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QWR: Bank Loan Printouts are Not Records; They are Summaries

Judgment as to amount in favor of the lender would be improper in the face of a denial by the debtors as to the amount sought.

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Capital City Developers, LLC v. Bank of North Georgia, 730 S.E.2d 99 (Ga. Ct. App. 2012)

JULY 5, 2012 | REPUBLISHED BY LIT: MAY 29, 2021

The Bank of North Georgia (the “Bank”) sued borrowers Capital City Developers, LLC; Anderson Avenue Partners, LLC; Giles Properties, LP; and Benjamin Michael Giles, along with guarantors Benjamin J. Giles, Jr.; Harold T. Pounders; and Keith D. Kantor (collectively, “Appellants”) to collect money owed, alleging that Appellants had defaulted on 24 promissory notes and related guaranties.

The trial court granted summary judgment in favor of the Bank and entered a final judgment against all Appellants in the total amount of $3,288,969.08 in principal, interest, and attorney fees.

On appeal, Appellants asserted that the trial court erred because:

1) their affirmative defense of estoppel precludes a grant of summary judgment in the Bank’s favor; and the Bank failed to establish the amounts owed through proper tendering of evidence into the record.

We affirm as to the first issue; as to the second issue, we affirm the judgment as to liability, but reverse the amount of damages and remand for further proceedings consistent with this opinion.

A grant of summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. “On summary judgment, after the movant makes a prima facie showing of its entitlement to judgment as a matter of law, the burden then shifts to the respondent to come forward with rebuttal evidence.

To do so, the respondent must set forth specific facts showing the existence of a genuine issue of disputed fact.” On appeal from the grant or denial of a motion for summary judgment, we apply a de novo standard of review, viewing the evidence and all reasonable inferences and conclusions drawn from it in the light most favorable to Appellants as the non-moving parties.

1 .OCGA § 9–11–56(c).

2 (Footnote omitted.) Shropshire v. Alostar Bank of Commerce, 314 Ga.App. 310, 724 S.E.2d 33 (2012).

3 Jenkins v. Wachovia Bank, Nat. Assn., 309 Ga.App. 562, 711 S.E.2d 80 (2011).

So viewed, the evidence shows that Appellants began acquiring real estate for the purpose of constructing single-family dwellings. In early- through mid–2009, they obtained acquisition and construction loans from a predecessor-in-interest to the Bank. For each acquisition of real estate, one of the borrowers executed a promissory note secured by the real estate purchased, and a subset of one or more guarantors executed related guaranties.

In October 2009, the Bank issued notices of default and demanded payment, and later sued for recovery on breach of the notes and guaranties. Appellants answered, denying that they owed the debt.

The trial court, without holding a hearing, granted the Bank’s motion for summary judgment as to liability only.

The trial court then entered a final judgment, from which this appeal arises, setting forth the amounts awarded to the Bank under the notes.

4 In a deposition, one of the guarantors, Pounders, acknowledged that Capital City did not fully pay its loans.

1. As a threshold matter, we note that the Bank provided the authenticated loan and guaranty documents evincing a debt, and Appellants did not dispute their authenticity. A plaintiff suing on promissory notes establishes a prima facie right to judgment as a matter of law by producing the notes and showing they were executed, and the trial court found that the Bank had met this burden.

Appellants do not challenge the trial court’s finding of a prima facie case. Rather, “[t]heir argument goes to the issue of the amount of money owed, not to liability vel non.”

They contend that the trial court erred in granting the Bank’s motion for summary judgment because the Bank failed to establish the amounts owed under the notes with admissible evidence.

We agree.

5 Alexander v. Wachovia Bank, Nat. Assn., 305 Ga.App. 641, 642, 700 S.E.2d 640 (2010).

6 (Emphasis in original.) Shropshire, supra at 315(3), 724 S.E.2d 33.

“Admissibility of evidence on motion for summary judgment is governed by the rules relating to form and admissibility of evidence generally.” “A trial court’s decision to admit evidence as an exception to the hearsay rule will not be disturbed absent an abuse of discretion.”

7 (Citation and punctuation omitted.) Albertson v. City of Jesup, 312 Ga.App. 246, 251(2), n. 18, 718 S.E.2d 4 (2011).

8 (Footnote omitted.) Walter R. Thomas Assocs. v. Media Dynamite, Inc., 284 Ga.App. 413, 416(1), 643 S.E.2d 883 (2007).

With its motion for summary judgment, the Bank submitted the affidavit of its vice president, David O’Rear, the custodian of the Bank’s business records related to claims and loans at issue.

In his affidavit, O’Rear averred that he was personally familiar with the Bank’s routine practice for maintaining those business records and calculating amounts owed; that the loan documents and records were made and kept in the ordinary course of business; and that it was the Bank’s routine practice to record payments and changes in amounts owed at or near the time the relevant events occurred.

His affidavit was accompanied by what appear to be computer printouts listing the current balance, daily interest charges, late charges, and other fees. He testified that the printouts are bank records reflecting current amounts owed.

Appellants contend that the printouts are “summaries” unaccompanied by the underlying business records on which they are based, and that as such, they are inadmissible hearsay evidence.

The documents at issue are accompanied by the relevant guaranty or guaranties, the original loan documents, and default letters from the Bank.

OCGA § 24–3–14(b) defines the type of writings admissible as a hearsay exception under the business records exception as follows:

[a]ny writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence, or event shall be admissible in evidence in proof of the act, transaction, occurrence, or event, if the trial judge shall find that it was made in the regular course of any business and that it was the regular course of such business to make the memorandum or record at the time of the act, transaction, occurrence, or event or within a reasonable time thereafter.

