Petition for Writ of Certiorari — Malatesta v. Court of Appeals

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- | Supreme Court, U.S,

FILE D

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86-2us50 'UN 22 3997

No. JOSEPH F. SPANIOL, JR,

IN THE

Supreme Court of the United States

OcToBER TERM, 1986

THEODORE L. MALATESTA,

Petitioner,

vs.

COURT OF APPEALS OF THE

STATE OF NEW YORK,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE COURT OF APPEALS

OF THE STATE OF NEW YORK

JEREMIAH S. GuTMAN, Esq.

Levy, GUTMAN, GOLDBERG,

AND KAPLAN

Attorneys for Petitioner

275 Seventh Avenue

New York, New York 10001

(212) 807-9733

Gait A. WECHSLER

Of Counsel

QUESTION PRESENTED

Whether it is permissible under the due process and equal

protection clauses of the Constitution of the United States for

the Supreme Court of the State of New York, Appellate Divi-

sion, First Judicial Department, to create and enforce an

automatic presumption of unfitness to practice law against every

attorney found to have commingled or to have failed to have

maintained the uninterrupted integrity of escrow funds,

regardless of context, motive, or effect and regardless of the

failure of confrontation with the complainant.

TABLE OF CONTENTS

QUESTIONS PRESENTED ...................

TABLE OF CASES AND AUTHORITIES.......

ee cae che kok ys ees oe

ES a

CONSTITUTIONAL AND STATUTORY

os Bs 8 5 A

STATEMENT OF THE CASE .....=...........

REASONS FOR GRANTING THE WRIT.......

a

II.

III.

IV.

The New York Court of Appeals, by

Denying Leave to Appeal, let Stand a

Decision Relying on a Presumption in

Conflict with the Constitution of the United

States and the Decisions of this Court ....

The Unconstitutional Presumption at Issue

in this Case is One Being Adopted by an

Increasing Number of States and Thus

Must be Reviewed by this Court .........

This Court Should Review this Case

Because it Concerns a Presumption Which

Applies only to New York Attorneys, Like

Petitioner, Who Maintain Offices within

the First Department and Thus Denies

Equal Protection of the Law to Such

UR ak i glaG. 6 Bie 09k 400 'as 6 0s

This Case Presents an Opportunity for this

Court to Correct Due Process Violations

Committed Below with Respect to the

Availability of a Necessary Witness.......

The Federal Constitutional Questions at

Issue were Timely and Properly Raised Below

1]

14

iii

Page

I 5 hl wade tn cee ee ba ae eaee 15

ERE Cae TOPE Gane Ee gE rE ae Ree A-1

B-1

iv

TABLE OF CASES AND AUTHORITIES

Cases

Attorney Grievance Committee v. Goldberg, 307

Md.2d 546, 515 A.2d 765 (Md. 1986).........

Bailey v. Alabama, 219 U.S. 219 (1911).........

Bell v. Burson, 402 U.S. 535 (1971).............

Ex Parte Garland, 71 U.S. (4 Wall) 333 (1866)...

In re Harrison, 461 A.2d 1034 (D.C. 1983) ......

In re Okerman, 310 N.W.2d 568 (Minn. 1981) ..

In re Ruffalo, 390 U.S. 544 (1967) .............

In re Wilson, 81 N.J. 451, 409 A.2d 1153 (N.J.

A Ses kare he ee ak ee eee ee ewan

In re Winship, 397 U.S. 358 (1970).............

Konigsberg v. State Bar of California, 353 U.S.

TE 555 aes x bee ORR tes ee

Matter of Goldman, 82 A.D.2d 574 (2nd Dept.

BOGE 5 « nkvk oo up eee eee eee

Matter of Levine, 101 A.D.2d 49 (ist Dept. 1984)

Matter of Malatesta, 124 A.D.2d 62 (1st Dept.

STE 6s 60 5b ds Kaeeeeenee es eee ees

Matter of Marks, 72 A.D.2d 399 (lst Dept. 1980)

Matter of Reardon, 76 A.D.2d 347 (2nd Dept.

| RRA erate PEO REE ren ges ee arEm Mages

Page

5, 8-10,

Matter of Rukeyser, 82 A.D.2d 589 (2nd Dept.

| ere Pe re rote oe eee ri Oe eee

Matter of Walker, 113 A.D.2d 254 (lst Dept.

a ee treo ier Aria ehe Ee: 7, Ne iy

McLaughlin v. Florida, 379 U.S. 184 (1964) .....

Morgan v. United States, 304 U.S. 1 (1938)......

Morissette v. United States, 342 U.S. 246 (1952) ..

Oklahoma Bar Association v. Raskin, 642 P.2d

ee ee ee

Patterson v. New York, 432 U.S. 197 (1977) .....

Roviaro v. United States, 353 U.S. 53 (1957).....

Sandstrom v. Montana, 442 U.S. 510 (1979) .....

Schware v. Board of Bar Examiners, 353 U.S. 232

(1957) ..... Pe ee ers Wr cr eh iscnpe Ame

Skinner v. Oklahoma, 316 U.S. 535 (1942) ......

