Board of Overseers of the Bar v. Andrew L. Broaddus, Esq.

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Docket No.: GCF-13-171

Issued by: Grievance Commission

Date: September 22, 2014

Respondent: Andrew L. Broaddus, Esq.

Bar Number: 002302

Order: Dismissal with Warning

Disposition/Conduct: Conflict of Interest; Personal Conflict; Interest In Litigation.


REPORT OF A PANEL OF THE GRIEVANCE COMMISSION

Upon due notice, Panel of the Grievance Commission conducted a hearing on June 23 and June 30, 2014, at the Cumberland County Courthouse, open to the public according to Maine Bar Rule 7.1(e)(2), on the petition of the Board of Overseers of the Bar alleging misconduct on the part of Andrew L. Broaddus, Esq., of Westbrook, Maine. The disciplinary petition before us is dated March 14, 2014. Its genesis was a complaint filed by Attorney Pamela S. Holmes on May 14, 2013. The Board’s petition asserts violations of formerly-applicable Maine Bar Rule 3.2(f), Maine Bar Rule 3.4(b), Maine Bar Rule 3.4(f), Maine Bar Rule 3.6(a), and Maine Bar Rule 3.7(c), all of which are denied by the Respondent.

The Board was represented by Assistant Bar Counsel Alan P. Kelley. Respondent was present and represented by Melissa A. Hewey, Esq. and G. Toby Dilworth, Esq. No objections were raised to the composition of the panel. At the commencement of the hearing, Board Exhibits 1 through 46 and Respondent’s Exhibits 1 through 28 were offered and admitted without objection; Board Exhibit 47 and Respondent’s Exhibits 29 and 30 was offered and admitted during the hearing without objection.

The Board called Attorney Broaddus and Attorney Pamela Holmes of Wells as witnesses, who were cross-examined by counsel for the Respondent. The Board expected to present Katherine Rounds as a witness and she was apparently in the hallway during the morning of the first day of the hearing. For reasons unknown, Ms. Rounds departed before she was called. Assistant Bar Counsel’s oral motion for permission to call her as a witness after Attorney Broaddus testified in support of his own case was denied. The Board then rested its case. The Respondent testified on his own behalf, and was cross-examined by Assistant Bar Counsel. Members of the panel asked questions of all witnesses.

The Board’s allegations arise from business and professional interactions between Katherine Rounds (who was also known as Katherine Rounds Pelletier at various times) and the Respondent (also Attorney Broaddus) and his business partner, James Foye. Prior to October 2005, Katherine Rounds owned waterfront property on Sand Pond in Baldwin. On October 31, 2005, the Respondent and Mr. Foye purchased an unimproved portion of Ms. Rounds’ land without water frontage – the “back lot” – while she retained the improved “front lot.” The closing statement provided for the hold-back by Attorney Broaddus and Mr. Foye of $4,262.37 to pay real estate tax liens from 2003 and 2004, plus YTD current property taxes for January 1 through October 31, 2005. The deed was signed and delivered on October 31, 2005.

Before the sale of the back lot to the Respondent and Mr. Foye, one Ralph Gibson provided Ms. Rounds with assistance on improvements she was making to the camp. Mr. Gibson was a building contractor who also had a personal relationship with Ms. Rounds. After the sale (and the unrelated souring of his relationship with Ms. Rounds), Mr. Gibson asserted a mechanic’s lien against the Baldwin property in December 2005 and perfected the lien in February 2006 by filing suit to enforce the lien, all pursuant to 10 M.R.S.A. ch. 603. At Ms. Rounds’ request, Attorney Broaddus agreed to represent her in the Gibson action.

The Respondent filed an answer and counterclaim to the Gibson lawsuit in April 2006. Thereafter, the court docket shows no motions, discovery, responses to the plaintiff’s discovery or to the plaintiff’s motions to compel discovery until the case was dismissed by stipulation in August 2008. Attorney Broaddus testified that he conducted informal discovery, but otherwise adopted a deliberate “no action” strategy in the hope and expectation that the plaintiff would abandon his case or have it dismissed for inaction under Rule 41(b). The case was settled by the payment on July 21, 2008 of $20,000 to Gibson from the funds of Attorney Broaddus and Mr. Foye.

