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In re Arneja1/31/2002
On Report and Recommendation of the Board on Professional Responsibility
Argued January 9, 2002
As of January 2000, Rule 1.15 (d) of the District of Columbia Rules of Professional Conduct provides that " dvances of unearned fees and unincurred costs shall be treated as property of the client . . . until earned or incurred unless the client consents to a different arrangement." The present disciplinary matter, however, arose in the context of the predecessor Rule 1.15 (d), which specified that " dvances of legal fees and costs become the property of the lawyer upon receipt." Respondent (Arneja) received certain Personal Injury Protection (PIP) insurance payments while representing two clients and an estate in connection with a personal injury suit he was engaged to file. Although he used a portion of these receipts to pay personal expenses (leaving his trust account at various times below the amount of the received payments), the Board on Professional Responsibility rejected Bar Counsel's charge of misappropriation because it found that the clients had consented to Arneja's use of the PIP funds to pay expected litigation expenses, thereby making them his property under former Rule 1.15 (d). At the same time, the Board found that Arneja had violated Rule 1.15 (a) (commingling), Rule 1.15 (b) (failure to notify and promptly deliver funds to clients and/or third parties), Rule 1.16 (a) (failure to withdraw from representation after notification of discharge), Rules 1.8 (i) and 1.16 (d) (failure to surrender files on termination of representation), and Rule 8.4 (c) (conduct amounting to dishonesty, fraud, deceit, and/or misrepresentation). The Board recommends that Arneja be suspended from the practice of law for one year.
Bar Counsel contests the Board's failure to find misappropriation of client funds on two grounds. First, she argues that the PIP payments did not lose their character as client funds entrusted to Arneja merely because he was permitted to use them to pay litigation costs. Second, she contends the record shows at most that the clients consented to use of a portion, but not all, of the PIP funds for litigation expenses. Arneja, for his part, contends mainly that the record fails to establish either commingling or dishonesty - the latter based partly on his having filed the personal injury suit naming himself as the attorney of a client who had fired him. We accept the Board's findings and recommendation, and therefore order respondent's suspension for one year.
I.
The Hearing Committee of the Board found that Arneja, a solo practitioner, agreed to represent Arcadio Gonzalez, the estate of Mr. Gonzalez's deceased wife (Ana Edith Rodriguez), and Reyna Castillo in connection with a claim for damages arising from a May 1993 automobile accident in which a tree fell on the car Mr. Gonzalez was driving, killing Ms. Rodriguez and injuring Mr. Gonzalez and Ms. Castillo. In February 1994 Arneja received a PIP insurance check for $2,500 payable to Mr. Gonzalez, and in March 1994 he received a second PIP check for $2,500 payable to Ms. Castillo. He endorsed both checks and deposited them in his trust account. Minus litigation expenses of $365 at the time, the monies received from the Gonzalez/Castillo clients totaled $4,635. Between February and July 1994 Arneja transferred funds from the trust account to his operating account (and vice-versa) to pay business and/or personal expenses, with the result that in June and again in July the balance in the trust account had dipped well below the PIP payments received minus litigation expenses. The same thing occurred after November 1994 when Arneja received a PIP check from Mr. Gonzalez's insurer payable to t
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