In the Matter of JOHN C. GARAS, an Attorney, Respondent. GRIEVANCE COMMITTEE OF THE EIGHTH JUDICIAL DISTRICT, Petitioner.
Fourth Department
June 12, 2009
881 NYS2d 744
Susan M. Eagan, Associate Counsel, Eighth Judicial District Grievance Committee, Buffalo, for petitioner.
OPINION OF THE COURT
Per Curiam.
Respondent was admitted to the practice of law by this Court on February 7, 1986, and maintains an office for the practice of law in Williamsville. The Grievance Committee filed a petition charging respondent with acts of professional misconduct, including aiding nonlawyers in the unauthorized practice of law. Respondent filed an answer denying material allegations of the petition, and a referee was appointed to conduct a hearing. Prior to the hearing, the parties executed a stipulation resolving all remaining factual issues. Based upon the stipulation, the Referee has filed a report, which the Grievance Committee moves to confirm. Respondent has cross-moved to confirm in part and disaffirm in part and to dismiss the petition.
We confirm the factual findings of the Referee, which are based upon both admitted and stipulated facts.
Respondent formed Resale Closing Services, LLC (RCS), for the purpose of bidding on a contract with the United States Department of Housing and Urban Development (HUD) for the provision of closing agent services on the sale of previously foreclosed properties. The HUD contract required the designation as “key personnel” of an admitted attorney. RCS consisted of two members: respondent and a nonlawyer. The nonlawyer member owned a majority share of the corporation, and the two members shared in profits and losses according to their membership interests. The nonlawyer was paid an annual salary as general manager of RCS, and respondent received an annual fee for his services as general counsel. HUD accepted the bid of RCS, and the nonlawyer member established an office in Buffalo. The services provided by nonlawyer employees of RCS included the preparation of deeds. Although respondent reviewed the prepared deeds and title searches, he had no involvement in the day-to-day operations of RCS, and he exercised no supervisory authority over the nonlawyer member, who administered the services provided under the HUD contract. In addition, respondent and the nonlawyer member opened a noninterest-bearing trust account as joint signatories, through which the proceeds of each sale were disbursed. Nonlawyer employees of RCS attended closings for which RCS provided services.
Respondent thereafter established the Garas Law Firm (GLF), which also successfully bid on a closing agent services contract
The determinative issue is whether the activities of RCS and GLF pursuant to the contracts with HUD constituted the practice of law. Respondent contends that the services required by the contracts consisted mainly of clerical functions that did not involve the exercise of legal judgment, i.e., functions such as completing forms and complying with HUD regulations. The Grievance Committee, however, contends that RCS was engaged in activities that, by statute, may only be performed in the State of New York by an attorney and that, even with respect to those tasks that may be appropriately delegated to nonlawyers, respondent failed to exercise the required supervision.
While the applicable statutes make it clear that the provision of closing services such as the preparation of deeds constitutes the practice of law, an exception has been recognized for a single transaction that occurred incident to otherwise authorized business and did not involve the rendering of legal advice (see People v Title Guar. & Trust Co., 227 NY 366, 375-376 [1919], rearg
We find that the services provided by RCS and GLF pursuant to the HUD contracts constituted the practice of law (see Lawyers Tit. Corp., 282 NY 513 [1940]; Matter of LaMattina, 51 AD3d 371 [2008]; see also
We conclude that respondent has violated the following Disciplinary Rules of the Code of Professional Conduct:
We have considered, in mitigation, that this proceeding did not originate as the result of a complaint by a purchaser of a HUD property and was, instead, commenced upon the complaint of an attorney whose firm bid unsuccessfully on the contract awarded to GLF. Nor is there any evidence to suggest that the closing services provided by RCS and GLF were not performed in a competent manner. Additionally, we have considered the assertions of respondent that the deposit of closing proceeds into a noninterest bearing account was an attempt to comply with a contract requirement concerning the transfer of funds, and that he offered title insurance to purchasers at the behest of HUD. Further, we note in support of the assertion by respondent that he did not intend to violate the disciplinary rules that, during the course of this proceeding, he executed an agreement assigning the contractual duties of RCS to GLF in an attempt to conform his conduct to the rules, and he ultimately terminated his relationship with RCS. Finally, we have considered that respondent has a previously unblemished record and that he cooperated with the investigation conducted by the Grievance Committee. Accordingly, after consideration of all the factors in this matter, we conclude that respondent should be censured.
Hurlbutt, J.P., Smith, Centra, Peradotto and Gorski, JJ., concur.
Order of censure entered.