Filed May 7, 2012

BEFORE THE HEARING BOARD
OF THE
ILLINOIS ATTORNEY REGISTRATION
AND
DISCIPLINARY COMMISSION

In the Matter of:

JAMES THOMAS BALL,

Attorney-Respondent,

No. 6189040.

Commission No. 09 CH 21

REPORT AND RECOMMENDATION OF THE HEARING BOARD

INTRODUCTION

The hearing in this matter was held on January 12, 2012 at the offices of the Attorney Registration and Disciplinary Commission ("ARDC") in Chicago, Illinois, before a hearing panel consisting of Stephen S. Mitchell, Chair, Lee A. Marinaccio, and Bonnie K. Curran. Lea S. Black represented the Administrator of the ARDC. Respondent James Thomas Ball appeared and was represented by Samuel J. Manella.

THE PLEADINGS

On May 14, 2009 the Administrator filed a Complaint against Respondent alleging he made a false statement in connection with the settlement of a claim he filed against the City of Chicago. Respondent submitted an answer in which he admitted filing suit against the City of Chicago and settling that claim, but denied engaging in any professional misconduct.

THE EVIDENCE

The Administrator called three witnesses, including Respondent, and presented twelve exhibits which were admitted into evidence. Respondent testified on his own behalf, presented the testimony of two witnesses, and introduced nine exhibits which were admitted into evidence.

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The following is a summary of the admitted allegations, testimony and exhibits.

Undisputed facts

On November 1, 2000 the City of Chicago ("the City") seized Respondent's 1996 Toyota 4Runner vehicle. At the time of the impoundment, Respondent was responsible for making payments to Bank of America pursuant to a lease agreement for the purchase of the vehicle. When he attempted to claim his vehicle, Respondent was told it had been destroyed.

Respondent submitted a claim to his insurer, Government Employees Insurance Company ("Geico"), and thereafter Geico determined his net loss to be $15,118.36. On or about April 9, 2001, Geico remitted payment to Bank of America in the amount of $15,118.36.

On November 7, 2001, Respondent filed a complaint in the Circuit Court of Cook County against the City and on December 19, 2001, an amended complaint was filed. The complaint and amended complaint alleged that the City was "unjustly enriched" to the detriment of Respondent in that it received a windfall by essentially converting Respondent's property. On or about January 17, 2003 an attorney for the City drafted a Release and Settlement Agreement in which the parties stipulated that Respondent agreed to dismiss his claims against the City in consideration for his receipt of $21,000. The attorney for the City signed the agreement on January 17, 2003, and submitted it to Respondent on or after that date. Thereafter, Respondent executed the settlement agreement.

Paragraph six of the settlement agreement stated:

[Respondent] represents and warrants that no other person or entity has or has had any interest in the claims or causes of action referred to herein, that [Respondent] and [his] attorney have the sole right and exclusive authority to execute this Agreement and receive the sums specified herein; and that he has not sold, assigned, transferred, conveyed, or otherwise disposed of any of the claims or causes of action referred to herein.

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Dan Byrd

Dan Byrd testified he has worked at Geico for more than twelve years. In 2000 and 2001 he was a coverage adjuster and in that capacity, he investigated claims to determine if coverage would apply. (Tr. 18).

Byrd identified a standard Geico automobile insurance policy that was in effect in 2000 and 2001. A paragraph in that policy entitled "subrogation" provided:

When we make a payment under this coverage, we will be subrogated (to the extent of payment made by us) to the rights of recovery the injured person or anyone receiving the payments may have against any person or organization. Such person will do whatever is necessary to secure our rights and will do nothing to prejudice them.

This means we will have the right to sue for or otherwise recover the loss from anyone else who may be held responsible.

(Tr. 18-20; Adm. Ex. 8).

Byrd recalled investigating a claim submitted by Respondent, and identified an "activity log" which reflected computer recorded notes of actions and communications regarding Respondent's claim, including details of correspondence or conversations with the parties involved. He explained the notes are entered by Geico personnel and reflect all details of conversations, but they are not verbatim accounts of the conversations. The log indicates that the initial report of Respondent's loss was made by Respondent on December 12, 2000. The log entry from that date indicates Respondent reported his vehicle was towed for unpaid parking tickets, which he then paid, but the City then advised him his vehicle had been crushed. Respondent further reported he was seeking legal action. Byrd stated the person taking the report would typically ask numerous questions, including whether any personal property had been lost or damaged with the vehicle. If any personal property had been lost, that fact would be

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reflected in the log as part of the claim. Byrd had no knowledge that Respondent ever reported any loss of personal property. (Tr. 21-22, 25-26, 53-54, 58; Adm. Ex. 1).

Byrd stated he had never seen a claim involving the loss of a vehicle that had been booted and towed, and then left at the impound lot until its disposal. Byrd had some doubts about the veracity of the claim because Respondent had left the vehicle at the impound lot instead of trying to mitigate the damages. (Tr. 21-22).

The activity log reflects that in a recorded call on December 13, 2000, Respondent reported further details of the loss of the vehicle and stated he was filing suit against the City for the incident. Byrd explained that a call is recorded when the details of the case are being determined, or if the case involves questions of liability, injuries, or coverage issues. The recording would then be transcribed if a lawsuit or arbitration were involved. Byrd stated that as of December 2000, no reason existed to have the recorded interview transcribed. Byrd had no involvement in any attempts by Respondent to obtain a transcript of the December 13 call, and does not know why he did not receive a transcript. (Tr. 44, 55-59, 77; Adm. Exs. 1, 6; Resp. Ex. 1).

The activity log reflects that on December 22, 2000 Byrd spoke to Respondent and was informed Respondent was preparing a suit against the City and would be adding GEICO as a subrogated party "whether Geico is willing to be added to suit or not." Byrd denied informing Respondent of Geico's position with respect to a suit, and denied waiving Geico's subrogation rights. (Tr. 26-27, 61; Adm. Ex. 1).