Speiser v. Randall, 357 U.S. 513 (1958) .........

Spevak v. Klein, 385 U.S. 511 (1967) ...........

United States v. Agurs, 427 U.S. 97 (1976) ......

United States v. United States Gypsum Co., 438

Wes SC EE 5 Fes ea eee Cee,

Williams v. Illinois, 399 U.S. 235 (1970) ........

Willner v. Committee on Character and Fitness,

ee ey I esol ck Fee See

Page

11-12

vi

Page

Wolff v. McDonnell, 418 U.S. 539 (1974) ....... 12

Yick Wo v. Hopkins, 118 U.S. 356 (1886) ....... 12

Constitution and Statutes

Re SE, Sr es ae ere 13

oR Re Se eee ere eS 13

ee ae ec eku eevee wus 2. 6. li

ee eek Se 8 Beer ereeer rere 2

Disciplinary Rule 9-102(A) .................65. 3

Other

Johnson, “Lawyer, Thou Shall Not Steal,” 36

Rutgers L. Rev. 454 (1984) .................. 10

No.

IN THE

Supreme Court of the United States

OctToseER TERM, 1986

THEODORE L. MALATESTA,

Petitioner,

VS.

COURT OF APPEALS OF THE

STATE OF NEW YORK,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE COURT OF APPEALS

OF THE STATE OF NEW YORK

Theodore L. Malatesta petitions for a writ of certiorari to

review the judgment of the New York State Court of Appeals

in this case.

OPINIONS BELOW

The opinion of the Supreme Court of the State of New York,

Appellate Division, First Judicial Department, is reported at

124 A.D.2d 62 (1st Dept. 1987) and is annexed as Appendix A.

The opinion of the Court of Appeals of the State of New York

is annexed hereto as Appendix B.

. |

‘ a

I.

‘

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JURISDICTION

The order of the New York Court of Appeals denying peti-

tioner’s motion for leave to appeal the decision of the Appellate

Division, First Judicial Department, disbarring him was entered

on March 24, 1987. See Appendix B. This petition for certiorari

has been filed in this Court within ninety days of that date. This

Court’s jurisdiction is invoked under 28 U.S.C. § 1257(3).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Section One of the Fourteenth Amendment to the Constitu-

tion of the United States provides as follows:

All persons born or naturalized in the United States,

and subject to the jurisdiction thereof, are citizens of

the United States and of the state wherein they reside.

No state shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any state deprive any person

of life, liberty, or property without due process of law;

nor deny to any person within its jurisdiction the equal

protection of the law.

22 N.Y.C.R.R. § 603.15(a) provides in pertinent part:

An attorney in possession of any asset or sum of money

belonging to a client is a fiduciary and must not com-

mingle client funds with his own funds or personal

or business accounts. An attorney shall maintain in

a bank or trust company within the State of New York

in his own name. . . a special account or accounts,

separate from his personal accounts or from any ac- ‘

counts in which assets belonging to his firm are

deposited, and separate from any accounts which may

be maintained in the capacity of executor, guardian,

trustee, or receiver, into which special account or ac-

counts all funds entrusted to such attorney or such

firm shall be deposited.

na

| 3

Disciplinary Rule [hereinafter “DR”] 9-102(A) provides:

All funds of clients paid to a lawyer or law firm, other

than advances for costs and expenses, shall be

deposited in one or more identifiable bank accounts

maintained in the state in which the law office is

situated and no funds belonging to the lawyer or law

firm shall be deposited therein except as follows:

(1) Funds reasonably sufficient to pay bank charges

may be deposited therein.

(2) Funds belonging in part to a client and in part

presently or potentially to the lawyer or law firm must

be deposited therein, but the portion belonging to the

lawyer or law firm may be withdrawn when due

unless the right of the lawyer or law firm to receive

it is disputed by the client, in which event the disputed

portion shall not be withdrawn until the dispute is

finally resolved. ;

STATEMENT OF THE CASE

On December 15, 1982 the Departmental Disciplinary Com-

mittee for the First Judicial Department [hereinafter

“Disciplinary Committee”] served a complaint upon Theodore

L. Malatesta, the Petitioner, and requested a reply thereto. The

complaint was instigated by Gloria Sparber, a former client of

the Petitioner, and alleged, inter alia, that Petitioner had settled

a case for Ms. Sparber without her consent and had failed to

disburse settlement funds to her.' Soon after Petitioner submit-

ted his reply to the complaint, in which he admitted signing

Ms. Sparber’s name on a release and settlement check based

upon the express terms of a retainer agreement with her, he

agreed to and did appear before the Disciplinary Committee.

' Ms. Sparber filed the complaint on the very day she had in fact received

a check for $2,500 from Mr. Malatesta covering her share of the settlement

proceeds. Ms. Sparber’s allegation of nonpayment was not pursued by the

Disciplinary Committee.

Mr. Malatesta also provided the Disciplinary Committee with

full financial records as requested by it.

