Before Fann received her "guaranteed" $200,000 share of the settlement proceeds, the sum of $112,800 was expended from her funds in the following manner: (1) $12,800, by a check dated June 22, 1977, and made payable to Julia Fann, was used to pay, in part, gambling debts incurred by the respondent at the Las Vegas MGM Grand Hotel, and (2) $100,000, by a check dated June 22, 1977, was issued to the Chambers Stamp Company and David Blair, purportedly as an investment in that company. On the reverse side of the check the following words were typed: "Loan to be repaid in monthly interest payments of $1,000.00 per month starting immediately. Mrs. Fann shall receive 12% per year on investment and principal to be returned as agreed by the parties." This agreement contained no other provisions for security. To understand the significance of these disbursements it is necessary to review the evidence relating to the respondent's gambling debt and the origin of the Chambers Stamp Company.
SUPREME COURT OF ILLINOIS
515 N.E.2d 85, 118 Ill. 2d 365, 113 Ill. Dec. 276 1987.IL.1485
CHIEF JUSTICE CLARK delivered the opinion of the court. JUSTICE CUNNINGHAM took no part in the consideration or decision of this case.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CLARK
In this disciplinary proceeding the Administrator for the Attorney Registration and Disciplinary Commission charged the respondent, Joseph Rosin, with various violations of the Code of Professional Responsibility in a three-count complaint. All of the violations charged in the three counts related, directly or indirectly, to the respondent's conduct in connection with the distribution and investment of his client's settlement proceeds.
The first count charged that the respondent's conduct in connection with his client's investment in a small, close corporation violated the Code in several different ways, including: (1) failing to refuse to undertake employment when his personal interests could have influenced his personal judgment, in violation of Rule 5 -- 101 of the Code of Professional Responsibility (107 Ill. 2d R. 5 -- 101); (2) failing to avoid the influence of persons other than the client in violation of Rule 5 -- 107 of the Code (107 Ill. 2d R. 5 -- 107); (3) failing to represent the client with undivided fidelity in violation of Rule 5 -- 107(a) of the Code (107 Ill. 2d R. 5 -- 107(a)); (4) prejudicing or damaging the client in violation of Rule 7 -- 101(a)(3) of the Code (107 Ill. 2d R. 7 -- 101(a)(3)); and failing to limit business relations with the client in violation of Rule 5 -- 104 of the Code (107 Ill. 2d R. 5 -- 104). Count II charged that the respondent committed various breaches of the Code in connection with the use of the proceeds of the client's settlement to pay a personal debt of his own, including prejudicing or damaging the client in violation of Rule 7 -- 101(a)(3) of the Code (107 Ill. 2d R. 7 -- 101(a)(3)), and failing to maintain the integrity of the legal profession in violation of Rule 1 -- 101 of the Code (107 Ill. 2d R. 1 -- 101). Count III charged the respondent with making false statements to the Commission during the investigation of the other charges, thereby committing misrepresentation violative of Rule 1 -- 102(a)(4) of the Code (107 Ill. 2d R. 1 -- 102(a)(4)).
The Hearing Board found that the Administrator had proved counts I and II of the complaint, but dismissed count III for lack of sufficient
The charges at issue stem from the respondent's dealings with his client, Julia Fann. On December 23, 1974, Julia Fann was driving on Roosevelt Road through West Chicago, Illinois, when her auto was struck by a semitrailer truck. She suffered personal injuries, which required her admission to Central DuPage Hospital with head wounds, multiple contusions, speech difficulty, quadriparesis, and bladder incontinence. Fann testified, as affirmed by medical records, that she was unconscious for about a week after the accident and suffered from amnesia for several weeks. Pleadings filed in Fann's personal injury suit state she also suffered chronic post-traumatic organic brain disturbance that caused intellectual defect and a reduced capacity to deal with daily stresses and strains.
The day after the accident, while Fann was still unconscious at the hospital, attorney W. Jason Mitan appeared at Julia Fann's brother's home, uninvited and unannounced. Mitan persuaded Fann's brother that he would protect Fann's welfare and make sure that her children were taken care of. Fann's brother then signed a retainer agreement empowering Mitan to represent his sister in any personal injury claim she might assert.
On March 24, 1975, Mitan filed suit on Fann's behalf against the parties allegedly liable for her injuries. After suit was filed, Mitan referred Fann's case to the respondent.
Mitan was disbarred by this court in January 1980 for making material false statements on his application for admission to the Illinois Bar. (In re Mitan (1979), 75 Ill. 2d 118, cert. denied (1979), 444 U.S. 916, 62 L. Ed. 2d 171, 100 S. Ct. 231.) The respondent served as Mitan's attorney during the disbarrment proceedings before this court. In addition, the respondent was a personal friend of Mitan for several years prior to his disbarment, and they enjoyed a longstanding professional and social relationship.