These printouts are not such records; they are summaries of such records.

They were not made at or near the time of the transactions at issue. They were generated and printed between January 27 and February 4, 2011, yet they purportedly represent amounts owed on loans whose terms commenced between July 9, 2008, at the earliest and June 5, 2009, at the latest.

9 (Emphasis supplied.)

10 See Patterson v. Bennett Street Properties, 314 Ga.App. 896, 903(4), 726 S.E.2d 147 (2012).

“[A]lthough a summary prepared in support of a demand for payment may not qualify as a business record under OCGA § 24–3–14, … summarized statements of what records show are admissible if the records themselves are accessible to the court and the parties.”

Here, the Bank’s summaries were accompanied by some business records, but a search of the record reveals that crucial underlying business records related to fees and interest were not available to the this Court or Appellants.

11 (Citations omitted.) Morris v. Nat. Western Life Ins. Co., 208 Ga.App. 443, 444(1)(c), 430 S.E.2d 813 (1993).

Most of the summaries list “late charges,” but are unaccompanied by business records showing from what relevant dates and on what underlying amounts the late charges accrued. Some summaries list “other fees” that are not explained, and the Bank has pointed us to no supporting business records. Neither the Bank’s briefing nor O’Rear’s affidavit identifies any provision in the notes or guaranties obligating Appellants to pay the “other fees.” Additionally, all the summaries list “interest” charges and indicate the daily rate of accrual. The notes, however, provide that interest is variable based upon “Lender’s Prime” plus one percent prior to maturity, and a fixed rate after maturity. The summaries are unaccompanied by business records showing pre-maturity interest calculations and rate variations.

“[W]here, as in this case, such [documents] are neither introduced in evidence nor accounted for, it is erroneous to admit in evidence such summarized statement[s].” Absent evidence to establish a variable interest rate, judgment as to amount in favor of the lender would be improper in the face of a denial by the debtors as to the amount sought. Further, where business records do not adequately show a requirement to pay fees, the amount of damages has not been established.

12 Camp v. State, 31 Ga.App. 737, 740(6)(a), 122 S.E. 249 (1924); Patterson, supra. See also Walter R. Thomas Assocs., supra at 416–417(1)(b), 643 S.E.2d 883 (where summary lists fee but no supporting business records are presented, “that entry is hearsay and cannot be considered in determining the amount owed”) (footnote omitted).

13 See also Shropshire, supra at 314(2)(b), 724 S.E.2d 33. See Garrett v. Atlantic Bank & Trust Co., 157 Ga.App. 103–104(1), 276 S.E.2d 152 (1981) (fact issue remained where bank introduced no evidence establishing interest rates during life of loan based on bank’s prime rate and debtor denied liability).

14 See Aniebue v. Jaguar Credit Corp., 308 Ga.App. 1, 6(2), 708 S.E.2d 4 (2011).

We find that the trial court abused its discretion by considering these summaries in its determination of the amounts awarded. We affirm judgment as to liability, but reverse the award of damages and remand for further proceedings consistent with this opinion.

2. Appellants argue that because they tendered into the record facts supporting the affirmative defense of estoppel, the trial court erred in granting summary judgment to the Bank.

We disagree.

Summary judgment law does not require the movant to show that no issue of fact remains but only that no genuine issue of material fact remains; and, while there may be some shadowy semblance of an issue, the case may nevertheless be decided as a matter of law where the evidence shows clearly and palpably that the jury could reasonably draw but one conclusion.

15 (Citation and punctuation omitted.) Hendricks v. Enterprise Financial Corp., 199 Ga.App. 577, 581(4), 405 S.E.2d 566 (1991).

Appellants contend that when they could not keep up their loan payments, Pounders, a guarantor, spoke with O’Rear and his superior, Terence Lewis. Pounders deposed that Lewis and O’Rear agreed to accept offers from third-party buyers of $70,000 “per house” regardless of the amount owed.

The record shows that Appellants had found third-party buyers for three of the notes.

Pounders deposed that O’Rear told him the Bank had accepted the offer from the third-party buyers, but the Bank later reneged on the deal.

Invoking both the doctrines of equitable estoppel and promissory estoppel, Appellants argue that they were prejudiced by the Bank’s refusal to sell the notes because the potential third-party buyers of the three notes also were planning to buy the remaining loan portfolio for $70,000 per completed house.

Appellants further allege that both the Bank and the third-party buyers had agreed not to pursue Appellants for any deficiency.

The Bank denies agreeing to sell the notes and denies any agreement not to pursue Appellants for a deficiency.

“In order for equitable estoppel to arise, there must generally have been some intended deception in the conduct or declarations of the party to be estopped, or such gross negligence as to amount to constructive fraud, by which another has been misled to his injury.”

Appellants have pointed us to no portion of the record showing, nor have they made any argument, that the Bank, Lewis, or O’Rear “made the alleged representation with knowledge that a sale would not occur or intention that a sale would not be finalized.

Bare conclusions and contentions unsupported by an evidentiary basis in fact are insufficient to oppose a motion for summary judgment.”

Appellants have nowhere in their briefs addressed this requirement.

16 .OCGA § 24–4–27. Accord Medders v. Smith, 245 Ga.App. 323, 324(1), 537 S.E.2d 153 (2000) (party asserting estoppel must establish, inter alia, “conduct amounting to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert”). See also Fundus America (Atlanta) Ltd. Partnership v. RHOC Consolidation, 313 Ga.App. 118, 121(1)(a), n. 9, 720 S.E.2d 176 (2011) (party claiming equitable estoppel must prove it is free from fraud in the transaction, and must have acted in good faith and with reasonable diligence).

