitigator is the character or reputation of

the Respondent.

      Notwithstanding the Respondent’s prior disciplinary record, Mr. Brown has

a lengthy and distinguished record of and reputation for charitable and other

philanthropic involvement in the community. In that regard, Respondent has served

on the Board of Directors for United Way, has participated in or otherwise been

involved with United Cerebral Palsy, Cystic Fibrosis, the American Heart

Association, the American Cancer Society, the Sarasota County Educational

Foundation, Special Olympics, the Humane Society, and the Boys and Girls Clubs.

Over the years, the Respondent has coached basketball, baseball, T-ball, football

and soccer for young children.

      The Respondent has also been actively involved in the Ringling Museum, the

American Jewish Committee, and has received several awards from the Sarasota-




                                         20
Manatee Lawyer Referral Service in recognition of his contributions to the

provision of pro-bono service in Sarasota.

      The Referee has no doubt but that the Respondent has made substantial

contributions to his community. As he stated in his testimony before the Referee,

he is generally regarded as a “soft touch” when it comes to giving back to his

community.

      All that said, however, the Referee finds it most difficult to reconcile the

Respondent’s philanthropic efforts with his conduct in this and the prior case cited

above.

                                  CONCLUSION

      Throughout the course of these proceedings, counsel have, at various times,

characterized this matter as “complicated.” And while the transactions that serve as

the underlying basis for the allegations made against the Respondent were anything

but ordinary, the Referee does not agree with this characterization.

      This is essentially a simple matter. Mr. Brown, a member of the Florida Bar

with over 30 years experience in the field of construction contract litigation, sought

a mechanic’s lien discharge bond from an insurance company. He represented that

a certificate of deposit that he would post as collateral for the issuance of that bond

would serve as “full cash collateral.” It matters not that at the time he made that

representation, his potential liability as a principal of Hillview would have been or

                                          21
could have been less than the amount of the CD. In the end, that turned out not to

be the case.

       Within days of pledging the CD as “full cash collateral” to Pioneer General

as consideration for the issuance of a mechanic’s lien discharge bond, the

Respondent, also a member of a law firm in Sarasota, Florida, turned around and

pledged the same collateral to his own law firm. The Bar’s characterization of this

as a “double pledge” is most apt, as it plainly indicates that which the Bar has

proven, and that is that the Respondent essentially sought to secure for his law firm

legal fees incurred by a corporation he founded. These fees were incurred as the

corporation was on the threshold of bankruptcy, with the Respondent all the while

knowing that he had pledged the same collateral to a surety company as “full cash

collateral.”

       At the time Respondent signed the security agreement inuring to the benefit

of his own law firm, Respondent knew that his conduct was contrary to honesty

and justice. Further, he did not disclose the existence of the security agreement to

Pioneer General. Even more troubling is the fact that he sees nothing wrong with

any of this.

       The Referee is unpersuaded by testimony elicited from the Respondent and

his partners to the effect that the security agreement was an “internal document”

which was never intended to be used to undermine the interests of Pioneer General.

                                         22
The very fact that the law firm derived the benefit of $100,000 through so-called

settlement negotiations during the course of the underlying state court litigation

suggests to the Referee that it was the law firm’s intent from the very beginning to

protect its interests, even if it came at the expense of Pioneer.

          In addition, there is nothing about the security agreement that even remotely

suggests that it was a boilerplate document. There are numerous references to the

fact that the law firm had a priority interest and that Hillview was the sole owner of

the CD. There was no reference whatsoever to Pioneer’s interest, even though it

was the procurement of the CD and its pledge by the Respondent to Pioneer

General that caused Pioneer General to issue the bond and allowed Hillview to sell

the property in the first place.

          That experienced lawyers did not know and understand the import of the

document that they created for their own benefit defies both common sense and

belief.

                           RECOMMENDED DISCIPLINE

          The Referee disagrees with the recommended sanctions of the Bar and the

Respondent, and after due consideration of the record and relevant case law,

instead recommends a six-month suspension from the practice of law.




                                            23
             STATEMENT OF COSTS AND MANNER TAXED

      It is the finding of the Referee that reasonable costs have been incurred by

The Florida Bar and that they should be taxed against the Respondent.



Grievance Committee Level

      1.    Administrative costs pursuant to Rule 3-7.6(o)(1)(I)           $750.00

      2.    8/22/01 Grievance Committee Meeting
            Travel/Tolls – Brett A. Geer                                      52.90
            Meals                                                              7.42

      3.    7/15/02 Meeting with Daryl Brown in Sarasota
            Travel – Jodi Anderson                                            49.40

      4.    8/28/02 Grievance Committee Summary Hearing
            Travel – Jodi Anderson                                            28.50


Referee Level


      5.    4/22/03 Summary Judgment Hearing, Fort Myers
            Travel/Parking – Jodi Anderson                                   105.50
            Meals                                                              8.00

      6.    6/9/03 Deposition of Leo Meirose, Jr.
            Riley Reporting Services fees                                    215.25

      7.    6/17/03 Depositions of Brown, Christopher & Clark, Sarasota
            Travel – Jodi Anderson and Debra J. Davis                   49.40
            Meals – Jodi Anderson and Debra J. Davis                    15.00

