The California Raisins

The District of Columbia Board on Professional Responsibility proposes disbarment of an attorney based on a finding of intentional misappropriation

Under a set-aside program authorized by the Agricultural Marketing Agreement Act of 1937, as amended, 7 U.S.C. § 601 et seq. (“AMAA” or “Act”), raisin producers were required to deliver a portion of their crop to the federal government. The government arranged to store the raisins and would release them on to the market so as to help stabilize the price of raisins. Raisin producers retained an equitable interest in the raisins they delivered to the government and would receive payment from any net proceeds as the raisins were sold.

For many years, Respondent’s law practice focused on aspects of the set-aside program. See FF 3. He represented Lion Farms, LLC, a producer of raisins in the San Joaquin Valley of California. FF 5-6. In the 2000s, he filed two lawsuits in the U.S. Court of Federal Claims challenging the set-aside program. FF 6; see FF 10; DCX 4. That court dismissed the lawsuits. The United States Court of Appeals for the Federal Circuit affirmed. DCX 4 (Lion Raisins, Inc. v. United States, 416 F.3d 1356 (Fed. Cir. 2005)); see FF 6. Respondent never sought a fee for his legal work in these cases. FF 7. Nor did he have a written agreement with his client that spelled out what if any fees he would be entitled to receive in the later litigation from which the present matter arises. FF 12.

Other raisin producers also filed lawsuits challenging the set-aside program. In Horne v. Dep’t of Agriculture, 576 U.S. 350 (2015), the U.S. Supreme Court held that the requirement that producers deliver a portion of their crop to the government constituted a “taking” within the meaning of the Fifth Amendment. FF 8. Lion Farms and other raisin producers, relying on the Horne decision, sought to recover the economic loss they suffered from the set-aside program. FF 13-14; see FF 9-10. Lion Farms eventually reached a settlement agreement entitling it to $7,633,273.79. FF 17, 21. There was no agreement as to how much of that amount Respondent was owed as his fee. See FF 12. Respondent did not inform Lion Farms when he received the settlement funds; rather, five days later, he told the company to expect to receive the funds directly from the government and requested a one-third contingency fee. FF 21-24. Lion Farms did not respond to the fee request, as it intended to discuss the fee after it received the settlement funds. FF 25.

In December 2019, one month after he received the settlement funds, Respondent started withdrawing portions for his personal use. FF 27. Before Lion Farms even knew that Respondent had received the settlement funds, Respondent had already withdrawn $200,000. FF 27, 30.

Meanwhile, Respondent ignored Lion Farms’s repeated requests for information regarding the status of the settlement funds. FF 29. The company learned from other sources, seven months after the fact, that the government had paid Respondent, rather than paying the company directly. FF 31. After ignoring two inquiries from Lion Farms, Respondent simply mailed a check to Lion Farms for approximately two-thirds of the amount of the settlement funds ($5,039,821.47). FF 32-35. Lion Farms repeatedly asked about the remaining settlement funds, but Respondent still failed to respond. FF 36. At various times, the company made offers of approximately $1 million to $1.5 million in legal fees on the condition that Respondent immediately turn over the remaining funds, but he still failed to respond. FF 37-38, 40, 44.

Respondent has gradually withdrawn funds from the trust account, typically in $10,000 increments, from December 2019 through at least July 2023 – at which point he had taken $585,000 for his personal use. FF 68; see, e.g., FF 66. These withdrawals continued before, during, and after Lion Farms filed a complaint with the D.C. Bar’s Attorney/Client Arbitration Board (“ACAB”), ACAB ordered Respondent to pay $2,696,203.32, and the D.C. Superior Court confirmed the ACAB award. FF 47, 55, 57, 63, 66.

Respondent knew that Lion Farms had never agreed that he could take any amount of the settlement funds as his fee. There was no fee agreement in place, and Respondent and Lion Farms both ignored one another’s settlement offers. While his client sought to collect the money to which it was entitled, Respondent’s outright mendacity and artful misrepresentations frustrated the client’s efforts. By unilaterally withdrawing settlement funds from the trust account for his personal use, while knowing he lacked consent from his client, Respondent engaged in intentional misappropriation.

Thus

we recommend that Respondent be disbarred.

(Mike Frisch)