STATEWIDE GRIEVANCE COMMITTEE
David Reis, Complainantvs. John B. Kennelly, Respondent
Grievance Complaint #01-0769
Pursuant to Practice Book §2-35, the undersigned, duly-appointed reviewing committee of the Statewide Grievance Committee, conducted a hearing at the Superior Court, 300 Grand Street, Waterbury, Connecticut on September 3, 2002. The hearing addressed the record of the complaint filed on March 4, 2002, and the probable cause determination filed by the Hartford Judicial District Grievance Panel for Geographical Area 13 and the town of Hartford on June 24, 2002, finding that there existed probable cause that the Respondent violated Rule 3.3 of the Rules of Professional Conduct.
Notice of the hearing was mailed to the Complainant and to the Respondent on August 2, 2002. The Complainant, represented by Attorney Raymond A. Garcia, appeared at the hearing and testified. The Respondent, represented by Attorney Christopher L. Brigham, also appeared at the hearing and gave testimony. Attorney William S. Wilson, III testified on behalf of the Complainant, and Attorney Scott Orenstein testified on behalf of both the Complainant and the Respondent. Two exhibits were admitted into evidence.
This reviewing committee finds the following facts by clear and convincing evidence:
The Complainant is the managing member of Shoreline Care Limited Partnership (hereinafter “Shoreline Care”). Shoreline Care, represented by Attorney Garcia and Attorney Wilson, initiated a civil lawsuit against Jansen & Rogan Consulting Engineers, P.C. (hereinafter “Jansen & Rogan”), among other defendants. The Respondent represented Jansen & Rogan and Attorney Orenstein assisted the Respondent in defense of the lawsuit.
Jansen & Rogan was insured under a $1 million professional liability policy that contained an expense within limits provision. A policy with such a provision is one in which the amount available to pay a settlement or judgment on behalf of a policyholder is reduced by the amount expended in defending the matter. Before trial commenced on February 5, 2002, Attorney Garcia repeatedly asked the Respondent for a statement as to the amount of insurance coverage remaining on Jansen & Rogan’s policy. The Respondent disclosed only that the policy had a coverage limit of $1 million and that the amount of coverage was declining as the litigation continued.
On February 5, 2002, the Respondent and Attorney Orenstein, at the request of Attorney Garcia, joined the Complainant, Attorney Garcia and Attorney Wilson for dinner. Before he entered the restaurant, the Respondent made notes regarding the amounts expended and committed under the policy, which the Respondent knew were false. During dinner, Attorney Garcia requested that the Respondent indicate what the remaining coverage was under the policy. The Respondent stated that approximately $520,000 had been billed for legal fees to defend the case as of November 30, 2001 and that approximately $80,000 had been billed through February 1, 2002 but was unpaid. The Complainant and Attorney Garcia indicated that they did not believe the Respondent’s figures. The Respondent explained that he had checked the figures with his firm’s billing department and explained that several attorneys had worked on the file. The Respondent also made statements about other charges that would have to be deducted from the policy limit – namely, that his firm required $50,000 to monitor the case against the other co-defendant if Jansen & Rogan settled, that $20,000 to $25,000 had been spent on an expert witness, that $5000 had been spent on transcripts, that $3000 had been spent on copies and that $5000 to $10,000 would be required to close the file. Accordingly, the Respondent represented that approximately $320,000 of the $1 million policy limit remained available for settlement purposes. The Respondent’s representations were contemporaneously memorialized in writing by Attorney Wilson.
