PETER M. NAPOLITANO
BOARD OF PROFESSIONAL RESPONSIBILITY
Session in Jackson November 2, 2016
Circuit, No. CC-15-CV-159 Ben H. Cantrell, Special Judge BPR
Docket No. 2013-2272-6-AW
matter initially originated from a fee dispute between
attorney Peter M. Napolitano ("Attorney") and his
client Gayle Connelly ("Client"). Client filed a
complaint with the Tennessee Board of Professional
Responsibility ("the Board") regarding the fee
dispute in 2008. The Board dismissed this complaint in 2010
without imposing any sanctions. Client sued Attorney over the
fee dispute and, after Attorney was deposed in conjunction
with the lawsuit, Client filed a second complaint with the
Board in 2012. This second complaint alleged that Attorney
had mishandled funds in his trust account and lied under
oath. The Board prosecuted this second complaint, resulting
in a hearing before a hearing panel ("the Panel").
The Panel determined that Attorney had committed ethical
violations related to his trust account and by lying under
oath. Accordingly, the Panel imposed sanctions against
Attorney, including a five-year suspension of Attorney's
law license, with one year of active suspension. Attorney and
the Board both sought review in circuit court. The circuit
court modified the Panel's sanctions in part but affirmed
the five-year suspension. Both Attorney and the Board sought
review by this Court, with Attorney seeking a lesser
punishment and the Board seeking disbarment. Additionally,
both parties disagree with the Panel's order of $7, 500
in restitution to Client. We hold that the five-year
suspension is appropriate and that the Panel did not err in
ordering $7, 500 in restitution. Accordingly, we affirm the
circuit court's judgment but modify it by adding the
requirement of a practice monitor during Attorney's
Sup. Ct. R. 9, § 1.3 (2013);Judgment of the Circuit Court
Affirmed and Modified
S. Faughnan, Memphis, Tennessee, for the appellant, Peter M.
Russell Willis, Brentwood, Tennessee, for the appellee, Board
of Professional Responsibility.
Jeffrey S. Bivins, C.J., delivered the opinion of the Court,
in which Cornelia A. Clark, Sharon G. Lee, Holly Kirby, and
Roger A. Page, JJ., joined.
JEFFREY S. BIVINS, CHIEF JUSTICE.
and Procedural Background
hired Attorney in 2005 to represent her in an employment
claim against the Department of the Army ("the
Litigation"). Client and Attorney entered into a written
fee agreement concerning this representation, and Client paid
$22, 000 to Attorney pursuant to this agreement. In September
2007, the parties settled the Litigation for $75, 000, and
this sum was paid into Attorney's trust account
("the Litigation Proceeds"). Client and Attorney
entered into an agreement regarding the split of the
Litigation Proceeds, with Attorney to pay Client $40, 000 and
Attorney to retain the $35, 000 balance in full satisfaction
of his remaining fees and expenses ("the 2007 Fee
after entering into the 2007 Fee Agreement, Attorney
contacted Client and stated that he had miscalculated his
expenses by approximately $1, 800. Attorney asked Client to
accept less than the $40, 000 previously agreed upon in order
to compensate him for this omitted expense. Client refused to
modify the 2007 Fee Agreement. Attorney then refused to pay
Client the agreed-upon $40, 000.
days later, Client wrote the administrative law judge who had
overseen the Litigation in an effort to rescind the
settlement. Client was unsuccessful in this effort.
Eventually, in April 2008, she filed a complaint with the
Board ("the First Complaint"). Client asserted the
following in the First Complaint:
I was awarded $75, 000 in a settlement agreement with the
U.S. Army at Fort Campbell, Ky. That amount was deposited in
my attorney's trust account. The agreement was that
Attorney would retain $35, 000 and forward $40, 000 of the
settlement to me. Attorney continues to refuse to pay me my
portion. He claims I moved without giving him a forwarding
address. I have written to him numerous times to request the
settlement and my records. I went to his office on
Mar. 28 and he refused to see me and ordered his secretary
not to release my files.
(Parenthetical references to enclosures omitted). In due
course, Attorney responded to the First Complaint and,
eventually, one of the Board's disciplinary counsel told
Attorney that he owed Client $16, 715.50. The calculations
resulting in this perplexing amount are not in the record.
time, Client had retained another lawyer. After being told by
the Board how much it suggested he owed Client, Attorney sent
Client's new lawyer a check in the recommended amount
along with the explanation that the negotiation of the check
would constitute a waiver of all of Client's claims
against Attorney. Client refused the check and sought
additional action from the Board on the First Complaint. On
August 25, 2010, the Board responded to Client as follows:
Your complaint filed with this office has been reviewed and
considered. Our inquiry has not revealed sufficient evidence
to proceed against the attorney(s) for violations of the
Rules of Professional Conduct. Dismissal of the complaint has
been recommended, reviewed and approved in accordance with
the rules and procedures of the Board.
