(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interests of brevity, portions of any opinion may not have been summarized).
Argued March 29, 1999 -- Decided June 18, 1999
PER CURIAM
This attorney disciplinary case arises from a Report and Recommendation of the Disciplinary Review Board
(DRB) that respondent, James R. Picciano, be disbarred.
Respondent was retained to represent Mary Milanese for personal injuries she sustained on August 5, 1991,
when an electrician dropped a ladder on her while she was shopping in an IGA supermarket. The case was settled in
October 1993 for $27,000. Respondent received the settlement proceeds in three separate checks - one in the amount
of $23,000 on October 29, 1993, and the two others in the amounts of $3,000 and $1,000 on December 7, 1993.
On October 29, 1993, respondent deposited $20,000 of the $23,000 check into his attorney business account
with the notation “cash substitution.” He took the remaining $3,000 of that check in cash. No distribution was made
to his client. Thereafter, on December 7, 1993, respondent deposited the $1,000 check into his attorney trust account.
He deposited the $3,000 check into his attorney business account.
On December 8, 1993, respondent deposited $17,000 in his trust account. The funds came from a corporation
owned by his wife. This deposit replaced the $17,000 in Milanese's funds (her share of the total settlement) that
respondent had put into his attorney business account in October. Two days later, on December 10, 1993, Milanese
and respondent signed a settlement statement itemizing disbursements of the total $27,000 settlement. According to
that statement, $5,000 of the proceeds was to be paid to Milanese's treating physician. The settlement statement
provided that respondent would hold these funds and would negotiate with the physician to lower his outstanding bill.
In the statement, respondent agreed to return to his client any amount in excess of that ultimately paid to Dr. Houck.
On February 23, 1994, respondent paid Dr. Houck $1,000 from his attorney trust account. Ultimately, the
doctor refused to reduce his bill to an amount less than $5,000. Following the doctor's death in 1994, his estate
pursued payment of the balance and filed the grievance giving rise to this proceeding.
After investigation, the Office of Attorney Ethics (OAE) charged respondent with misappropriation of the
$17,000 he had put in his business account and of the $4,000 in the funds he was holding for payment of Dr. Houck's
bill. After hearing, a special master concluded that the evidence did not clearly and convincingly establish that
respondent had misappropriated the $17,000. Respondent had maintained, and Ms. Milanese had confirmed, that she
had given respondent permission to borrow the funds so long as she were repaid before Christmas. The special master
found however that respondent had misappropriated the funds he was to hold to pay Dr. Houck - never returning any
balance to the client.
On de novo review, four members of the DRB concluded that respondent had knowingly misappropriated the
$17,000. Three members dissented on that issue, finding that respondent had the permission of his client to borrow the
funds. All seven DRB members however found that respondent had knowingly misappropriated the funds he was to
hold in escrow for the payment of Dr. Houck's bill. Thus, the Board recommended that respondent be disbarred.
The matter is before the Court pursuant to R. 1:20-16(a).
HELD: Respondent's use of the funds escrowed for the payment of his client's outstanding physician's bill, without
the consent of the physician, constituted knowing misappropriation of escrow funds for which he is disbarred.
1. An attorney may not use escrow funds without the permission of all parties having an interest in them, and
respondent's unauthorized use of the funds held for the payment of Dr. Houck's outstanding bill constituted the
knowing misuse of escrow funds, in violation of In re Hollendonner . (pp. 5-6)
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN, and
COLEMAN join in this PER CURIAM opinion.
SUPREME COURT OF NEW JERSEY
D-
120 September Term 1998
IN THE MATTER OF
JAMES R. PICCIANO
An Attorney at Law.
Argued March 29, 1999 -- Decided June 18, 1999
On an Order to show cause why respondent
should not be disbarred or otherwise
disciplined.
Walton W. Kingsbery, III, Deputy Ethics
Counsel, argued the cause on behalf of the
Office of Attorney Ethics.
James R. Picciano argued the cause Pro se.
PER CURIAM
This attorney discipline matter arises from a Report and
Recommendation of the Disciplinary Review Board (DRB) that
respondent be disbarred. Four members of the DRB concluded that
respondent had knowingly misappropriated $17,000 in client trust
funds following the settlement of a personal injury action.
Three members dissented concerning that issue, finding that the
attorney had the permission of his client. All members found
that respondent had knowingly invaded escrow funds retained from
the same settlement. The funds had been placed in escrow pending
an agreement with the client's physician regarding the amount of
the physician's bill. Although we would hesitate to disbar
respondent for the conduct surrounding the disposition of the
client's $17,000 share of the settlement proceeds, we find clear
and convincing evidence, based on our independent review of the
record, that respondent knowingly made an unauthorized use of the
escrow funds held for the physician. Such an unauthorized use
without the permission of the person for whom the escrow fund was
held constitutes a knowing misappropriation of trust funds that
warrants disbarment under the rule of In re Wilson,
81 N.J. 451
(1979).
The matter involves respondent's representation of Mary Milanese in connection with a personal injury that she sustained on August 5, 1991. An electrician dropped a metal ladder on her while she was shopping in an IGA supermarket. The case was settled in October 1993 for $27,000. The settlement was paid by three checks. Harleysville Insurance Company paid the electrician's share of $23,000 on October 29, 1993. Respondent did not receive two other checks for $3000 and $1000 from the IGA's agents until December 7, 1993.
