The opinion
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Disciplinary Counsel v. Cannata and Phillips, Slip Opinion No. 2016-Ohio-3027.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2016-OHIO-3027
DISCIPLINARY COUNSEL v. CANNATA.
DISCIPLINARY COUNSEL v. PHILLIPS.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Disciplinary Counsel v. Cannata and Phillips, Slip Opinion
No. 2016-Ohio-3027.]
Attorneys—Misconduct—Violations of the Rules of Professional Conduct,
including conflict-of-interest violations—Conditionally stayed six-month
suspension.
(No. 2015-1316—Submitted December 2, 2015—Decided May 18, 2016.)
ON CERTIFIED REPORT by the Board of Professional Conduct of the Supreme
Court, No. 2014-091.
_______________________
Per Curiam.
{¶ 1} Respondent Sam Patrick Cannata of Cleveland, Ohio, Attorney
Registration No. 0078621, was admitted to the practice of law in Ohio in 2005.
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Respondent Gerald Wayne Phillips of Avon Lake, Ohio, Attorney Registration No.
0024804, was admitted to the practice of law in Ohio in 1977.
{¶ 2} In December 2014, a probable-cause panel of the Board of
Commissioners on Grievances and Discipline certified to the full board two
separate three-count complaints filed by relator, disciplinary counsel, against
Cannata and Phillips. Relator alleged that a co-counsel arrangement between
Cannata and Phillips, which included the representation of limited-liability
companies in which Cannata was a member, created conflicts of interest and falsely
created the impression that the two attorneys were practicing law in a partnership,
in violation of the Rules of Professional Conduct.
{¶ 3} In January 2015, the chairperson of the board, now known as the
Board of Professional Conduct, see Gov.Bar R. V(1)(A), 140 Ohio St.3d CII,
consolidated the cases against Cannata and Phillips for a hearing. The panel
appointed to hear the matter unanimously rejected the parties’ timely consent-to-
discipline agreements in order to obtain clarification of certain issues at a final
hearing.
{¶ 4} Before the hearing, the parties submitted stipulations of fact,
misconduct, and mitigation that mirrored their consent-to-discipline agreements,
and relator agreed to dismiss several alleged violations with respect to each
respondent. The parties recommended that Cannata and Phillips be suspended from
the practice of law for six months, all stayed on the condition that they engage in
no further misconduct.
{¶ 5} After hearing testimony from Cannata and Phillips, the panel issued a
report that largely adopted the parties’ stipulations and their recommended
sanction. The board adopted the panel report in its entirety. Although Phillips
initially objected to the board’s findings of fact and recommended sanction, he
ultimately withdrew those objections.
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{¶ 6} We adopt the board’s findings and recommendation and suspend
Cannata and Phillips from the practice of law in Ohio for six months, with the entire
suspension stayed on the condition that they engage in no further misconduct.
Misconduct
Count One
Creating False Impression that Attorneys Are Practicing as a Law Firm
{¶ 7} After graduating from the United States Air Force Academy, serving
on active duty in the Air Force, and obtaining a master’s degree in business
administration from Rensselaer Polytechnic Institute, Cannata returned to
Cleveland in 1993 and started a construction business. He branched out into
housing and commercial real-estate development before he attended and graduated
from the Cleveland Marshall College of Law in 2002. He continued his business
career after completing law school and devoted only 20 to 30 percent of his
professional time to his solo legal practice. Because of his business contacts,
Cannata was able to attract legal business that required more legal experience and
expertise than he possessed, so he began to refer certain matters to Phillips, a more
experienced lawyer, and worked with him as co-counsel.
{¶ 8} In 2009, Cannata and Phillips entered into a written co-counsel
agreement that established how they would divide their fees on their co-counsel
cases, provided that they would maintain their separate practices of law in their
separate offices, and stated that nothing about the co-counsel relationship would
“establish * * * any other relationship, including without limitation a partnership,
a professional association, or a law firm.” At the same time, they filed articles of
organization for a limited-liability company called Cannata Phillips, L.P.A., L.L.C.,
in which they represented that they were a law firm, and Cannata created a website
for the company that appeared to represent that he and Phillips were members of a
law firm. Phillips testified that they did not intend to operate as a law firm and that
he intended for the filing to provide public notice that he would not be bound by
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Cannata’s other liabilities. From 2009 through 2011, Cannata and Phillips shared
approximately $140,000 in legal fees.