17 (Citation and punctuation omitted; emphasis supplied.) Griffin v. State Bank of Cochran, 312 Ga.App. 87, 91(1)(a), 718 S.E.2d 35 (2011).

A party asserting equitable estoppel also must show, among other things, that it changed its position prejudicially and justifiably relied to its detriment upon the representations at issue. A party asserting promissory estoppel must show reasonable reliance on the promise. Here, the affirmative defenses fail as a matter of law because Appellants could neither reasonably nor justifiably rely on what they allege were the Bank’s representations. The promissory notes specifically provide that “no modification of this agreement may be made without [the lender’s] express written consent.” The guaranties provide, “this guaranty may not be waived, modified, amended, terminated, released or otherwise changed except by a writing signed by the Undersigned and Lender.”

18 Medders, supra at 324–325(1), 537 S.E.2d 153.

19 State Farm Mut. Automobile Ins. Co. v. Penrow, 142 Ga.App. 463, 466(4), 236 S.E.2d 275 (1977).

20 Fidelity & Deposit Co., etc. v. West Point Constr. Co., 178 Ga.App. 578, 580(1), 344 S.E.2d 268 (1986).

Appellants have presented no evidence of the Bank’s written consent to any of the note sales, nor have they alleged that the Bank consented in writing.

Although Pounders deposed that a broker helped Appellants find buyers who executed a promissory note purchase agreement for three of the properties, that agreement contains a number of blank spaces and never was signed by the Bank.

Appellants could not reasonably rely on the alleged oral promises of Bank officials to sell the notes. Given the language in the notes and guaranties, those

21 Griffin, supra at 95(2)(a), 718 S.E.2d 35 (no reasonable reliance on oral representations for sale of bank where note and guaranty contained integration clauses providing that those documents constituted the entire agreement of the parties).

clear and unambiguous provision[s] served to place [Appellants] on due notice that [they] could not thereafter reasonably rely upon any words or other course of dealing to [their] inducement, other than a modification agreement actually reduced to writing….

Likewise, in view of this provision [the Bank] could not reasonably expect that [its] particular conduct, even when such conduct is viewed in the light most favorable to [Appellants], would induce the asserted action or forbearance.

22 (Citations and punctuation omitted.) Gerdes v. Russell Rowe Communications, Inc., 232 Ga.App. 534, 536(2), 502 S.E.2d 352 (1998) (reliance on oral agreement not reasonable where contract provides only for written modification).

Accord OCGA § 13–3–44(a). See, e.g., Dukes v. Board of Trustees, etc., 280 Ga. 550, 553, 629 S.E.2d 240 (2006) (detrimental reliance, as an essential element of equitable estoppel, is not a factor where estoppel cannot be applied as a matter of law).

The trial court did not err in granting summary judgment to the Bank on Appellants’ estoppel claim.

Judgment affirmed in part and reversed in part, and case remanded.

MILLER and BLACKWELL, JJ., concur.

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Judges

Judges’ Referrals and Complaints About Lawyers Rules Change Adopted by Florida Supreme Court

Judicial Referrals to Receive Special Treatment as proposed by the Florida Bar

Published

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IN RE:

AMENDMENT TO RULES REGULATING THE FLORIDA BAR – RULE 3-7.18

OCT 21, 2021 | REPUBLISHED BY LIT: JAN 10, 2021

PER CURIAM.

Before the Court is the petition of The Florida Bar (Bar) proposing amendments to the Rules Regulating the Florida Bar (Bar Rules).

We have jurisdiction. See art. V, § 15, Fla. Const.

The Bar proposes the addition of new rule 3-7.18

(Disposition of Inquiries or Complaints Referred to the Bar by Members of the Judiciary).

The new rule establishes a process by which the Board of Governors of The Florida Bar and the Court will review and approve the disposition of referrals regarding lawyer misconduct from members of the judiciary that do not result in a finding of probable cause or the filing of a formal complaint if a finding of probable cause is not required.

The new rule is the product of the Special Committee on Examination of Judicial Referral Process, which was tasked with determining the most effective and efficient process to address judicial referrals of lawyer misconduct. Both the Special Committee and the Board of Governors approved the new rule, and consistent with Bar Rule 1-12.1(g), the Bar published formal notice of its proposal in The Florida Bar News.

The notice directed interested persons to file their comments directly with the Court.

No comments were received.

Having considered the Bar’s petition, we adopt new rule 3-7.18 with the following modifications.

We decline to adopt subdivisions (d)(2)(A) (Time Period for Review) and (d)(2)(B)(v), and renumber or reletter the other provisions within subdivision (d) accordingly.

The two subdivisions, respectively, would have required the Court to act on the Board of Governors’ recommendation and summary report within thirty days of its submission, and would have authorized the Court to successively extend the thirty-day period for an additional thirty days as needed.

The Bar does not identify a specific need for these restraints.

Accordingly, the Rules Regulating the Florida Bar are amended as set forth in the appendix to this opinion. New language is indicated by underscoring. The amendments shall become effective December 20, 2021, at 12:01 a.m.
It is so ordered.

CANADY, C.J., and POLSTON, LABARGA, LAWSON, MUÑIZ, COURIEL, and GROSSHANS, JJ., concur.

THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER THE EFFECTIVE DATE OF THIS AMENDMENT.