On or about June 4, 1985, the Disciplinary Committee serv-

ed Petitioner with a notice of charges alleging professional

misconduct. On November 6, 1985, by a pre-hearing stipula-

tion, the Disciplinary Committee represented that Gloria

Sparber would appear as a witness at the Departmental

disciplinary hearings. The Committee did not notify Mr.

Malatesta that Ms. Sparber was not appearing because she had

disappeared and that the Committee had been unable to find

her since as-teng-ago as 1983 until directly questioned by Mr.

Malatesta’s counsel at the hearing. The record at the hearing

also established that the Disciplinary Committee was unable

to depuse Ms. Sparber or obtain any information from her other

than an unsworn complaint and “reply” in a handwriting dif-

ferent from that in the complaint.”

After a hearing and investigation in which Mr. Malatesta fully

cooperated, the Disciplinary Committee Hearing Panel sustain-

ed a finding of professional misconduct with regard to Peti-

tioner’s handling of the Sparber settlement [Charge Two] and

with regard to two other matters [Charges One and Four]. On

the Sparber matter, the absence of the complainant was ignored

and her unavailability for cross-examination, although com-’

plained of, disregarded. With regard to Charge One, the Panel

found that Petitioner had deposited a $4,200 check from William

and Marilyn Cassin into his escrow account in April of 1982,

let the amount in the account fall below $4,200 in May of 1982,

and then returned the $4,200 to the Cassins in June of 1982.

With regard to Charge Four, the Panel found that in 1982 Peti-

tioner had deposited two checks, one from a personal insurance

claim and another from his own personal injury claim, into his

escrow account. Petitioner candidly admitted depositing these

checks into his escrow account, stating that he acted as his own

? An independent investigation of Ms. Sparber in 1983 disclosed that she

had a criminal record, was known under several different names and Social

Security numbers, and had a history of disappearing from sight after sonal

ing large debts.

attorney in handling both matters. The Panel dismissed a fourth

charge alleging that Petitioner had violated various Disciplinary

Rules by issuing two escrow checks returned for insufficient

funds, finding that insufficient evidence had been produced to

show that issuance of the checks constituted dishonesty or fraud.

On September 19, 1986, a divided Hearing Panel recommend-

ed the disbarment of Petitioner based virtually exclusively upon

Petitioner’s alleged misappropriation of client funds. While

acknowledging that Petitioner had presented evidence in mitiga-

tion of this offense,*? namely evidence of severe psychological,

physical, and financial stress at the time of the alleged miscon-

duct, the Panel found itself, without addressing Petitioner’s

assertion of his due process right to be confronted by the com-

plainant, “constrained” to recommend disbarment due to the

“well established presumption [in the First Judicial Department]

that an attorney who misappropriates funds held by him in trust

is wefit x remain a member of the bar.” Central to this presump-

tion, according to the Panel, was language from the First

Department’s decision in Matter of Marks, 72 A.D.2d 399 (1st

Dept. 1980), citing In re Wilson, 81 N.J. 451, 409 A.2d 1153

(N.J. 1979), for the proposition that careless handling of client

funds is per se sufficient ground for disbarment, regardless of

injury or loss to anyone and regardless of motive.

On November 8, 1985, the Disciplinary Committee submit-

ted a notice of petition to the Appellate Division, First Judicial

Department [hereinafter “Appellate Division”] seeking discipline

of Petitioner. On February 5, 1987, the Appellate Division

granted the Disciplinary Committee’s petition and ordered Peti-

tioner disbarred from practice as an attorney in New York ef-

fective March 5, 1987. In its opinion, the Appellate Division

followed the reasoning of the Disciplinary Committee Hearing

Panel, citing Matter of Marks, supra, and its progreny as con-

trolling in the First Department and establishing that “[a]n at-

torney who misappropriates funds is presumptively unfit to

> Indeed, it was in light of this mitigating evidence that one panel member

broke with the majority and found that a lesser sanction, such as a three-

year suspension, was the appropriate level of punishment in this case.

practice law.” Appendix A. The Appellate Division, in order-

ing disbarment, #ieregarded Mr. Malatesta’s otherwise

unblemished record vi over twenty-five years* as well as Mr.

Malatesta’s claims that the acts of misappropriation [from which

he in no way profited] were the result of good faith mistake

and naiveté and were related to the physical, mental, and finan-

cial traumas he was experiencing during this period. The Ap-

pellate Division made no determination whatsoever about Mr.

Malatesta’s present moral or professional fitness to practice law.

Although the issue of violations of federal due process was brief-

ed by Petitioner’s counsel below, the Appellate Division ignored

all such issues and implicitly overruled them. See, generally,

Exhibit A. |

On February 26, 1987, Judge Richard Simon of the Court

of Appeals of the State of New York [hereinafter “Court of Ap-

peals”] signed an order to show cause staying the order of the

Appellate Division pending determination by the Court of Ap-

peals of Petitioner’s motion for leave to appeal. On March 24,

1987, the Court of Appeals issued its order denying Petitioner’s

motion for leave to appeal and dismissing Petitioner’s motion

for a stay of the order of the Appeilate Division. See Appendix

B. On April 3, 1987, Petitioner’s application to this Court to

stay enforcement of the judgment of the Court of Appeals of

the State of New York was denied.