On February 6, 2002, the Honorable Beverly J. Hodgson conducted a mediation session in which the Complainant, Attorney Garcia, Attorney Wilson, the Respondent and Attorney Orenstein attended and participated. During the joint phase of the mediation session, Judge Hodgson was made aware of the statements that the Respondent made the prior evening regarding Jansen & Rogan’s defense costs and the remaining coverage under the policy. More specifically, Judge Hodgson was informed that approximately $680,000 had been paid or committed to Jansen & Rogan’s defense, thereby leaving approximately $320,000 available under the policy for payment of any settlement or judgment. At that time, the Respondent did not inform Judge Hodgson that the figures were inaccurate or that he had provided erroneous figures to the Complainant, Attorney Garcia and Attorney Wilson the evening before. Judge Hodgson then had an ex parte discussion with the Complainant, Attorney Garcia and Attorney Wilson. Judge Hodgson remarked that although only approximately $320,000 was available under the policy, if she could get Jansen & Rogan to offer $400,000, that would be reasonable. The Complainant agreed with Judge Hodgson. At that point, Judge Hodgson had an ex parte discussion with the Respondent and Attorney Orenstein. The Respondent alerted Judge Hodgson several times that the figures provided to her during the joint phase of the mediation session were inaccurate and that there was additional settlement money available. However, the Respondent neither provided Judge Hodgson with the accurate figures nor with a more accurate range of what was available under the policy. Pursuant to Judge Hodgson’s request, the Respondent telephoned his client and received authority to offer $400,000 to settle the case with the agreement that the Complainant would indemnify Jansen & Rogan against any potential cross-claims by the non-settling co-defendants. The Complainant declined this offer and the settlement discussions terminated.
On February 8, 2002, the Honorable Robert F. McWeeny ordered the Respondent to provide Attorney Garcia with a copy of the policy. On February 13, 2002, Judge McWeeny ordered the Respondent to disclose the costs of defending the lawsuit, including attorney’s fees billed, and the specific amount of coverage remaining under the policy. The Respondent immediately complied by writing the information on a piece of paper and handing it to Attorney Garcia. The Respondent’s note disclosed the following: that $134,913.21 had been billed by his firm for legal fees associated with the defense; that $96,379.61 had been incurred as legal fees but not billed; that approximately $7000 had been incurred in expert witness fees; and that $18,125.47 had been incurred for other claims. Thus, the total amount expended or committed was $231,292.82. Accordingly, the balance remaining under the policy was $725,435.86, not $320,000 as previously stated by the Respondent. At no time prior to Judge McWeeny’s order did the Respondent attempt to clarify or advise the Complainant, Attorney Garcia or Attorney Wilson that his representations as to amounts expended or committed were erroneous.
This reviewing committee also considered the following:
The Complainant testified that he altered his settlement demand based on the Respondent’s misrepresentations. Initially, the Complainant’s demand was $700,000, but he dropped his demand to $400,000 during the mediation session with Judge Hodgson. Additionally, the Complainant testified that during the joint phase of the mediation session with Judge Hodgson, the Respondent reiterated the same figures that he had made over dinner the previous evening, stated that he checked the figures with his firm’s billing department and attempted to justify the amount of the fees by explaining how many lawyers worked on the case. Attorney Wilson’s testimony was consistent with the Complainant’s testimony regarding what topics the Respondent discussed at the joint phase of the mediation session.
The Respondent maintained that neither the Complainant nor Attorney Garcia relied on his misrepresentations regarding the costs of defending the lawsuit, and that he did not mislead Judge Hodgson as to the amount of coverage remaining under the policy. Moreover, the Respondent claimed that his misrepresentations did not involve material facts. He also indicated that the Complainant threatened to file a grievance complaint on several occasions during the trial and used this threat as a trial tactic. The Complainant, however, denied such conduct.
The Respondent testified that, at the time of the hearing before this reviewing committee, he had been in the practice of law for six years, had conducted only six trials, had never conducted a jury trial, had never tried a case of this magnitude, and had never faced opposing counsel with the experience and background of Attorney Garcia. The Respondent apologized for his conduct at the settlement dinner and testified that he did know at the time that he was violating the Rules of Professional Conduct because he thought that he did not have to share accurate figures with Attorney Garcia. The Respondent also testified that the Complainant and Attorney Garcia shared the figures with Judge Hodgson during the joint phase of the mediation session. He maintained that he only explained how complicated the case was because of the death of the original attorney assigned to handle the case. However, the Respondent insisted that he repeatedly made it clear to Judge Hodgson during their ex parte discussion that the figures were not accurate. Attorney Orenstein’s testimony was consistent with the Respondent’s testimony as to the Complainant and Attorney Garcia sharing the figures with Judge Hodgson and the Respondent repeatedly informing Judge Hodgson that the figures were not accurate. Finally, the Respondent was adamant that he did not lie to Judge Hodgson.