{¶ 9} Consistent with the parties’ stipulations, the board found that by
forming Cannata Phillips, L.P.A., L.L.C., Cannata and Phillips created the
appearance that they were practicing in a partnership or firm when that was not
their intention and that they therefore violated Prof.Cond.R. 7.5(d) (permitting
lawyers to state or imply that they practice in a partnership or other organization
only when that is the fact).
{¶ 10} But because the evidence did not demonstrate an intention to create
a partnership or firm within the meaning of Prof.Cond.R. 1.10(a), the board adopted
the parties’ recommendation that we dismiss alleged violations of that rule,
imputing a lawyer’s conflicts of interest to all members of the lawyer’s law firm,
with respect to both respondents in accordance with their stipulations. See
Prof.Cond.R. 1.10, Comment [1] (stating that whether two or more lawyers
constitute a firm can depend on the specific facts).
Conflicts of Interest in an Eviction Proceeding
{¶ 11} Cannata formed several real-estate- and property-management
companies with David Snider in the mid-1990s. Those companies owned and
operated several properties in Northeast Ohio. Snider also owned various
businesses in whole or in part, and Phillips rendered legal services for some of those
entities.
{¶ 12} A significant downturn in the real-estate market in 2008 had a
negative effect on the businesses owned by Cannata, Snider, and their spouses. A
dispute arose in their business relationship that reached an impasse in 2012, and the
conduct of Cannata and Phillips during that impasse is at the heart of this
disciplinary case.
{¶ 13} Vista Way Partners, L.P.A., was a limited-liability company that in
2012 was equally but indirectly owned by the wives of Cannata and Snider.
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January Term, 2016
Various Cannata/Snider businesses, including Snider Cannata Property
Management, L.L.C. (“SCPM”), in which Cannata and Snider each owned a 50
percent interest, housed their headquarters in property they rented from Vista Way.
In July 2012, Snider unilaterally locked Cannata out of the premises, removed the
company computer server and records from the premises, and allegedly withdrew
approximately $160,000 from various company bank accounts—all without
Cannata’s consent. And because SCPM had not paid rent to Vista Way for 43
months, Cannata, acting as the co-manager of Vista Way, sought to evict SCPM
from the premises in order to rent the premises to a paying tenant. At Cannata’s
request, Phillips filed a complaint on behalf of Vista Way against SCPM in the
Cuyahoga County Court of Common Pleas on July 13, 2012.
{¶ 14} Simultaneously with the filing of the complaint alleging breach of
the lease agreement and seeking to evict SCPM from the premises, Cannata filed a
waiver of service in which he acknowledged that SCPM had already received a
copy of the complaint. And four minutes after the complaint was filed, he filed an
answer admitting that SCPM had breached the lease but denying other allegations.
Cannata and Phillips submitted a stipulated judgment entry of eviction to the court,
but the judge never signed it. Snider and Cannata ultimately reached an agreement
concerning the leased premises, and the eviction proceeding was dismissed just five
days after it was filed.
{¶ 15} At the panel hearing, Cannata and Phillips acknowledged that
although the SCPM operating agreement provided that the members had “equal
rights in the management of the business,” they acted without the consent of Snider
or his wife. In retrospect, they conceded that the Sniders’ consent was required.
The board found that Cannata’s actions in unilaterally filing an answer and
stipulated judgment entry on behalf of a business entity that was jointly owned by
his wife and Snider’s wife (and that he co-managed) against the business he jointly
owned with Snider clearly conflicted with his fiduciary duty to the Sniders. The
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board also found that Phillips’s co-counseling and mentoring relationship with
Cannata materially limited his objectivity toward the Sniders, who owned 50
percent of each of the litigants in the eviction proceeding. Therefore, the board
found that Cannata and Phillips violated Prof.Cond.R. 1.7(a)(2) (providing that a
lawyer’s continued representation of a client creates a conflict of interest if there is
a substantial risk that the lawyer’s ability to represent the client will be materially
limited by the lawyer’s responsibilities to another client, former client, or third
person or by the lawyer’s own personal interests).
