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Supreme Court of New Hampshire

January 23, 2019

SALOMON'S CASE

         Original

          Argued: November 27, 2018

          Elizabeth M. Murphy, assistant disciplinary counsel, on the brief and orally, for the attorney discipline office.

          Upton & Hatfield, LLP, of Portsmouth (Russell F. Hilliard on the brief and orally), for the respondent.

          DONOVAN, J.

         On June 5, 2018, the Supreme Court Professional Conduct Committee (PCC) filed a petition recommending that the respondent, Craig N. Salomon, be disbarred. We order the respondent disbarred.

         I. Background

         A. Haase Matter

         The PCC found the following facts. The Attorney Discipline Office (ADO) received two unrelated complaints regarding the respondent. The first complaint (hereinafter, the Haase matter) led to an investigation of the respondent's representation of Deborah Fogg during and after her divorce from George Fogg. The divorce was finalized in 2009 and the final divorce agreement included, inter alia, the following: (1) Ms. Fogg would obtain possession of the marital property in Seabrook (the Fogg property); (2) she agreed that she owed Mr. Fogg $22, 350; (3) she would convey a first mortgage to Mr. Fogg for that amount; and (4) the $22, 350 was payable within eighteen months. Ms. Fogg planned to sell the property and use the proceeds to pay Mr. Fogg. At the time the divorce was finalized, Ms. Fogg also owed the respondent $12, 000 in attorney's fees and granted the respondent a second mortgage on the Fogg property in the amount of $12, 000 to guarantee the payment. Both of these mortgages were recorded.

         Following the divorce, the respondent continued to provide assistance to Ms. Fogg by helping her to find a buyer or a developer to purchase the Fogg property. The respondent never billed Ms. Fogg for his efforts relating to the Fogg property, nor is there evidence that the respondent asked Ms. Fogg to execute a fee agreement for his services in this regard. The respondent testified that he had intended to put a future advances clause in the $12, 000 mortgage instrument as security for future legal fees, but had forgotten to do so.

         After the divorce was finalized, the respondent contacted a friend and client, Dale Wood, to advise him of the settlement. The respondent persuaded Wood's company, Pan American Fund, LLC, to accept an assignment of the second mortgage in exchange for a payment from Pan American Fund to the respondent. The respondent used information obtained through his representation of Ms. Fogg, including appraisals and other non-public information the respondent obtained during his representation, to negotiate the assignment of the second mortgage and, thus, to obtain his attorney's fees prior to the sale of the Fogg property.

         Shortly thereafter, the respondent sought a $22, 350 advance from Pan American Fund. He testified that he planned to use the money to purchase the mortgage issued to Mr. Fogg. He then planned to have Ms. Fogg execute a mortgage to the respondent in the amount of $22, 350, and he intended to assign that second mortgage to Pan American Fund, so that Pan American Fund could be in the first position to foreclose on the property if Ms. Fogg was unable to sell it or otherwise failed to fulfill her obligations.

         The respondent's file included a proposed assignment of the $22, 350 mortgage from Ms. Fogg to the respondent. The third page of the document contained a signature that appeared to be Ms. Fogg's, but was never dated, witnessed, or recorded and Ms. Fogg testified that she did not recall signing the document nor did she recall being apprised of the respondent's plan to buy out her ex-husband's mortgage.

         Pan American Fund advanced the respondent the full $22, 350 to buy out the mortgage even though the respondent testified that it was never his intention to offer the full-face amount of the mortgage to Mr. Fogg. When asked what the parties intended with respect to any money earned by a discounted buy-out of Mr. Fogg, the respondent testified that he did not know. The respondent then offered to buy out Mr. Fogg for less than the full value of the mortgage. Mr. Fogg declined to accept the offer.

         Thereafter, the respondent negotiated with Wood to turn the $22, 350 into a personal loan, creating an obligation in that amount plus interest to Pan American Fund. The record reflects that when the respondent signed the promissory note, he identified the Fogg property as security for the loan of $22, 350.

         Subsequently, Pan American Fund assigned to Irving Haase/Heirs, LLC both the $12, 000 mortgage and the respondent's $22, 350 loan. Haase believed that those amounts were secured by mortgages filed against the Fogg property. In 2013, Haase contacted the respondent to have him initiate the process of collecting on the notes, which were past due. Unbeknownst to Haase or the respondent, Ms. Fogg had quitclaimed the deed to her property to Mr. Fogg to satisfy her debt to him.

         The respondent represented Haase/Heirs, LLC in foreclosure proceedings against the Fogg property which was now owned by Mr. Fogg. In November 2013, the respondent sent a letter to Mr. Fogg demanding payment of principal and interest in the amount of $47, 891.13. Mr. Fogg notified the respondent that he contested the amount and requested documentation supporting the demand. The respondent did not provide documentation. Formal foreclosure proceedings were initiated in December 2013.

         Mr. Fogg retained an attorney who communicated with the respondent. A settlement agreement was ultimately reached that recognized that the only mortgage eligible for foreclosure was the second mortgage for $12, 000 that the respondent had assigned to Pan American Fund.

         B. Florida Matter

         The second unrelated complaint against the respondent was received by the ADO in October 2014 from an attorney at a law firm in Florida who filed on behalf of HPC U.S. Fund 1, L.P. and HPC U.S. Fund 2, L.P. and its authorized representative, Mr. Brinke. This matter involves the respondent's representation of Blackport Investment Group, LLC, which was created and retained by HPC U.S. Fund 1, L.P. and HPC U.S. Fund 2, L.P. The HPC entities are holding companies of German-based investment vehicles that hold real estate interests throughout the United States. Blackport managed these interests for HPC.

         Wood was Blackport's asset manager representative. The respondent previously represented Wood individually and has represented companies, including Blackport, of which Wood was an owner, member, or manager. Wood and the respondent had a lengthy personal and professional relationship.

         HPC initiated proceedings in the United States District Court for the Southern District of Florida concerning Wood's mismanagement of HPC's funds, and alleged that Wood had misappropriated approximately $10, 000, 000. The federal court issued a temporary restraining order followed by a preliminary injunction, entered on September 4, 2013, against a number of defendants, including Wood. The preliminary injunction prohibited Wood or "any and all persons acting under Defendant's direction or control" from taking any action with respect to any property interests held by HPC. The prohibition included transferring or secreting any property interests or liquid assets they held as a result of the transfer, sale, or conveyance of HPC's property interests.

         During this time frame, the respondent began to represent Blackport in the sale of property in Idaho, which was largely owned by HPC. The respondent contacted North Idaho Title, the company that was handling the purchase and sale of the Idaho property, and conducted some preliminary work on behalf of Blackport. Wood was one of the respondent's contacts for Blackport. However, as the parties moved towards a possible closing date, Wood informed the respondent via e-mail about the injunction issued by the federal court, which prohibited Wood from having any involvement in the conveyance of any property interests of HPC. In fact, Wood explicitly informed the respondent that, because of the injunction, Wood was not authorized to sign on behalf of Blackport for the sale of the property.

         Thereafter, the closing was dependent on determining who was authorized to sign on behalf of the seller. Despite his knowledge of the injunction, the respondent informed North Idaho Title that Wood could sign on behalf of Blackport, and the transaction closed in November 2013. The respondent testified that he advised North Idaho Title that Wood had authority because Wood had told him that Wood's ...


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