By letter dated March 15, 2002, Judge Hodgson responded to a letter from the Respondent’s former counsel, Attorney Frank G. Usseglio, in connection with this grievance complaint. Judge Hodgson’s letter explained the following: “At the time of the mediation, Atty Kennelly stated that more than $600,000 of a $1,000,000 policy had been consumed by litigation expenses, and that only the balance remained for purposes of settling the plaintiff’s claims.”
This reviewing committee finds the following violation of the Rules of Professional Conduct by clear and convincing evidence:
The Respondent violated Rule 3.3(a)(1) of the Rules of Professional Conduct by knowingly making false statements of material fact to Judge Hodgson regarding the amount of coverage available under Jansen & Rogan’s policy for settlement purposes. Although the evidence was conflicting as to whether the Respondent or the Complainant and Attorney Garcia provided the figures to Judge Hodgson, it is undisputed that the Respondent made no attempt to clarify for Judge Hodgson that the figures presented to her were not accurate during the joint phase of the mediation session. According to the commentary for Rule 3.3 of the Rules of Professional Conduct, “[t]here are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.” We find that such circumstances were present in this case. This reviewing committee finds the testimony of the Complainant and Attorney Wilson credible that the Respondent attempted to justify the costs expended or committed to Judge Hodgson during the joint phase of the mediation session. We also find that the Respondent knew that his figures were inaccurate and that Judge Hodgson was relying on them in conducting the mediation session. Although this reviewing committee finds the Respondent’s and Attorney Orenstein’s testimony credible that the Respondent informed Judge Hodgson during their ex parte discussion that the figures were not accurate, the Respondent admitted that he did not give Judge Hodgson accurate numbers or even a range within which the amount of remaining coverage fell. It appears from Judge Hodgson’s letter that she believed that the Respondent’s figures were approximated and did not know that the Respondent’s figures were drastically inaccurate. The Respondent’s misrepresentations set an artificial limit for the settlement negotiations and the mediation session. Given that the policy contained an expense within limits provision, it was critical for the Complainant, Attorney Garcia and Attorney Wilson to know what amount of coverage remained on the policy in evaluating settlement options. As such, the Respondent’s misrepresentations necessarily involved material facts.
Although Rule 3.3(a)(1) of the Rules of Professional Conduct does not require that a party rely on a misrepresentation, we note that the Respondent admitted that he intended for the Complainant, Attorney Garcia and Attorney Wilson to rely on his misrepresentations. The Complainant testified that although he was incredulous as to the amount of attorneys’ fees billed, he relied on the Respondent’s statements as fact.
While this reviewing committee appreciates the Respondent’s candor and his apology for making misrepresentations to the Complainant, Attorney Garcia and Attorney Wilson, we view the Respondent’s conduct in this matter as a very serious breach of the Rules of Professional Conduct. As such, we order that the Respondent be presented to the Superior Court for the imposition of whatever discipline the Court may deem appropriate.
Finally, this reviewing committee concludes by clear and convincing evidence that the Respondent violated Rules 4.1(1) and 8.4(3) of the Rules of Professional Conduct by knowingly making false statements of material fact to the Complainant, Attorney Garcia, Attorney Wilson and Judge Hodgson regarding the amount of coverage available under Jansen & Rogan’s policy for settlement purposes, and orders that the presentment complaint include violations of these rules since the presentment will be a trial de novo.
Attorney M. Katherine Webster-O’Keefe
Attorney Frederick W. Krug
Reverend Meredith Payton