After learning of Respondent's potential suit, Byrd testified he never notified the City that Geico might have a lien against any settlement or proceeds Respondent might receive, nor was he aware anyone else from Geico notified the City. He stated if Geico is trying to get its money back from an insured, it typically files a lien. (Tr. 62-63).

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On January 3, 2001, Byrd was informed by Respondent that Respondent was filing a civil rights action against the City. Byrd denied stating a position on behalf of Geico at that time. On that same date Byrd sent a letter to Respondent advising him that Geico was not waiving any of its rights or admitting any obligations under the policy, and that it was reserving its rights because "it appears that no loss occurred within the definitions and meanings of a covered loss under the policy." Byrd stated that the reference to Geico's "rights" included subrogation rights. He explained that the letter, which in effect informs the insured that Geico may not cover the incident, is standard practice in cases where coverage is an issue and no determination has been made. Nothing in the activity log suggested to Byrd that Respondent called to discuss the letter. (Tr. 27-30, 67; Adm. Exs. 1, 2; Resp. Ex. 8).

On January 5, 2001 Byrd called Respondent and left a message requesting a copy of Respondent's lawsuit. He testified he wanted the information because if a suit had been filed, he would have transferred the file to an upper level adjuster. He denied that Respondent ever provided a copy of a complaint. Byrd made another request for a courtesy copy of the suit in a telephone conversation on January 8, 2001, and at that time was advised by Respondent that a suit had not yet been filed. Byrd was further advised that Respondent sues insurance companies for a living and if Geico did not pay his claim in a timely manner, Respondent would add Geico as a defendant. Byrd recalled transferring the call to his supervisor after Respondent cursed at him. He stated Respondent used the same tone with other Geico employees. (Tr. 30-32; Adm. Ex. 1).

During the telephone conversation of January 8, 2001, Byrd did not tell Respondent that Geico had a position on Respondent's lawsuit against the City. Byrd denied receiving a copy of any complaint filed by Respondent, and was not aware Respondent sued Geico until several years later. (Tr. 33, 78).

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Following the telephone call of January 8, 2001, Byrd continued to investigate the claim and obtain paperwork. As best he could determine, Respondent's vehicle was sold for $130 and landed in a junkyard in New York. Although Byrd believed the claim was not covered because the vehicle was left in the impound lot and Respondent did not attempt to mitigate the damages, a decision was made at the corporate level to pay for the loss. Geico determined the vehicle's value to be $19,000 but after subtraction of the deductible and the salvage value, the payment due the lienholder, Bank of America, was $15,118.36. (Tr. 21, 34-36, 74; Adm. Ex. 3).

Byrd identified a "Letter of Guarantee" from Bank of America to Geico, dated April 3, 2001, which lists the amount of Respondent's indebtedness to Bank of America as $25,092.41, but indicates the Bank was releasing its interest in the vehicle for the settlement amount of $15,118.36. Byrd explained that a reference in the letter to "gap insurance" refers to coverage that may be provided by another party if the vehicle is a total loss and the insured still owes money on it, as Respondent did in this case. The letter instructs Geico to "please advise clamant to continue making payments until settlement is received and to contact the Bank regarding any deficiency that my be owed." (Tr. 38-39, 65: Adm. Ex. 8).

On April 9, 2001 Geico sent a check for $15,118.36 to Bank of America. Byrd did not know if Geico sent a copy of the Letter of Guarantee or the check to Respondent, but stated the insured typically would not receive checks to lienholders. As to whether Bank of America could pursue Respondent for any deficiency not covered by Geico's payment, Byrd testified he was not a total loss adjuster and therefore did not know the answer, but he understood the settlement to be full and final. (Tr. 37-38, 66, 70-72, 80; Adm. Exs. 1, 8).

Byrd testified that a written explanation of the settlement amount was sent to Respondent on or about April 17, 2001. He recalled, and the activity log confirms, that he also had a telephone conversation with Respondent on April 17, 2001 during which he informed

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Respondent that Geico had paid the lienholder. On April 18, 2001 Byrd received a call from Respondent inquiring why a deduction was made for salvage value, and Byrd advised Respondent he did not handle total loss and salvage. Byrd testified he had no personal knowledge of why salvage value was included in the calculation because he was not a total loss adjuster, but he understood Geico retains salvage rights in a total loss situation. (Tr. 36, 39-40, 63, 73; Adm. Exs. 1, 3).

Byrd testified that after Geico paid Bank of America, the claim was considered closed and his own involvement ended. Approximately three years later on November 17, 2004, he received a phone call from a Chicago police officer who informed him Respondent was trying to file a class action lawsuit against the police department alleging it stole his vehicle. The police officer asked for information regarding Geico's payment to the lienholder. Byrd then received a call from another City representative who asked if Respondent had been informed of Geico's payment to the lienholder, and if Respondent would be required under his policy to reimburse Geico from the amount he received as a result of litigation. Byrd stated those calls were his first notice of Respondent's suit, as Respondent had not informed him of any filing. Byrd advised the City representative that Respondent had been verbally informed of the payment. Byrd stated that Geico reopened Respondent's file and learned Respondent had settled his lawsuit against the City. (Tr. 33, 41-43, 69, 78-79; Adm. Ex. 1).

On November 19, 2004, Byrd received a call from Respondent, which call was recorded and transcribed. Byrd acknowledged that Respondent volunteered information regarding his settlement with the City, but noted at the time of the conversation Geico already knew of the settlement, and Respondent was aware of Geico's knowledge. The transcript reflects that Respondent's statement "I've been paid by the City" occurred immediately after Byrd stated that

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Geico was investigating any possible subrogation interest it might have. (Tr. 44, 68-69, 79-80; Adm. Ex. 6; Resp. Ex. 6).

On November 23, 2004 Byrd made a notation in the activity log under the heading "Subro Summary" indicating that Respondent recovered $21,000 from the City through a lawsuit, but had never informed Geico of the recovery. Byrd testified that Geico continued its investigation and ultimately brought suit against Respondent to recover money it had paid out. Byrd testified in that lawsuit. (Tr. 51-52; Adm. Ex. 1).

