In the Matter of Diviacchi

NOTICE: All slip opinions and orders are subject to formal

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SJC-12025

IN THE MATTER OF VALERIANO DIVIACCHI.

November 2, 2016.

Attorney at Law, Disciplinary proceeding, Suspension, Contingent

fee agreement, Attorney-client relationship. Supreme

Judicial Court, Superintendence of inferior courts.

Administrative Law, Substantial evidence. Board of Bar

Overseers.

The respondent, Valeriano Diviacchi, appeals from an order

of a single justice of this court suspending him from the

practice of law for twenty-seven months, as recommended by the

Board of Bar Overseers (board). We affirm.

1. Procedural background. Bar counsel filed a petition

for discipline with the board, alleging that Diviacchi committed

the following violations of the Massachusetts Rules of

Professional Conduct:

(a) failure to explain to the client contingent fee

agreement provisions not contained in Forms A or B of Mass.

R. Prof. C. 1.5 (f), as appearing in 459 Mass. 1301 (2011),

and to obtain the client's informed consent to these

provisions, in violation of Mass. R. Prof. C. 1.5 (f);

(b) limitation of representation of the client, failure to

seek the client's lawful objectives, and failure to

represent the client competently and diligently, in

violation of Mass. R. Prof. C. 1.1, 426 Mass. 1308 (1998);

Mass. R. Prof. C. 1.2 (a), 426 Mass. 1310 (1998); and Mass.

R. Prof. C. 1.3, 426 Mass. 1313 (1998);

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(c) false statements of material fact to the United States

District Court and the Boston Municipal Court, in violation

of Mass. R. Prof. C. 3.3 (a) (1), 426 Mass. 1383 (1998);

and Mass. R. Prof. C. 8.4 (c), 426 Mass. 1429 (1998); and

(d) attempting to charge and collect a clearly excessive

fee, in violation of Mass. R. Prof. C. 1.5 (a), as

appearing in 459 Mass. 1301 (2011).1

Diviacchi denied any violation of the disciplinary rules.

After an evidentiary hearing, a hearing committee found all the

violations charged by bar counsel, found no mitigating factors

and several aggravating factors, and recommended that Diviacchi

be suspended from the practice of law for fifteen months. The

respondent appealed to the board, which adopted the hearing

committee's findings and made some additional findings. The

board filed an information in the county court recommending that

Diviacchi be suspended for twenty-seven months. After a

hearing, the single justice adopted the board's recommendation

and entered an order of term suspension.

2. Factual background. The single justice summarized the

following relevant findings made by the hearing committee and

the board, which we supplement with certain additional findings

of the hearing committee. On the recommendation of a mutual

acquaintance, a client contacted Diviacchi seeking

representation in a Federal action filed against her by a

lender. The lender alleged that the client had defaulted on a

construction loan and on a line of credit and owed approximately

$2.8 million. The client asserted a counterclaim against the

lender. Although the client had retained other counsel to

represent her in this action, rising legal fees motivated her to

seek new representation on a contingent fee basis.

The client consulted with Diviacchi, who agreed to

represent her on a contingent fee basis with an upfront payment

1

Subsequent to the filing of bar counsel's petition, the

Massachusetts Rules of Professional Conduct were amended. Those

amendments did not significantly change the rules at issue in

this matter. See Mass R. Prof C. 1.1, as appearing in 471 Mass.

1311 (2015); Mass. R. Prof. C. 1.2 (a), as appearing in 471

Mass. 131 (2015); Mass. R. Prof. C. 1.3, as appearing in 471

Mass. 1318 (2015); Mass. R. Prof. C. 1.5 (a), (f), as amended,

471 Mass. 1304 (2015); Mass. R. Prof. C. 3.3 (a) (1), as

appearing in 471 Mass. 1416 (2015); and Mass. R. Prof. C. 8.4

(c), as appearing in 471 Mass. 1483 (2015).