Original Proceeding – Florida Rules Regulating the Florida Bar

Joshua E. Doyle, Executive Director, Michael G. Tanner, President, Gary S. Lesser, President-elect, Paige A. Greenlee and Michael Fox Orr, Co-Chairs, Special Committee on the Examination of the Process and Procedures for Judicial Referrals of Discipline Matters to The Florida Bar, and Elizabeth Clark Tarbert, Ethics Counsel, The Florida Bar, Tallahassee, Florida, for Petitioner

Appendix

RULE 3-7.18 DISPOSITION OF INQUIRIES OR COMPLAINTS REFERRED TO THE BAR BY MEMBERS OF THE JUDICIARY

(a) Definitions.

Wherever used in this rule, the following words or terms have the following meaning:

(1) Disposition.

A disposition of an inquiry or complaint is the termination of an inquiry or complaint before a finding of probable cause or the filing of a formal complaint where a probable cause finding is not required. A disposition includes a:

(A) decision not to pursue an inquiry;

(B) dismissal of a disciplinary case;

(C) finding of no probable cause;

(D) finding of no probable cause with issuance of a letter of advice;

(E) recommendation of diversion; and

(F) recommendation of admonishment for minor misconduct.

(2) Judicial Referral.

A judicial referral is an inquiry, communication, or complaint questioning the conduct of a member of the bar submitted to the bar by a member of the judiciary. A judicial referral also includes a court order, judgment, or opinion specifically referring to the bar a matter questioning the conduct of a member of the bar.

(b) Suspension of Deadlines for Final Disposition of Judicial Referrals.

All deadlines for final disposition elsewhere in these rules are suspended under this rule. No disposition of a judicial referral will become final until the review required by this rule is complete.

(c) Review by Board of Governors. The disciplinary review committee will review all dispositions of judicial referrals first and will recommend a disposition to the board. The board may accept or reject the recommended disposition. If the board rejects the recommended disposition, the board may:

(1) refer the matter to a grievance committee for additional investigation or review;

(2) find probable cause, and the case will proceed accordingly;
or

(3) recommend a different disposition to the Supreme Court
of Florida.

The executive committee may act on behalf of the board or disciplinary review committee in connection with its review of dispositions of judicial referrals as specified with other disciplinary matters under these rules.

(d) Supreme Court of Florida Review.

The Supreme Court of Florida may review the board’s recommendation for approval of dispositions of judicial referrals.

(1) Submission of Summary Report and Documents.

The bar will submit the board’s recommendations for approval of judicial referrals to the clerk of the Supreme Court of Florida as soon as practicable after the board’s decision but not later than 30 days.

The submission will include a summary report of the inquiry or complaint; the nature of the alleged rule violations; the board’s recommended disposition; the judicial referral; any response by the respondent; applicable orders, decisions, opinions, or communications by the judge or court; and all other non-confidential documents considered by the board.

(2) Supreme Court of Florida Actions. The Supreme Court of Florida may take the following actions:

(A) approve the board’s recommended disposition;

(B) reject the board’s recommendation, which will be deemed a finding of probable cause and direction to the bar to file a formal complaint;

(C) refer the matter back to the board for further review, with or without a recommendation or guidance; or

(D) request that the bar provide additional information.

October 21, 2021

Case No. SC21-653. In re: Amendments to Rules Regulating The Florida Bar – Rule 3-7.18.

On October 21, 2021, the Supreme Court of Florida adopted new rule 3-7.18 setting forth procedures for handling referrals of lawyers to the bar by the judiciary which includes review of staff and bar closures of those cases by the Supreme Court of Florida.

Amendments are effective December 20, 2021.

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Florida

Secret and Sealed Attorney Discipline Case in SDFL

Florida attorney Kenneth Edward Walton II Suspended from the Practice of Law with immediate effect. It only took nearly a year from the complaint.

Published

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Unknown Case Title

(1:22-mc-20028)

District Court, S.D. Florida

JAN 4, 2022 | REPUBLISHED BY LIT: JAN 4, 2022

Bookmark for updates.

Jan 19, 2022

ORDER OF SUSPENSION

On December 20, 2021, the Supreme Court of Florida entered an Order of Suspension, suspending Kenneth Edward Walton, II from the practice of law.

See The Florida Bar v. Walton, No. SC21-243, 2021 WL 6013465 (Fla. Dec. 20, 2021) [ECF No. 1].

The suspension was predicated on an uncontested report of the referee, which was based upon an Unconditional Guilty Plea for Consent Judgment. (See [ECF No. 2]).

Rule 9(b) of the Rules Governing the Admission, Practice, Peer Review, and Discipline of Attorneys, Local Rules of the United States District Court for the Southern District of Florida, provides that “[a]n attorney . . . who shall be suspended . . . on consent . . . from the bar of any state . . . while an investigation into allegations of misconduct is pending shall . . . cease to be permitted to practice before this Court and be stricken from the roll of attorneys admitted to practice before this Court.” Id. (alterations added).

Under these circumstances involving suspension on consent, service of an order to show cause is unnecessary, and the attorney may be immediately suspended.

In accordance with Rule 9(b) and the inherent authority of this Court to oversee officers admitted to membership in its bar, see Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (“[A] federal court has the power to control admission to its bar and to discipline attorneys who appear before it.” (alteration added)),

IT IS ORDERED that Mr. Walton is suspended from practice in this Court, effective immediately.

Mr. Walton may not resume the practice of law before this Court until reinstated by court order. See Rule 12(a).

The Clerk of Court shall strike this attorney from the roll of attorneys eligible to practice in the United States District Court for the Southern District of Florida and shall also immediately revoke the attorney’s CM/ECF password.

IT IS FURTHER ORDERED that Mr. Walton shall advise the Clerk of Court of all pending cases before this Court in which he is counsel or co-counsel of record.

