disciplinary handbook: volume v - Supreme Court - State of Ohio

McNamee, Disciplinary Counsel v.
119 Ohio St.3d 269, 2008-Ohio-3883. Decided 8/7/2008.
Case Summaries- 206
Respondent entered into business transactions with clients and represented their competing interest in
those transactions, creating conflicts of interest. Respondent and relator submitted a consent-to-discipline
agreement for the two count complaint arising out of the real-estate development of 80 acres of land in
Xenia Township, Ohio, owned by respondent and his siblings, into Summer Brooke, a single-family
housing community. In Count One, respondent entered into the Arnold-McNamee Joint Venture
(Arnold-McNamee) to develop the land, valued at $3,125 an acre, with Robert S. Arnold, a local
builder and long-time client of the firm respondent was an associate. Per this agreement, respondent was
to ―manage all of the legal affairs, review all contracts awarded for development of the premises, and
assist Arnold as required with the operation of [Arnold-McNamee].‖ In January 1993, after transferring
the McNamee property to Arnold-McNamee, respondent had the property annexed to the city of Xenia
and rezoned, which unless a second entrance was constructed, restricted the number of lots to be
developed to 100. To provide an area for a second entrance, respondent contacted John and Damaine
Vonada, who owned 40 acres contiguous to the McNamee property. Against their accountant‘s advice
and relying on respondent as their counsel, the Vonadas committed to a joint venture with Arnold
(Arnold-Vonada), which included the same property valuations as the McNamee property, allowed the
Vonadas‘ to purchase and develop some of the lots, and referenced the Arnold-McNamee agreement.
Respondent did not advise the Vonadas of his dual representation or to get an appraisal of their land, but
did recommend himself to do the legal work necessary to rezone and annex their land. He charged the
Vonadas $4500 for the annexation and $900 for the preparation of the Arnold-Vonada agreement; they
paid both fees. As to Count I, the board agreed that respondent violated DR 2-103(A), DR 5-101(A)(1),
and DR 5-104(A). The Supreme Court agreed. In Count Two, while usually acting in his or Arnold‘s
interests and without disclosures or waivers of the conflict of interest, respondent represented Arnold-
McNamee and Arnold-Vonada in a series of transactions: the sale of three lots at a profit to the
Vonadas while charging them for the preparation of the purchase agreements in 1994 and 1995; filing
incorporation papers for the Vonadas‘ construction company, listing himself as statutory agent and
afterward representing the company; and without the Vonadas‘ knowledge, conveying 52.3 acres of
undeveloped McNamee land owned by respondent to Arnold for $7,000 an acre in 1996. Further in
1997, respondent contacted the Vonadas on Arnold‘s behalf because Arnold owed the Vonadas
$13,493.19 for the sale of three Vonada lots, but wanted to pay back his capital account in Summer
Brooke instead of the Vonadas. At this conversation, the Vonadas first learned respondent had been
representing Arnold and Vonada simultaneously. After explaining that ―he had worked with Bob Arnold
since 1989,‖ informing the Vonadas of respondent‘s simultaneous representation for the first time,
respondent requested compromise, threatened the Vonadas with ―dog lots‖ instead of premium lots if they
refused, and admonished them for not being grateful for such a ―damn good investment.‖ When
questioned about conflicting interests, respondent explained that he saw no conflict and would withdraw
or have waivers signed if one arose. In 1998, continuing to represent all sides, respondent, without the
Vonadas‘ knowledge, made Arnold the authorized partner and himself the statutory agent of a limitedliability
partnership between the Vonadas and Arnold, for which he prepared the agreement and then filed
before the Vonadas had signed it. In 2001, the Vonadas‘ newly retained independent counsel expressed
grave concerns about the Vonadas representation in Summer Brooke. Respondent claimed that he
represented Arnold and the Vonadas with full disclosure and waiver of conflicts; again indicating he
would withdraw should the parties not be able to resolve their misunderstandings. Respondent never
withdrew his representation of Arnold or the joint ventures, despite accusations of wrongdoings and
conflicts by the Vonadas, their attorneys, and their accountant. Arnold continued to commit to sell
multiple Vonada lots to which they held title without their consent as required by their partnership
and Arnold-Vonada. In February 2002, after sending the Vonadas a lot-sales proceeds check for
$79,903.69, respondent demanded the Vonadas convey title of their property into the joint venture‘s
name. To force the conveyance, respondent threatened litigation and then served the Vonadas with a
demand for arbitration. The Vonadas responded to the arbitration demand and called for respondent‘s