The proposed dismissal will become final in 30 days in the
absence of your written appeal to the Board setting forth
specific and detailed grounds and reasons why the proposed
dismissal should not become final.
appealed to the Board. On November 3, 2010, the Board
responded as follows: "Your appeal of the previous
disposition of your complaint has been reviewed by the Board.
The grounds for your appeal were fully considered. The Board
has approved the prior disposition of your complaint which is
now final and closed."
March 2011, Client filed a lawsuit against Attorney in an
attempt to recover the money she claimed she was due.
Pursuant to the lawsuit, Client's new lawyer deposed
Attorney in September 2012. During the deposition, and while
under oath, Attorney stated that none of the Litigation
Proceeds remained in his trust account. Attorney also made
statements while under oath regarding previous ethical
violations, previous bankruptcies, and IRS liens. Convinced
that Attorney had (1) mishandled his trust account with
regard to the Litigation Proceeds and (2) lied under oath
during the deposition, Client's new lawyer filed a second
complaint with the Board on behalf of Client in November 2012
("the Second Complaint").
its investigation of the Second Complaint, the Board filed
its petition for discipline in November 2013 ("the
Petition"). The Petition alleged that Attorney violated
Tennessee Supreme Court Rule 8, Rule of Professional Conduct
("RPC") 1.15 by his handling of the Litigation
Proceeds; RPC 3.3 and 4.1 by testifying falsely during his
deposition; and RPC 8.4 by engaging in professional
August 2014, prior to the hearing on the Petition, Client and
Attorney entered into a written settlement agreement
disposing of the lawsuit that Client filed against Attorney
in 2011 ("the Fee Dispute Settlement"). Pursuant to
the Fee Dispute Settlement, Attorney was to pay Client $18,
500 on or before August 12, 2014, followed by ten periodic
payments of $750 each. The payment of these latter sums was to be
postponed if Attorney was suspended, "until six (6)
months have passed from when his law license is reinstated
and if it is not reinstated, no additional payments shall be
Hearing on the Petition
hearing before the Panel, Attorney testified and conceded
that he had made errors with respect to his trust account
concerning the Litigation Proceeds. However, when questioned
about removing the Litigation Proceeds from his trust
account, Attorney testified, "I still to this day do not
agree or admit that I ever converted funds. Whatever moneys I
withdrew for myself, I have always believed that, as I
believe today, was legitimately my money."
the hearing, the Board established that the following
questions and answers took place during Attorney's
Q. Okay. Any Bar complaints related to your New York license?
. . . .
Q. Okay. Any lawsuits whatsoever with clients or former
clients related to your practice in New York?
. . . .
Q. Have you or any of your businesses ever filed for
. . . .
Q. Okay. Any liens ever filed against you?
A. Not that I can recall.
Q. Okay. You'd remember that if it had happened.
A. I imagine I would if I knew about it.
to this testimony, the Board established during the hearing
that Attorney's license to practice law in the State of
New York had been suspended for a period of five years
commencing in January 1994 for misappropriating funds from an
escrow fund in a real estate transaction and for giving false
testimony under oath in connection with the ensuing
investigation; that Attorney had filed for personal
bankruptcy protection in 1993 and again in 2003; and that the
IRS had filed liens against two parcels of real estate that
Attorney owned in Montgomery County, Tennessee. Attorney had
referenced the debt secured by one of these liens in one of
the schedules that he filed in conjunction with his first
questioned during the hearing about his answers to these
questions, Attorney explained that he thought Client's
attorney already knew about the New York suspension. As to
the bankruptcies, Attorney stated that he thought he was
being asked only about business, as opposed to personal,
bankruptcies. Attorney maintained that he had never received
notice of the IRS liens.
called several witnesses to testify on his behalf. Judge John
H. Gasaway, III, a circuit judge in the judicial district in
which Attorney practiced, testified about his experience with
Attorney's conduct in his court. Judge Gasaway testified
that Attorney's demeanor was appropriate, he came to
court prepared, he adduced and objected to evidence
appropriately, and appeared to have good relationships with
his clients. Judge Gasaway stated that he considered Attorney
"to be a truthful person." Judge Gasaway also
explained that Attorney assisted the trial courts by
preparing a document that was helpful in resolving domestic
relations matters that involved members of the military.
K. Barnes, juvenile judge, testified that Attorney was very
helpful in accepting appointments in juvenile court. Attorney
had previously assisted Judge Barnes when Judge Barnes was in
private practice, and Judge Barnes had "no reason to
believe that [Attorney] was anything other than . . . an
upright, upstanding member of the Bar."
Hibbeler testified that he practiced law with Attorney in the
same office for about eighteen months when Mr. Hibbeler was a
newly-licensed lawyer. Several years later, Mr. Hibbeler
began practicing with Attorney again. Mr. Hibbeler stated
that Attorney had been very helpful to him when he began
practicing, and he was happy to begin working with Attorney
again later in his career. Mr. Hibbeler described Attorney as
a mentor to younger lawyers.