IT IS FURTHER ORDERED that the Clerk of Court attempt to serve by certified mail a copy of this Order of Suspension upon Mr. Walton at his court record and Florida Bar addresses.

DONE AND ORDERED in Miami, Florida, this 19th day of January, 2022.

CECILIA M. ALTONAGA
CHIEF UNITED STATES DISTRICT JUDGE

 

c:         All South Florida Eleventh Circuit Court of Appeals Judges

All Southern District of Florida District Judges, Bankruptcy Judges, and Magistrate Judges United States Attorney

Circuit Executive Federal Public Defender

Clerks of Court – District, Bankruptcy, and 11th Circuit Florida Bar and National Lawyer Regulatory Data Bank Library

Kenneth Edward Walton, II

IN THE SUPREME COURT OF FLORIDA

THE FLORIDA BAR,

Supreme Court Case No. SC-
Complainant,

The Florida Bar File Nos.

2019-70,668 (11P)
2020-70,037 (11P)

v.

KENNETH EDWARD WALTON II, 2020-70,203 (11P)

Respondent.
2020-70,204 (11P)

COMPLAINT

The Florida Bar, complainant, files this Complaint against Kenneth Edward Walton II, respondent, pursuant to the Rules Regulating The Florida Bar and alleges:

1. Respondent is and was at all times mentioned herein a member of The Florida Bar admitted on September 29, 1999, and is subject to the jurisdiction of the Supreme Court of Florida.

2. Respondent practiced law in Miami-Dade County, Florida, at all times material to this complaint.

3. The Eleventh Judicial Circuit Grievance Committee P found probable cause to file this complaint pursuant to Rule 3-7.4, of the Rules Regulating The Florida Bar, and this complaint has been approved by the presiding member of that committee.

COUNT I

THE FLORIDA BAR FILE NO. 2019-70, 668

4. Salenna Burgess originally retained respondent for a file review related to a bankruptcy matter. Respondent completed the file review promptly and well by all accounts.

5. In or around April 2018, Ms. Burgess decided to retain respondent to handle her bankruptcy matter, following a bad experience with her prior attorney and based on recommendations respondent made during the file review.

6. Ms. Burgess paid respondent $6,000.00 for the representation.

7. Although communication was good at the outset of the representation, respondent became more difficult to reach as time went by.

8. On June 7, 2018, respondent forwarded correspondence dealing with Ms. Burgess’ matter to the client.

9. Roughly three months later, Ms. Burgess emailed respondent on September 5, 2018, requesting an update on the status of her case.

10. When she did not hear from respondent for about ten days, Ms. Burgess followed up with him on September 13, 2018.

11. Respondent replied that same day and represented to Ms.Burgess that he would work on her case over the weekend. Notably, at that time, respondent apologized to Ms. Burgess for not being more prompt in his reply “or communicating better.” He stated in his email to her that his lack of communication was “unacceptable, inexcusable, and embarrassing.”

12. Afterward, respondent ceased communication with Ms. Burgess, even though Ms. Burgess emailed him on October 2, 2018; October 5, 2018; October 9, 2018; and October 22, 2018.

13. Months later, respondent finally replied to Ms. Burgess on December 21, 2018. Respondent wanted to discuss with his client what he characterized as “everything that has and hasn’t happened” in her case.

14. Following that email, Ms. Burgess and respondent spoke about her case. According to her bar grievance, Ms. Burgess said respondent apologized to her for what respondent described as his own unacceptable behavior.

15. Ms. Burgess communicated with respondent once more in January 2019. However, at the end of the month, when Ms. Burgess resumed requesting updates on her case, communication ceased until March 12, 2019.

16. In the March 12, 2019, email, respondent forwarded an email to Ms. Burgess regarding her bankruptcy case and stated he was on his way to court. He promised to download and email the docket to her that day.

17. When Ms. Burgess filed her grievance with the bar on May 7, 2019, she had still not heard from respondent regarding her case.

18. On January 15, 2020, respondent provided a statement to the bar where he admitted he “initially did a poor job of helping her understand that the work was completed and explaining the meaning of the all of the final documents we received back from the bankruptcy court.”

19. Additionally, respondent stated Ms. Burgess “successfully completed her 60 months in Chapter 13, however she could not enjoy it as soon as it happened because of my poor communication.”

20. Significantly, in that same January 15, 2020, communication to the bar, respondent stated he was medically incapacitated for the majority of his representation of Ms. Burgess. He stated to the bar, “[t]o this day, I am still under doctor’s care for one of the conditions that seriously affected how I represented Ms. Burgess and will be treating for the rest of my life it appears. Although, I am lightyears ahead of where I was most of the past two years, I am still improving as each week passes.”

21. By reason of the foregoing, respondent has violated the following Rules Regulating The Florida Bar: 4-1.3 (Diligence); (4-1.4 Communication); and 4-1.16(a) (When Lawyer Must Decline or Terminate Representation).

COUNT II

THE FLORIDA BAR FILE NO. 2020-70,037

22. Respondent was hired as the closing agent by the buyer for the preparation of documents related to a real estate transaction for 429 NW 43rd Street in Miami, Florida.

23. Sandor Urban was the realtor on behalf of the seller in this transaction.

24. Mr. Urban and his client were notified of the closing date, time and location. They went to respondent’s office at the agreed-upon time on or around October 18, 2019, at 4:00 p.m.

25. Respondent’s staff was unaware of the appointment.

Nonetheless, Mr. Urban and his client waited until 5:30 p.m., at which point office staff asked them to leave since the office was closing.