Byrd denied ever telling Respondent that Geico had waived its subrogation rights, or that Geico would not be interested in any recovery Respondent received from the City. Byrd did not have the authority to waive Geico's subrogation rights and had no knowledge that Geico ever waived its subrogation rights. Byrd stated he has never seen another case where the insured sued for a loss on which Geico had already paid. (Tr. 52-53).

Kevin Gross

Kevin Gross, an attorney with Geico for ten years, testified that subrogation allows an insurance company to step into the shoes of its policyholder and recover monies paid out on a covered claim. Subrogation rights can be waived if the insurer agrees not to enforce its rights under a policy, but the waiver is always memorialized in writing and typically something is given in consideration for the waiver. Whether an insurance company could waive its rights by "conduct" depends on the circumstances as well as the context of any communications between the insurer and the insured. An insurance company's statement that it wants nothing to do with any lawsuit filed by the insured is not a waiver of rights, and does not affect the company's right to recover any payments the insured may receive. (Tr, 84-86, 125-26).

Gross testified that a provision in Respondent's insurance policy gave subrogation rights to Geico, and Geico did not waive those rights. Gross acknowledged he was not a party to the

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conversations between Respondent and Geico representatives that are reflected in the activity log, but he believes the descriptions are accurate. Regarding Respondent's intention to sue the City, as reflected in the log, Gross was not aware that Geico filed any lien regarding the lawsuit, and denied that filing a lien would be a natural course of conduct for Geico. He explained that subrogation is a contractual right of reimbursement, rather than a lien. (Tr. 86, 121-23, 127-28).

Gross was not aware that Geico sent any letters placing Respondent on notice of Geico's subrogation rights. In January 2001 Geico sent Respondent a reservation of rights letter and in April 2001 Geico sent a breakdown of the lienholder payment. With respect to the $5,000 withheld as salvage value, Gross explained that if the vehicle were ever recovered an additional $5,000 would be paid to the lienholder or, if the lien were paid off, the money would be paid to Respondent. Gross was not aware of any releases or documents signed by Respondent when Geico issued payment to the lienholder. (Tr. 129-32, Adm. Exs. 2, 3).

Gross testified he handled Geico's claim against Respondent after it was referred to him by Geico's payment recovery unit. Gross understood Geico had paid on Respondent's claim and then Respondent recovered for the same loss against the City. In reviewing Respondent's settlement agreement with the City and a provision that "[t]he settlement check will be made payable to plaintiff, the plaintiff's attorney," Gross was struck by the fact that a line had been drawn through the remaining words in the sentence "and lien claimants, if any, of which the CITY OF CHICAGO has notice." Respondent's initials appeared by the lined out portion of the sentence. Gross also took note of a paragraph of the agreement which stated "no other person or entity has or has had any interest in the claims or causes of action." Gross felt the statements were factually false and inconsistent with Geico's previous payment of Respondent's claim. (Tr. 86-88; Adm. Ex. 5).

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After investigating the matter, Gross sent a letter to Respondent in which he pointed out the subrogation clause in Respondent's policy and demanded reimbursement of the $15,118.36 Geico had paid to the lienholder. Gross then received a telephone call from Respondent, who denied making a claim for the loss and inquired as to why Geico had paid the lienholder. Gross stated he was surprised by Respondent's denials because he recalled notes in the activity log regarding Respondent's insistence that Geico take action. Gross did not recall Respondent mentioning anything about Bank of America pursuing him for any deficiency. (Tr. 87-93; Adm. Ex. 7).

When Respondent failed to send payment to Geico, Gross drafted and filed a complaint against Respondent. Service of process was achieved after at least twenty-three attempts, but the case was then dismissed on Respondent's motion for failure to exercise due diligence in service. Geico refiled the complaint and Respondent was served by substitute service on his roommate. After Respondent failed to participate and Geico proved up its damages, an ex parte default judgment was entered against Respondent. Respondent subsequently filed a motion to vacate the judgment of default, which motion was stricken as untimely, and he then filed a petition to vacate the judgment. (Tr. 94-97; Adm. Ex. 8).

Gross testified that Respondent attached an affidavit to his petition to vacate in which he denied being properly served because the summons was left with a neighbor in his building who did not live with him. After reviewing the process server's affidavit, Gross concluded either the process server was in error, or Respondent's affidavit was false. Gross stated he addressed the inconsistency in a written pleading, to which Respondent responded by filing an amended motion with a different affidavit. The new affidavit made reference to substituted service and stated the person who was apparently served never advised Respondent of the service and has since not been seen. Gross believed Respondent's second affidavit was a "complete 180" from

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his first affidavit, and he reported the inconsistent statements to the ARDC. Gross never asked Respondent why the affidavits were different. (Tr. 103-106, 134; Adm. Ex. 8).

Gross recalled at the January 23, 2008 hearing on Respondent's petition, Respondent reported to the judge that Geico had not paid off the entire lien to Bank of America; Respondent had been sued for the balance of the lien by a successor in interest to Bank of America; the suit had been dismissed without prejudice; Respondent lost personal property with his vehicle; and he had paid between $8,000 and $10,000 in tickets. Gross did not recall seeing any mention of personal property loss in the Geico log notes or in Respondent's complaint against the City. Gross stated that Respondent's petition to vacate the default judgment was eventually granted. (Tr. 106, 110-13; Adm. Ex. 4).

Gross stated that Geico's suit against Respondent proceeded to trial and a judgment was entered against Respondent for the full amount of $15,118.36. In delivering the ruling, the Court stated that Respondent's representation in his settlement agreement with the City that "no other person or entity has or has had an interest in the claims or causes of actions referred to herein" was a "falsity." On appeal, the Illinois Appellate Court affirmed the judgment of the trial court. (Tr. 114-16; Adm. Exs. 9, 11).