On October 29, 1993, respondent deposited $20,000 of the $23,000 Harleysville check into his attorney business account with the notation “cash substitution.” He did not make any distribution of the proceeds to his client. He took the remaining $3000 of the Harleysville check in cash. On December 7, 1993, respondent deposited the $1000 IGA check into his attorney trust account and the $3000 IGA check into his business account.See footnote 1 On December 8, 1993, respondent deposited $17,000 in his trust account. The funds came from a corporation owned by his wife. The deposit replaced the $17,000 in client's funds that respondent had put into his attorney account in October.
Two days later, on December 10, 1993, Milanese and respondent signed a settlement statement itemizing disbursements of the $27,000. According to that statement, $17,000 of the settlement was to be disbursed to the client, $5000 was to be paid to respondent as his fee, and the remaining $5000 would be paid to the client's treating physician. Specifically, the Settlement Statement read as follows:
Since it appears that at the present time Doctor Houck is willing to settle his claim for no less than $5000, I have held this amount and will continue, per your instructions, to see if he will lower his amount any more. I have also held and will be responsible for a medical bill in the approximate amount of $300. My attorney's fee is being set at $5000 less the amount that I have agreed to pay for that small remaining medical bill. If I can get Doctor Houck to agree to a lesser figure then you will receive the additional funds.
Respondent admitted that although he represented in the
settlement statement that he was holding the $5000 in escrow, in
reality the funds had, with the exception of the $1000 IGA check,
gone into his business account.
Ultimately, the physician did not agree to reduce his bill
to an amount less than $5000. The physician died in 1994. His
estate pursued payment of the $4000 balance and filed the
grievance giving rise to this proceeding. After investigation,
the Office of Attorney Ethics (OAE) charged that respondent had
misappropriated the $17,000 that he had put in his business
account for the forty-four days between October 29, 1993 and
December 11, 1993, and that he had misused $4000 in escrow funds.
A Special Master, after hearing the evidence, concluded that the
evidence did not clearly and convincingly establish that
respondent misappropriated the $17,000 for the forty-four days.
Respondent claimed that he had consent to borrow the $17,000.
Respondent testified that his client's son told him that she had
agreed that he could use the money as long as she were paid
before Christmas. Both the mother and son confirmed this claim
by respondent.
The Special Master, found, however, as did the DRB, that
respondent agreed that he would hold the $5000 in escrow while he
negotiated with the physician and would return to the client
whatever funds were not required for a final settlement of the
physician's bill. (Recall that respondent later paid $1000 to
the physician from the trust account.) The funds were to be held
either for the doctor or the client if the doctor consented to a
lower sum for his fee. Respondent was not successful in
persuading the physician to waive any part of the $4000 balance.
Respondent acknowledged his obligation to pay the
physician's bill, but said that he had delayed doing so in the
hope that his client's son would cover the debt. Whatever
respondent's relationship with his client's son, respondent
should not have withdrawn the escrowed funds without the consent
of the party for whom they were held. In re DiLieto,
142 N.J. 492, 507 (1995). See also In re Kernan,
118 N.J. 361, 368 (1990)
(declining to impose discipline because of absence of clear and
convincing evidence that physician “had an interest in the
[retained] fund”) and In re Peterman,
134 N.J. 201 (1993)
(declining to disbar because unauthorized use of funds intended
for physician predated our decision in In re Hollendonner,
102 N.J. 21 (1985), in which we prospectively announced that we would
apply Wilson rule to attorney found to have used escrow funds
without permission of one of parties having interest in funds).
The evidence clearly and convincingly established that respondent
knowingly misused escrow funds in violation of the Hollendonner
rule.
We order the disbarment of respondent. Respondent shall
reimburse the Disciplinary Oversight Committee for appropriate
administrative costs.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN,
GARIBALDI, STEIN, and COLEMAN join in this PER CURIAM opinion.
SUPREME COURT OF NEW JERSEY
D-
120 September Term 1998
IN THE MATTER OF :
JAMES R. PICCIANO, : O R D E R
AN ATTORNEY AT LAW :
It is ORDERED that JAMES R. PICCIANO of DEEPWATER, who was
admitted to the bar of this State in 1972, be disbarred and that
his name be stricken from the roll of attorneys of this State,
effective immediately; and it is further
ORDERED that JAMES R. PICCIANO be and hereby is permanently
restrained and enjoined from practicing law; and it is further
ORDERED that all funds, if any, currently existing in any
New Jersey financial institution maintained by JAMES R. PICCIANO,
pursuant to Rule 1:21-6, be restrained from disbursement except
on application to this Court, for good cause shown, and shall be
transferred by the financial institution to the Clerk of the
Superior Court, who is directed to deposit the funds in the
Superior Court Trust Fund, pending further Order of this Court;
and it is further
ORDERED that JAMES R. PICCIANO comply with Rule 1:20-20
dealing with disbarred attorneys; and it is further
ORDERED that JAMES R. PICCIANO reimburse the Disciplinary
Oversight Committee for appropriate administrative costs.
WITNESS, the Honorable Deborah T. Poritz, Chief Justice, at
Trenton, this 18th day of June, 1999.
/s/ Gail G. Haney
ACTING CLERK OF THE SUPREME COURT
NO. D-120 SEPTEMBER TERM 1998
Application for
Disposition Disbar
Decided June 18, 1999
Order returnable
Opinion by PER CURIAM
Footnote: 1Respondent paid $1000 to the physician from his trust account on February 23, 1994.