In re Robert

10 A.D.3d 96, 779 N.Y.S.2d 236, 2004 N.Y. App. Div. LEXIS 9088

This text of 10 A.D.3d 96 (In re Robert) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Robert, 10 A.D.3d 96, 779 N.Y.S.2d 236, 2004 N.Y. App. Div. LEXIS 9088 (N.Y. Ct. App. 2004).

Opinion

OPINION OF THE COURT

Per Curiam.

The petitioner served the respondent with a petition dated April 11, 2002, containing 11 charges of professional misconduct. After a preliminary conference on May 22, 2002, and hearings conducted on June 20, June 27, July 8, July 15, August 6, September 12, September 20, and October 29, 2002, the Special Referee sustained all 11 charges. The petitioner moves to confirm the Special Referee’s report and to impose such discipline upon the respondent as the Court deems just and proper. The respondent cross-moves to disaffirm the findings of the Special Referee and to deny the petitioner’s motion to confirm the report.

Charge One alleged that the respondent breached his fiduciary obligations and converted escrow funds to a use other than that for which they were intended, in violation of Code of Professional Responsibility DR 9-102 (a) (22 NYCRR 1200.46 [a]). On or about January 11, 1997, Michael Azzarelli, Sr. and his wife, Maryann Azzarelli, were appointed guardians over the person and property of their son, Michael, by the Supreme Court, Suffolk County (Leis, J.). Michael was the plaintiff in a medical malpractice action captioned Azzarelli v Matteleone, then pending before the Supreme Court, Kings County (Levine, J).

In or about September 1997, the guardians retained the respondent, inter alia, to contest an alleged Medicaid lien claimed by the Suffolk County Department of Social Services (hereinaf[98]*98ter the DSS) against any potential recovery by Michael. The Azzarelli action was settled for $2.2 million on or about October 30, 1997.

Justice Levine issued a compromise order dated October 30, 1997, directing that the sum of $525,000 be set aside and held by the respondent’s law firm in an interest-bearing escrow account pending a motion and determination of the Supreme Court, Kings County, of the alleged lien held by the DSS. On or about November 26, 1997, the respondent received that sum from the settlement proceeds and deposited it into an interest-bearing client subaccount within his law firm’s escrow account at Chase Manhattan (hereinafter the Azzarelli escrow).

On or about January 12, 1999, the respondent withdrew $10,000 from the Azzarelli escrow, without the knowledge and consent of the court or other interested parties, for a down payment to purchase a home for Michael. On or about July 2, 1999, the respondent withdrew $15,000 from the Azzarelli escrow, again without the knowledge and consent of the court or other interested parties, for additional down payment funds in connection with the real estate transaction. On or about October 1, 1999, the $25,000 down payment was forfeited to the seller pursuant to the term of the contract.

Charge Two alleged that the respondent knowingly made a false statement of fact during the course of representing a client, in violation of Code of Professional Responsibility DR 7-102 (a) (5) (22 NYCRR 1200.33 [a] [5]). On or about August 9, 1999, the respondent submitted a motion to the Supreme Court, Suffolk County (Leis, J.), which sought, inter alia, to utilize the Azzarelli escrow to purchase a home for the Azzarellis. In his affirmation in support of the motion, the respondent made the representation that Michael’s assets were presently in two funds: $1.2 million in a supplemental needs trust and $525,000, plus interest, in an escrow account. The respondent knew or should have known that this statement was misleading in that it failed to truthfully disclose that $25,000 had already been removed from the escrow account and used as a down payment for the Azzarellis. Justice Leis denied the respondent’s motion, in part because the Supreme Court, Kings County, had jurisdiction over the Azzarelli escrow.

Charge Three alleged that the respondent violated a court order and breached his fiduciary obligations by failing to promptly remit funds in his possession to a third person entitled to receive the same and by failing to render an appropriate account of [99]*99funds held in his possession, in violation of Code of Professional Responsibility DR 1-102 (a) (5) (22 NYCRR 1200.3 [a] [5]). On or about October 22, 1999, the office of the Suffolk County Attorney, as counsel to the DSS, submitted a motion to Justice Levine seeking to compel the respondent to file an accounting of the Azzarelli escrow and to release the amount of $542,963.04 in satisfaction of the DSS lien. Justice Levine granted the motion, without opposition, and directed the respondent to file an accounting and remit the entire fund of at least $525,000 to the DSS within 30 days. Despite repeated requests by the DSS, the respondent failed to timely tender any portion of the Azzarelli escrow until approximately January 20, 2000. The respondent tendered his escrow check for $533,511.36 without filing a proper accounting. The DSS presented the check for payment on or about March 1, 2000, leaving a balance of $1,803.53 in the respondent’s escrow account attributable to the Azzarelli escrow. He failed to remit that balance or to render an accounting, as directed in Justice Levine’s order.

The respondent appeared before Justice Levine on or about March 2, 2000, and was directed to submit an accounting by March 23, 2000. On or about March 23, 2000, the respondent submitted a supplemental affirmation which contained a purported preliminary accounting of the Azzarelli escrow, and requested additional time to obtain bank records to prepare a final accounting. Justice Levine directed the respondent to appear with his final accounting on April 27, 2000. Upon the respondent’s failure to appear, Justice Levine directed the DSS to settle an order for a hearing on contempt against the respondent. On or about June 27, 2000, the DSS moved to hold the respondent in contempt for his failure to obey Justice Levine’s compromise order and memorandum and order, dated October 30, 1997, and November 15, 1999, respectively. The DSS withdrew that motion on October 18, 2000, upon the respondent’s payment of $30,000.

Charge Four alleged that the respondent breached his fiduciary obligations by failing to preserve escrow funds entrusted to him, in violation of Code of Professional Responsibility DR 9-102 (a) (22 NYCRR 1200.46 [a]). As of November 17, 1999, the respondent caused the entire remaining balance of the Azzarelli escrow, plus interest, totalling $535,314.89 to be transferred to and held in the master account of his law firm’s escrow account. Between approximately November 17, 1999, and March 1, 2000, the respondent should have maintained and [100]*100preserved at least $535,314.89 attributable to the Azzarelli escrow in the master account within his law firm’s escrow account. From approximately November 17, 1999, through March 1, 2000, the balance in the escrow account attributable to the Azzarelli escrow from time to time fell below the balance required to have been preserved. The respondent’s account reflects the following balances:

12/07/99 $534,228.49
12/22/99 $519,373.69
01/25/00 $437,014.83
01/26/00 $435,514.83
01/27/00 $335,261.13
01/28/00 $333,362.63
01/31/00 $332,814.63
02/03/00 $331,814.63
02/07/00 $331,504.23
02/08/00 $329,170.70
02/10/00 $484,778.39
02/11/00 $382,770.65

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Bluebook (online)
10 A.D.3d 96, 779 N.Y.S.2d 236, 2004 N.Y. App. Div. LEXIS 9088, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-robert-nyappdiv-2004.