Gross stated Respondent's arguments throughout the court proceedings lacked authority or common sense, and he failed to distinguish or even address a 2006 Illinois appellate case which dealt with an insurance company's assertion of its subrogation rights. In that case the court examined the same exact policy language and held that Geico had a right to sue a tortfeasor, but had no obligation to sue that tortfeasor. Gross stated that subrogation is a business decision made by the insurance company, and it is not dictated by the policy holder. Gross recalled that during the litigation the Court chastised Respondent for things he said or produced

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and took note of the differing affidavits. Gross acknowledged Respondent was never formally sanctioned. (Tr. 118-20, 133).

Prior to this case, Gross recalled representing Geico in two to five matters where an insured sued for a loss that Geico had already paid. In those cases, however, the insured was not an attorney. (Tr. 117).

Respondent

Respondent testified he was licensed to practice in Illinois in 1984 after practicing in Ohio for three years, and started his own law practice in 1992. From 1986 until he closed his practice in 2007 or 2008, he focused on representing plaintiffs in medical malpractice cases. On a number of occasions Respondent has dealt with issues involving subrogation and the resolution of liens. He understands subrogation to mean that an insurance company who pays benefits on behalf of an insured has the right to proceed against a tortfeasor for the amounts paid out. In Respondent's experience, when a lienholder asserts a lien on proceeds from a settlement or verdict, the lienholder gives notice of the lien by letter or court filing. (Tr. 152-54, 192, 194, 250).

Respondent testified he leased a Toyota 4Runner in 1996 when the cost of the vehicle was approximately $30,000. In November 2000, he was responsible for making payments to Bank of America pursuant to the lease agreement, and owed approximately $25,000 on the vehicle. Respondent last saw his 4Runner in October or November 2000 when it was parked on a street near his home. When he discovered the vehicle was missing, he contacted the police and was informed it had not been towed. He assumed the vehicle was stolen but within a few days the police advised him it had, in fact, been booted and towed. Respondent acknowledged he had received approximately forty parking tickets in a twelve-month period totaling approximately

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$2,000, which he paid, and that his city sticker had expired. In December 2000 Respondent reported the loss of his vehicle to Geico. (Tr. 155-63, 194-95; Adm. Ex. 1).

Respondent recalled that when he attempted to retrieve his vehicle, he was told it had been crushed. Because he was suspicious, he investigated further and eventually learned the City had sold his vehicle for $134. Respondent stated he informed Geico of his intention to sue the City and to add Geico as a third-party plaintiff to the suit, whether Geico wanted to be added or not, because Geico had a subrogation interest and because if Geico paid the claim on the vehicle it would be the real party in interest. Respondent stated he believed Geico had a subrogation interest in any proceeds he would receive from the City, and he advised Geico of that fact from the start. He recalled speaking to an in-house attorney who clearly stated that Geico did not want to be part of the suit and would seek sanctions against Respondent if Geico were added as a plaintiff. Respondent interpreted Geico's position as either a waiver or abandonment of its subrogation claim. He acknowledged, however, that no one from Geico ever told him, either verbally or in writing, that Geico waived its subrogation rights. (Tr. 194-99, 203-204, 327, 242-45; Adm. Ex. 1).

On January 3, 2001 Respondent received a letter from Geico stating that the insurer was reserving its rights because "it appears that no loss occurred within the definitions and meanings of a covered loss under the policy." Respondent admitted being angry that Geico would refuse to pay. (Tr. 200-202; Adm. Ex. 2).

Respondent did not recall receiving a letter from Geico, dated April 17, 2001, which provided an explanation of the payment to the lienholder in the amount of $15,118.36, but stated he did have discussions with Geico about the contents of the document and the amount that was paid. Notes in the activity log confirm he had not received the letter as of April 17, but the notes also indicate he was verbally informed of Geico's payment to the lienholder. Respondent

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remembers arguing with Geico representatives that Geico's deduction for salvage value was unfair because Respondent did not have the vehicle and therefore could not sell it for salvage. (Tr. 206-210; Adm. Ex. 1).

Respondent stated he hired attorney Paul Shuldiner, who is now deceased, to file a lawsuit against the City and agreed that Shuldiner would be entitled to one-third of the recovery plus costs. Respondent decided to bring suit because the City's actions were wrong; he had to make a downpayment of $8,000 or $10,000 on another vehicle; he lost personal property that was in the 4Runner; and he was afraid Bank of America might attempt to recover against him for the amount of the lien not paid by Geico. He stated that Geico assumed no risk or costs of the lawsuit, and had been repeatedly informed of his intentions. (Tr. 209-12).

Respondent testified that Shuldiner prepared a complaint for unjust enrichment, based on information provided by Respondent, and filed it on November 7, 2001. Respondent acknowledged the lawsuit does not mention the loss of personal property, but he noted his damages would have been offered as evidence at trial. With respect to a paragraph in the complaint that states "plaintiff is still liable to the leasing company for the value of the car and he has been notified that he will be sued," Respondent did not recall who notified him or when, but stated someone must have notified him because Shuldiner included the allegation in the complaint. Respondent noted that at that time the complaint was filed, he was not certain Geico had paid Bank of America. Although Geico had informed him of the payment verbally, he did not recall receiving the document explaining the payment and, until recently, he had not seen the check to Bank of America. (Tr. 172, 177, 185, 198, 213, 233-35, 238-39, 259).

Respondent testified he did not add Geico as a party to his suit because Geico representatives had stated they did not want to be involved in the suit. With respect to Dan Byrd's request for a copy of any complaint filed against the City, Respondent acknowledged he

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did not tell Byrd when he filed the case nor did he send a copy of the complaint because he left that to his attorney. He noted Geico's request for a copy of the suit was made before any complaint was ever filed. Respondent denied trying to keep Geico in the dark and pointed out he wanted the insurer to be involved. (Tr. 205, 215, 217, 232-33).