REASONS FOR GRANTING THE WRIT

I. The New York Court of Appeals, by Denying Leave

to Appeal, Let Stand a Decision Relying on a

Presumption in Conflict with the Constitution of the

United States and the Decisions of this Court.

As this Court has consistently held, a state “cannot exclude

a person from the practice of law . . . in a manner or for reasons

that contravene the Due Process or Equal Protection clauses of

the Fourteenth Amendment.” Schware v. Board of Bar

* No complaints were ever filed against Mr. Malatesta arising out of miat-

ters during any years since 1982.

i

4

7

Examiners, 353 U.S. 232, 238-39 (1957); see also, Willner v.

Committee on Character and Fitness, 373 U.S. 96, 102 (1963).

Especially because an adverse determination in this area

prevents an individual from earning a living in the profession

for which he or she has trained, a “deprivation” with “grave

consequences,” Konigsberg v. State Bar of California, 353 U.S.

252, 258 (1957), determinations concerning one’s ability to prac-

tice law require strict adherence to all requirements of due pro-

cess and equal protection. Jd. Indeed, proceedings which may

lead to disbarment are more closely analogous to criminal pro-

ceedings than to ordinary civil proceedings. Cf. Konigsberg v.

State Bar of California, 353 U.S. at 258. For this reason, the

Court requires that the burden of proving the elements necessary

to an adverse determination be placed on the state, including

elements relating to character and intent. See, e.g., Patterson

v. New York, 432 U.S. 197 (1977); cf. Schware v. Board of Bar

Examiners, 353 U.S. 232 (1957).

In Schware v. Board of Bar Examiners, 353 U.S. 232 (1957),

this Court held that a person may not be excused from bar ad-

mission unless he lacks good character or is professionally un-

fit. The Court held that ignoring such traits in evaluating

qualifications for bar membership violates the Due Process

Clause of the Fourteenth Amendment. Thus, after granting cer-

tiorari to review a state judgment excluding an individual from

bar membership, the Court reversed the decision and remand-

ed the case, finding that the state had presented insufficient

evidence of “moral turpitude” on the part of the applicant. The

Court stressed that “[iJn light of petitioner’s forceful showing

of good moral character, the evidence upon which the State

relies . . . cannot be said to raise substantial doubts about his

present and good moral character” warranting denial of admis-

sion. 353 U.S. at 246.

This Court has consistently required that some degree of fault

or venality be proved before a judicially ordered forfeiture of

property or liberty is granted. Just as the Court required a show-

ing of moral turpitude prior to denial of bar admission in

Schware v. Board of Bar Examiners, supra, see also, Willner

v. Committee on Character and Fitness, 373 U.S. 96 (1963),

it struck down a Georgia motor vehicle provision requiring tem-

porary license suspension of all uninsured motorists involved

in an accident in Bell v. Burson, 402 U.S. 535 (1971). Justice

Brennan, writing for a unanimous Court including four Justices

now sitting, reviewed the statute on certiorari and found it

violative of the Due Process clause of the Fourteenth Amend-

ment because it granted no real hearing on the issue of the

motorist’s fault. Jd. Likewise, in the criminal context, this Court

has uniformly condemned presumptions of criminal wrongdo-

ing based on actions alone rather than on evidence of evil in-

tent. See, e.g., Morissette v. United States, 342 U.S. 246 (1952)

[conclusive presumption that any knowing taking of property

is sufficient to prove a finding of larcency, regardless of criminal

intent, violates Due Process clause]; Sandstrom v. Montana, 442

U.S. 510 (1979) [presumption of “knowing” or “deliberate”

homicide where one person kilis another violative of due pro-

cess]; United States v. United States Gypsum Co., 438 U.S. 422

(1978) [presumption of wrongful intent to violate antitrust laws

based only on evidence of an effect on prices violates due

process].

The New York Court of Appeals, by its denial of Theodore

Malatesta’s motion for leave to appeal, let stand an appellate

court order disbarring him because of that court’s acknowledged

“presumption” that an attorney who misappropriates funds for

any reason and under any set of circumstances is unfit to prac-

tice law. As in Matter of Marks, 72 A.D.2d 399 (1st Dept. 1980),

upon which it relied, the Appellate Division erroneously refus-

ed to evaluate the mitigating factors relevant to any considera-

tion of Mr. Malatesta’s intent at the time the misappropriations

occurred. The Court of Appeals thus upheld a presumption of

professional unfitness to practice law without requiring any

showing of bad intent, presuming moral turpitude from the fact

of “knowing” misappropriation alone. This type of presump-

tion is constitutionally infirm, whether it is viewed as conclusive

[ Morissette v. United States, 342 U.S. 246 (1952); United States

v. United States Gypsum Co., 438 U.S. 422 (1978)] or as a mere

shifting of the burden of proof or persuasion, i.e., a rebuttable

+

ee ee

oa : — ee

presumption [Patterson v. New York, 432 U.S. 197 (1977); Sand-

strom v. Montana, 442 U.S. 510 (1979); In re Winship, 397 U.S.

