Former president of trial lawyers group punished by Supreme Court

By John O'Brien and Lawrence Smith | Apr 1, 2013

Nace


CHARLESTON – A former president of a national trial lawyers group has been suspended from the practice of law for 120 days by the state Supreme Court.

The court decided March 28 to adopt the sanctions recommended by the Lawyer Disciplinary Board against Washington, D.C., attorney Barry Nace, who was accused of failing to turn over the proceeds from a woman’s medical malpractice lawsuit to the trustee of her bankruptcy estate.

Nace, 68, was once the president of the Association of Trial Lawyers of America, which is now known as the American Association for Justice. He also served as chairman of ATLA’s political action committee and is a partner in the firm Paulson & Nace.

“Of the aggravating factors in this case, most notable is Mr. Nace’s refusal to accept any hint of responsibility for the harm caused by his failure to properly represent Mr. (Robert) Trumble, for his dishonest conduct, or for obscuring a full investigation by the LDB,” the per curiam decision says.

“Instead, Mr. Nace has repeatedly shifted responsibility onto others. In his brief to this court, Mr. Nace writes extensively on Mr. Trumble’s duties as trustee and how Mr. Trumble did not fulfill his responsibilities as trustee.

“While this court is not in any position to evaluate Mr. Trumble’s responsibilities as trustee – the matter is not properly before this court – there is ample evidence that Mr. Nace, as Mr. Trumble’s attorney, had his own set of duties and responsibilities that he failed to perform.”

The court also adopted LDB’s recommendation that Nace perform 50 hours of pro bono work, satisfy any obligations imposed on him in the final disposition of a pending adversary proceeding in U.S. Bankruptcy Court and pay the cost of the proceedings before the Hearing Panel Subcommittee.

The proceeding concerns a medical malpractice claim that Nace and Martinsburg attorney Michael Burke pursued. In November, the court admonished Burke, of Burke Schultz Harman and Jenkinson.

Margaret Ann Miller hired Burke on Feb. 5, 2004, to file a medical malpractice suit on behalf of her deceased husband. Seven months later, Miller filed for Chapter 7 bankruptcy, and Robert Trumble was appointed trustee.

In January 2005, Trumble sent Burke a letter asking for a valuation of the medical malpractice case. Burke replied later that month saying he and Nace could not place a value on it until completion of a medical review.

Later that month, Trumble sent both Burke and Nace affidavits to sign accepting employment as Trumble’s special counsel. They did, and the bankruptcy court approved Trumble’s motion to employ Burke and Nace on March 4, 2005.

Eventually, the suit was filed on June 17, 2005. A month later, Burke withdrew from the case because one of his employees was one of the co-defendant’s neighbors.

Despite his withdrawal, Burke told Miller that Nace would remain as her attorney. However, Burke not only failed to file a motion to withdraw from the suit, but also to provide Trumble a notice of his withdrawal, the Burke opinion says.

In September 2006, a partial settlement was reached in which one of the defendants agreed to pay Miller $75,000. A month later, the case against the remaining defendants went to trial, and a jury awarded Miller $500,000.

According to the Burke decision, the disbursement of funds was made without Trumble’s “approval, knowledge or authority.” When Trumble sent him a letter in July 2007 requesting an update on the lawsuit, Burke forwarded it to Nace and later left a message with Trumble’s secretary that said he was no longer on the case and to contact Nace.

After the court on Feb. 12, 2008, declined to hear the defendants’ appeal, Nace tendered a check to Miller for her share of the proceeds of $220,467.45. According to the decision, this, too, was done without informing or getting approval from Trumble.

Later in October 2008, Trumble sent both Burke and Nace a letter not only reminding them of their roles as special counsel to him, but also requesting all documents in the malpractice suit. In addition to later filing ethics complaints against them, Trumble filed an adversarial proceeding against Burke and Nace in Bankruptcy Court.

Trumble told Nace that the allowable exemption for Miller was $25,768, and, after Nace took his fees and expenses, the rest of the proceeds should have been turned over to her estate to be distributed to her creditors.

Nace wrote Trumble in February 2009, stating that he had not heard anything from Trumble since signing an affidavit in February 2005 and that he had never received the application to employ special counsel. Trumble filed an ethics complaint five months later.

Justice Menis Ketchum called the disciplinary case against Burke a waste of time. He said Burke’s failure to notify Trumble of the outcome of the case was “an inadvertent slip.”

Nace was represented by Morgantown attorneys J. Michael Benninger and Daniel D. Taylor of Benninger Law.

In his brief to the court, Nace said he has served his profession in a myriad of ways for more than 40 years, but his participation in several organizations “hangs in the balance” with the disciplinary proceeding.

“This lawyer is not unethical; and his entire reputation and good standing in this Bar and the Bars in Maryland, Pennsylvania and the District of Columbia would be stained with an adverse decision in this proceeding, where he, at most, made a mistake in not knowing or fully understanding the expectations of others with whom he had little or no communication,” his brief said.

According to the decision, after being served a subpoena dues tecum, Nace appeared before the LDB's investigative panel on April 7, 2010, and gave a sworn statement denying he received Trumble’s application in January 2005 and that Miller even filed for bankruptcy. However, after a statement of charges was filed against both he and Burke, Nace testified at an Oct. 11, 2011, evidentiary hearing and said he was aware of Trumble’s letter.

In rendering its decision, the court found unpersuasive Nace’s arguments that an attorney-client relationship existed between he and Trumble and that the court lacked jurisdiction to consider Trumble’s ethics complaints since the issues raised occurred in federal court. Since the affidavit he signed regarding Miller’s bankruptcy formed the essential elements of an attorney-client relationship, and he holds a West Virginia law license, the court said any violations of the Rules of Professional Conduct Nace committed are well within its jurisdiction.

“To the extent that Mr. Nace entered into an attorney-client relationship with Mr. Trumble,” the court said, “Mr. Nace practiced law in West Virginia. It is patently clear from our case law that the Court has the authority to supervise, regulate and control the practice of law in this state, and so the Court has subject matter jurisdiction over Mr. Nace’s practice of law in West Virginia.”

“Contrary to Mr. Nace’s suggestion,” it added, “the Court is not divested of jurisdiction merely because the order appointing him as special counsel was entered in the bankruptcy court. The disciplinary proceeding before this Court is not contingent upon the construction of the order appointing him special counsel; instead, it depends only on whether an attorney-client relationship formed, which did occur.”

Since this was the first time Nace had formally had disciplinary charges brought against him since becoming an attorney in 1970 and since his admission to the West Virginia Bar on March 19, 1997, the court said a short suspension was appropriate punishment.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.

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