{¶ 16} Based on the insufficiency of the evidence, however, the board
recommends that we dismiss alleged violations of Prof.Cond.R. 8.4(d) (prohibiting
a lawyer from engaging in conduct that is prejudicial to the administration of
justice) with respect to both respondents and Prof.Cond.R. 8.4(h) (prohibiting a
lawyer from engaging in conduct that adversely reflects on the lawyer’s fitness to
practice law) with respect to Cannata.
{¶ 17} We adopt the board’s findings of fact and agree that Cannata and
Phillips violated Prof.Cond.R. 1.7(a)(2) and 7.5(d). We also dismiss the alleged
violations of Prof.Cond.R. 1.10(a) and 8.4(d) with respect to both respondents and
8.4(h) with respect to Cannata.
Count Two
{¶ 18} In their stipulations, the parties agreed to dismiss the alleged
violations in Count Two of the complaints against Cannata and Phillips and
presented no evidence or argument regarding these allegations. We therefore
dismiss Count Two with respect to both respondents.
Count Three: Conflicts of Interest in a Dissolution Matter
{¶ 19} Relator alleged that both Phillips and Cannata had conflicts of
interest arising from their legal representation of various entities in the dissolution
of Bridgeview Center South, L.L.C. (“BCS”), an Ohio limited-liability company
owned by Snider Interests, L.L.C., and Cannata-Infinity, L.L.C. Phillips’s conflict
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January Term, 2016
arose from his representation of Snider Interests, L.L.C., in a foreclosure case and
his representation of the party opposing Snider Interests, L.L.C., in the BCS
dissolution matter. Cannata’s conflict arose when, after being disqualified as
counsel in the BCS dissolution, he violated a court order—that he represent no party
other than himself in that action—when he filed pleadings not only on behalf of
himself but also on behalf of Cannata-Infinity, L.L.C.
{¶ 20} In March 2009, Cannata and Snider retained Phillips to represent
96th Street Development, L.L.C. (“96th Street”), a company in which they both had
ownership interests, in connection with an anticipated foreclosure filing against the
company by Bank of America. As part of that representation, Phillips was to
prepare certain mortgages for money that 96th Street owed on intercompany
accounts to other related entities, including Snider Interests, L.L.C., which was
owned by the Sniders. Phillips prepared and recorded the mortgages, defended 96th
Street in the foreclosure action, and filed cross-claims asserting the mortgage-
security interests of the mortgages he had recorded.
{¶ 21} In 2010, the mortgage obligations based on the intercompany
accounts were either written off as capital contributions or fully satisfied. Phillips,
however, remained as counsel of record for 96th Street and the cross-claimants
(including Snider Interests, L.L.C.) until late 2012.
{¶ 22} On June 27, 2012, Phillips filed a complaint on behalf of Cannata-
Infinity, L.L.C., seeking to dissolve BCS on the ground of management deadlock.
Phillips was required by statute to name Snider Interests, L.L.C., as a defendant in
the action because it had an ownership interest in BCS. But at that time, Phillips
was still counsel of record in the 96th Street foreclosure action for (1) 96th Street
(partially owned by Snider), (2) cross-claimant BCS, and (3) cross-claimant Snider
Interests, L.L.C. Phillips admitted that his simultaneous representation of Snider
Interests, L.L.C., in the 96th Street foreclosure, and his filing against Snider
Interests, L.L.C., in the BCS dissolution action created a conflict. At the panel
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hearing, he testified that at the time he filed the complaint to dissolve BCS, he
thought that his representation of Snider Interests, L.L.C., in the 96th Street
litigation was a limited engagement that did not include the receipt of any
confidential information. He also explained that he considered his representation
in the BCS dissolution to be nonadversarial because all parties were in agreement
that there was a management deadlock that necessitated statutory dissolution.
{¶ 23} The board found that relator had proven by clear and convincing
evidence that Phillips’s conduct in this matter violated Prof.Cond.R. 1.7(a)(2). But
it recommended that we adopt the parties’ stipulation to dismiss an alleged violation
of Prof.Cond.R. 1.7(a)(1) (prohibiting a lawyer’s continued representation of a
client if the representation of that client will be directly adverse to another client),
because even though Phillips remained counsel of record for Snider Interests,
L.L.C., the company’s mortgage interest had been written off and charged as a
capital contribution. Thus, Phillips’s representation was effectively terminated
before Phillips filed the BCS corporate dissolution.