358 (1970)].

The New York Court of Appeals’ affirmance of the presump-

tion that petitioner acted with corrupt knowledge and its ac-

ceptance of the presumption that any misappropriation by peti-

tioner rendered him unfit to practice law are no substitutes for

the requirement under the Due Process Clause of the Fourteenth

Amendment that the court carefully and seriously evaluate peti-

tioner’s current fitness and character, Schware v. Board of Bar

Examiners, 353 U.S. 232 (1957), and his actual state of mind

at the time the misappropriations occurred, Morissette v. United

States, supra; cf. Ex Parte Garland, 71 U.S. (4 Wall) 333 (1866)

[Court condemned ex post facto disbarment of attorneys who

had supported the Confederacy]. “The power to create presump-

tions is not a means of escape from constitutional restrictions.”

Speiser v. Randall, 357 U.S. 513 (1958), citing Bailey v.

Alabama, 219 U.S. 219 (1911). The Court of Appeals’ failure

to evaluate petitioner’s misappropriations in light of the sur-

rounding circumstances affecting his state of mind and in light

of his current character and fitness contravenes the well

established holdings of this Court, see, e.g., Schware v. Board

of Bar Examiners, supra; Morissette v. United States, supra,

and warrants this Court’s review on certiorari of the Court of

Appeals decision.

II. The Unconstitutional Presumption at Issue in this

Case is One Being Adopted by an Increasing Number

of States and Thus must be Reviewed by this Court.

While the existence in even one state of a presumption of un-

fitness to practice law based on a misappropriation without re-

quirement of any wrongful intent warrants this Court’s interven-

tion, the importance of reviewing such a constitutional infir-

mity is magnified by the fact that an ever increasing number

of states are adopting this approach. As noted previously, see

p. 5, supra, the New York courts rely on New Jersey’s presump-

tion of per se unfitness where a misappropriation exists. See,

e.g., Matter of Marks, supra, citing In re Wilson, 81 N.J. 451,

10 8

409 A.2d 1153 (N.J. 1979). Other jurisdictions which have ac-

cepted this same rule subsequent to Wilson and Marks include

Maryland [Attorney Grievance Committee v. Goldberg, 307

Md. 546, 515 A.2d 765 (Md. 1986)], the District of Columbia

{In re Harrison, 461 A.2d 1034 (D.C. 1983)], Oklahoma

[Oklahoma Bar Association v. Raskin, 642 P.2d 262 (Okla.

1982)], Minnesota [In re Okerman, 310 N.W.2d 568 (Minn.

1981)], and Maine and Texas [unpublished decisions noted in

Johnson, “Lawyer, Thou Shall Not Steal,” 36 Rutgers L. Rev.

454, 486 (1984)].

This Court has not hesitated to grant certiorari to correct

substantial constitutional errors in the context of attorney ad-

mission and discipline. In Konigsberg v. State Bar of Califor-

nia, 353 U.S. 252 (1957), this Court reversed a state denial of

bar admission because the lower court had failed to prove that

petitioner was “morally unfit to practice law.” In Willner v.

Committee on Character and Fitness, 373 U.S. 96 (1963), this

Court on certiorari reversed a state’s denial of bar admission,

holding that petitioner was deprived of a fair opportunity to

prove his character and fitness. In Spevak v. Klein, 385 U.S.

511 (1967), this Court on certiorari to the New York Court of

Appeals reversed a disbarment based on an attorney’s assertion

of the Fifth Amendment. See also Schware v. Board of Bar Ex-

aminers, 353 U.S. 232 (1957), discussed at pp. 6-8, supra, and

In re Ruffalo, 390 U.S. 544 (1968) [failure to provide notice

to attorney in state disbarment proceedings that employment

of certain person would be a disbarment offense amounts to un-

constitutional denial of due process]. Certiorari should likewise

be granted to stem a nationwide trend which violates the due

process rights of attorneys by presuming corrupt intent and man-

dating disbarment by the isolated fact of misappropriation

alone, regardless of motive, effect, and context.

1]

III. This Court should Review this Case Because it

Concerns a Presumption which Applies only to New

York Attorneys, like Petitioner, who Maintain Offices

within the First Department and thus Denies Equal

Protection of the Law to Such Attorneys.