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in the amount of $25,000. Because the client could not pay that

amount in a lump sum, Diviacchi agreed to accept $15,000 up

front. Diviacchi presented the client with a contingent fee

agreement providing that "[t]he claim, controversy, and other

matters with reference to which the services are to be performed

are SOVEREIGN BANK v. [CLIENT] & COUNTERCLAIM." It further

provided that "[t]he contingency upon which compensation is to

be paid is: recovery by judgment or settlement or otherwise."

Modifying the language provided in the forms appearing in

Mass. R. Prof. C. 1.5 (f), the contingent-fee agreement stated

the following: "Client is responsible for any amount owed to

prior or other counsel not associated with the undersigned.

CLIENT IS TO RECEIVE A CREDIT FOR A NON-REFUNDABLE FLAT RATE

PAYMENT OF $15,000 PAID NOW AND $10,000 STILL DUE." Diviacchi

made additional modifications to the contingent fee agreement

which, according to the board, "favor[ed] [Diviacchi] in any

attempt to collect fees and expenses from the client if the

relationship [was] terminated or if the client obtain[ed] a non-

monetary compensation or no money." The client "looked the

agreement over quickly; [Diviacchi] did not review the agreement

with her paragraph by paragraph; he did not explain to the

client the provisions and wording he had added; and he did not

obtain her informed consent in writing to the modifications he

had made."

Diviacchi entered his appearance in the Federal litigation

on May 8, 2012 and filed an amended counterclaim and an

emergency motion for a thirty-day stay in view of his plans to

be out of State for approximately two weeks. The board found

the amended counterclaim to be "only marginally different from

the one filed by the client's prior counsel." The amended

counterclaim asserted claims under G. L. c. 93A, § 9, and State

common law, and it included, among other things, a request for

an injunction preventing the lender from foreclosing on the

client's property. Nonetheless, although the client requested,

on multiple occasions, that Diviacchi try to stop the scheduled

foreclosure of her property because she wanted to end the matter

with a short sale, Diviacchi refused to do so. Consequently,

the client hired another attorney, Harold Jacobi, who filed a

limited appearance to enjoin the foreclosure. The court denied

the client's emergency motion for injunctive relief, and, with

Jacobi representing her as her principal counsel on that matter,

the client appealed to the United States Court of Appeals for

the First Circuit.

4

On May 23, 2012, the client contacted Diviacchi with an

inquiry about filing for bankruptcy. In response, Diviacchi

strongly advised the client against this, indicating that such

action would not be beneficial. He specifically told the client

to "[t]alk to whatever idiot attorney told [her] to file for

bankruptcy." Nevertheless, the client filed for bankruptcy,

which stayed the impending foreclosure for approximately two

months.

Meanwhile, on May 29, 2012, the First Circuit notified

counsel of record, including Diviacchi, of a "Mandatory Pre-

Argument Settlement Conference" scheduled for July 12, 2012.

Diviacchi informed Jacobi that he expected him to "handle the

First Circuit matters." Diviacchi did not attend the July 12

mediation and did not provide any input to Jacobi.

In June, 2012, Diviacchi filed an opposition to the

lender's motion to dismiss the counterclaim. The board found

that "[t]hereafter, [Diviacchi] did no work of substance on the

client's case and filed nothing further on her behalf in

[F]ederal court."

After refusing to meet with the client between May 29 and

July 12,2 Diviacchi sent an electronic mail (e-mail) message to

her asking that she make "'the remaining flat rate payment' by

the end of July" and threatening to file an attorney's lien if

she did not do so. The client wrote in response: "I was not

aware there was a deadline on that payment, especially since I

thought it was related to costs." Diviacchi then informed the

client, for the first time, that this payment "ha[d] been past

due for months." The client begged Diviacchi not to file for

the lien as she awaited a sale and settlement. She also

indicated that she needed to discuss with him what had happened

at the mediation. Nonetheless, Diviacchi filed a notice of lien

on July 17, 2012, and agreed to meet with the client the next

day. At this meeting, the client revealed "disturbing"

information from the mediation, the nature of which the record

does not disclose. In response, Diviacchi ordered the client to

leave his office and threatened to telephone the police if she

did not do so immediately. At the hearing before the hearing

committee, Diviacchi testified that he considered her a

trespasser at that point and acknowledged that he did in fact

call the police. The committee found that Diviacchi's actions

2

Diviacchi wrote to the client, "I was not hired to stop

any [foreclosure] sale, my job is to handle the lender liability

case."

