Board of Overseers of the Bar v. Steven J. Lyman, Esq.

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Docket No.: GCF-13-237

Issued by: Grievance Commission

Date: May 30, 2014

Respondent: Steven J. Lyman, Esq.

Bar Number: 001099

Order: Dismissal with Warning

Disposition/Conduct: Failure to retain disputed funds and property until after settlement of dispute; Engaging in conduct prejudicial to the administration of justice


On May 21, 2014, pursuant to due notice, Panel A of the Grievance Commission conducted a disciplinary hearing open to the public according to Maine Bar Rule 7.1(e)(2), concerning the Respondent, Steven J. Lyman, Esq. of Southwest Harbor, Maine. This disciplinary proceeding was commenced by the filing of a Disciplinary Petition by the Board of Overseers of the Bar through Bar Counsel dated February 11, 2014, alleging violations of M. R. of Prof. Conduct 1.15(d)(e), 4.1, 4.2(a) and 8.4(a)(c)(d).

At the disciplinary hearing, the Board was represented by Bar Counsel Alan P. Kelley, Esq. and Respondent was present and represented by Marvin H. Glazier, Esq. and Jane S.E. Clayton, Esq. Joint exhibits marked Board Exh. 1 – 21 were admitted without objection. The Panel heard testimony from the following witnesses:

Steven J. Lyman, Esq.
Daniel A. Pileggi, Esq.
Sandra Y. Gray

This matter stems from a disagreement between Sandra Gray who was the principal owner of Village Wash Tub Limited Partners and Jose Feliciano who was the principal owner of Village Wash Tub LLC. There was a great deal of distrust between the parties. Mr. Feliciano, who was represented by Mr. Lyman, filed a Complaint for Forcible Entry and Detainer seeking to evict Ms. Gray because she was in arrears in the payment of rent. The matter was set for hearing on April 25, 2013. Ms. Gray was present at the court house on April 25, 2013 and was represented by counsel. Mr. Lyman and Ms. Gray’s counsel worked with their clients (in separate rooms) to come to an agreement for resolution of the issues between Mr. Feliciano and Ms. Gray. The hearing was continued and the matter was later dismissed.

Ms. Gray testified that the agreement reached on April 25th as she understood it, was:

“The mortgage was going to be shortened by 10 years, and I was going to move out of the apartment by June 15th and any liability from either party was going to be released prior to that date and there was also going to be a money settlement. One of the notes that was due on September 30th, I was to get half of that up front on June 15...”

On April 25, 2013, Mr. Feliciano wrote a check to Mr. Lyman for $4,000 which Mr. Lyman deposited in his client trust account. Ms. Gray’s counsel drafted a Settlement Agreement and Mutual Release (Board Exhibit #6) and emailed it to Mr. Lyman on April 29, 2013. The Agreement required Mr. Feliciano to deposit funds with Mr. Lyman prior to the agreement’s execution. Mr. Lyman testified that he had a telephone conversation with Ms. Gray’s attorney prior to June 15, 2013 in which each attorney represented that his client did not want to sign the Settlement Agreement and Mutual Release until the other party had signed it. However, Mr. Lyman testified that he told Ms. Gray’s attorney that he would have (or did have) Mr. Feliciano execute the Settlement Agreement and Mutual Release and the Allonge on June 14.

Testimony about a series of emails and telephone calls and messages that were exchanged on June 14th demonstrates the miscommunication which was happening between Mr. Lyman and Ms. Gray’s counsel. Mr. Lyman testified that obtaining a release from Ms. Gray was critical to his client, but his emails do not mention the importance of signed releases. Unfortunately, Ms. Gray’s attorney did not know that she had signed the Settlement Agreement and Mutual Release on June 6, 2013 (when she received a copy of the Allonge in the mail) and therefore he did not communicate to Mr. Lyman that a signed Agreement existed. Ms. Gray moved out of the apartment on June 15th, but June 15th passed without signed Settlement Agreements and Mutual Releases being exchanged by the parties. Unfortunately, June 15th was a Saturday.

Mr. Feliciano demanded the return of his $4,000 from Mr. Lyman on June 17, 2013 and Mr. Lyman testified that he felt that he had no choice but to return his client’s funds because he was not aware that both parties had signed separate Settlement Agreements and Mutual Releases. He testified that he believed that signed releases by June 15th were a part of the agreement and this belief is supported by Ms. Gray’s testimony (“…any liability from either party was going to be released prior to that date…”) He testified that he believed a signed agreement would have created an escrow arrangement but that otherwise, the $4,000 was his client’s money. Ms. Gray’s attorney testified that he does not remember using escrow language in their conversation, but that Mr. Lyman “was going to hold his client’s money to show good faith in proceeding with the deal.”

