In Re Morton Allan Segall, Attorney

Brief Fact Summary. An attorney attempted to settle certain disputes over credit card bills in a deceptive manner.

Synopsis of Rule of Law. "A party, having employed counsel to act as an intermediary between himself and opposing counsel, does not lose the protection of [Rule 7-104] merely because opposing counsel is also a party to the litigation." 

Facts. The Respondent, Morton Allan Segall (the "Respondent"), was charged by the Administrator of the Attorney Registration and Disciplinary Commission (the "Commission") with three counts of personal misconduct.  First, Carte Blanche alleged that the Respondent incurred and did not pay a substantial credit card bill of $12,837.42.  A default judgment was entered in favor of Carte Blanche.  The Respondent attempted to vacate the default judgment first on November 22, 1982, but in the meantime, on October 4, 1982, directed his secretary to send a check for $95.60 directly to Carte Blanche, intentionally circumventing their counsel.  On the back of the check the Respondent included an attempted limitation that read:  "acceptance, negotiation or endorsement of this draft shall constitute a full and final release in settlement of all claims and causes of action for Acct. No. 944-148- 645-4 in the name of Mort A. Segall."  The Respondent included a letter, which reiterated and went into more detail than what was said on the back of the check.  The first default motion was denied and the Respondent filed another motion to vacate on December 19, 1982, attaching a copy of the negotiated check as evidence of a settlement.  The trial court concluded "there had been no accord and satisfaction, and dismissed the action."  An appellate court affirmed.  The Respondent on May 24, 1984, satisfied the judgment in full.
•    Second, Amoco alleged that the Respondent incurred and did not pay a substantial credit card bill of $11,238.16.  October 4, 1982, the Respondent directed his secretary to send a check for $48.76 directly to Amoco, with the same letter and endorsement restriction as the Carte Blanche matter.  The Respondent also knew Amoco was represented by counsel.  The Respondent sought to dismiss Amoco's complaint, claiming that the negotiated check was evidence.  Also, the Respondent attempted to quash his own deposition, which he failed to appear, despite court orders, twice.  The Respondent's motion was dismissed by the trial court and the dismissal affirmed by the appellate court.

Issue. Should any sanctions be imposed against the Respondent? 

Held. Yes.  The court first refers to Disciplinary Rule 7-104, which forbids an attorney to directly communicate or cause someone to directly communicate with an opposing party, if the attorney knows that opposing party is represented by counsel.  The court found "[a]n attorney who is himself a party to the litigation represents himself when he contacts an opposing party." Further, "[a] party, having employed counsel to act as an intermediary between himself and opposing counsel, does not lose the protection of the rule merely because opposing counsel is also a party to the litigation."  Second, the court refers to Rules 1-102(a)(4) and (5), which forbid attorneys from "engag[ing] in conduct involving dishonesty, fraud, deceit, or misrepresentation" and from "engag[ing] in conduct that is prejudicial to the administration of justice."  The court observes that it has adopted a broad definition of fraud, finding fraud if conduct is "calculated to deceive".  The court agreed with "the Hearing Board and the Review Board that respondent's conduct, taken as a whole, was calculated to deceive Carte Blanche and Amoco by obtaining settlements of large claims for de minimis amounts."  Further, "Respondent bypassed each plaintiff's attorney in these cases and sent each plaintiff a letter which was designed to make the plaintiffs' agents believe that the minimal amount tendered was the amount actually due."  The court also found that the Respondent in filing motions to dismiss in this matter involved the court and as such perpetrated a scheme "prejudicial to the administration of justice" and violative of Rule 1-10(a)(5)

Discussion. This case provides another interesting look at the rules of Professional Responsibility and their interaction with contract law.