26. Respondent’s paralegal told them to wait in the lobby. Mr. Urban and his clients waited until 7:00 p.m., at which point the sellers decided to leave.

27. Respondent never made it to the agreed-upon appointment for the scheduled closing.

28. Shortly thereafter, Mr. Urban and the sellers were able to speak to respondent, who agreed to send the seller the documents to be signed and notarized. The seller printed and executed the documents.

29. As the closing agent, respondent was responsible for making sure all the funds were disbursed to finalize the transaction. Respondent was also responsible for sending Mr. Urban his commission as part of his duties as closing agent, as well as creating a closing statement, which turned out to be rife with errors.

30. Respondent completed the closing on October 18, 2018.

31. On October 22, 2018, respondent sent what appeared to be Mr.

Urban’s commission to him only to stop payment on the check minutes after Mr. Urban’s office received it.

32. Shortly after the closing, it was discovered that the closing statement had errors. Respondent overpaid the seller by approximately
$6,586.00, the approximate amount due Sandor Urban. Respondent produced the final corrected closing statement in May 2020, approximately 18 months later.

33. Between April 14, 2020, and August17, 2020, Mr. Urban sent no fewer than 14 requests for an update on the status of his payment for commission. Several of these emails also requested updates about the status of respondent’s corrections to the seller’s closing statement.

34. Respondent sporadically replied to Mr. Urban’s desperate requests eight times. Notably, respondent rarely gave updates other than to excuse himself by saying he was in the process of completing some task.

35. Respondent used the back and forth of the emails between himself and Mr. Urban to delay and string Mr. Urban along while he waited for payment for work, which had been completed, he was entitled to, and that respondent was obligated to provide.

36. Respondent never provided the payment to Mr. Urban.

37. Instead, Mr. Urban, through his office, requested his commission directly from the seller when Mr. Urban failed to keep his promises.

38. Ultimately, Mr. Urban received his commission from the seller after he sent his own demand letter.

39. Additionally, respondent failed to maintain technical trust accounting records. The bar served a subpoena upon respondent requesting the following documents covering the period of time between January 1, 2018, to February 29, 2020: copies of bank statements for two Bank of America bank accounts; copies of trust accounting records required by Rule 5-1.2 of the Rules Regulating The Florida Bar; copies of HUD-1 statements and balance sheets for all real estate transactions; and a complete copy of respondent’s closing file for the purchase/sale of the property that is the subject of this complaint.

40. Respondent’s response to the bar’s subpoena was deficient. He did not provide trust account bank statements and cancelled checks for January 1, 2018 through February 29, 2020; any client ledger cards, any cash receipts and disbursement journals; any trust account bank reconciliations; and any reconciliations of the trust account bank balances to the individual client ledger card balances.

41. Respondent is required on a monthly basis to maintain the records outlined in paragraph 36 of this complaint, and he failed to do so.

42. By reason of the foregoing, respondent has violated the following Rules Regulating The Florida Bar: 4-4.4(a) (In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third or knowingly use methods of obtaining evidence that violate the legal rights of such a person); and 5-1.2 (Failure to maintain technical trust accounting records).

COUNT III

THE FLORIDA BAR FILE NO. 2020-70,203

43. Dmitri Mikhailov and Maritza Lagos retained respondent in or about August 2018 to remove a lien over a Sunny Isles Beach, Florida, property for which they were being charged a daily $500.00 fine.

44. Respondent charged a $5,000.00 fee but failed to perform the agreed-upon services.

45. Ultimately, Mr. Mikhailov ended up owing the City of Sunny Isles Beach $700,000.00 in daily fines because of respondent’s failure to pursue the matter at all, let alone in a timely matter.

46. Between October 15, 2018, and July 1, 2019, Mr. Mikhailov initiated correspondence requesting status updates with respondent no fewer than 15 times only to encounter silence on respondent’s end.

47. The 15th email from Mr. Mikhailov on July 1, 2019, stated that he would initiate a complaint with The Florida Bar due to respondent’s failure to communicate with him throughout the case.

48. The next day, on July 2, 2019, respondent replied to Mr. Mikhailov. In that email, respondent apologized to Mr. Mikhailov.

49. Incredibly, after apologizing, respondent inappropriately thanks his client “for your email versus responding in a different manner, such as waiting in the shadows near my house or office with a baseball bat and then using it.”

50. After the July 2, 2019, correspondence, respondent was asked to draft and mail a proposal to Mr. Mikhailov indicating how he plans to resolve the matter he was retained for. Additionally, Mr. Mikhailov requested that respondent forward all communications between Sunny Isles Beach and respondent.

51. Respondent was given a deadline of July 8, 2019, to provide this information. He never responded to Mr. Mikhailov’s request.

52. Shortly thereafter, Mr. Mikhailov requested updates on his case no fewer than seven more times between July 11, 2019, and September 23, 2019, with no response from respondent, save for one letter respondent sent to Mr. Mikhailov on or around August 9, 2019, related to a conversation between respondent and another party in the matter.

53. After August 2019, respondent did not speak to Mr. Mikhailov again.

54. In a January 15, 2020, letter to the bar, respondent stated that he “[agreed] with Mr. Mikhailov that he should receive a refund of the money tendered to me.”

55. Respondent in that letter to the bar also stated he suffered from “multiple medical conditions that rendered me unable to fully complete services and to stay in close communication with Mr. Mikhailov.”

56. However, respondent neither communicated any limitation to rendering services to his client nor withdrew from the representation.

57. By reason of the foregoing, respondent has violated the following Rules Regulating The Florida Bar: 4-1.3 (Diligence); 4-1.4 (Communication); 4-1.5 (Fees and Costs for Legal Services); and 4-1.16(a) (When Lawyer Must Decline or Terminate Representation).