Respondent identified a settlement agreement between himself and the City, which he stated he entered into on the advice of his attorney. With respect to a sentence listing the payees of the settlement check, Respondent stated that the additional phrase "and lien claimants, if any, of which the City of Chicago has notice" was lined out because the City represented that Geico never submitted a notice of lien to the Court or to the City. Respondent noted he had not received any lien letter from Geico and the lack of such document signified to him that Geico wanted nothing to do with the case. Respondent acknowledged he was the person who drew a line through the words, and he placed his initials next to the deletion. He did not speak to anyone at Geico before making the deletion. (Tr. 193, 212-14, 244; Adm. Ex. 5).

The settlement agreement also stated:

Plaintiff represents and warrants that no other person or entity has or had any interest in the claims or causes of action referred to herein, that it and its attorney have the sole right and exclusive authority to execute this Agreement and received the sums specified herein.

Respondent believed the foregoing language to be accurate because Geico had waived or abandoned its claim. He also stated he received only $13,000 of the $21,000 paid by the City in settlement and because that amount did not begin to cover his losses, he did not believe Geico had a right to it. (Tr. 216-17).

On January 31, 2003 an agreed order was entered by the Court dismissing Respondent's case against the City due to the parties having reached a settlement. The settlement agreement reflects that it was signed by Respondent on March 13, 2003, and filed with the Court on March

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25, 2003. Respondent acknowledged he did not send a copy of the settlement agreement to Geico. He noted that Geico could have sued the City pursuant to its subrogation rights even after Respondent's settlement with the City. (Tr. 201, 244, Adm. Ex. 5).

On November 19, 2004, Respondent telephoned Dan Byrd of Geico because he was concerned that he may have misreported his vehicle as being stolen. During that conversation he advised Byrd he had been paid by the City pursuant to a settlement. He denied trying to hide anything from Geico, and pointed out that he had advised news reporters of the settlement after the case was settled. (Tr. 218-19; Adm. Ex. 6).

Respondent received a letter dated February 4, 2005 from Geico's attorney, Kevin Gross, in which Gross noted Respondent's settlement with the City for $21,000 and requested reimbursement of the amount Geico had paid to Bank of America. Respondent refused the demand because he received only $13,000, which did not even cover his total loss. He also advised Gross that, pursuant to the common fund doctrine, if Geico's lien were adjudicated, any recovery would be reduced by one-third because Respondent had paid one third of his settlement in fees and costs. Respondent stated that Gross would not budge. (Tr. 220-21; Adm. Ex. 7).

Thereafter, Respondent was sued by Geico. Regarding service of process, an affidavit of a special process server states that substitute service was accomplished on March 27, 2007 by leaving a copy of the summons and complaint with Respondent's roommate, Kelly Cole. Respondent denied that Cole lived with him at the time of service, but stated she did have a key to his home. After a default order was entered against him, Respondent challenged the service of process and submitted a supporting affidavit stating that his neighbors told him they had received the summons and placed it on top of a common mailbox. Prior to filing the affidavit, he did not check the court file to read the process server's affidavit, but he stated he had no reason to disbelieve his neighbors. When Respondent later learned Cole had been served, he realized his

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first affidavit was in error and thereafter filed an amended affidavit in which he admitted substitute service. He noted that the Court granted his petition to reopen the case despite the opposing counsel's objections that his affidavits were contradictory. He denied being reprimanded or sanctioned by the Court for any reason. (Tr. 221-24, 246-50, 260-61; Adm. Ex. 8).

Respondent acknowledged that during the Geico proceedings in January 2008, he advised the Court he had been sued by Bank of America, or someone on its behalf, in relation to the lien on his car. He testified he had been sued by Arrow Financial Services in 2006 in connection with a credit card debt owed to Bank of America, but he stated he did not have a credit card with that entity. Because the amount involved in the credit card suit was similar to the amount he owed Bank of America for his vehicle, and the debt covered the same time period, he believed Arrow Financial had purchased Bank of America's debt and mistakenly brought the suit as a credit card debt. The suit, which made no mention of a lien for a vehicle, was voluntarily dismissed without prejudice and no other suit was ever filed. Respondent believed his statement to the Court was true, but acknowledged he did not advise the Court that the suit by Arrow Financial was for a credit card debt. He also acknowledged no one pursued him specifically for money owed to Bank of America in relation to his vehicle. (Tr. 164-72, 174-77, 179-80, 186-88, 242; Adm. Ex. 12).

Respondent advised the Court in 2008 that he lost personal property when his car was towed. He believed he also reported that fact to Geico, although that loss was not recorded by Geico. He recalled losing a suitcase, one or two suits, some ties, a shirt and CDs. Respondent also advised the Court that he had to pay between $8,000 and $10,000 in tickets. With respect to his previous testimony that he paid $2,000, he stated the City originally claimed he owed between $8,000 and $10,000, but was in error as to many of the tickets. (Tr. 172-74).

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During the pendency of Geico's lawsuit, Respondent requested that Geico provide any transcripts of his telephone conversations with Geico representatives. Geico's counsel responded that Geico had already produced the one and only transcript it had. Respondent knew at least one other call had been recorded, as stated by Geico in its answers to interrogatories, and suspected that others had been as well. (Tr. 226-27; Adm. Ex. 1; Resp. Exs. 4, 5 ).

After a judgment was entered in favor of Geico, Respondent paid Geico $17,000 for the amount Geico paid to Bank of America, plus interest. Respondent stated he had never been involved in a case where the subrogated party received more than it paid out, as Geico did in this case. Respondent denied that he engaged in any subterfuge, and stated he takes his reputation and license to practice law very seriously. (Tr. 224, 228, 257; Adm. Ex. 9; Resp. Ex. 3).

Evidence in Rebuttal

Kevin Gross

Kevin Gross testified that after he sent Respondent the letter of February 4, 2005, he spoke to Respondent but they did not discuss settlement. In 2008 Respondent made an offer of $5,000, but that offer was rejected by Geico. Gross recalled briefing the issue of the common fund doctrine and concluding that Respondent did not have standing to seek a reduction of what Geico was contractually entitled to recover, because Respondent was not the attorney who created the settlement fund from the City of Chicago. Gross was not aware that Respondent's attorney, Shuldiner, ever pursued a claim based on the common fund doctrine. Gross noted that the judge agreed with his argument and rejected Respondent's argument. He acknowledged that Geico did not pay any portion of the fees Respondent paid to Shuldiner, nor did it pay any costs of the lawsuit. (Tr. 266-70).