‘

This Court held in Schware v. Board of Bar Examiners, 353

U.S. 232 (1957), that a state may not exclude a person from

the practice of law in a manner or for reasons which contravene

the equal protection clause of the Fourteenth Amendment. Cur-

rently in New York State, the same or similar professional in-

fractions by attorneys are sanctioned quite differently depen-

ding solely upon the geographic location of the attorney’s of-

fice. As the Appellate Division, First Department, admitted in

Matter of Walker, 113 A.D.2d 254 (1st Dept. 1985), “complaints

about attorneys are processed differently, and sanctions for

similar misconduct vary significantly, among and even within

the four Departments of the Appellate Division.” 113 A.D.2d

at 256. Thus, an attorney like Petitioner who maintains an of-

fice in Manhattan is disbarred for failing to maintain the

uninterrupted integrity of escrow funds, 124 A.D.2d 62 (lst

Dept. 1987); see also Matter of Levine, 101 A.D.2d 49, 50 (1st

Dept. 1984); Matter of Marks, 72 A.D.2d 399 (1st Dept. 1980),

while an attorney with an office in Brooklyn or Queens guilty

of the same (or even a more serious) infraction receives no greater

sanction than censure, especially where, as was true in Peti-

tioner’s case, mitigating factors exist. See, e.g., Matter of Rear-

don, 76 A.D.2d 347 (2nd Dept. 1980); Matter of Rukeyser, 82

A.D.2d 589 (2nd Dept. 1981); Matter of Goldman, 82 A.D.2d

574 (2nd Dept. 1981). While the Constitution does not require

identical procedures or identical sanctions by courts within the

same state for the same infractions, it does mandate that similar-

ly situated individuals not be treated in vastly disproportionate

ways based on arbitrary considerations such as geographic loca-

tion within a city or state. Cf. Williams v. Illinois, 399 U.S. 235

(1970) [state practice of confining only certain prisoners beyond

the maximum statutory term based upon financial considerations

held violative of equal protection]; McLaughlin v. Florida, 379

U.S. 184 (1964) [state law punishing interracial couples guilty of

12

cohabitation but not couples of the same race guilty of the same

offense held violative of equal protection]. As this Court stated

in the decision of Skinner v. Oklahoma, 316 U.S. 535, 541

(1942), citing Yick Wo v. Hopkins, 118 U.S. 356 (1886), “[w]hen

the law lays an unequal hand on those who have committed

intrinsically the same quality of offense and sterilizes one and

not the other, it has made as an invidious a discrimination as

if it had selected a particular race or nationality for oppressive

treatment.”

In light of the acknowledged and egregious disparity of

punishment for the same and similar improprieties among the

Appellate Divisions of New York State, which disparity led to

the severe sanction of disbarment of Petitioner for conduct which

would only have warranted censure in other Boroughs of New

York City or Counties of New York State, this Court should grant

a writ of certiorari. Only by doing so can it correct a denial

of equal protection whereby in only one Appellate Division at-

torneys are almost automatically presumed professionally un-

fit and subject to disbarment should they misappropriate funds

for any reason and under any circumstance.

IV. This Case Presents an Opportunity for this Court

to Correct Due Process Violations Committed Below

with Respect to the Availability of a Necessary

Witness.

As this Court has held, the essential requirements of any bar

disciplinary proceeding are “notice and the opportunity to be

heard” with regard to all charges and all evidence presented.

In re Ruffalo, 390 U.S. 544 (1967). Under due process principles,

for notice to bé adequate it must be given sufficiently before

any hearing to permit the party against whom a proceeding is

brought an adequate opportunity to prepare a response. See,

e.g., Wolff v. McDonnell, 418 U.S. 539 (1974). In Mr.

Malatesta’s case, the crux of the charges sustained against him

at the disciplinary hearing were based on an unsworn complaint

and reply of the one witness besides Petitioner to the complained

of events, a witness whose whereabouts were unknown to the

Disciplinary Committee for at least two and one half years

before the Committee disclosed this fact to Petitioner. This

failure to disclsoe the unavailability of Ms. Sparber until the

ennai

13

hearings were well under way, and, indeed, the Disciplinary

Committee’s listing of Ms. Sparber as a witness at the hearing,

despite her known unavailability, thereby lulling Petitioner into

the reasonable belief that the complainant would be available

to cross examine as to the truth of her allegations and her

credibility® is exactly the type of due process violation abhor-

red by the courts and which requires this Court’s intervention.

The coyness of the Disciplinary Committee was a procedural

Fifth Amendment due process violation resulting in the substan-

tive Sixth Amendment due process violation of denial of con-

frontation. Cf. United States v. Agurs, 427 U.S. 97 (1976), in

which this Court articulated the principle, in the analogous

criminal context, that withholding of information which would

have created a reasonable doubt constitutes an unconstitutional

denial of due process, whether or not the withheld informa-

tion is specifically requested by the opposing party.°®

In Roviaro v. United States, 353 U.S. 53 (1957), this Court

granted certiorari to reverse and remand a judgment of con-

viction where the party against whom adverse action was taken

was denied disclosure of the identity of the one witness to the

underlying transaction whose testimony could either amplify

or contradict the facts underlying the case against him. In Peti-

tioner’s case, a similar situation exists in that Petitioner was con-

structively prevented from locating a crucial witness to the

underlying transactions which were the basis of the disbarment

due to a material nondisclosure by the Disciplinary Commit-

tee. This Court should grant certiorari to correct this unconstitu-

tional infirmity.

* Complainant’s criminal record and past history of suspicious conduct were

noted at p. 4, supra.

* As the Disciplinary Committee erroneously represented to Mr. Malatesta

that Ms. Sparber would be testifying at the hearings, Mr. Malatesta could

not have been expected to request information from the Committee as to

whether she was available.

14

V. The Federal Constitutional Questions at Issue were

Timely and Properly Raised Below.