{¶ 24} Less than two weeks after Cannata and Phillips filed the complaint
on behalf of Cannata-Infinity, L.L.C., to dissolve BCS, the Sniders filed a statutory-
dissolution proceeding to dissolve various Cannata/Snider business entities
including BCS, Vista Way, and SCPM on the basis of the management deadlock.
Shortly thereafter, the court consolidated the two dissolution proceedings and
ordered the appointment of a receiver for BCS to wind up the affairs of the
company.
{¶ 25} On October 3, 2012, the court granted a motion of Snider Interests,
L.L.C., to disqualify Cannata and Phillips as counsel and issued an order stating,
“The Court finds the motion to disqualify counsel to be well taken and it is hereby
granted. Gerald Phillips and Sam Cannata are disqualified as counsel and shall not
represent any party in the above-captioned consolidated matters. (Sam Cannata is
a party to the case and is permitted to represent himself pro se.)” But Cannata
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continued filing pleadings on behalf of himself or Cannata-Infinity, L.L.C., after
the court issued that order.
{¶ 26} Cannata stipulated that he believed his filings were germane to his
role as a party or were intended to represent his individual membership in Cannata-
Infinity, L.L.C., pro se. He did not regard this conduct as being inconsistent with
or otherwise in violation of the court’s order until he received a show-cause motion,
at which time he ceased filing documents on behalf of Cannata-Infinity, L.L.C.
Cannata stipulated and the board found that he violated Prof.Cond.R. 1.7(c)(1)
(prohibiting a lawyer from accepting or continuing a representation if a conflict of
interest is created, even with client consent, if the representation is prohibited by
law) by continuing to represent Cannata-Infinity, L.L.C., after the court had
disqualified him from representing any party other than himself. Relator and
Cannata stipulated to the dismissal of an alleged violation of Prof.Cond.R. 3.4(c)
(prohibiting a lawyer from knowingly disobeying an obligation under the rules of
a tribunal), and the board recommends that we adopt their stipulation, because
Cannata did not knowingly violate the court’s order.
{¶ 27} We adopt the board’s findings of fact with respect to Count Three of
relator’s complaints and find that Phillips violated Prof.Cond.R. 1.7(a)(2) and
Cannata violated Prof.Cond.R. 1.7(c)(1). We also dismiss the alleged violation of
Prof.Cond.R. 1.7(a)(1) with respect to Phillips and Prof.Cond.R. 3.4(c) with respect
to Cannata.
Sanction
{¶ 28} When imposing sanctions for attorney misconduct, we consider
relevant factors, including the ethical duties the lawyer violated and the sanctions
imposed in similar cases. Stark Cty. Bar Assn. v. Buttacavoli, 96 Ohio St.3d 424,
2002-Ohio-4743, 775 N.E.2d 818, ¶ 16. In making a final determination, we also
weigh evidence of the aggravating and mitigating factors listed in Gov.Bar R.
V(13). Disciplinary Counsel v. Broeren, 115 Ohio St.3d 473, 2007-Ohio-5251,
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875 N.E.2d 935, ¶ 21. Although the board consolidated these matters for hearing,
it considered these factors separately for each respondent. To the extent that those
factors are the same, however, we address them together.
{¶ 29} The only aggravating factor the board found was that both Cannata
and Phillips committed multiple ethical violations. See Gov.Bar R. V(13)(B)(4).
As for mitigating factors, the parties stipulated and the board found that Cannata
and Phillips have no prior disciplinary record, made full and free disclosure to the
disciplinary board and exhibited a cooperative attitude toward the proceedings, and
submitted evidence of their good character and reputation. See Gov.Bar R.
V(13)(C)(1), (4), and (5). Additionally, the board found that Cannata and Phillips
did not act with a dishonest motive and that they have acknowledged the wrongful
nature of their misconduct. See Gov.Bar R. V(13)(C)(2).
