When white-collar criminal charges enter the scene, civil suits over foul business dealings are not far behind.
That’s a delicate dance for lawyers to manage without stepping on each other’s toes.
Michael Egan was arrested for embezzling from an Onslow County restaurant he co-owned. Then he sued his partner, Timothy Anderson, alleging Anderson was the one guilty of skullduggery in their business. According to a recent order by a North Carolina Business Court Judge, a civil attorney for Egan offered to settle the case if Anderson would pay $25,000 and make the criminal charges go away.
A game of telephone ensued. Anderson’s civil lawyer talked with Egan’s criminal lawyer, who talked to the prosecutor and relayed back to Anderson that the DA’s office would not drop the charges but would let Egan enter a “deferred prosecution” agreement. A deferred prosecution would require community service and probation before dismissal.
Anxious to declare the civil matter resolved before a motion to dismiss Egan’s lawsuit would be heard, the civil attorneys for Egan and Anderson both informed the Business Court in writing that the civil matter was settled.
The civil lawyers even drafted a settlement agreement that Anderson signed, and the defendant went ahead and paid the settlement money. Egan’s civil lawyer sent the settlement agreement to his criminal attorney counterpart for review, but was met with some ethical mumbo-jumbo that a criminal lawyer couldn’t get his hands dirty with civil matters related to a criminal case. An ethics opinion from the State Bar blessing the form of the settlement agreement did not satisfy his qualms about crossing the civil-criminal divide, so he wouldn’t say if the deal worked for him.
Nevertheless, Egan’s civil lawyer became convinced his client had signed the settlement agreement and told Anderson’s lawyer and the court it was a done deal. But he soon discovered Egan wasn’t happy. Egan said he had wanted his criminal case dismissed outright and, in a twist, hadn’t even cared about the money Anderson agreed to pay to settle the civil case. Hmmm. Ok.
Egan’s criminal lawyer piped up and contended the deferred prosecution resolution was all the result of his awesome criminal defense lawyering and had nothing to do with the civil matter — including Anderson’s agreement not to request restitution from the criminal court or his desire that the case not proceed. And by the way, suggested Egan’s criminal lawyer, someone should investigate Anderson for prosecution!
In a pickle but under pressure from the Business Court, Egan’s civil attorney filed a Voluntary Dismissal of his lawsuit “without prejudice.” That last part — ”without prejudice” — means Egan could refile the claims within a year. The settlement agreement those civil lawyers had reached required the civil case to be dismissed “with prejudice,” meaning it would be gone forever. So that’s a big difference.
Egan’s civil lawyer later refiled the civil lawsuit, contending there never really was a binding settlement agreement between Egan and Anderson since Egan never signed it. The Business Court disagreed. Judge Julianna Theall Earp ruled recently that a lawyer empowered to negotiate a settlement agreement, which is just a contract, can bind his client to the terms agreed by the lawyers. Case dismissed.
This situation holds lessons for lawyers and clients alike.
First, criminal and civil matters often mix naturally, but it is especially perilous work to engineer their combined resolution when a prosecutor’s office can’t be bound to anything you might try to negotiate. A game of telephone about who would do what and to whom just invites errors to creep into the formula, especially when you’ve got a criminal defense lawyer and criminal defendant being coy about their input to the whole deal.
Second, criminal defendants can be prone to play their own games even with their lawyers. Judge Earp chalked up this situation to miscommunication between Egan and his civil attorney. Fine. But from my experience, there are also lots of criminal defendants who think they can outsmart the system by playing criminal and civil matters against each other, and they often get in their own way as a result.
White-collar criminal charges and civil claims often walk hand in hand. But don’t expect them to waltz in sync without serious choreography.
Kommentare