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Civil Litigation No. 05-02-00833-CV, 6/25/2003. Click here for the full text of this decision FACTS: The appellant, Robert N. Goldstein, appeals the trial court’s judgment of disbarrment. The facts of the case, as set out by the court, are as follows: In January 1997, Lynne Ryan Ginsburg retained Goldstein to represent her in her divorce. Ginsburg and Goldstein entered into a fee contract establishing an hourly rate of $225, with a possible increase to $300 per hour if Goldstein devoted all of his time to the case. Ginsburg and her husband subsequently reached a settlement agreement in which she would receive property valued at approximately $50 million from a marital estate estimated to be worth about $200 million. Goldstein represented to the family court his fee was $300,000. Later that year, Ginsburg delivered 100,000 shares of stock to Goldstein valued at $4.8 million. Goldstein accepted the stock and recorded the payment on his records as a “gift.” Ginsburg later sued Goldstein alleging the stock was delivered to Goldstein to satisfy their prior oral agreement that she pay him a contingent fee. Ginsburg alleged the agreement violated the Texas Disciplinary Rules of Professional Conduct and was thus voidable. Ginsburg also alleged that Goldstein failed to conduct adequate discovery, did not adequately represent her, violated his fiduciary duties and converted the $4.8 million in stock. Ginsburg sought as damages return of the $4.8 million fee as well as actual and exemplary damages. After the trial, the trial court directed a verdict in favor of Ginsburg that the $4.8 million payment was an unconscionable contingent fee that was not in writing. However, the trial court also allowed Goldstein to submit the issue to the jury of whether the $4.8 million was a fair gift or bonus and made its directed verdict subject to the jury’s finding that the payment was not such a fair gift or bonus. Because of the jury’s failure to find the $4.8 million was a fair gift or bonus, and because of the directed verdict, the trial court ordered Goldstein to repay the stock to Ginsburg. The Commission for Lawyer Discipline brought this disciplinary proceeding against Goldstein based in part on his receiving $4.8 million from Ginsburg. The commission filed a motion for partial summary judgment asserting Goldstein was collaterally estopped from relitigating whether the $4.8 million payment 1. was a fair gift or bonus; 2. was a contingent fee; 3. was not in writing; and 4. was unconscionable. The trial court granted the commission’s motion for partial summary judgment. At trial, the commission presented evidence of other alleged ethical violations, according to the court of appeals. In its findings of fact and conclusions of law, the trial court stated that it had granted a partial summary judgment that Goldstein was collaterally estopped from relitigating whether the $4.8 million payment was a contingent fee. In doing so, the court noted contingent fees in divorce cases raise per se ethical concerns and recited a portion of comment 9 to Texas Disciplinary Rule of Professional Conduct 1.04. The trial court further found that Goldstein’s use of the contingent fee in the divorce case was not justified and that its receipt violated rule 1.04(a), that prohibits an attorney from charging an unconscionable fee. The trial court also found Goldstein committed numerous other ethical violations and concluded Goldstein should be disbarred. HOLDING: Affirmed. In determining whether to apply collateral estoppel offensively, the trial court must consider the Parklane Hosiery factors. Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979). The first factor is whether application of the doctrine will tend to increase litigation by allowing a plaintiff to “wait and see” before filing suit instead of joining in the prior litigation. Second, the offensive use of collateral estoppel may be unfair under the circumstances of a particular case. Under this factor, the court considers the defendant’s incentive in the first action to vigorously defend the suit, the foreseeability of future suits, and the availability of procedural safeguards in the second suit that were not available in the first suit. Applying the Parklane Hosieryfactors to this case, the court cannot conclude the trial court abused its discretion by giving collateral estoppel effect to findings in the prior malpractice suit. The court rejects Goldstein’s reliance on Neely v. Commission for Lawyer Discipline, 976 S.W.2d 824 (Tex. App. – Houston [1st Dist.] 1998, no pet.). The findings that resulted from the prior malpractice action were not the result of a mere hearing following a motion. To the contrary, Goldstein had a full and lengthy trial with all the safeguards associated with such and had more than an adequate opportunity to litigate whether he violated the disciplinary rules. Additionally, unlike the attorney in the Neelycase who faced a $64,600 sanction, Goldstein faced a $4.8 million judgment if Ginsburg proved her allegations. Finally, Goldstein had the benefit of a jury trial in the malpractice case. Consequently, Neelyis distinguishable. The court recognizes that, in declining to give preclusive effect to findings from the rule 13 sanctions hearing, the Neelycourt placed great emphasis on the fact that a trial court in a rule 13 sanctions case considers different factors in determining appropriate sanctions than a trial court in a disciplinary action. However, applying collateral estoppel to a finding made in prior litigation that a disciplinary violation occurred does not limit a trial court in a subsequent disciplinary proceeding from then considering the appropriate factors when considering what sanction to impose based on that violation. The Neelycourt also placed emphasis on the fact that an attorney in a rule 13 sanctions case does not face suspension or disbarrment. However, the possible consequences a lawyer may face are relevant only to the extent it suggests a lack of incentive to defend. Because Goldstein had a more than adequate incentive to defend the malpractice case, the court cannot conclude the trial court abused its discretion in applying the doctrine even if the possible consequences to an attorney are not identical. Goldstein also asserts collateral estoppel was improperly used in this case because the factual determinations made in the malpractice case were not the same as those presented in the disbarrment case. Goldstein’s argument under this point presumes the trial court in the malpractice suit found the fee was an unconscionable contingent fee based solely on the jury’s failure to find the payment was not a “fair gift or bonus.” According to Goldstein, this was improper because in the malpractice suit, he was given the burden to prove the payment was a fair gift or bonus. He asserts the jury’s failure to find in his favor on this issue cannot be converted into an affirmative finding that the fee was a contingent fee, was not in writing and was unconscionable. The court disagrees with Goldstein’s interpretation of the findings in this case. Specifically, Goldstein ignores the trial court’s independent findings regarding the fee. In those findings, the trial court expressly stated that it withdrew from the jury the issue of whether the fee was contingent and directed a verdict that the fee was a contingent fee, that it was not in writing, and that it was unconscionable. The trial court ordered Goldstein to repay Ginsburg more than $4.8 million based specifically on its own affirmative finding, not merely because of the jury’s failure to find the payment was a fair gift or bonus. The court finds that Goldstein’s argument is without merit. OPINION: O’Neill, J.; James, O’Neill, and Francis DISSENT: James, J. “The majority’s opinion today paves the road for the State Bar to discipline attorneys based on determinations in private malpractice actions in tort. Attorneys will not only need to consider defending the suit before them when a former client brings them into civil court, but they must simultaneously defend that allegation as if facing probation, suspension, resignation, or even disbarrment from their chosen profession. However, I conclude the facts before us do not withstand a fairness assessment in reviewing the court’s application of offensive collateral estoppel. Accordingly, I would resolve issue one in Goldstein’s favor, and I respectfully dissent.”

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