An Idaho Ethics Quagmire

Attention Concordia Law students of Professor Oths:

The Idaho Supreme Court declined to wallow in an “ethical quagmire” that arose in a mediation between an attorney and his former client, enforcing the settlement agreement reached in the process.

Kosmann retained Dinius to represent him in a dispute with a third party concerning the sale of real property. Following trial, Kosmann was awarded a judgment of approximately  $32,000. The opposing party appealed. Kosmann had difficulty paying Dinius’s attorney fees, so Dinius withdrew from representation and filed a lien for his attorney fees against the judgment. Kosmann then hired Loren Messerly to replace Dinius as his attorney throughout the appeal. The judgment was ultimately affirmed on appeal. Kosmann v. Gilbride, 161 Idaho 363, 386 P.3d 504 (2016). One month later, Kosmann filed a lawsuit against Dinius alleging claims of professional negligence and breach of contract. Dinius was represented by Yvonne Dunbar.

Mediation was ordered

After several hours of contentious negotiations, the parties reached a tentative agreement to settle the dispute by having Dinius make a payment of $40,000 to Kosmann. However, before the agreement was final, Messerly met in the hallway with Dunbar and requested an additional term: a release of all potential claims by Dinius against Messerly. Dunbar and Dinius refused, stating that they believed it was unethical for Messerly to make such a request. The request caused a considerable delay in the mediation while the attorneys contacted and spoke with counsel from the Idaho State Bar regarding the ethical concern. Eventually, Messerly dropped his request and instructed Kosmann to inform the mediator that he would accept the original proposed settlement of $40,000 without the release for Messerly.

Kosmann left the room alone and went into the hall to inform the mediator that he was willing to accept the settlement agreement without the release. However, in addition to conveying his decision, Kosmann asked the mediator if he (Kosmann) could meet one-on-one with Dinius. Messerly claims that he was unaware that Kosmann was going to make this request. Without informing Messerly, the mediator communicated Kosmann’s wish to Dinius. Dinius initially refused, but claims that after repeated urging from the mediator, he acquiesced and agreed to meet alone with Kosmann. Neither Dinius nor Dunbar were informed that Messerly was unaware of the meeting. During the meeting, Dinius and Kosmann agreed to settle their dispute for approximately $32,000 (the amount held by the court in the property sale dispute between Kosmann and the third party), with the stipulation that Dinius would not pursue litigation against Messerly.

When about twenty minutes had passed without Kosmann’s return, Messerly went into the hallway to see what was going on. At that time, the mediator informed him that Kosmann and Dinius were having a private discussion. Messerly expressed concern over the meeting because Dinius was an attorney and should not have been speaking to Kosmann without Messerly being present. However, the mediator reportedly advised him that the parties to a mediation are allowed to meet alone, if they wish. Soon thereafter, Kosmann returned and informed Messerly of the new settlement terms. At that point, Messerly advised Kosmann that he could either adhere to the renegotiated settlement agreement and end the litigation or continue to pursue the $40,000 settlement. Kosmann chose to end the litigation.

The court here held the oral agreement that was placed on the record enforceable.

Nor did the ethics issues render it void

The remaining question, then, is whether the alleged ethical violations have so tainted the agreement to render it void. Whether an ethical violation in the negotiation process renders an agreement void is an issue of first impression in Idaho. However, we decline to decide that issue here. Even if a contract could be deemed void or violative of public policy for that reason, there are no findings in the record as to whether Dinius (or any of the attorneys) actually violated the Idaho Rules of Professional Conduct because the trial court properly left that determination to the State Bar. Kosmann argues that Runsvold v. Idaho State Bar, 129 Idaho 419, 925 P.2d 1118 (1996), which holds that an attorney acting pro se in a matter is bound by Rule 4.2, applies to Dinius’s conduct during mediation even though Dinius was represented by counsel. The district court found that whether Runsvold applies is an issue of first impression, and again left to the Idaho State Bar the responsibility to make the initial factual determinations necessary to
ascertain whether Dinius violated Rule 4.2. We must defer as well, inasmuch as there are no factual findings upon which this court can determine the issue on appeal. However, as will be discussed further below, this question may be answered in the future, if it is presented to us in the proper context.

Additionally, while Messerly is quick to point out that Dinius’s behavior constituted a potential ethical violation under Rule 4.2, he completely ignores his own substantial contributions to this case’s descent into an ethical quagmire. Specifically, the Court is mindful of the allegations that Messerly initially refused to accept the $40,000 settlement without securing a personal release from Dinius. If proven, such conduct also raises the specter of additional ethical violations under Rules 1.2(a) and 1.7(a)(2). Therefore, given the breadth of the problematic behavior alleged in this case, we properly leave the initial factual determinations as to whether ethical violations occurred to the Idaho State Bar. See I.C. § 3-412.

The court declined to impose sanctions on Dinius and reversed sanctions imposed on Messerly and the client.

In conclusion

The record in this case is so tarnished with questionable conduct that it has presented this Court with a vexing ethical and legal dilemma. While we are gravely concerned over the potential ethical lapses which allegedly occurred during the mediation of this matter, there are no findings in the record concerning these matters. Therefore, as the trial court determined, we will leave to the Idaho State Bar, if properly called upon, the responsibility to investigate this matter further and make the necessary findings and conclusions as to the ethical issues presented.

However, as to the contract issues appropriately before us, we affirm the district court’s decisions enforcing the oral settlement agreement and declining to impose sanctions against Dinius for the alleged violation of Rule 4.2. We reverse the district court’s imposition of sanctions against Kosmann and Messerly and order Dinius and Dunbar to return the $200 sanction in a timely manner. Because both sides partially prevailed, we do not award attorney fees or costs on appeal to either party.

(Mike Frisch)