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on this occasion effectively ended the attorney-client

relationship.

With Jacobi now acting as the sole counsel for the client

in the underlying Federal court action, the client and the

lender reached a settlement. The settlement agreement,

finalized on July 20, 2012, specified the following terms:

"The client would sell the property to a buyer who had

offered $2.24 million, and the lender would accept $1.9

million in total satisfaction of its claims against her.

The property was to be sold on or before September 5, 2012,

and the litigation was to be stayed through that date. The

client would pay off the junior lienholders. The lender's

suit and the client's counterclaim would both be dismissed

with prejudice. The lender and the client would exchange

mutual releases, as a result of which the lender would pay

no money to the client."

The client received no net funds from the lender, but only from

the third-party buyer. The hearing committee found that the

client's contingent fee agreement with Diviacchi did not

anticipate or cover this contingency.

Jacobi represented the client again at the September 5,

2012, closing. The following day, he signed a stipulation of

dismissal of the Federal litigation on the client's behalf. The

same day, he and the client informed Diviacchi that the matter

was resolved and that, following the payment of the junior

lienholders and other necessary payments, "the client had

received no net funds." Diviacchi "accused Jacobi of ignoring

his lien and threatened to do discovery on it and seek a jury

trial." On September 14, 2012, the client filed a grievance

with the board. She referenced Diviacchi's threats and

challenged his claim that she owed $10,000. She also inquired

whether the board had a fee dispute group that could assist in

handling the matter. Diviacchi was notified of the grievance.

Before responding to the grievance, Diviacchi filed State

and Federal actions against the client. Around September 17,

2012, he filed a complaint against the client in the Boston

Municipal Court (BMC), seeking to recover $10,000 under the

contingent fee agreement and quantum meruit for sixty hours that

he claimed to have spent on the client's Federal court matter.

Diviacchi stated in a verified complaint, signed under oath,

that the client "specifically told [Diviacchi] that she agreed

to the flat rate payment of $25,000 and would bring such payment

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to the meeting. That was the first lie told by [the client] to

[Diviacchi]; she did not bring the full agreed upon flat rate

amount but only $15,000 of such amount"; and violated the fee

agreement by settling the Federal case without "notice and

completely behind [Diviacchi's] back."

The hearing committee found these allegations to be

knowingly false. It also found them to be material to

Diviacchi's requests for relief in that they portrayed the

client as a liar in a case where her credibility would be at

issue. As to the allegation that the client settled the case

"behind [Diviacchi's] back," the hearing committee pointed out

that Diviacchi knew about the mediation and expressly refused to

attend and that both the client and Jacobi continued to inform

him about the settlement negotiations.

Diviacchi also filed an ex parte motion for real estate

attachment for $10,000, the amount he claimed to be due on the

agreed sum for costs. The motion repeated the same allegations

regarding the client's breach of the fee agreement.

Around September 23, 2012, Diviacchi filed an "Attorney's

Motion to Enforce Attorney's Lien Against all Parties" in

Federal court. He sought $96,483.33 in attorney's fees from the

client, arguing that since the bank had accepted $1.9 million

from her in lieu of the $2.24 million sales price of her home,

she had "received" $340,000 and, based on the contingency fee

agreement, he was entitled to one-third of that amount minus her

upfront $15,000 payment, plus costs.3 He reiterated the two

allegations made in his BMC complaint. Around September 24,

3

The hearing committee noted an error in Diviacchi's

calculations, stating that "thirty-three percent of [$340,000]

