Bonnie Sweeten, the “hoax mom” paralegal who is a poster child for the axiom that an attorney needs to know what is going on in his or her office, has been sentenced. Ms. Sweeten has been sentenced to 8 years and 4 months in prison for wire fraud and identity theft. Ms. Sweeten’s case is an important lesson in malpractice and professional liability avoidance.
Archive for January, 2012
We have previously written about attorney Michael Kwasnik’s legal troubles. Mr. Kwasnik is facing charges that he stole over $1 million from clients. The total amount of his alleged theft has been raised to $1.3 million, and he was indicted on Tuesday for new charges of theft by failure to make required disposition of property received, misapplication of entrusted property, and money laundering, all in the second degree. Mr. Kwasnik is also a party to civil lawsuit brought by the New Jersey attorney general charging him, his father and others with a fraudulent scheme in which 73 mostly elderly investors lost $8.5 million.
Mr. Kwasnik has incurred the full wrath of the criminal justice system. “When people hire a lawyer, they typically are looking for a professional they can trust to guide them through matters beyond their own sphere of knowledge – often matters involving high financial stakes,” said Director Stephen J. Taylor of the Division of Criminal Justice. “When a lawyer takes advantage of that trust to steal, as we allege Kwasnik did, the results can be devastating.”
It is important to remember that malpractice avoidance and professional liability avoidance requires attorneys avoid stealing from their clients. Not only will it lead to criminal charges, but it can also lead to disciplinary action under Rule 8.4 of the Rules of Professional Conduct, and civil lawsuits with charges of legal malpractice and breach of fiduciary duty.
In October, we wrote about the case of Corey R. Maples which was being argued in front of the Supreme Court. The Supreme Court’s opinion was published today. The Court has ruled in favor of Mr. Maples in a decision authored by Justice Ginsburg. By a 7-2 vote, the court ruled that the lack of action by Mr. Maples’ attorneys was sufficient reason to give Mr. Maples a second chance. As Justice Ginsburg wrote:
Abandoned by counsel, Maples was left unrepresented at a critical time for his state postconviction petition, and he lacked a clue of any need to protect himself pro se. In these circumstances, no just system would lay the default at Maples’ death-cell door.
Justice Ginsburg continued:
We agree that, under agency principles, a client cannot be charged with the acts or omissions of an attorney who has abandoned him. Nor can a client be faulted for failing to act on his own behalf when he lacks reason to believe his attorneys of record, in fact, are not representing him.
Justice Ginsburg’s opinion contains a lengthy critique of the Alabama capital justice system. Justice Alito filed a concurring opinion expressing his opinion that the cause of the problem was not Alabama’s system, but the case represents a “perfect storm” of misfortune. Justices Scalia and Thomas filed a dissent.
Pennsylvania is unusual with respect to the extent that wrongful use of civil proceedings claims, also known as Dragonetti claims, are used not only as a shield but a sword. Professional liability avoidance in Pennsylvania requires an understanding of what constitutes that sword. We have previously written on the first prong of a wrongful use of civil proceedings claim, termination. Today, we will focus on the second prong, the existence of probable cause to pursue the original action.
Wrongful use of civil proceedings is codified at 42 Pa.C.S.A. § 8351. Section 8351 provides:
(a) A person who takes part in the procurement, initiation or continuation of civil proceedings against another is subject to liability to the other for wrongful use of civil proceedings:
(1) He acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and
(2) the proceedings have terminated in favor of the person against whom they are brought.
42 Pa. C.S.A. § 8351(a). Accordingly, a cause of action for wrongful use of civil proceedings requires a plaintiff to allege and prove three elements: (1) the underlying proceeding was terminated in favor of the plaintiff, (2) the defendant caused these proceedings to be instituted without probable cause or with gross negligence, and (3) the proceedings were instituted primarily for an improper purpose.
As our Superior Court recently reaffirmed in Keystone Freight v. Stricker, 2011 Pa. Super. 216 (Pa. Super. 2011), “[a]bsence of probable cause is an indispensable element of a Dragonetti claim, and it is not conclusively established by a jury verdict in the prior proceeding.” The plaintiff bears the burden to prove the lawyer defendant acted without probable cause when initiating the underlying proceedings. Cosmas v. Bloomingdales Bros., Inc., 660 A.2d 83, 86 (1995); Amicone v. Shoaf, 423 Pa.Super. 281, 285, 620 A.2d 1222, 1224 (1993). “The existence of probable cause is a matter of law for the court to decide.” Gentzler v. Atlee, 443 Pa. Super. 128, 660 A.2d 1378, 1382 (Pa.Super. 1995); see also, Jaindl v. Mohr, 637 A.2d 1353 (Pa. Super. 1994); Meiksin v. Howard Hanna Co., 590 A.2d 1303, 1305 (Pa. Super. 1991).