COUNT IV

THE FLORIDA BAR FILE NO. 2020-70,204

58. Roy Collins retained respondent in or about June 2019 to represent him in a foreclosure defense case and to provide him with potential bankruptcy assistance.

59. Mr. Collins paid respondent a $5,000.00 retainer fee on June 18, 2019. Mr. Collins did not hear from respondent again until late August 2019.

60. Between August 10, 2019, and August 17, 2019, Mr. Collins attempted communication with respondent by calling his office and mobile phone, sending emails and text messages, and leaving several messages every day during that time period.

61. On August 16, 2019, Mr. Collins emailed respondent and terminated their relationship. He requested a refund in that email.

62. On August 21, 2019, respondent sent Mr. Collins a text message apologizing to him for being “out of pocket,” explaining that he had been “recovering from an injury.” He asked if he could call Mr. Collins around 8:00 p.m. that evening.

63. However, respondent did not call. Instead, respondent sent a text message to Mr. Collins at 10:39 p.m. with a promise to call the next day.

64. That was the last time Mr. Collins ever heard from respondent.

65. In a letter to the bar, dated February 27, 2020, respondent admits he did not communicate with Mr. Collins as he should have.

66. In that letter, respondent also admitted he was not healthy enough to represent Mr. Collins, stating that he “probably should not have accepted Mr. Collis [sic] case at that time [sic] I see that I was overly optimistic that I would soon make a full recovery.”

67. By reason of the foregoing, respondent has violated the following Rules Regulating The Florida Bar: 4-1.4 (Communication); 4-1.5 (Fees and Costs for Legal Services); and 4-1.16(a) (When Lawyer Must Decline or Terminate Representation).

WHEREFORE, The Florida Bar prays respondent will be appropriately disciplined in accordance with the provisions of the Rules Regulating The Florida Bar as amended.

Rita Elizabeth Florez,

Bar Counsel The Florida Bar
Miami Branch Office 444 Brickell Avenue
Rivergate Plaza, Suite M-100 Miami, Florida 33131-2404
(305) 377-4445
Florida Bar No. 1011307 rflorez@floridabar.org

Patricia Ann Toro Savitz, Staff Counsel The Florida Bar
651 E. Jefferson Street Tallahassee, Florida 32399-2300
(850) 561-5839
Florida Bar No. 559547 psavitz@floridabar.org

CERTIFICATE OF SERVICE

I certify that this document has been efiled with The Honorable John A. Tomasino, Clerk of the Supreme Court of Florida, with a copy provided via email to Kenneth Edward Walton II, at kenneth@waltonlawfirm.com; and that a copy has been furnished by United States Mail via certified mail No. 7017 1450 0000 7821 0285, return receipt requested to Kenneth Edward Walton II, whose record bar address is Bank of America Financial Center, 701 Brickell Avenue, Suite 1550, Miami, FL 33131-2824 and via email to Rita Elizabeth Florez, Bar Counsel, rflorez@floridabar.org, on this 16th day of February, 2021.

Patricia Ann Toro Savitz Staff Counsel

NOTICE OF TRIAL COUNSEL AND DESIGNATION OF PRIMARY EMAIL ADDRESS

PLEASE TAKE NOTICE that the trial counsel in this matter is Rita Elizabeth Florez, Bar Counsel, whose address, telephone number and primary email address are The Florida Bar, Miami Branch Office, 444 Brickell Avenue Rivergate Plaza, Suite M-100Miami, Florida 33131-2404,
(305) 377-4445 and rflorez@floridabar.org. Respondent need not address pleadings, correspondence, etc. in this matter to anyone other than trial counsel and to Staff Counsel, The Florida Bar, 651 E Jefferson Street, Tallahassee, Florida 32399-2300, psavitz@floridabar.org.

Jan 4, 2022

SYSTEM ENTRY – Docket Entry 1 restricted/sealed until further notice. (tah)

SYSTEM ENTRY – Docket Entry 2 restricted/sealed until further notice. (tah)

Order (none of these entries or the order are available on PACER).

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U.S. District Court
Southern District of Florida (Miami)
CIVIL DOCKET FOR CASE #: 1:22-mc-20028

 

Assigned to: Attorney Discipline
Cause: Attorney Discipline
Date Filed: 01/04/2022
Jury Demand: None
Nature of Suit: 890 Other Statutory Actions
Jurisdiction: Federal Question
In Re
2022-AD-01

U.S. District Court
Southern District of Florida (Miami)
CIVIL DOCKET FOR CASE #: 1:22-mc-20028

Create an Alert for This Case on RECAP

Assigned to: AttorneyDiscipline
Cause: Attorney Discipline
Date Filed: 01/04/2022
Jury Demand: None
Nature of Suit: 890 Other Statutory Actions
Jurisdiction: Federal Question
In Re
2022-AD-01

 

Date Filed # Docket Text
01/19/2022 4 Administrative Order 2022-10 In re Order of Suspension of Attorney Kenneth Edward Walton, II, Florida Bar #183997. Signed by Chief United States District Judge Cecilia M. Altonaga on 1/19/2022. See attached document for full details. (cw) (Entered: 01/19/2022)
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Federal Judges

You’re Too Early to Dismiss the Judicial Complaint Sayeth the All-Gal Panel at Eleventh Circuit

The magistrate judge sua sponte dismissed Makere’s complaint because, as an administrative law judge, Judge Early is entitled to absolute judicial immunity.