is $112,200" and that this amount less the $15,000 already paid

by the client is $97,200. Diviacchi claims that this itself is

a mathematical error and accuses the board and the single

justice of inattention to detail in accepting the hearing

committee's calculation. The hearing committee's arithmetic is

correct, but it is based on a contingent fee amount of "thirty-

three percent" rather than one-third. One-third of $340,000,

rounded to the nearest penny, is $113,333.33; that amount less

$15,000 is $98,333.33. It remains unclear how Diviacchi arrived

at the figure he claimed. In any event, in the circumstances of

this case, these slight differences in the calculation of the

claimed fee are not material to the question whether it is

excessive.

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2012, Diviacchi filed an amended complaint in the BMC, repeating

all the claims made above.

On April 2, 2013, Diviacchi filed a "Conditional Motion to

Further Amend the Complaint and to Join Additional Defendants"

in the BMC. He supplemented previous allegations with the

following:

"Discovery has further revealed that such deceit by the

[client] is her standard habit and business routine for

dealing with attorneys. In the past ten years, [the

client] has had > 15 different attorneys represent her in a

half-dozen matters ranging from a divorce in probate court

to a lender liability action in [F]ederal court with the

same pattern: she hires an attorney, works him or her

until she stops paying the bill, fires that attorney and

disputes the bill and files a [board] complaint, and then

gets another attorney and starts the process again."

The hearing committee found these statements to be

knowingly false "[w]ith a few minor exceptions." In particular,

the hearing committee found that there was no evidence of the

alleged pattern of hiring an attorney, not paying the bill,

firing the attorney, and disputing the bill. There was also no

evidence that the client had filed any complaints with the

board, other than the one against Diviacchi. At the hearing,

Diviacchi was asked to provide the basis for these statements,

and he was unable to do so.

3. Proceedings below. Based on these findings, the

hearing committee and the board both concluded that Diviacchi's

conduct violated the rules of professional conduct as charged.

In particular, the hearing committee found that Diviacchi

(1) violated Mass. R. Prof. C. 1.5 (f) by entering into a

contingent fee agreement that included provisions not

contained in Form A or B without explaining these

provisions to the client and without obtaining her informed

consent, confirmed in writing;

(2) violated Mass. R. Prof. C. 1.1, 1.2 (a), and 1.3 by

refusing to further the client's lawful objective of

attempting to halt the foreclosure, a goal that he knew was

important to the client, because doing so would risk harm

to the predatory lending counterclaim which he hoped would

be the source of his fee, by refusing to meet and talk with

the client despite her begging, by refusing to participate

8

in settlement discussions, and by unilaterally limiting his

representation despite describing himself as "counsel of

record for all purposes" in his Federal court appearance;

(3) violated Mass. R. Prof. C. 3.3 (a) (1) and 8.4 (c) by

knowingly making false statements of material fact to both

the Federal court and the BMC, as detailed above; and

(4) violated Mass. R. Prof. C. 1.5 (a) by claiming in the

Federal court and the BMC that the client owed him

approximately $96,000 in attorney's fees, where no

contingency on which to ground such recovery had occurred

and where the attorney-client relationship had effectively

ended well before the sale of the house, a transaction in

which Diviacchi did not participate in any event.

The board upheld each of these conclusions, as did the single

justice.

In addition, the hearing committee found no factors in

mitigation and several in aggravation, including prior

discipline, Diviacchi's experience as an attorney, his

motivation of personal gain, his "unnecessarily combative and

vengeful" attitude toward the client,4 and his lack of remorse or

understanding of his misconduct. The board and the single

justice upheld these findings.

For this serious misconduct, the board recommended that

Diviacchi be suspended from the practice of law for twenty-seven

months.