In Petitioner’s brief submitted to the Appellate Division, First

Department, the court of initial review, Petitioner’s counsel em-

phasized the importance of providing due process to Mr.

Malatesta at all stages of the proceeding against him. Although

at that stage of the case it was not known that the Appellate

Division would rely on a presumption of unfitness based on the

isolated fact of a misappropriation of funds, and therefore a

constitutional challenge to such a presumption was not yet

made, Petitioner did fully argue that the Committee’s failure

to provide adequate notice and disclosure of important facts,

documents, and evidence amounted to a denial of constitutional

rights. The Appellate Division ignored Petitioner’s constitutional

arguments and implicitly overruled them. See Appendix A.

In Petitioner’s motion for leave to appeal to the Court of Ap-

peals, Petitioner’s counsel raised the issue of the constitutionality

of a presumption of unfitness based upon the fact of misap-

propriation alone, as well as the equal protection problem raised

by the disparity of punishment for the same infractions among

the Appellate Divisions of the Supreme Court of New York. As

this Court noted in Willner v. Committee on Character and

Fitness, 373 U.S. 96 (1963), quoting from Morgan v. United

States, 304 U.S. 1 (1938), “the requirements of fairness are not

exhausted in the taking or consideration of evidence, but ex-

tend to the concluding parts of the procedure as well as to the

beginning and intermediate steps.” 373 U.S. at 105. Thus, the

issues of fundamental fairness, including due process and equal

protection, were raised as they emerged in response to the course

of the proceedings below. Id.

Each of the issues upon which a grant of a writ of certiorari

is sought was raised by Mr. Malatesta at appropriate points in

the proceedings below in response to constitutional infirmities

as such infirmities arose. These due process and equal protec-

tion issues were ignored by the Court of Appeals by virtue of

its denial of leave to appeal. It is left to this Court to rectify

this denial of fundamental constitutional rights.

Leoaucle ad

a)

15

CONCLUSION

For all the foregoing reasons, Petitioner respectfully requests

that this petition for a writ of certiorari be granted.

Dated: New York, New York

June 19, 1987

Respectfully submitted,

JEREMIAH S. GUTMAN

Levy, GUTMAN, GOLDBERG,

AND KAPLAN

275 Seventh Avenue

New York, New York 10001

(212) 807-9733

Gait A. WECHSLER

Of Counsel

APPENDIX

A-1

APPENDIX A

Joseph P. Sullivan, J.P.

John Carro

Sidney H. Asch

Bentley Kassal

Ernst H. Rosenberger, JJ.

xX

In the Matter of Theodore L. Malatesta,

(admitted as Theodore Malatesta), an at-

torney and counselor-at-law:

Departmental Disciplinary Committee

for the First Judicial Department,

Petitioner, M-4698

Theodore L. Malatesta, (admitted as

Theodore Malatesta),

Respondent.

x

Disciplinary proceedings instituted by the Departmental

Disciplinary Committee for the First Judicial Department.

Respondent was admitted to the Bar at a Term of the Appellate

Division of the Supreme Court for the First Judicial Depart-

ment on June 20, 1960. &

In re Theodore L. Malatesta, an Attorney

PER CURIAM:

Respondent Theodore L. Malatesta was admitted to prac-

tice as an attorney and counsellor-at-law by this Court on June

20, 1960. At all times relevant, he has maintained an office for

the practice of law in this judicial department.

Patricia Smillie-Scavelli, of counsel (Michael A. Gentile,

attorney) for the petitioner

Jeremiah S. Gutman, of counsel (Gail A. Wechsler with

him on the brief; Levy, Gutman, Goldberg & Kaplan and

Albert Felix, attorneys) for the respondent

A-2

Petitioner Departmental Disciplinary Committee moves for

an order confirming the findings of fact and conclusions of law

of a hearing panel, which also recommended disbarment.

On April 19, 1982, respondent, who had been retained to

represent Gloria Sparber in the sale of a cooperative apartment,

agreed in writing to hold in escrow a check for $4,200. The check

was received as a downpayment on the apartment from pros-

pective purchasers, William and Marilyn Cassin, pending ap-

proval of the Cassins by the board of directors of the cooperative

corporation. On April 19 and 22, 1982, without notifying the

Cassins, respondent issued two checks, totalling $1,000, to

Sparber, drawn on the escrow account in which he had

deposited the Cassin funds. Each of the checks bore on their

face the notation “adv. co-op.” Thereafter, he converted the

bulk of the funds to his own use. He apparently replaced the

funds, and on June 8, 1982 repaid the Cassins.

On February 16, 1982, Sparber retained respondent to handle

a personal injury action. In September 1982, the insurer for one

of the defendants made an offer of settlement in the amount

of $6,000. Respondent accepted the offer, signed Sparber’s

name, without indicating that he was doing so, to a general

release running to both defendants, and notarized the signature

himself. Upon receipt of the check made payable to both res-

pondent and Sparber, respondent endorsed the check in their

respective names, again without indicating that he was sign-

ing for her, and deposited it on October 5, 1982 into his escrow

account. The balance in the account diminished until the ac-

count was overdrawn. On December 9, 1982, Sparber de-

manded her share of the settlement proceeds, and respondent

repaid her with a check drawn on his personal account.