Ms. Gray’s attorney helped her to prepare the Attorney Grievance Complaint Form (Board Exhibit #1) naming Mr. Lyman as Respondent (signed on July 10, 2013), but she hired a new attorney to complete the agreement that had been negotiated on April 25, 2013. She received the benefits negotiated in the Agreement, except that she did not have the benefit of the early payment of $3,600 and she paid her new attorney $3,000.

M.R.Prof. Conduct 1.15(e)

The Board alleges that Mr. Lyman violated M.R.Prof. Conduct 1.15(e) by returning his client’s money to him when Ms. Gray claimed an interest in the funds. By June 15, 2013, the parties had taken steps to follow through with the April 25, 2013 oral agreement – Mr. Feliciano had set aside money and Ms. Gray had moved out of her apartment. But, as affirmed by Ms. Gray, a part of the agreement was that liability was to have been released by that date. Because of confusion not wholly caused by Mr. Lyman, to the best of Mr. Lyman’s knowledge, releases of liability did not occur by June 15. He believed that Mr. Feliciano had the right to demand the return of his money. M.R.Prof. Conduct 1.15(d) would require prompt delivery of funds to which he was entitled. However, because of her counsel’s representations on June 14, 2013, Mr. Lyman was also aware that Ms. Gray was claiming an interest in the funds he was holding. M.R.Prof. Conduct 1.15(e) required that he protect the funds until the matter was resolved.

M.R.Prof. Conduct 4.1 and M.R.Prof. Conduct 4.2

The panel finds that Bar Counsel did not meet its burden of proof to establish by a preponderance of the evidence that Mr. Lyman engaged in misconduct subject to sanction under Maine Rule of Professional Conduct 4.1 or Maine Rule of Professional Conduct 4.2.

M.R.Prof. Conduct 8.4

The Board alleges that Mr. Lyman’s conduct violates Maine Rule of Professional Conduct 8.4. Ms. Gray’s counsel testified that he felt that he had been fooled by Mr. Lyman and that the lawyers had bound their clients to follow through with the negotiated agreement. Ms. Gray’s counsel relied on statements like Mr. Lyman’s June 14, 2013 3:13 p.m. email indicating, “I am holding the $3,600 in my Client Trust Account but that, of course, will not be released until she moves out tomorrow. As I have previously stated, Mr. Feliciano agrees with your draft Release…” (Board Exhibit #12) By not emphasizing the critical need for a signed release by June 15, 2013 in the email communication and then breaking the trust that was placed in him by Ms. Gray’s attorney by releasing the funds to which Ms. Gray was claiming an interest, Mr. Lyman has engaged in conduct that was prejudicial to the administration of justice.

Based upon the petition, admitted exhibits, and testimony presented at the hearing, pursuant to M. Bar R. 7.1, the panel concludes that misconduct subject to sanction has occurred in the violation of M.R.Prof. Conduct 1.15(e) and M.R.Prof. Conduct 8.4. The panel finds that an appropriate sanction in this matter would be dismissal with a warning pursuant to M. Bar R. 7.1(e)(3)(B):

  • because the misconduct was minor in the context of the confusion and miscommunications between the parties and Mr. Lyman’s sincere belief that his client was entitled to the return of his funds because, to the best of his knowledge, the liabilities had not been released by June 15, 2013;
  • because Mr. Lyman’s conduct was not the sole or even the predominant cause of Ms. Gray’s injuries and it was not the sole cause of the breakdown in trust between the attorneys; and
  • because there is little likelihood of repetition in that Mr. Lyman acknowledged his mistakes in not scheduling a meeting of the parties to exchange documents before June 15, 2013, in that he is now more familiar with Rule 1.15(e) and in that he is less likely to face circumstances of an incomplete agreement again.

As a result, based upon the above-described professional misconduct, the Panel now issues the sanction of a public non-disciplinary dismissal with a warning upon Steven J. Lyman, Esq. pursuant to M. Bar R. 7.1(e)(3)(B).

Grievance Panel A

Sarah McPartland-Good, Esq., Acting Chair

Cynthia M. Mehnert, Esq.


Public Member Norman Ross feels that the appropriate resolution would be a public reprimand because of the clear violation of M.R.Prof.Conduct 1.15(e). Mr. Lyman knew that there was a dispute over how the $3,600 would be distributed, and he used poor judgment in releasing it ($4,000) to Mr. Feliciano. He testified in the hearing that he wished he had not done so. Ms. Gray as a result felt betrayed and went for several months and further personal expense to retrieve those funds. Ms. Gray should expect that an attorney licensed in the State of Maine would use forcefulness and wisdom in controlling the progress of her situation, in this case to minimize the consequences of her impatience and that of the one who wanted her out of “his” apartment. Mr. Lyman used misdirected focus and ignorance of his code of conduct.

Norman Ross, Public Member