The Fann case was only one of several personal injury cases which Mitan referred to the respondent. The respondent himself estimated that Mitan referred to the respondent during the course of their business relationship 13 cases, many of which resulted in multimillion dollar settlements.
Whenever Mitan referred a case to him, the respondent would give Mitan "an advance on fees." The amount of money paid Mitan depended upon whether, in the respondent's words, "a given case was meritorious." This arrangement continued up until Mitan's disbarment. Money thus was passed from the respondent to Mitan and from Mitan to the respondent throughout the duration of their professional relationship. At the time of Mitan's disbarment, the respondent owed Mitan $150,000. He eventually paid this money to a licensed attorney named Wilcox, whom the respondent described as Mitan's "successor in interest."
In October of 1975, Mitan and the respondent went to visit Fann in the hospital. The respondent asked Fann questions about the accident, but she remembered little because of her amnesia. Subsequently, Fann entered into a written contract with the respondent for legal services. Under the terms of the agreement, Fann retained the respondent as "additional counsel" with Mitan and Michelloti, Ltd. The lawyers were to receive 33 1/3% of any settlement unless suit was filed. In the event suit was filed and the case was assigned for trial, the lawyers would receive 40% of any settlement. Mitan and the respondent agreed between themselves that the respondent would receive 37 1/2% from the attorney fees recovered in the case. In addition, the respondent paid Mitan an "advance on fees" of $45,000.
After the respondent was retained, Fann dealt primarily with the respondent. She rarely spoke with Mitan concerning her case, feeling that she could not trust him. In her words, the respondent was the only attorney she spoke with because: "He was the only one I trusted."
After being retained, the respondent learned that Fann had severe psychological problems and was diagnosed a schizophrenic following post-accident examinations by several psychiatrists and psychologists. She was raised in rural southern Illinois and completed an 11th-grade education. Prior to her accident, she was estranged from her husband and ostracized by her family. She was responsible for raising four young children while earning $6,988.80 a year at her job on an assembly line at a Batavia, Illinois, factory.
Within 18 months after the accident, Fann incurred $43,871.51 in medical bills and had been hospitalized or received out-patient care at seven different hospitals and psychiatric facilities for recurrences of depression and attempted suicides.
From the time of her accident until May 1979, Fann frequently was under the influence of Valium, Darvon, and Placidyl, which were prescribed to her on a regular basis. The respondent considered Fann a "pill-taker." In synergism with her physical and mental condition, the drugs would cause Fann to suffer from poor memory, dizziness, fainting spells and blackouts.
Between October 1975 and May 1977, the respondent prepared Julia Fann's case for trial. During this period, the respondent developed a relationship with his client which he himself characterized as "unusually close." He would lend money to her and contacted social services agencies on her behalf or for her children.
In May 1977, after five days of trial, the respondent settled Julia Fann's injury case for $435,000. On May 16, he provided Fann with a written guarantee that she would receive $200,000 as her share of the settlement proceeds after deduction of his costs and loans. Mitan and the respondent were to share $174,000 of the settlement as attorney fees.
On June 17, 1977, checking account number 20-03309-8 at Bank Leumi, Chicago, was opened by Mitan in the name of Julia Fann with a $1 deposit. On the same date he had her sign the account signature card. Fann was unaware that she could not draw checks on the account without the co-signature of one of Mitan's secretaries. She never possessed the checkbook, and did not receive any monthly statements.
In either May or June of 1977, the respondent received three settlement drafts from various insurance companies responsible for making the settlement payments. The first settlement check the respondent received was made payable to the respondent, Julia Fann, and the law firm of Mitan and Michelotti in the amount of $185,000. The respondent endorsed the check and forwarded it to Mitan. The second settlement check the respondent received was made payable to Northwestern Memorial Hospital and was drawn in the amount of $28,245. The respondent forwarded this check to the named payee. Finally, the respondent received a check payable to himself, to Julia Fann, and to Mitan and Michelotti in the amount of $221,775. The respondent obtained the signatures of the other named payees on the draft and deposited the proceeds into his special account at the Chicago-Tokyo Bank. From the proceeds of this third settlement draft the respondent deducted fees and costs owed him for his work in the Fann case.
On June 29, 1977, the respondent sent a check to Mitan, payable to Fann and Mitan in the amount of $98,636.46. After receiving the check, Mitan gave the respondent a written receipt representing that ...