In February and March 1982, respondent deposited into his

escrow account two checks, one in settlement of a personal in-

surance claim and another in settlement of his own injury claim.

He had acted as his own attorney in both matters.

The Hearing Panel found petitioner guilty of misconduct in-

volving dishonesty, fraud, deceit, and misrepresentation

in violation of DR 1-102(A)(4); conduct prejudicial to the

Ee

eer ~ 7

Ran aa ocala SARA hag

AEE DNR ELAS RR IO SR Di

POE 2 Tied BG DOO cr OT BOL ie ae

A-3

administration of justice in violation of DR 1-102(A)(5); con-

duct that adversely reflects on his fitness to practice law in viola-

tion of DR 1-102(A)(6); failing to preserve the identity of funds

and property of clients in violation of DR 9-102(A); and 22

NYCRR §603.15(a); and improper use of notarial powers in

violation of Executive Law §135 and §135-a of the Code of Pro-

fessional Responsibility, and determined to refer the matter to

this Court with the recommendation that respondent be dis-

barred. One member of the Panel would have recommended

a lesser santion, such as a three year suspension, in view of the

evidence offered in mitigation.

Absent extremely unusual mitigating circumstances, this

court has consistently viewed conversion of funds belonging to

a client or third-party as grave misconduct warranting the severe

penalty of disbarment. Matter of Walker, 113 AD2d 254, 257

(1st Dept, 1985); Matter of Levine, 101 AD2d 49, 50-51 (lst

Dept, 1984); Matter of Pinello, 100 AD2d 64 (1st Dept, 1984).

An attorney who misappropriates funds is presumptively unfit

to practice law. Matter of Pressment, 118 AD2d 270, (lst

Dept, 1986), citing Matter ba Marks, 72 AD2d 399, 401 (1st

Dept, 1980).

The record contains ample evidence to support the charges.

It was sharply disputed whether Sparber consented to the por-

tion of the handwritten notation included on the copy of the

retainer agreement adduced by respondent, but not on the one

possessed by the insurance company which settled the personal —

injury action, which stated“ . . . [subject to] full authority to

settle, sign release and endorse check, as case was abandoned.”

However, we agree with petitioner that such a provision, even

if agreed to by Sparber, (the hearing panel had found that it

was not agreed to) excused neither respondent’s conversion of

the funds nor his act of notarizing her forged signature on the

release in violation of Executive Law §135. Respondent’s claim

that the conversion was unintentional, and due to naivete and

lack of prior experience with the use of a power of attorney,

strains credulity. It is belied by the evidence tha he altered his

handwriting to resemble Sparber’s.

A-4

Respondent is fifty-four years of age, has a record as an at-

torney which is otherwise unblemished, and which includes

many instances of public and pro bono service for community

and religious organizations. It is not seriously disputed that when

respondent misappropriated and commingled the funds in ques-

tion he was under emotional stress due to legal, administrative,

and financial responsibilities thrust upon him when the attorney

with whom he shared an office became seriously ill, and other

office tenants defaulted on their share of the rent. He also had

problems with his daughter, who had dropped out of school

and run away from home on several occasions. The siress

ultimately manifested itself in chest pains and breathing dif-

ficulties, requiring a two day hospitalization in late September

1982. Even on these issues the hearing panel cites several in-

stances in which the respondent’s testimony lacked :andor.

The psychiatrist who began treating respondent in March

1986 essentially testified that respondent had a passive-aggressive

personality with a mixed state of anxiety and depression, and

a martyr complex. Based upon this diagnosis, and his interpreta-

tion of the hospital records and a note from respondent’s per-

sonal physician, the psychiatrist opined that psychological stress

could have played a role in respondent’s poor judgment in a

variety of situations.

We agree with petitioner that this testimony was too

speculative to furnish an acceptable excuse. It was insufficient

to establish the probability that the psychological stress affecting

respondent in 1982 so impaired his judgment as to cause the

offenses charged. Matter of Levine, supra; Matter of Wolf, 73

AD2d 419 (1st Dept, 1980); Matter of Marks, supra. Neither

respondent’s acts of restoring the converted funds, nor his public

service, demonstrate such exceptional character as could ap-

propriately be weighed against his disbarment. Matter of

Pinello, supra, at 65-66.

Accordingly, the motion by petitioner Departmental

Disciplinary Committee, for an order confirming the Findings

of Fact and Conclusions of Law of the Hearing Panel, with its

A-5

recommendation of disbarment, should be granted and res-

pondent’s name should be ordered stricken from the roll of at-

torneys in the State of New York.

Accordingly, the name of respondent is stricken from the roll

of attorneys and counsellors-at-law in the State of New York.

All concur.

alle PGBS. Ee RRA

Order filed.

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B-1

APPENDIX B

244. MATTER OF MALATESTA, res (Malatesta, ap) -- Mo-

tion for leave to appeal denied.

Motion for a stay dismissed as academic.

| March 24, 1987

|