In 2007, Attorney Broaddus and Mr. Foye decided to purchase the “front lot.” They commissioned an appraisal of the property which showed a value of $130,000 as of June 9, 2007. On June 22 2007, Attorney Broaddus sent a copy of the appraisal, a purchase and sale agreement and a “consent” to Ms. Rounds, with a note asking her to contact him if she had any questions. On July 8, 2007, Ms. Rounds signed both the “consent” and the purchase and sale agreement for the front lot. The substantive portion of the consent reads in full:

I, KATHERINE ROUNDS PELLETIER, consent to my attorney, ANDREW L. BROADDUS, and his partner, JAMES W. FOYE, purchasing upon terms and conditions in a Purchase and Sale Agreement, or any extensions or modifications thereto, my remaining real estate, being the land and buildings, together with all rights, easements, right of ways [sic] and matters of record at 40 Jackson Lane, Sand Pond, Baldwin, Maine, being the remaining portion of the same premises described in Deed from Mabel L. Rounds to Katherine R. Pelletier, dated November 30, 2000 and recorded in the Cumberland County Registry of Deeds in Book 15905, page 102. I acknowledge that I have been advised that I may seek independent counsel regarding this transaction.

The purchase and sale agreement provided for the sale of the front lot for $120,000, of which $20,000 was due within 14 days of execution, to be followed by monthly payments of $500 for eight months and $100,000 “to be paid in March, 2008 when Seller can convey title to the premises free of all liens and other encumbrances, except rights of way of record.” No interest was to be paid. No note or mortgage was offered or signed by the Respondent in 2007. The P&S further provided,

That a good and sufficient Warranty Deed showing marketable title shall be delivered to the Purchasers and held in escrow until the premises are free and clear of all liens and encumbrances, except rights of way of record at which time the Purchasers shall pay the remaining principal balance to Seller. It is agreed that this transaction shall be closed and executed all papers necessary for the completion of the purchase by July 20, 2007.
If the Purchasers fail to make any of the payments, or any part thereof, or to perform any of the covenants on their part made or entered into, this Agreement, at the option of the Seller, shall be terminated.

The closing statement provided for the hold-back of $2,488.24 to cover a 2006 real estate tax lien and YTD 2007 property taxes. The deed was dated July 20, 2007.

Until the settlement of the Gibson mechanic’s lien lawsuit in August 2008, neither deed to the back or front lots was recorded. Both parcels remained subject to the Gibson lien until it was discharged in October 2009. The Respondent did not inform opposing counsel of his and his business partner’s interest in the property and no M.R.Civ.P. 19 issues were presented to the district court.

At the time of the back lot sale and through the July 2007 closing on the front lot, Attorney Broaddus and Mr. Foye as purchasers and Ms. Rounds as seller believed that the each lot could be developed separately. On March 26, 2009, they were informed by the code enforcement officer of the Town of Baldwin that the property could not be divided and had to be used as a single lot. There was no testimony or evidence that the divisibility of the property was discussed by Ms. Rounds and Attorney Broaddus prior to that time.

At the July 20, 2007 closing, Ms. Rounds delivered a fully executed deed to Attorney Broaddus and Mr. Foye in exchange for $20,000. They owed her $100,000, due on some date in March 2008 without interest. They delivered neither a note nor a mortgage to Ms. Rounds for the $100,000 balance.

Thereafter, the relationship between Ms. Rounds and Attorney Broaddus became confused. Her communications to the Respondent were variously complaining, scolding, threatening and complimentary, all without pattern, depending on the events of the moment. At the same time, Attorney Broaddus’ communications to Ms. Rounds were almost exclusively by telephone.

Ms. Rounds was not paid in full by March 2008 as agreed in the purchase and sale agreement. After several demands, including Ms. Rounds’ e-mail threat on October 20, 2008 to report Attorney Broaddus to the Board of Overseers, Mr. Foye and Attorney Broaddus executed a note and mortgage on October 30, 2008 for the then balance of $65,000, plus interest at 10%, due on April 1, 2009.

