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MATTER EDWARD J. KELLY AND JOHN P. WHALEN (12/12/68)

COURT OF APPEALS OF NEW YORK 1968.NY.43921 <http://www.versuslaw.com>; 244 N.E.2d 456; 23 N.Y.2d 368 decided: December 12, 1968. IN THE MATTER OF EDWARD J. KELLY AND JOHN P. WHALEN, ATTORNEYS, APPELLANTS. SAMUEL GREASON, RESPONDENT Matter of Kelly, 29 A.D.2d 651, modified. Counsel Bernard Jeffrey for Edward J. Kelly, appellant. John P. Whalen, appellant pro se. I. There was effective denial of due process. Counsel Harold M. Spitzer and James J. Fitzpatrick for respondent. Breitel, J. Chief Judge Fuld and Judges Burke, Scileppi, Bergan, Keating and Jasen concur. Author: Breitel


Matter of Kelly, 29 A.D.2d 651, modified.

Breitel, J. Chief Judge Fuld and Judges Burke, Scileppi, Bergan, Keating and Jasen concur.

Author: Breitel

 Respondents Kelly and Whalen appeal from an order of the Appellate Division suspending each respondent from the Bar for a period of two years. In a memorandum decision, that court confirmed in part and rejected in part a report of the Referee sustaining charges of professional misconduct.

There are two principal issues. The first relates to the sufficiency of the evidence in finding respondents guilty of professional misconduct in the representation of conflicting interests (Canons of Professional Ethics, canon 6*fn1). The second involves the sufficiency of the evidence in finding respondents guilty of professional misconduct in stirring up litigation (Canons of Professional Ethics, canon 28*fn2). The record is insufficient to sustain the determinations. Because additional facts should be ascertained to determine whether there indeed was professional misconduct in the representation of conflicting interests, the proceeding should be remanded for further proof. The charge of stirring up litigation should be dismissed.

There were two lesser charges sustained. The first involved the making of "improper" loans to one who had referred accident cases to respondents. The other involved the improper withholding of moneys due to a physician for medical services rendered to a client in an accident case. Because the record is insufficient to sustain them, these lesser charges should also be dismissed.

Apart from the substantive issues, respondent Whalen argues that he was deprived of a speedy hearing; and both respondents argue that the compulsory disclosure by subpoena of the law firm's records violated constitutional limitations. Both also seek a review of the two-year suspension as excessive.

On April 13, 1959, the Appellate Division, Second Department, on the petition of the Nassau County Bar Association, authorized a judicial inquiry into the conduct of lawyers in Nassau County. After an extensive investigation with hearings before a Supreme Court Justice, he recommended, on January 4, 1963, that disciplinary proceedings be instituted against respondents Kelly and Whalen. The Appellate Division, on January 9, 1963, designated petitioner, the Honorable Samuel Greason, to begin these proceedings, which he did by petition and order to show cause dated February 4, 1963. The charges set forth in paragraph 7 of the petition were as follows:

"(A) The respondents have submitted fraudulent and exaggerated lost earnings statements to insurance companies in connection with claims for special damage in negligence claims.

"(B) Respondents, Kelly and Whalen have accepted referrals of claimants with resultant conflict of interest: (i) from adjusters and other employees of insurance companies, which companies had employed either one or the other of the respondents as adjusters; and (ii) from brokers, agents and assureds of insurance companies, which companies had employed either one or the other of the respondents.

"Respondents also accepted referrals of claimants in negligence claims, which claimants were insured by Nationwide Insurance Company, although respondent, John P. Whalen, was working for Nationwide Insurance Company as an adjuster.

"(C) The respondents, Kelly and Whalen, have submitted inflated and built-up medical bills to insurance companies.

"(D) Respondents have withheld payment of medical bills.

"(E) Respondents have made loans to clients in negligence suits and also to referrers.

"(F) The respondents have benefitted by the stirring up of litigation through referrals by auto repairmen, insurance agents and brokers."

Hearings, held between September 17, 1965 and January 7, 1966 before a Special Referee, culminated in the submission of a report and findings on May 1, 1967.

As to specification A (fraudulent claims), the report sustained the charge against Kelly with respect to one client, but dismissed the charge against Whalen. Specification B (conflict of interest) was sustained against both respondents. Specification C (inflated bills) was dismissed against both respondents. Specification D (withholding payments) was sustained against Kelly with regard to a bill for medical services and dismissed against Whalen. Specification E (loans to referrers) was sustained against Whalen concerning loans to one Chicavich and dismissed against Kelly. Specification F (stirring up litigation) was sustained against both respondents, the Referee resting his conclusion on his earlier finding that Whalen had made the loans to Chicavich, one of the referrers, as a "gratuity" or splitting of fees.

The Appellate Division confirmed the report with the exception of specification A (fraudulent claims), which that court found was not sustained by the evidence. In directing the two-year suspension, the court stated, "With respect to the extent of the discipline to be imposed, we have been largely influenced by charges B and F, which reflect patterned conduct and not isolated instances of misconduct." (29 A.D.2d 651, 652.)

The two principal charges will be ...


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