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Evidence Offered In Mitigation

Respondent

Respondent testified he has provided pro bono legal services to individuals or groups such as indigent famers in Northern Ohio regarding a tax issue; a plumber who was owed more than $100,000; a family who was forced out of their home for delinquent rent; foreign students with visa difficulties; a children's art gallery; and elderly and impoverished persons through Resurrection Home Health. Respondent has also made charitable contributions to various organizations and has cooperated in the disciplinary proceedings. (Tr. 229-31)

Edward Washington, II

Edward Washington, II testified he has been a judge of the Circuit Court of Cook County since 2002 and has known Respondent since 2005 or 2006 when Respondent appeared before him in a personal injury case. Respondent was truthful in raising an issue in that case that harmed his own position. Judge Washington recalled asking two or three other judges about Respondent and learning Respondent was an excellent lawyer. He did not hear anything negative about Respondent's candor or truthfulness. He stated Respondent has not appeared before him in any other cases and their last contact may have been two years ago. (Tr. 135-46).

Judge Washington testified he has no knowledge of the facts of the Administrator's complaint but he would be surprised if Respondent were found to have made a false statement to a tribunal. He acknowledged such a finding could potentially change his opinion of Respondent's reputation, but he would have to know the facts. (Tr. 148-49).

Patricia Nowak

Patricia Nowak, an attorney, testified she first met Respondent in the late 1980s when he was the opposing counsel in a medical malpractice case. Since that time, they have been on opposing sides in two other cases. In all of the cases Nowak found Respondent to be fair and

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aboveboard in any representations he made. Based on conversations she has had with other attorneys in the medical malpractice legal community, she stated Respondent has a reputation for being a fierce advocate, but very honest and aboveboard. (Evid. Dep. 7-14).

Nowak stated she has not read the disciplinary complaint against Respondent, but she did not believe any allegations or findings of dishonesty would affect her opinion of his reputation for truth and honesty. She would be surprised if anyone found Respondent to be dishonest. (Evid. Dep. 17-19).

Prior Discipline

The Administrator reported that Respondent has not been previously disciplined by the Illinois Supreme Court or any Board of the Commission.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In attorney disciplinary proceedings the Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. In re Ingersoll, 186 Ill. 2d 163, 168, 710 N.E.2d 390 (1999). Clear and convincing evidence constitutes a high level of certainty, which is greater than a preponderance of the evidence but less than proof beyond a reasonable doubt. People v. Williams, 143 Ill. 2d 477, 577 N.E.2d 762 (1991). Suspicious circumstances, standing alone, are not sufficient to warrant discipline. In re Winthrop, 219 Ill. 2d 526, 848 N.E.2d 961 (2006).

The evidence showed that Respondent leased a 1996 Toyota 4Runner through Bank of America and insured the vehicle through Geico. Pursuant to the Geico insurance policy, when Geico made a payment under the policy it became subrogated to the insured's rights of recovery against others, and the insured had an obligation to do whatever was necessary to secure Geico's rights and not do anything to prejudice them. Sometime around November 2000, Respondent's Toyota 4Runner was towed by the City of Chicago for unpaid parking tickets and in December

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2000, he reported his loss to Geico. At that time, he owed Bank of America approximately $25,000.

Respondent had several conversations with Geico representatives in late 2000 and early 2001 during which he voiced his intention to sue the City of Chicago and add Geico as a party. Respondent claimed a Geico in-house attorney advised him that Geico did not want to be part of the suit and would seek sanctions if Respondent added Geico as a plaintiff. He acknowledged, however, that Geico never stated, either verbally or in writing, that it was waiving its subrogation rights. Dan Byrd, the coverage adjuster handling Respondent's claim, denied he ever expressed a position with respect to Respondent's lawsuit or that he waived Geico's subrogation rights. In fact, he stated he did not have any authority to waive those rights.

In January 2001 Byrd sent Respondent a reservation of rights letter. Three months later Geico made payment to Bank of America in the amount of $15,118.36. Byrd testified, and his log notes confirm, that Respondent was notified of the payment by telephone on April 17, 2001. Respondent did not dispute being verbally informed of the payment and, in fact, acknowledged having discussions with Geico regarding the amount withheld for salvage. He denied receiving a written explanation of the payment or a copy of the check to Bank of America, however, and therefore was not certain that Geico had actually made the payment to Bank of America.

In November 2001, Respondent brought suit against the City of Chicago for unjust enrichment in the conversion of his vehicle. In or about January 2003, the City agreed to pay Respondent $21,000 and Respondent agreed to dismiss his claims. As part of the settlement agreement, Respondent represented that "no other person or entity has or has had any interest in the claims or causes of action referred to herein, that [Respondent] and [his] attorney have the sole right and exclusive authority to execute this Agreement and receive the sums specified herein; and that he has not sold, assigned, transferred, conveyed, or otherwise disposed of any of

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the claims or causes of action referred to herein." We received no evidence that Respondent advised the City of Geico's payment to Bank of America or Geico's subrogation interests.

The Administrator has alleged that Respondent's representation in the settlement agreement, as set forth above, was false and Respondent knew or should have known of the falsity. We agree. The plain language that no other entity "has or has had" any interest in the claim asserted in the lawsuit is directly contrary to the provision in Respondent's insurance policy regarding Geico's subrogation rights upon its payment for a loss. Once Geico paid out on Respondent's claim, it stepped into the shoes of the insured, and could then pursue its subrogation rights if it chose to do so. See Trogub v. Robinson, 366 Ill. App. 3d 838, 846-67, 853 N.E.2d 59 (1st Dist. 2006) (Geico insurance policy gave insurer right to sue in subrogation but did not obligate insurer to file a subrogation action).