Published

on

Judicial Immunity Delayed Due to Hasty Dismissal

DEC 30, 2021 | REPUBLISHED BY LIT: DEC 31, 2021

Before ROSENBAUM, BRANCH, and GRANT, Circuit Judges. PER CURIAM:

Elias Makere appeals from the district court’s dismissal of his pro se amended complaint alleging violations of his civil rights un- der 42 U.S.C. § 1983, on the ground that the defendant was entitled to absolute judicial immunity.

Makere argues that the district court erred when it sua sponte dismissed his complaint against Judge E. Gary Early—who had ruled previously against Makere in an employment discrimination case—because Makere paid the filing fee for his complaint, Judge Early had not been served process, and the district court lacked the authority to assert absolute judicial immunity on behalf of Judge Early.

After de novo review,1 we agree with Makere that the district court erred by sua sponte dismissing his complaint at this stage.2

1 The record is unclear as to what rule or statute the district court was relying upon when it sua sponte dismissed Makere’s complaint—it appears that the district court may have been proceeding under 28 U.S.C. § 1915(e)(2) or possibly Federal Rule of Civil Procedure 12(b)(6). S

ua sponte dismissals under § 1915(e)(2) or Rule 12(b)(6) are reviewed de novo.

Hughes v. Lott, 350 F.3d 1157, 1159–60 (11th Cir. 2003) (explaining that we review a district court’s sua sponte dismissal under § 1915(e)(2) de novo);

Timson v. Sampson, 518 F.3d 870, 872 (11th Cir. 2008) (explaining that we review de novo a Rule 12(b)(6) dismissal.

2 Because we vacate and remand this case due to the district court’s procedural error, we deny as moot Makere’s accompanying motion to take judicial notice of twelve public records relating to the merits of his case.

In February 2021, Makere filed a complaint in the U.S. District Court for the Northern District of Florida against Judge Early, along with an application to proceed in forma pauperis (“IFP”).

Consequently, the case was referred to a magistrate judge for further processing.3

The magistrate judge then issued an order explaining that Makere’s complaint and IFP motion could not be considered because they failed to comply with the local rules — both documents lacked the required handwritten signature and the IFP motion was not submitted on the correct form.

The magistrate judge directed the clerk’s office to send Makere the correct IFP form and ordered that Makere file an amended complaint and amended IFP motion that complied with the referenced local rules by a certain date.

The magistrate judge cautioned that “[f]ailure to comply with this

[c]ourt [o]rder may result in a recommendation of dismissal of this action.”

3 Although the record does not reflect the basis for referring the case to the magistrate judge, we presume that the district court was operating under its Local Rule 5.3, which provides that where a party files a civil action and moves to proceed IFP, “the Clerk must open the case and refer any motion for leave to proceed in forma pauperis to an assigned judge.”

N.D. Fla. Local Rule 5.3.

Furthermore, under the Local Rules, a party seeking to proceed IFP is prohibited from serving process on the defendants until the district court “enters an order authorizing” service. Id. Rule 4.1(A).

Thus, Judge Early was not served at this time.

When Makere failed to file the amended pleadings by the specified date, the magistrate judge issued a report and recommendation (“R&R”), recommending that the district court dismiss the case for Makere’s failure to comply with its prior order.

Approximately twelve days later, Makere filed an amended complaint, objected to the magistrate judge’s R&R, and, on the following day, paid the filing fee in full.

On April 9, 2021, the magis- trate judge, recognizing that Makere had filed an amended com- plaint and paid the filing fee, treated Makere’s objections to the R&R as a motion for reconsideration, which it granted, and vacated the R&R.

Later that same day, however, the magistrate judge issued a second R&R recommending that the district court sua sponte dis- miss Makere’s complaint because, as an administrative law judge, Judge Early is entitled to absolute judicial immunity.

While the magistrate judge did not reference 28 U.S.C. § 1915, presumably — as there is nothing in the record that indicates that the defendant was ever served or filed his own motion to dismiss—the magistrate judge was screening the case pursuant to § 1915, which governs in forma pauperis proceedings.4

4 Section 1915 provides that in IFP proceedings, the court:

shall dismiss the case . . . if the court determines that . . . (B) the action or appeal—(i) is frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.

28 U.S.C. § 1915 (e)(2).

Although the magistrate judge did not specify the § 1915 provision under which he proceeded, his repeated references to judicial immunity suggest § 1915(e)(2)(B)(iii).

Makere objected to the second R&R, arguing that he filed an amended complaint and paid the filing fee, and that the magistrate judge failed to cite a rule or statute that authorized the sua sponte dismissal of his civil action under these circumstances.

The district court adopted the second R&R it in a one-page order over Makere’s objections and dismissed the case.

The district court erred when it dismissed this case. After paying the filing fee, Makere was not subject to 28 U.S.C. § 1915,5 and the district court could not sua sponte dismiss his case under the screening provisions of § 1915.

See 28 U.S.C. § 1915(e)(2)(B)(ii)- (iii).

Furthermore, to the extent the district court dismissed the complaint sua sponte under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim—because again it is not clear what rule or statute the district court was proceeding under—we have prohibited such dismissals where, as here, the defendant has not filed an answer (indeed, here, the defendant was never served), “and the district court failed to provide the plaintiff with notice of its intent to dismiss or an opportunity to respond.”

See American United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1057 (11th Cir. 2007); Jefferson Fourteenth Assocs. v. Wometco de Puerto Rico, Inc., 695 F.2d 524, 527 (11th Cir. 1983).

In short, the district court erred in sua sponte dismissing the case at this preliminary stage of the proceedings.6

Accordingly, we vacate and remand the case.

VACATED AND REMANDED.

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