Matter of Nicosia
152 A.D.3d 46, 54 N.Y.S.3d 148, 2017 NY Slip Op 5092 (2017)
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Rule of Law:
An attorney who engages in professional misconduct in one jurisdiction, particularly involving client trust accounts and record-keeping violations, is subject to reciprocal discipline in another jurisdiction where they are also admitted to practice.
Facts:
- On August 1, 2011, Nicholas Nicosia (respondent) represented Catherine McCaw in a real estate closing.
- On August 2, 2011, Nicosia deposited four checks totaling $62,176.43 into his TD Bank trust account No. 1 for McCaw, and the same day, disbursed checks for McCaw totaling $62,176.43, which cleared.
- A $55,575 check deposited for McCaw was returned for insufficient funds, leading to the invasion of other clients' funds in trust account No. 1 because Nicosia did not review his bank statements, maintain proper bookkeeping records, or perform monthly reconciliations, and remained unaware for eight months.
- Around October 9, 2012, Nicosia represented John and Karen Peterson in a real estate closing, issuing checks and making wire transfers from his TD Bank trust account No. 2, but mistakenly deposited a $259.61 check related to the Peterson closing into his business account instead of trust account No. 2, causing the client trust account to be overdrawn and other clients' funds to be invaded.
- On October 22, 2012, Nicosia deposited a $2,664.89 check for Laura Sposato into his TD Bank trust account No. 3, though it should have gone into trust account No. 2, and then issued checks from trust account No. 2 for the Sposato closing, which resulted in the invasion of other clients' funds in trust account No. 2.
- On October 29, 2014, Nicosia received a $14,919.20 check representing Alejandro and Lisa Baca's property sale proceeds for deposit into his Highlands State Bank attorney trust account No. 4, but failed to deposit it.
- On November 10, 2014, Nicosia issued checks from trust account No. 4 for the Baca purchase, invading other clients' funds because the Baca proceeds were never deposited, a failure he only discovered upon reviewing his November 2014 bank statement.
- Over a period of more than three years, Nicosia authorized Eileen Nicosia, a non-attorney, to sign checks from trust account No. 2, failed to designate his trust accounts and deposit slips as 'Attorney Trust Account,' made online transfers from trust account No. 2 without proper authorization, held old outstanding checks in trust account No. 3, and commingled personal funds in trust account No. 4 by erroneously depositing earned legal fees.
- Nicosia's attorney trust accounts were not IOLTA trust accounts as required by New Jersey Rules of Court rule 1:28A.
Procedural Posture:
- The New Jersey Office of Attorney Ethics (OAE) filed a motion for discipline by consent, based on a stipulation signed by the OAE and the respondent, Nicholas Nicosia, with supporting bank records.
- The Disciplinary Review Board of the Supreme Court of New Jersey (DRB) granted the OAE’s motion, determining that a reprimand was the appropriate measure of discipline for Nicosia's violations.
- On November 4, 2016, the Supreme Court of New Jersey publicly reprimanded Nicholas Nicosia for violations of New Jersey Rules of Professional Conduct and New Jersey Rules of Court.
- The Appellate Division of the Supreme Court of the State of New York, Second Judicial Department, issued an order to show cause dated January 20, 2017, for Nicholas Nicosia to explain why reciprocal discipline should not be imposed.
- Nicholas Nicosia submitted an affidavit in response to the order to show cause, stating he had complied with the New Jersey order and amended his policies.
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Issue:
Does an attorney's admitted professional misconduct in New Jersey, including failure to safeguard client funds, commingling, and severe record-keeping violations, warrant reciprocal disciplinary action in New York?
Opinions:
Majority - Per Curiam.
Yes, an attorney's admitted professional misconduct in New Jersey warrants reciprocal disciplinary action in New York. The Court found that the record of the New Jersey proceedings confirmed Nicosia's failure to properly handle escrow funds in four real estate transactions (McCaw, Peterson, Sposato, and Baca), which resulted in the invasion of other clients' funds on deposit. Additionally, he engaged in commingling, and continued to do so even during the Office of Attorney Ethics (OAE) investigation. Nicosia also improperly authorized a non-attorney to sign trust account checks and failed to adhere to bank and bookkeeping mandates across multiple trust accounts, spanning a period in excess of three years. While the Court considered mitigating factors such as the respondent's lack of prior discipline in over 10 years of practice and the implementation of remedial measures, his misconduct was deemed a "course of conduct" rather than an isolated error. Therefore, the Court concluded that a six-month suspension from the practice of law was the appropriate sanction.
Analysis:
This case underscores the serious consequences of an attorney's failure to adhere to strict rules governing client trust accounts and record-keeping, even when misconduct occurs in another jurisdiction. It demonstrates the principle of reciprocal discipline, where a New York court will impose a disciplinary sanction for misconduct committed in another state, often reflecting the severity of the original finding. The court's emphasis on Nicosia's "course of conduct" highlights that systemic failures in managing client funds are viewed with extreme gravity, serving as a strong deterrent for attorneys licensed in multiple states to maintain rigorous ethical and administrative compliance.
