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The Florida Bar v. Parrish

Supreme Court of Florida

May 3, 2018

THE FLORIDA BAR, Complainant,
v.
JON DOUGLAS PARRISH, Respondent.

          Original Proceeding - The Florida Bar

          Joshua E. Doyle, Executive Director, Tallahassee, Florida, Troy Matthew Lovell, Bar Counsel, Tampa, Florida, and Adria E. Quintela, Staff Counsel, The Florida Bar, Sunrise, Florida, for Complainant

          Donald G. Peterson and Jonathan M. Weirich of Parrish, White & Yarnell, P.A., Naples, Florida; and J. Christopher Lombardo, Lenore Brakefield, and Joseph M. Coleman of Woodward, Pires & Lombardo, P.A., Naples, Florida, for Respondent

          PER CURIAM.

         We have for review a referee's report recommending that Respondent, Jon Douglas Parrish, be found guilty of professional misconduct in violation of the Rules Regulating the Florida Bar (Bar Rules) and suspended from the practice of law for a period of one year.[1] Parrish seeks review of the referee's report, challenging the referee's recommendations of guilt and recommended discipline. Subsequent to the filing of the referee's report, the Court issued an order directing Parrish to show cause why the referee's recommended discipline should not be disapproved and a more severe sanction imposed. Upon review of the report of referee, the parties' briefs, and the response to the order to show cause and the Bar's reply, we approve the referee's findings of fact and recommendations as to guilt. However, as discussed below, we disapprove the referee's recommended discipline and instead suspend Parrish from the practice of law for three years.

         FACTS

         On October 29, 2015, The Florida Bar filed a formal complaint against Respondent Parrish, alleging various instances of ethical misconduct in connection with his representation of a client, Spruce River Ventures, LLC, and its principal, Benjamin Bergaoui, in three separate legal matters.

         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 4-1.8(a) (Conflict of Interest; Prohibited and Other Transactions; Business Transactions With or Acquiring Interest Adverse to Client).[2] Based on the above findings of fact, the referee recommended that Parrish be found guilty of violating Bar Rules 3-4.3 (Misconduct and Minor Misconduct), 4-1.5(a) (Illegal, Prohibited, or Clearly Excessive Fees and Costs), and 4-1.8(a) (Business Transactions With or Acquiring Interest Adverse to 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).

         As for the remaining allegations, the referee found that on April 8, 2011, one of the defendants in the Cotton case wrote to the trial court and advised that another of the defendants, Louise McKamey, had died. The letter was copied to the attorneys of record, including Parrish, who testified that his firm received the letter. No action was taken by Parrish or anyone in his firm to substitute a new party in place of McKamey. Over a year later, on May 24, 2012, another defendant filed a motion to dismiss the complaint, with prejudice, as a result of Spruce River's failure to substitute a new party within ninety days, as required by Florida Rule of Civil Procedure 1.260(a). On February 27, 2013, the court granted the motion to dismiss. Parrish filed a motion to substitute parties related to three deceased defendants, including McKamey, over a year after the notice of McKamey's death, but the court denied the effort as untimely. This issue was appealed by subsequent counsel in the case, but was never decided by the appellate court because the case settled.

         Parrish testified before the referee that the defendants were elderly and the death of individual defendants was an ongoing concern. In addition, the defendants argued that the real estate contract was not severable, so diligence in substituting new defendants for deceased defendants was imperative because dismissal of one could result in dismissal of the entire action. Parrish testified that although his firm received the letter he did not personally see it, and he contended that because an associate had been assigned to the case, he was not responsible to respond. When he learned of the letter, he did attempt to substitute parties but well after the deadline. The referee concluded that Parrish's attempts to blame others for his failure to respond were not persuasive, because Bergaoui believed Parrish was his attorney and the retainer agreement stated that Parrish would be "primarily responsible" for the representation. Thus, the referee found that Parrish's failure to act in response to the death notice was an unreasonable failure to act diligently and competently.

         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.

         The referee found that no written disclosures were made outside of the loan documents and specifically no written notice was given to Bergaoui to seek independent legal advice and no written disclosure was made of Parrish's role in the transaction and whether he was representing Spruce River in the transaction. The referee found that White did not act as independent legal counsel advising Bergaoui. Parrish initially consulted with White about the tax deeds and their effect. White prepared the note and mortgage for Parrish and took his instructions for the preparation of those documents from Parrish. Parrish testified that he chose White and required Bergaoui to meet with White. Although White claimed he considered himself to be representing Bergaoui and Spruce River, Bergaoui testified that he did not consider White to be representing him or Spruce River. After the mortgage transaction was completed, another defendant moved to disqualify Parrish, in response to which Parrish prepared an affidavit to be signed by Bergaoui stating that Bergaoui had declined the opportunity to seek independent legal counsel. Only after Bergaoui refused did Parrish begin claiming that White had been independent legal counsel for Spruce River. Because of this, the referee found that Parrish's and White's testimony regarding White having been independent counsel was not credible, and was instead a post hoc effort to recast events in a manner more consistent with ethical requirements. The referee also found that by making the loan to the defendants, Parrish expended funds on something other than litigation expenses, in order to benefit his client, which constituted financial assistance to the client. Further, the referee found that the mortgage transaction constituted the acquisition of a proprietary interest in the subject matter of the litigation.