{¶ 30} The board considered a number of cases in which we sanctioned
attorneys for similar rule violations. It found numerous cases in which we publicly
reprimanded attorneys whose only misconduct consisted of engaging in legal
representation in which the attorneys had a conflict of interest. See, e.g., Ohio State
Bar Assn. v. Wick, 116 Ohio St.3d 193, 2007-Ohio-6042, 877 N.E.2d 660;
Mahoning Cty. Bar Assn. v. Reid, 102 Ohio St.3d 402, 2004-Ohio-3121, 811 N.E.2d
542.
{¶ 31} In other cases, we have imposed fully stayed suspensions for
conflict-of-interest violations. See, e.g., Disciplinary Counsel v. Dettinger, 121
Ohio St.3d 400, 2009-Ohio-1429, 904 N.E.2d 890 (imposing a stayed six-month
suspension on an attorney who accepted a loan from a client without disclosing the
attendant risks of their conflicting interests); Disciplinary Counsel v. McNamee,
119 Ohio St.3d 269, 2008-Ohio-3883, 893 N.E.2d 490 (adopting a consent-to-
discipline agreement and imposing a stayed one-year suspension on an attorney
who represented multiple parties to a business venture in which he also had a
significant financial interest, failed to make proper disclosures to his clients, and
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continued his representation when the alliance had begun to unravel and it became
likely that he would be called as a witness).
{¶ 32} We have also imposed fully stayed suspensions on attorneys who
have falsely stated or implied that they practice in a partnership, in conjunction with
other ethical violations. See, e.g., Disciplinary Counsel v. Henderson, 95 Ohio
St.3d 129, 2002-Ohio-1756, 766 N.E.2d 590 (imposing a stayed six-month
suspension on an attorney who used letterhead that falsely implied that he and
another attorney with whom he shared office space were partners and made false
statements to a bankruptcy court regarding the compensation he had received from
a bankruptcy client); Disciplinary Counsel v. Conese, 102 Ohio St.3d 439, 2004-
Ohio-3888, 812 N.E.2d 944 (imposing a stayed two-year suspension on an attorney
who failed to obtain client consent to an attorney-fee-sharing arrangement and used
letterhead that falsely suggested that he and his brother practiced as a partnership);
Cleveland Metro. Bar Assn. v. Schiff, 139 Ohio St.3d 456, 2014-Ohio-2573, 12
N.E.3d 1207 (imposing a stayed two-year suspension on an attorney who neglected
a client matter, failed to keep the client reasonably informed about the status of the
matter, used a fee contract that falsely implied that his co-counsel was a member of
his law firm, and failed to disclose the manner in which his fees would be divided).
{¶ 33} The parties in this case recommended that Cannata and Phillips be
suspended from the practice of law for six months, all stayed on the condition that
they engage in no further misconduct. Although the board believed that a public
reprimand may have been the appropriate sanction for any of the individual rule
violations, it concluded that the cumulative effect of multiple violations weighed in
favor of a fully stayed suspension. Noting that the mitigating factors outweighed
the aggravating factor and that neither respondent was likely to commit further
misconduct, the board adopted the parties’ recommended sanction.
{¶ 34} Having considered the conduct at issue, the applicable aggravating
and mitigating factors, and the sanctions imposed for comparable misconduct, we
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agree that a six-month suspension, fully stayed on the condition that Cannata and
Phillips engage in no further misconduct, is the appropriate sanction in this case.
{¶ 35} Accordingly, Sam Patrick Cannata and Gerald Wayne Phillips are
suspended from the practice of law for six months, all stayed on the condition that
they engage in no further misconduct. If either Cannata or Phillips engages in
further misconduct, the stay of his suspension will be lifted and he will serve the
full six-month suspension. Costs of these proceedings are assessed jointly and
severally against Cannata and Phillips.
Judgment accordingly.
O’CONNOR, C.J., and PFEIFER, O’DONNELL, LANZINGER, KENNEDY,
FRENCH, and O’NEILL, JJ., concur.
_________________
Scott J. Drexel, Disciplinary Counsel, and Donald M. Scheetz, Assistant
Disciplinary Counsel, for relator.
Montgomery, Rennie & Jonson, L.P.A., George D. Jonson, and Kimberly
Vanover Riley, for respondent Sam Patrick Cannata.
Gerald W. Phillips, pro se.
_________________
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