STATEWIDE GRIEVANCE COMMITTEE
Mary Guilles, Complainant vs. Stephen N. Schaffer, Respondent
Grievance Complaint #00-0845
Pursuant to Practice Book ß2-35, the undersigned, duly-appointed reviewing committee of the Statewide Grievance Committee, conducted hearings at the Superior Court, 235 Church Street, New Haven, Connecticut on December 5, 2001, March 6, 2002 and June 5, 2002. The hearings addressed the record of the complaint filed on April 25, 2001, and the probable cause determination filed by the Stamford/Norwalk Judicial District Grievance Panel on September 12, 2001, finding that there existed probable cause that the Respondent violated Rules 1.3, 1.4(a) and (b), 1.8(a) (1) and (2), and 1.15(a) and (b) of the Rules of Professional Conduct.
Notice of the hearing on December 5, 2001 was mailed to the Complainant and to the Respondent on November 1, 2001. Notice of the hearing on March 6, 2002 was mailed to the Complainant and to the Respondent on February 7, 2002. Notice of the hearing on June 5, 2002 was mailed to the Complainant and to the Respondent on April 4, 2002. The Complainant appeared at the hearing on December 5, 2001 represented by Attorney Robert F. Maslan, Jr. and was heard by this reviewing committee. The Respondent appeared at the hearings represented by Attorney Richard Albrecht, and was heard by this reviewing committee. Gilbert Watkins, CPA, appeared at the hearings at this reviewing committeeís request and testified. Attorney Allen Williams testified as the Court-appointed monitor for the Respondent at the hearing on June 5, 2002.
Subsequent to the hearing in this matter, reviewing committee member Attorney Christopher Carveth had to recuse himself. Therefore, this decision is rendered by the undersigned.
This reviewing committee finds the following facts by clear and convincing evidence:
On April 17, 2000, the Respondent represented the Complainant in her capacity as a real estate grantor. The Complainant did not receive any proceeds from the sale of the real property or closing statements on the day of the closing. Nine days later, the Complainant returned to the Respondentís office and received closing proceeds in the amount of two hundred twenty-five thousand two hundred six dollars and twenty-two cents ($225,206.22).
In March of 2001, the Complainantís accountant informed the Complainant that he needed a copy of the closing statement in order to prepare her income tax return. The Complainant asked for and received a copy of the closing statement from the Respondent. The Complainant then provided the closing statement to her accountant. After reviewing the Complainantís records, her accountant informed her that she should have received sixty-nine thousand nine hundred ninety dollars ($69,990.00) more in closing proceeds.
On March 20, 2001, the Complainant and her two brothers met with the Respondent and requested the additional proceeds due the Complainant. The Respondent informed them that he was not able to make the disbursement. The Respondent offered to provide the Complainant with a promissory note for seventy thousand dollars ($70,000.00). The Complainant declined the Respondentís offer of a promissory note and demanded immediate disbursement. The Respondent did not make immediate disbursement because he did not believe he had sufficient funds in his clientsí fund account to cover the disbursement. The Respondent had not reconciled his clientsí funds account. Thereafter, the Respondent engaged Gilbert Watkins, an accountant, to review his clientsí funds account. Attorney Allen Williams was appointed by the Superior Court to monitor the Respondentís clientsí trust account, as the result of an application for interim suspension arising out of the concerns associated with this grievance complaint. The accountantís review revealed that the Respondent had had sufficient funds in his clientsí trust account to disburse all of the additional proceeds to the Complainant. Thereafter, the Respondent disbursed the additional funds due the Complainant to the Complainant with the supervision of the Court-appointed monitor.
This reviewing committee finds the following violations of the Rules of Professional Conduct by clear and convincing evidence:
The Respondent did not represent the Complainant in the real estate closing with reasonable diligence in violation of Rule 1.3 of the Rules of Professional Conduct. The Respondentís failure to reconcile his clientsí funds account and disburse the full proceeds due the Complainant at or about the time of the closing rose to the level of violating Rule 1.3.
The Respondent did not keep the Complainant reasonably informed about the status of her real estate closing. The Respondentís failure to provide the Complainant with a closing statement at or about the time of the closing and inform her of the status of her full proceeds, constituted violations of Rules 1.4(a) and (b) of the Rules of Professional Conduct.
The Respondent failed to keep the Complainantís closing proceeds safeguarded by not reconciling his clientsí trust account in violation of Rule 1.15(a) of the Rules of Professional Conduct. The Respondentís failure to promptly deliver the Complainantís full closing proceeds to the Complainant constituted a violation of Rule 1.15(b) of the Rules of Professional Conduct.
We do not, however, find clear and convincing evidence of a violation of Rules 1.8(a)(1) and (2). The Respondentís offer of a promissory note under the circumstances of this case, including the Respondentís belief that he did not have sufficient funds to cover disbursement to the Complainant when he did have sufficient funds, did not rise to the level of a business transaction between the Complainant and the Respondent within the scope of Rule 1.8(a).
Because we find that the Respondent violated Rule 1.15(a) of the Rules of Professional
Conduct, we reprimand the Respondent and order that he complete a continuing legal education course in law office management, at his own expense, within six months of the date of this decision. We further order that the Respondent notify the Office of Statewide Bar Counsel in writing within ten business days of the date of his completion of the continuing legal education course.
Although we find that the Respondent also violated Rules 1.3 and 1.4(a) and (b) of the Rules of Professional Conduct, we do not order any additional discipline. We note that the Respondent has represented that he will personally compensate the Complainant for lost interest earnings resulting from delayed disbursement of the full closing proceeds and that he will so notify the Office of the Statewide Bar Counsel in writing when said compensation has been made.
Attorney Carl Fortuna, Jr.
Professor Paul Hawkshaw