Hicks, also a circuit judge in the judicial district in which
Attorney practiced, testified that he had known Attorney
since 2002, when he became a judge. Judge Hicks stated that
he had had some professional contact with Attorney over that
time "at least once a week." Judge Hicks described
Attorney as "very candid." He had never known
Attorney to misrepresent facts and had had "no occasion
to question" Attorney's honesty or integrity. Judge
Hicks reiterated that Attorney had been very helpful to the
courts dealing with domestic relations matters involving
Gary F. Baumann testified that he worked for the United
States Army in Fort Campbell as "environmental and
ethics counsel." Prior to that position, he was the
"labor and employment counsel" and, in that
capacity, had many professional dealings with Attorney. Mr.
Baumann testified that, in all of his dealings with Attorney,
Attorney had "been nothing but truthful and
Joseph Farkas testified that he hired Attorney to represent
him in 2012 on an employment matter. Mr. Farkas was very
pleased with Attorney's work.
Totten testified that he was the pastor of Attorney's
church. Attorney had discussed with him Attorney's
dispute with Client, and Mr. Totten described Attorney's
demeanor as "remorseful."
After the hearing, the Panel entered the following Findings
[Attorney] was licensed to practice law in the State of New
York in 1981. In 1993, his New York license was suspended for
five years based on missing funds from his escrow account and
giving false testimony in the course of the investigation.
[Attorney] has been a licensed attorney in the State of
Tennessee since 2002. His only prior discipline in Tennessee
was a private reprimand related to an overdraft of his Trust
On December 23, 2005, [Client] retained [Attorney] to
represent her in a civil service employment claim against the
Department of the Army. [Client] signed a written fee
agreement, which provided that [Attorney] was to be
compensated at the rate of $200.00 [per hour], support staff
at $35.00 per hour, and that [Client] was to be responsible
for all other expenses. [Client] paid [Attorney] $5, 000.00
towards his retainer fee.
On June 20, 2006, [Client] paid an additional $8, 000.00 to
[Attorney], for a total payment of $13, 000.00.
The retainer fees paid by [Client] were deposited to
[Attorney]'s firm trust account and drawn down until the
retainer was exhausted on July 21, 2006.
[Client] paid an additional $9, 000.00 to [Attorney] on or
about September 4, 2006, for a total payment of $22, 000.00.
A bench trial was held on [Client]'s employment claim and
on or about June 22, 2007, she was awarded $25, 000.00
pursuant to a Preliminary Decision by an Administrative Law
Judge. Such decision also directed [Client]'s attorney,
[Attorney], to file a verified statement of attorney fees and
[Attorney] prepared a Motion for [Attorney]'s Fees and
Expenses which he filed on July 27, 2007. According to his
Motion, [Attorney]'s fees totaled $49, 957.50 and his
expenses were $7, 120.83 for a total bill of $57, 078.33.
After submission of the Motion for Attorney's Fees,
[Client] and [Attorney] entered into settlement negotiations
with the Army regarding a global settlement of the case
whereby [Client] would waive her right to appeal, would be
reimbursed her attorney's fees and expenses, would have
certain compensatory time she had earned restored, and would
have a poor performance review removed from her personnel
On September 18, 2007, [Attorney] sent an e-mail to [Client]
explaining how the Army's global settlement offer of $75,
000 would be divided. He erroneously stated that his total
fees and expenses were $56, 358.33 (rather than $57, 078.33
as stated in his Motion). He estimated that the time to
finalize the settlement would require additional fees of $2,
000.00, which he added to his fee amount. He then erroneously
deducted $21, 000.00 for prior payments by [Client] (rather
than $22, 000.00) and summarized that the total of unpaid
fees and expenses that [Client] would owe was $37, 642.00.
(Technically, the amount that she would have owed at such
time would have been $57, 078.33 plus $2, 000.00 minus $22,
000.00 or $37, 078.33). "In an effort to make the
settlement option more appealing, " [Attorney] then
offered to compromise and accept a reduced amount for fees
and expenses of $35, 000.00, from which he would pay all
expenses, so that [Client] would "get a check for $40,
000.00 (even)." [Client] testified that [Attorney]
represented to her that she would owe nothing further to
[Attorney] if she accepted the $75, 000.00 offer and paid him
$35, 000 of the settlement.
[Client] authorized [Attorney] to accept the $75, 000.00
settlement offer on this basis and the parties began to work
on a written settlement agreement.
On September 21, 2007, [Client] and [Attorney] executed a
written negotiated Release and Settlement Agreement which
provided for a lump sum payment of $75, 000.00. The
Settlement Agreement included [Client]'s compensatory
award of $25, 000.00 and reimbursement of the attorney's
fees and expenses reflected in [Attorney]'s Motion.
also waived her right of appeal, received 300 hours of
compensatory time, and had the prior performance review
removed from her personnel record.
The $75, 000 settlement proceeds were deposited into
[Attorney]'s Trust account on October 16, 2007 and
[Attorney] sent [Client] an e-mail ...