      8.    6/17/03 Depositions of Christopher, Brown & Clark
            Demby & Associates, Inc. Court Reporter fees                     995.00

                                        24
9.    6/18/03 – 6/20/03 Depositions, Denver, Colorado
      Airfare – Jodi Anderson                                    423.00
      Lodging (2 nights)                                         224.00
      Meals/Tips – Jodi Anderson                                  51.83
      Auto Rental                                                 75.00
      Hotel Tips/Shuttle                                          20.00

10.   6/19/03 Depositions of Lowdermilk, Warburton, Meer, Neel
      Bruno Reporting Company fees                             463.20

11.   6/30/03 Mediation, Tampa
      Travel/Parking – Jodi Anderson                               7.20
      Travel/Parking – Susan V. Bloemendaal                       10.84

12.   7/25/03 Colorado Secretary of State
      Certified Copies Re: Hillview Development Corporation        7.00

13.   8/18/03 Deposition of Anthony Alfieri
      Personal Touch Reporting fees                              617.80

14.   8/25/03 Nolen-Martina Reporting Services
      Hearing Appearance fee                                      45.00

15.   8/26/03 Depositions of Krahenbuhl, Madagan, Sugar, Tampa
      Travel – Jodi Anderson                                       5.70

16.   Depositions of Krahenbuhl, Madagan, Sugar
      Clark Reporting Service fees                               855.55

17.   9/4/03 Deposition of Randolph Braccialarghe, Tampa
      Travel – Jodi Anderson                                       5.70

18.   9/4/03 Deposition of Randolph Braccialarghe
      Riley Reporting Service fees                               273.25

19.   9/8/03 – 9/12/03 Final Hearing, Fort Myers
      Lodging – Jodi Anderson and Debra J. Davis (3 nights)      258.88
      Lodging (5 witnesses)                                      304.00

                                25
      Travel/Tolls – Jodi Anderson                161.80
      Meals – Jodi Anderson and Debra J. Davis    102.93
      Parking/Tips – Debra J. Davis                15.00

20.   6/19/03 – 9/12/03 Robert Warburton
      6/19/03 Deposition:
      Travel – Automobile                         176.40
      Lodging                                     123.66
      Meals                                        12.20
      9/8/03 – 9/9/03 Trial:
      Witness Fee                                  15.00
      Airfare                                     376.50
      Travel – Automobile                         176.40
      Lodging                                     222.56
      Meals                                        63.78
      Taxi                                          6.00

21.   9/8/03 – 9/9/03 Bruce Lowdermilk
      Witness Fee                                  10.00
      Airfare                                     376.50
      Travel – Automobile                          25.92
      Meals-Lowdermilk and Warburton               80.19
      Taxi/Tolls/Parking                          104.00

22.   9/9/03 – 9/10/03 Robert Meer
      Witness Fee                                   5.00
      Airfare                                     391.50
      Meals                                        24.00
      Taxi/Parking                                 60.00

23.   8/14/03 – 9/10/03 Michael J. Sugar
      Expert Witness Consultation                4,000.00
      Travel                                       192.96
      Meals                                         24.00
      Fax and copies                                22.40
      Tolls/Parking                                 18.50

24.   8/18/03 – 9/10/03 Randolph Braccialarghe
      Expert Witness Fee                         4,590.00

                                26
             Travel                                                              94.54
             Meals                                                               35.22
             Tolls/Parking                                                        7.50

      25.    Fort Myers Court Reporting
             9/9/03 – 9/11/03 Final Hearing                                4,093.35
             10/12/03 – 10/13/03 Sanctions Hearing                           935.00

      26.    10/12/03 – 10/13/03 Sanctions Hearing, Fort Myers
             Lodging – Jodi Anderson and Susan V. Bloemendaal                 84.00
             Meals – Jodi Anderson and Susan V. Bloemendaal                   79.92
             Travel                                                          125.40
             Tolls/Parking                                                     6.00

      27.    Copy costs (1.624 @ $.15 per page)                             243.60
             TOTAL                                                      $23,006.0
5

      It is recommended that the reasonable costs should be charged to the

Respondent and that interest at the statutory rate shall accrue and be payable

beginning 30 days after the judgment in this case becomes final unless a waiver is

granted by The Board of Governors of The Florida Bar.

      DATED this_______ day of November, 2003.




__________________________________
                              Leigh Frizzell Hayes
                              Referee
                              1700 Monroe Street
                              Fort Myers, Florida 33901

                         CERTIFICATE OF SERVICE


                                         27
      I HEREBY CERTIFY that the original of the foregoing Report of Referee
has been mailed to THE HONORABLE THOMAS D.HALL, Clerk, Supreme
Court of Florida, 500 South Duval Street, Tallahassee, Florida 32301, and that
copies were mailed by regular U.S. Mail to JOHN A. BOGGS, Staff Counsel, The
Florida Bar, 650 Apalachee Parkway, Tallahassee, Florida 32399-2300; Jodi
Anderson, Assistant Staff Counsel, The Florida Bar, 5521 West Spruce Street,
Suite C49, Tampa, Florida 33607-5958; and Scott K. Tozian, Esquire, Smith and
Tozian, P.A., 109 North Brush Street, Suite 200, Tampa, Florida 33602, on this
_______ day of November, 2003.



___________________________________
                              Referee




                                      28

								
To top