We do not accept Respondent's position that Geico waived or abandoned its subrogation rights. While it is true that a waiver does not have to be expressly stated and can be implied from acts or words that are consistent with an intent to waive, Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307, 821 N.E.2d 269 (2004), we do not believe any refusal on Geico's part to be a party to Respondent's suit equates to an implied waiver of its subrogation rights. Even if Respondent's report of a conversation with an in-house attorney is accurate, that conversation tells us only that Geico did not want to be involved in Respondent's suit. We do not interpret the statement to mean the insurer was giving up its right to pursue its own action if it paid out on Respondent's claim, nor do we believe Respondent could have inferred such a meaning from the statement, especially given his background of working with insurance companies and subrogation issues. Moreover, even if Respondent did believe Geico had given up its subrogation rights, his conversations with Geico representatives confirm that he was aware

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that Geico had those rights at one time and thus his representation that no entity has or "has had" an interest in his claims was clearly inaccurate.

With respect to Respondent's testimony that he was not certain Geico actually made a payment to Bank of America, we find that position to be implausible, as well as contrary to his answer to the Administrator's Complaint. Whether or not he saw physical proof of the payment, he admitted to being verbally informed of the payment and even discussed the details with a Geico representative. The fact Respondent's communications with Geico ceased after April 2001, as evidenced by the log notes, also indicates he knew that Geico had resolved the matter.

Respondent's argument that Geico did not have a subrogation interest in the proceeds of his settlement was also unpersuasive. Respondent testified he was seeking to recover for personal property left in his vehicle, yet that loss was not mentioned in his lawsuit against the City, nor was it noted in the activity log as part of his initial report to Geico. As to Respondent's claim that he sued the City because he remained liable for the value of his vehicle or for the deficiency left after Geico's payment, he did not present any evidence of his liability other than his own vague recollection that Bank of America had indicated it would hold him responsible. The fact an action was brought against him several years later for an alleged debt owed on a credit card issued by Bank of America, which Respondent believed had been mistaken for his debt on his leased vehicle, does not prove Bank of America made any demands on him in 2001.

Our determination that Respondent's representation in the settlement agreement was false is consistent with and supported by the Circuit Court's ruling in the suit brought by Geico. In announcing its decision in favor of Geico, the Court clearly stated that Respondent's representation was a "falsity." While the Court's finding is not binding on us, it can be considered with the other evidence presented in determining whether misconduct has been established. See In re Owens, 144 Ill. 2d 372, 378-79, 581 N.E.2d 633 (1991) (judgment in a

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civil case may not be the only factor in Hearing Board's decision but can be a component in the greater whole).

Having rejected Respondent's arguments, we find the Administrator proved by clear and convincing evidence that he made a statement of material fact of law to the City which he knew or should have known was false in violation of Rule 4.1. Because the settlement agreement was filed with the Court, we find he also made a statement of material fact to a tribunal which he knew or reasonably should have known was false in violation of Rule 3.3.1

With respect to the charge that Respondent engaged in dishonest conduct in violation of Rule 8.4(a)(4), we are aware that motive and intent are rarely proved by direct evidence and must be inferred from conduct and circumstances. See In re Stern, 124 Ill. 2d 310, 529 N.E.2d 562 (1988). We have found that Respondent knew of Geico's subrogation interests, he could not infer any waiver by Geico, he knew Geico made payment to Bank of America, and his suit against the City was not for claims separate and apart from the subrogated interests. We also consider Respondent's failure to provide key information to Geico. Notably, he did not inform his insurer of his suit against the City despite the fact Byrd made repeated requests for a copy of any complaint. Further, he did not advise Geico of his recovery until November 2004, at which time he knew Geico had already had conversations with City representatives and was contemplating asserting its subrogation interests. By depriving Geico of information regarding his actions, Respondent prevented that entity from asserting a possible roadblock to his own financial gain. We conclude from the foregoing conduct and circumstances that Respondent's statement in the settlement agreement that no entity "has or has had" an interest in his claim was intentionally false and a violation of Rule 8.4(a)(4).

Our conclusions are based on the evidence regarding Respondent's report of his loss, his communications with Geico and his filing of a suit against the City. Although the Administrator

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challenged Respondent's credibility by presenting evidence of his alleged misrepresentations in a subsequent lawsuit brought by Geico, we do not believe his explanations for his statements were so far-fetched as to be deemed totally unbelievable. We note that the judge in the Geico action did not sanction him for any misrepresentations.

The Administrator also charged Respondent with engaging in conduct that is prejudicial to the administration of justice in violation of Rule 8.4(a)(5). Because Respondent's actions were prejudicial to Geico and caused that company to bring suit to recover the payment it made on his behalf, we find he violated that rule. Finally, the Administrator charged Respondent with engaging in "conduct which tends to defeat the administration of justice or to bring the courts or legal profession into disrepute, in violation of Supreme Court Rule 770." The Illinois Supreme Court recently stated, "Rule 770 is not itself a Rule of Professional Conduct" and "one does not 'violate' Rule 770. Rather, one becomes subject to discipline pursuant to Rule 770 upon proof of certain misconduct." In re Thomas, 2012 IL 113035, par. 92. Accordingly, based on the wording of the allegation in the Complaint before us, we find no violation of Rule 770.

RECOMMENDATION

Having concluded Respondent engaged in misconduct, we must determine the appropriate discipline. In so doing, we keep in mind that the purpose of these proceedings is not to punish, but rather to safeguard the public, maintain the integrity of the profession and protect the administration of justice from reproach. In re Timpone, 157 Ill. 2d 178, 623 N.E.2d 300 (1993). Attorney discipline also has a deterrent value in that it impresses upon others the repercussions of errors such as those committed by Respondent in the present case. In re Discipio, 163 Ill. 2d 515, 645 N.E.2d 906, 912 (1994).