4. Discussion. The case is now before us on Diviacchi's

preliminary memorandum, pursuant to S.J.C. Rule 2:23 (b), as

appearing in 471 Mass. 1303 (2015) (Appeals in Bar Discipline

Cases). That rule requires

"the appellant to demonstrate . . . that there has been an

error of law or abuse of discretion by the single justice;

that the decision is not supported by substantial evidence;

that the sanction is markedly disparate from the sanctions

imposed in other cases involving similar circumstances; or

4

This attitude is much in evidence in Diviacchi's

preliminary memorandum, which is replete with invective toward

the client, as well as disdain for the hearing committee and the

board.

9

that for other reasons the decision will result in a

substantial injustice."

Diviacchi has not carried his burden under the rule.

First, Diviacchi takes issue with the findings of fact. He

argues that the hearing committee improperly credited the

client's account of the facts over his own version. We will not

disturb the hearing committee's credibility determinations.

"The hearing committee . . . is the sole judge of credibility,

and arguments hinging on such determinations generally fall

outside the proper scope of our review." Matter of McBride, 449

Mass. 154, 161-162 (2007), citing Matter of Abbott, 437 Mass.

384, 394, (2002). See S.J.C. Rule 4:01, § 8 (5) (a), as

appearing in 453 Mass. 1310 (2009). "The subsidiary findings of

the hearing committee, as adopted by the board, 'shall be upheld

if supported by substantial evidence,' see S.J.C. Rule 4:01,

§ 18 (5), as appearing in 453 Mass. 1315 (2009), and the hearing

committee's ultimate 'findings and recommendations, as adopted

by the board, are entitled to deference, although they are not

binding on this court.'" Matter of Weiss, 474 Mass. 1001, 1001

n.1 (2016), quoting Matter of Ellis, 457 Mass. 413, 415 (2010).

Diviacchi further argues that documentary evidence in the

record supports his version of the facts. He has not shown,

however, that the record lacks substantial evidence in support

of the hearing committee's findings. Moreover, none of his

arguments on this point casts doubt on the key findings

establishing his violations of the rules of professional

conduct, including that he failed to explain his contingent fee

agreement to the client, failed to obtain her informed consent

before she signed it, refused to meet with her to discuss her

case, failed to pursue her lawful objectives, swore to false

statements of material fact in both State and Federal court, and

attempted to collect an excessive fee where he did minimal work

on the client's case and where the contingency did not occur.

Diviacchi's legal contentions fare no better. As to his

violations concerning the contingent fee agreement, see Mass. R.

Prof. C. 1.5 (f), he argues that the client was sophisticated

and that this should have been considered in determining whether

she had given informed consent. The rule, however, is clear

that "[a] lawyer who uses a form of contingent fee agreement

that contains provisions that materially differ from or add to

those contained in Forms A or B shall explain those different or

added provisions or options to the client and obtain the

client's informed consent confirmed in writing" (emphasis

added). Mass. R. Prof. C. 1.5 (f) (3). Diviacchi did not do

10

so. The rule makes no exceptions for clients of varying levels

of sophistication; it applies uniformly to all individual

clients.5

As to his violation of rule 1.5 (a) by attempting to charge

or collect an excessive fee, Diviacchi argues that the hearing

committee, board, and single justice all improperly evaluated

the fee with the benefit of hindsight rather than as of the time

the contingent fee agreement was executed. In the circumstances

of this case, however, Diviacchi's violation was not that the

fee contemplated by the agreement was unreasonable. The hearing

committee found that the contingency called for in the agreement

did not occur. The client recovered nothing on her

counterclaim. Any funds obtained by the client did not come

from her adversary in the Federal court litigation, but from the

third party to whom she sold the property, a transaction with

which Diviacchi did not assist. We agree with the committee,

board, and single justice that the fee agreement did not cover

this eventuality.

As to the violations of rules 1.1, 1.2, and 1.3, Diviacchi

argues that he simply declined to file motions and a petition

for bankruptcy that were, in his professional judgment,

meritless. The single justice found this argument unpersuasive,

as do we. The violations of these rules were not based merely

on his not filing any particular motion or petition, but on his

persistent refusal to take any action in furtherance of the

client's clear desire to avoid foreclosure. Moreover, he

refused to participate in settlement negotiations and refused to

meet with the client to discuss her case. We agree that

Diviacchi violated the rules as charged.