Following the March 26, 2009 notice from the CEO for the Town of Baldwin, Attorney Broaddus commissioned a further appraisal of the entire parcel (retrospectively as of June 9, 2007). The appraiser’s opinion was that the property was worth $143,000 as a single parcel as of that date. On May 5, 2009, Attorney Broaddus sent a letter to Ms. Rounds offering the principal sum of $122,000 (plus accrued interest from October 2008). After several exchanges of correspondence, he and she agreed to a renegotiated price of $133,000 (plus accrued interest). Attorney Broaddus and Mr. Foye received credit for the $20,000 settlement with Gibson and both appraisals. The balance of the agreed purchase price was paid on July 1, 2009.

The Respondent provided a variety of services to Ms. Rounds. In addition to the Gibson litigation, he prepared wills for her in the summer of 2007 and the late winter of 2009. He consulted with her regarding her credit and credit report in the spring of 2009. He consulted with her regarding a business opportunity in New Hampshire in 2008 and 2009. Attorney Broaddus did not charge and Ms. Rounds did not pay any fee for his services in connection with the Gibson litigation, the wills, the credit issues and the business consultation.

Attorney Broaddus was the only witness with personal knowledge of the events that transpired between the autumn of 2005 and the summer of 2009. The Respondent’s relationship with Ms. Rounds prior to the spring of 2006 was straightforward – he and Mr. Foye bought property that Ms. Rounds was selling. Beginning in April 2006, however, their roles became more complex. Attorney Broaddus represented Ms. Rounds in the Gibson mechanics lien litigation without fee at a time when he (and Mr. Foye) had an interest in the property that was the subject of the litigation. His interest was undisclosed to Gibson’s lawyers or to the court from its commencement in 2006 to its conclusion in August 2008.

During his representation in June/July of 2007, Attorney Broaddus (and Mr. Foye) purchased the remaining front lot of Ms. Rounds’ property for $10,000 less than its appraised value. The absence of a note and mortgage for $100,000 (to be paid without interest) benefited the Respondent. Coincident with the purchase and sale agreement for the front lot on July 8, 2007, Attorney Broaddus prepared and Ms. Rounds signed the “consent” set forth above. Not until June 19, 2009 – throughout his failure to pay the purchase price as agreed in 2007, the negotiation and execution of the note and mortgage in October 2008, and the final negotiations for a settlement $10,000 below the newly-obtained appraisal value in 2009 – was there another written communication from the Respondent to Ms. Rounds that “you are free to consult with independent counsel, if you wish.”

Attorney Broaddus testified repeatedly and forcefully throughout his lengthy examinations that he kept Ms. Rounds fully informed and appraised of her rights under their several agreements. He said that she was a knowledgeable and sophisticated businessperson who represented herself ably and well. He asserted that the July 8, 2007 consent was sufficient disclosure, that it applied to the entire travel of his relationship with his client and that he was required to do nothing more.

The panel also heard from Attorney Pamela S. Holmes, who represented Ms. Rounds in a malpractice action against Attorney Broaddus in 2013. Attorney Holmes had no personal knowledge of any of the events prior to her representation of Ms. Rounds. All of her contact with Ms. Rounds occurred well after her client’s interaction with the Respondent concluded. In addition, Attorney Holmes’ credibility was impeached by contradictory and inaccurate statements in her original complaint. The panel bases its decision on the written record created during Attorney Broaddus’ representation of Ms. Rounds and its evaluation of his testimony.

Maine Bar Rule 3.4(b) provides that a lawyer “shall not commence or continue representation of a client if the representation would involve … a substantial risk that the lawyer’s representation … would be materially and adversely affected … by the lawyer’s own interests.” The panel finds that the Respondent breached this rule. The rule does not require that there be actual material and adverse impact on the representation, only that a substantial risk of material and adverse impact existed. From April 2006 through August 2008, Attorney Broaddus represented Ms. Rounds in the Gibson litigation. Gibson held a recorded and perfected mechanic’s lien against the entire Baldwin property – the back lot which Attorney Broaddus and Mr. Foye acquired prior to the litigation and the front lot which they acquired with full knowledge of the lawsuit – which admittedly not disclosed to Gibson’s lawyers or to the court. The lawsuit was settled by payment of $20,000 from the Respondent’s and Mr. Foye’s funds. Attorney Broaddus testified that the settlement was made and the funds advanced with the knowledge and permission of Ms. Rounds, although there is no documentation to that effect. The fact that the $20,000 was recouped from Ms. Rounds eleven months later in the financial compromise between her and them does not erase the substantial risk.

