Lamborghini An Excessive Fee
The Florida Supreme Court rejected a proposed one-year suspension and ordered that an attorney suspended for three years.
Count I of the Bar’s complaint was based on an agreement between Parrish and Bergaoui to use Bergaoui’s Lamborghini to pay Parrish’s legal fees. The referee found that the agreement was in writing and conferred a security interest in the Lamborghini in favor of Parrish’s firm in the amount of $30,000. Bergaoui was given ninety days to sell the vehicle for at least $30,000, with $30,000 to be paid to the firm for legal fees. If Bergaoui failed to sell the vehicle within ninety days, the firm would then have the right to market and sell the vehicle and give Bergaoui a credit for current and future legal fees in the amount of the sale or in the amount of $80,000, at the firm’s discretion. The referee found that although Bergaoui had given his Lamborghini as security to others in the past, that did not exempt Parrish from compliance with the clear requirements of Bar Rule[s governing excessive fees and business transactions].
Two other counts involved litigation and the same client
Count II of the Bar’s complaint was based on Parrish’s handling of litigation against Spruce River and Bergaoui related to an agreement to supply urea. The complaint alleged that Parrish failed to act diligently in defending the case and keeping Bergaoui informed and that he intentionally used an incorrect address to notify Bergaoui of his motion to withdraw, preventing Bergaoui from being aware of the withdrawal, resulting in default. At the close of the Bar’s case-in-chief, the referee granted Parrish’s motion for involuntary dismissal. Accordingly, as to this count, the referee recommended that Parrish not be found guilty of any rule violations. The Bar does not challenge these findings or recommendation.
Count III of the complaint pertained to Parrish’s representation of Spruce River in litigation against several defendants seeking specific performance of a contract to purchase seven parcels of real property in Charlotte County, Florida, for development and also seeking monetary damages in connection with the alleged breach of that contract (Spruce River Ventures v. Cotton, No. 082004CA001715XXXXXX (Fla. 20th Cir. Ct.) – the Cotton case). The complaint alleged several areas of misconduct: (1) failing to respond to a death notice filed in the case and lack of communication; (2) loaning money to several of the defendants in order to fund payment of back property taxes and accepting mortgages on several of the parcels involved in the case to secure that loan; (3) negotiating a potential settlement agreement which created a new entity in which Parrish would be a part owner; and (4) communicating directly with several defendants at a time when they were represented. Summary judgment was granted in Parrish’s favor with regard to the allegations of direct communication. In addition, after the close of the Bar’s case-in-chief, the referee granted Parrish’s motion for involuntary dismissal with regard to the allegations of lack of communication with the client in violation of Bar Rule 4-1.4 (Communication)
The court
With regard to the loan and mortgage transaction, the referee found Parrish loaned $150,000 to several defendants in the Cotton case, took a mortgage on the parcels owned by those defendants, and had Bergaoui sign a subordination agreement, subordinating Bergaoui’s interest in the property—which was being pursued in the Cotton case—to the mortgage. The defendants in question had failed to pay real estate taxes on the properties for several years and were financially unable to do so. The parcels constituted over fifty percent of the property at issue in the case, and Parrish testified that the loss of those parcels would result in the dismissal of the case because of the severability issue. Parrish made the loan in order to preserve his client’s claim and protect his interest in his fee, which was now a contingency fee. Parrish requested that another attorney, John White, prepare the documentation for the loan transaction. White had previously been a law partner with Parrish and is currently a partner of Parrish, but was not at the time of the mortgage transaction. White prepared the note, mortgage, and subordination agreement, and also met with Bergaoui regarding the subordination agreement.
As to the car
Here, the Lamborghini agreement clearly pertained to legal fees, in that it was designed to ensure payment of such fees. This was not an “ordinary fee arrangement.” The referee specifically found that the “forced sale” provision— i.e., the provision giving Parrish’s firm the right to sell the car and apply the proceeds of the sale to Bergaoui’s legal fees—triggered the requirements of the rule, which were not satisfied. Saliently, the agreement unfairly afforded Parrish’s firm the potential to obtain funds from the sale of the client’s Lamborghini in an indeterminate amount that would constitute an excessive fee.
And the litigation
The misconduct includes failing to respond to a death notice filed in the case, loaning money to several of the defendants in order to fund the payment of back taxes, accepting a mortgage on several parcels to secure the loan, and negotiating a potential settlement agreement which created a new entity in which Parrish would be a part owner.
The court sustained the misconduct but found the proposed sanction insufficient
we conclude that a three-year suspension is warranted by Parrish’s misconduct.
(Mike Frisch)