On a related point, Diviacchi complains that the hearing

committee made its determinations without regard for his

proffered expert testimony concerning the complexity of the

legal issues involved in the client's case. Putting aside his

intemperate remarks disparaging the hearing committee's

qualifications to decide this matter, it is clear that expert

testimony is not necessary to determine whether an attorney has

5

On a related point, Diviacchi argues that the rule

improperly requires that deviations from the model forms be

explained to an individual client but not to a client that is an

organization. Mass. R. Prof. C. 1.5 (f) (4). The rule exists

for the protection of clients, and we reject the assertion that

there is no rational basis to provide greater protection to

individual clients than to organizational clients.

11

violated the rules of professional conduct. See Matter of

Crossen, 450 Mass. 533, 570 (2008), quoting Fishman v. Brooks,

396 Mass. 643, 650 (1986) ("'[e]xpert testimony concerning the

fact of an ethical violation is not appropriate' in bar

discipline proceedings because the fact finder does not need

assistance understanding and applying the ethical rules"). In

any event, even accepting Diviacchi's representations that the

client's case involved "convoluted and esoteric issues of lender

liability law," the charge against Diviacchi was not that he

lacked the ability to handle such issues competently, but that

he wilfully disregarded his client's interests. Similarly, the

asserted complexity of the issues has no bearing on whether

Diviacchi was entitled to collect a contingent fee where the

contingency did not occur.

As to his violations of rules 3.3 and 8.4 by making sworn

false statements to court, Diviacchi maintains, without citation

to authority, that his statements should be evaluated under a

subjective, good faith basis standard. That is not the law.

"[A]n assertion purporting to be on the lawyer's own knowledge,

as in an affidavit by the lawyer or in a statement in open

court, may properly be made only when the lawyer knows the

assertion is true or believes it to be true on the basis of a

reasonably diligent inquiry" (emphasis added). Mass. R. Prof.

C. 3.3 comment 2.6 Diviacchi's false allegations about the

client's supposed "standard habit and business routine of

dealing with lawyers" were made on his own behalf and

purportedly on his own personal knowledge. The allegations were

found by the committee to be false. Diviacchi has offered no

evidence that he conducted a reasonably diligent inquiry prior

to making them.

Diviacchi also complains that a hearing committee member

was absent for a portion of the hearing. As the single justice

noted, § 3.7 (c) of the Rules of the Board of Bar Overseers

permits a hearing to proceed in the absence of any member of the

committee so long as a quorum is present. We perceive no

violation of due process in this procedure.

Finally, as to the proper sanction, a suspension of twenty-

seven months is not "markedly disparate from the sanctions

imposed in other cases involving similar circumstances,"

particularly those in which attorneys made false statements

under oath to one or more courts. S.J.C. Rule 2:23 (b). See

6

This language is in comment 3 of the current version of

Mass. R. Prof. C. 3.3.

12

Matter of Finneran, 455 Mass. 722, 731 n.13 (2010) (two-year

suspension is "usual and presumptive" sanction for giving false

testimony); Matter of Shaw, 427 Mass. 764, 764, 768-769 (1998)

(imposing two-year suspension where attorney "made false

statements under oath, filed a false affidavit in court

proceedings, and issued false and misleading opinion letters

signed under oath to which he forged the notarization of another

attorney"). Diviacchi does not suggest otherwise. We conclude

on all the facts and circumstances of this case that Diviacchi

was properly suspended from the practice of law for twenty-seven

months.

5. Conclusion. The order of the single justice suspending

the respondent from the practice of law for twenty-seven months,

effective January 2, 2016, is affirmed.

Judgment affirmed.

The case was submitted on the papers filed, accompanied by

a memorandum of law.

Valeriano Diviacchi, pro se.