Maine Bar Rule 3.4(f) provides that a lawyer “shall not … enter into any business transaction with a client, unless … [t]he transaction and terms … are fair and reasonable to the client and … the client is advised and given a reasonable opportunity to seek independent professional advice of counsel of the client’s choice on the transaction.” The panel finds that the Respondent breached this rule. Attorney Broaddus complied fully with the spirit and letter of Rule 3.4(f) in July 2007 when he prepared and sent – and Ms. Rounds signed – the “consent” set forth above in connection with the purchase of the front lot. A reduction of $10,000 from the appraised value of the property is consistent with the unfinished nature of the cottage on the front lot in 2007.

While a close call, the panel does not find that the additional price reduction of $10,000 from the appraised value (determine retrospectively) was unfair or unreasonable to Attorney Broaddus’ client. Given the deteriorated condition of the property, the proportion of the reduction to the overall price, and Attorney Broaddus’ testimony that the figure was mutually agreeable, he is entitled to the benefit of the doubt.

However, the nature and scope of the business transaction changed in March 2008 once the balance was not paid as promised, the parties were confronted in 2009 with the newly-discovered position of the Town that the property could not be subdivided into back and front lots, and the final negotiations culminating in the agreement of July 2009. Contrary to the Respondent’s assertions that the July 8, 2007 consent was sufficient, he was required to have a better tuned ear to the movements of his representation. Attorney Broaddus testified that Ms. Rounds was advised orally of her right to consult other counsel from time to time. Given that he properly obtained her consent in writing in July 2007, he was required to revisit that consent in writing as their business relationship waned and waxed and waned again.

It is well settled in Maine law that the “doctrine of merger by deed provides that once a … deed is accepted it becomes the final statement of the agreement between the parties and nullifies all provisions of the purchase-and-sale agreement.” Baillargeron v. Estate of Daigle, 2010 ME 127 ¶18 (but if there was a mutual mistake of the parties in the legal description, the deed may be reformed); Bryan v. Breyer, 665 A.2d 1020, 1022 (Me. 1995) (same). Attorney Broaddus’ assertions throughout the hearing that he never really accepted the conveyances from Ms. Rounds because he doubted her “good title,” are not supported by existing law.

Maine Bar Rule 3.7(c) generally prohibits a lawyer from acquiring a proprietary interest in the subject matter of litigation that the lawyer is conducting for a client. In this case, Attorney Broaddus started his representation of Ms. Rounds after he purchased an interest in the back lot but purchased the balance of the property which was subject to the Gibson lien while he represented Ms. Rounds in the litigation regarding that lien. The Respondent testified that he was not speculating in the property because of the litigation (or vice versa), which the panel regards as too fine a distinction.

The allegations regarding Maine Bar Rule 3.2(f) were not pressed.

The panel concludes that Attorney Broaddus failed to comply with his ethical duties to his client. That being said, the panel is constrained by the evidence presented as it considers the extent of those lapses. Ms. Rounds did not testify. We have only the first-hand testimony of Attorney Broaddus regarding her statements – other than those presented in her various e-mails, which are contradictory and occasionally equivocal – and nothing to contradict his assertions that Ms. Rounds was fully informed and expressed and understanding and acceptance of his professional and business dealings with her.

Attorney Broaddus appears to have learned from his experience. While the panel is disappointed that he has not accepted full responsibility for his lapses, it is clear that he has sworn off all business dealings with any client and all representation of those with whom he has business dealings. The problems presented in this case are unlikely to be repeated. The panel is also aware that Attorney Broaddus and Ms. Rounds settled all claims between them.

The purpose of bar disciplinary proceedings is not punishment, but rather the protection of the public. Since the evidence supports a finding that Attorney Broaddus did violate the Maine Bar Rules but without any evidence of substantial harm to the client or the public, and that he is unlikely to commit any future professional lapses, the panel concludes that a dismissal with warning is appropriate under all the circumstances. Pursuant to Maine Bar Rule 7.1(d)(4), the petition is dismissed with a warning to Attorney Broaddus to remain cognizant of his professional responsibilities hereafter.

September 22, 2014


Peter C. Fessenden, Esq., Acting Chair

A. J. Hungerford, Esq.

Marjorie Medd, Public Member