In arriving at the appropriate discipline, we consider those circumstances which may mitigate and/or aggravate the misconduct. In re Witt, 145 Ill. 2d 380, 583 N.E.2d 526 (1991). In

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mitigation, Respondent cooperated in these proceedings, has been licensed since 1984 with no prior discipline, presented witnesses who testified to his good character, and has provided pro bono legal services. See In re Clayter, 78 Ill. 2d 276, 399 N.E.2d 1318 (1980). In addition, Respondent engaged in an isolated act of misconduct rather than a pattern of bad behavior. See In re Enstrom, 104 Ill. 2d 410, 472 N.E.2d 446 (1984) (Court found an isolated act of misconduct was a significant factor in determining discipline).

We do not consider Respondent's professed reliance on his attorney's advice to be a mitigating factor. Reliance on counsel has been considered in cases where the attorney was young and inexperienced, In re Pietrzak, 92 CH 445, M.R. 8632 (Jan. 25, 1994), In re Moll, 99 CH 21, M.R. 16726 (May 17, 2000), or where the attorney was acting in an area of first impression. In re Gabe, 01 CH 8, M.R. 21734 (Sept. 18, 2007). Neither of those circumstances exist here. Respondent was experienced in insurance and subrogation issues, had dealt directly with representatives of Geico, voluntarily accepted the terms of the settlement agreement and made his own revisions to the agreement. Respondent cannot hide behind "advice of counsel" to excuse any of his actions.

In aggravation, we may consider any harm or risk of harm that was caused by Respondent's conduct. See In re Saladino, 71 Ill. 2d 263, 375 N.E.2d 102 (1978) (discipline should be "closely linked to the harm caused or the unreasonable risk created by the [attorney's] lack of care"). The evidence showed that Geico expended time and resources in bringing suit against Respondent to recover for the $15,118.36 it had paid out on his behalf. We also consider, however, that Respondent's payment of $17,000 to Geico compensated the insurer for its payment to Bank America, as well as its court costs. Since Geico ultimately received reimbursement for a payout that it apparently had decided not to pursue on its own, we do not give substantial weight to this factor.

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The Administrator, in urging us to recommend a suspension of one year, placed primary reliance on two cases involving attorneys who engaged in dishonest conduct for their own financial gain. In In re Segall, 117 Ill. 2d 1, 509 N.E.2d 988 (1987) the Court imposed a two year suspension upon an attorney who attempted to deceive two creditors. The attorney bypassed the lawyers who represented his creditors and sent the companies a minimal check which bore a limitation stating that acceptance of the draft would constitute a settlement of all claims against him. The Court found the attorney engaged in acts that were calculated to deceive the credit card companies, attempted to involve the courts in his fraudulent scheme, and improperly contacted litigants represented by counsel without permission from their counsel. In In re Sorkin, 91 CH 434, M.R. 10091 (May 19, 1994) a one-year suspension was imposed upon an attorney who fraudulently attempted to settle separate debts to both a parent corporation and its subsidiary by writing a check to the parent company with a restrictive endorsement that included the debt to the subsidiary company, and who communicated directly with the parent corporation even though the subsidiary company was represented by counsel.

We see some similarity between the present case and the foregoing cases in that the attorneys attempted to deceive business entities for their own financial benefit. The Segall case, however, involved two separate attempts at fraud. Moreover, both Segall and Sorkin included the additional misconduct of communicating with a represented party and, most significantly, neither of the cases involved any mitigating circumstances.

Other cases involving dishonest conduct have resulted in lesser sanctions. In In re Heyl, 96 CH 690, M.R. 12944 (Nov. 26, 1996), the attorney was suspended for three months for falsely reporting the date of an accident to her insurer so the uninsured driver of the other car could obtain insurance, and then testifying in court to the false date. The date of the traffic incident was material to the attorney's own insurer because it affected the enforceability and collectability

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of any subrogation judgment the insurer might obtain against the driver of the other car. The attorney presented various factors in mitigation. In In re Kleinmuntz, 98 CH 30, M.R. 15045 (Sept. 28, 1998), an attorney was suspended for forty-five days for fraudulently preparing a settlement disbursement statement and altering a copy of a settlement draft so he could pay his former employer less than the agreed-upon attorneys' fee. The attorney presented substantial mitigation evidence. See also In re Grosky, 96 CH 624, M.R. 15043 (Sept. 28, 1998), where an attorney was suspended for three months for preparing and sending a letter containing false information to opposing counsel in a pending case in a effort to mislead the opposing counsel. Grosky also made false statements about the matter, under oath, during sworn testimony in ARDC proceedings. Mitigating factors included evidence of good character, pro bono work and bar association activities, and lack of prior discipline.

We believe a suspension of one year is too harsh for the single instance of dishonesty which occurred in this case. Although we determined that Respondent made an intentional misstatement, he has practiced more than twenty years with no prior misconduct and has cooperated in these proceedings. Having considered Respondent's actions, as well as the mitigating evidence and the relevant legal precedent, we conclude that a three month suspension will satisfy the purposes of the disciplinary process.2

Accordingly, we recommend Respondent James Thomas Ball be suspended from the practice of law for a period of three months.

Date Entered: May 7, 2012

Stephen S. Mitchell, Chair, Lee A. Marinaccio and Bonnie K. Curran, Hearing Panel Members.

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__________________________________________________________________________________________________

1  We note some confusion regarding the dates of signing and filing the settlement agreement.  The Administrator alleged, and Respondent admitted in his answer to the Complaint, that he signed the settlement agreement on January 30, 2003.  The Court then dismissed the case on January 31, 2003.  The actual agreement, however, shows that his signature is dated March 13, 2003 and the agreement appears to bear a court file-stamp of March 25, 2003.  Assuming the March date is correct, we cannot conclude that the Court considered the settlement agreement when it dismissed the case in January.  Still, the agreement was filed with the Court and therefore the statements therein were, in fact, made to a tribunal.

2  The fact we did not find a violation of Supreme Court Rule does not affect our recommendation as to sanction.  In re Gerard, 132 Ill. 2d 507, 548 N.E.2d 1051 (1989).