The standard for determining the existence of probable cause in an action for wrongful use of civil proceedings is found in 42 Pa.C.S. 8352:
A person who takes part in the procurement, initiation or continuation of civil proceedings against another has probable cause for doing so if he reasonably believes in the existence of the facts upon which the claim is based, and either:
1. Reasonably believes that under those facts the claim may be valid under the existing or developing law;
2. Believes to this effect in reliance upon the advice of counsel, sought in good faith and given after full disclosure of all relevant facts within his knowledge and information; or
3. Believes as an attorney of record, in good faith that his procurement, initiation or continuation of a civil cause is not intended to merely harass or maliciously injure the opposite party.
The plaintiff’s burden to disprove the existence of probable cause or prove gross negligence is extremely high. “Lawyers can safely act on the facts stated by their clients.” Meiksin, 590 A.2d at 1307. A lawyer does not have to verify the accuracy of his client’s representations. Hong v. Pelagatti, 2000 Pa. Super. 373, 765 A.2d 1117, 1122 (2000).
In McNeil v. Jordan, 586 Pa. 413, 436-437 (Pa. 2006), the Pennsylvania Supreme Court noted at length that “probable cause,” as defined by the wrongful use of civil proceedings act, is a less rigorous standard than that necessary to a prima facie case in order to survive preliminary objections. The logical inference from this is that if the underlying action survived preliminary objections, there was probable cause, however, our courts have not yet ruled on that contention.
The takeaway for lawyers is to examine your clients claims before any action is commenced to make certain that you will be able to establish that there was probable cause to commence them should a Dragonetti action be brought against you.
The Disciplinary Board of the Supreme Court of Pennsylvania has published its year end statistics. Discipline last year included:
- 55 Informal Admonitions
- 16 Private Reprimands
- 8 Probations
- 2 Public Censure
- 34 Suspensions
- 45 Disbarments
- 106 Reinstatements Granted
- 1 Reinstatement Denied
The 45 disbarments are the most in Pennsylvania’s history, at least since 1973 (although not completely linear, the number of disbarments has increased with the number of lawyers in the Commonwealth). The disciplinary decisions of the Supreme Court in the last sixty days include, among others, an attorney who overdrew her IOLTA account and did not respond to clients’ inquiries about their cases; an attorney who failed to appear for a private reprimand; and an attorney who allowed a client to give testimony he knew was false, and did not honor a letter of protection to a doctor. Many of the legal malpractice and professional liability themes most commonly repeated on this blog are found in these opinions, communicating with clients, taking care of client funds, and responding to problems when they arise.
Arguing over whether Bonnie Sweeten stole $900,000 or $1,000,000 took all day, so sentencing will have to wait. Of particular note to our readers was Ms. Sweeten’s former employer’s testimony: “I trusted Bonnie,” Carlitz said. “I’m not going to say I was minding the store.”
Legal malpractice and professional liability avoidance require the store be minded. Not minding the store means that fraud of an employee can be imputed to the employer. Pennsylvania Rule of Professional Conduct 5.3 requires lawyers with supervisory or managerial authority “make reasonable efforts to ensure that [the firm and nonlawyer assistants] conduct is compatible with the professional obligations of the lawyer.”
We have previously written about Bonnie Sweeten, not because of her sensationalist faked kidnapping, but because of what her case means for professional malpractice avoidance. Ms. Sweeten will be sentenced in Federal Court today on charges of fraud relating to her theft of money from a number of people, including her former employer, Debbie Ann Carlitz, a lawyer. Ms. Sweeten faces 2 to 22 years in prison, but her conduct has also led to disciplinary actions against her former employer who is now disbarred. Although Ms. Carlitz expressed ignorance of Ms. Sweeten’s actions, she has paid a heavy price in legal malpractice lawsuits and disciplinary charges. Professional liability avoidance requires knowing what is going on in your office. Ignorance is only blissful until it causes damage.
-Josh J.T. Byrne, Esquire