         With regard to the proposed settlement agreement in the Cotton case, the referee found that although never fully executed, the agreement provided for the creation of a new Florida limited liability company to be owned by Parrish's firm, Bergaoui, and several of the defendants in the Cotton case. Parrish would also be a manager of the new entity. The entity would substitute into the litigation for its various participants and seek to obtain the entire tract for development. Witness David Alston, Jr., a family representative of several of the defendants in the Cotton case, testified that following a mediation conference, the framework of the settlement was established whereby the parties would seek to join forces to sell or develop the property. Alston testified that this format was the only feasible approach to settling the case and Parrish's inclusion in the deal was a requirement for the defendants to agree, because his family members had little faith in Bergaoui and did not want to be involved in a transaction with him unless Parrish was also involved. The referee found that under the terms of the agreement, Parrish would have co-equal decision-making authority with his client in directing litigation strategy and an ownership interest in the subject matter of the litigation, and that such an arrangement constituted a business transaction with the client. However, no written disclosures as required by Bar Rule 4-1.8(a) were made regarding the settlement. The referee found Parrish's testimony that he intended to advise Bergaoui to seek independent counsel prior to executing the agreement was not credible based on Parrish's prior failure to comply with Bar Rule 4-1.8(a) with regard to the Lamborghini agreement and the subordination agreement.

         After the motion to disqualify Parrish was filed, and Bergaoui refused to sign the affidavit prepared by Parrish, Bergaoui sought independent legal counsel from attorney Brad Bryant. Bryant advised Parrish that Bergaoui did not want Parrish to be a partner in any business venture. The relationship between Bergaoui and Parrish broke down, and Parrish withdrew from the Cotton case in February 2013.

         In regard to Count III, based on the above factual findings, the referee recommends that Parrish be found guilty of violating Bar Rules 3-4.3 (Misconduct and Minor Misconduct), 4-1.1 (Competence), 4-1.2 (Objectives and Scope of Representation), 4-1.3 (Diligence), 4-1.8(a) (Business Transactions With or Acquiring Interest Adverse to Client), 4-1.8(e) (Financial Assistance to Client), and 4-1.8(i) (Acquiring Proprietary Interest in Cause of Action). The referee also recommends that Parrish not be found guilty of violating Bar Rules 4-1.4 (Communication) and 4-4.2 (Communication with Person Represented by Counsel).

         The referee recommends that Parrish receive a one-year suspension. In making this recommendation, the referee found and considered the following aggravating factors: (1) dishonest or selfish motive; (2) pattern of misconduct; (3) multiple offenses; (4) refusal to recognize wrongful nature of the misconduct; and (5) substantial experience in the practice of law. The referee found and considered one mitigating factor-absence of a prior disciplinary record.

         ANALYSIS

         Parrish challenges the referee's recommendation that he be found guilty of violating Bar Rules 3-4.3, 4-1.5(a), and 4-1.8(a) in connection with Count I, the Lamborghini agreement. In addition, Parrish challenges the recommendation that he be found guilty of violating Bar Rules 3-4.3, 4-1.1, 4-1.2, 4-1.3, 4-1.8(a), 4-1.8(e), and 4-1.8(i) with regard to Count III, the Cotton case. Lastly, Parrish argues that the referee's recommendation of a one-year suspension is unsupported by the Standards for Imposing Lawyer Sanctions (Standards) and the cited case law; nor does Parrish believe that a more severe sanction is necessary.

         RULE VIOLATIONS

         To the extent Parrish challenges the referee's findings of fact for the rule violations, the Court's review of such matters is limited, and if a referee's findings of fact are supported by competent, substantial evidence in the record, this Court will not reweigh the evidence and substitute its judgment for that of the referee. Fla. Bar v. Frederick, 756 So.2d 79, 86 (Fla. 2000). Moreover, a referee's recommendation as to guilt will be approved by the Court if the referee's factual findings are sufficient under the applicable rules to support the recommendation. Fla. Bar v. Shoureas, 913 So.2d 554, 557-58 (Fla. 2005). Finally, the party challenging the referee's findings of fact and conclusions as to guilt has the burden to demonstrate that there is no evidence in the record to support those findings or that the record evidence clearly contradicts the conclusions. Fla. Bar v. Germain, 957 So.2d 613, 620 (Fla. 2007).

         Count I - The Lamborghini Agreement

         With regard to the Lamborghini agreement, 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 the 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 agreement, entered into evidence before the referee, required Bergaoui to "execute and sign over to PWL [Parrish's firm] title, in blank, " to the car "to hold as security against the payment of fees." It further required Bergaoui to, within ninety days, "procure a purchaser for the vehicle for not less than $30, 000." Upon procurement of a purchaser, the agreement provided that the "parties will cooperate to close upon the vehicle" and payment "shall be made to PWL to be held in escrow." Upon receipt of payment, PWL agreed to "release the title to the purchaser, " then "disburse $30, 000 to itself for payment of past and on-going legal fees and shall release any remainder to Bergaoui." If the vehicle was not sold in the ninety days, Bergaoui was required to "deliver the car to PWL" who then had the "right to market and sell the vehicle and apply the funds to Bergaoui's then legal fees or to future legal fees or to credit Bergaoui's account in the sum of $80, 000, at its discretion and sole option."

         Bar Rule 3-4.3 (Misconduct and Minor Misconduct)

         Bar Rule 3-4.3[3] ...


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