Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST Supreme Court of New Jersey, 171 N.J. 308, 793 A.2d 699 (2002) Case Brief
Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST PURPOSE: Frost demonstrates the rationale behind the attorney ethics rule requiring that a business transaction between an attorney and a client be fair and reasonable.
Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST CAUSE OF ACTION: Disciplinary action against an attorney.
Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST FACTS: Frost had represented Hagerman in a tort case settled in Hagermans favor. In an escrow account in Hagermans name, Frost still held $79,000, in all likelihood to be paid to cover an insurance companys lien. Frost asked Hagerman for a loan of the $79,000. Hagerman agreed to the loan and Frost drafted the loan agreement, which contained misrepresentations as to Frosts assets. Nor did Frost provide appropriate security for the loan. Frost declared bankruptcy without repaying the loan.
Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST ISSUE: Did Frost violate an attorney ethics rule when he borrowed money from a client?
Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST HOLDING: Frost engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation when he entered into a loan agreement with his client that was patently unfair and unreasonable to his client, misrepresented the extent of his interests in certain assets, and never intended to provide security for the loan [and] the appropriate penalty is disbarment.
Copyright 2007 Thomson Delmar Learning. All Rights Reserved. In re FROST REASONING: Transactions between attorney and client must be fair and reasonable. There was an inherent conflict of interest between Frosts positions as Hagermans attorney and his business partner. In negotiating the loan and drafting the loan agreement Frost took advantage of an unsophisticated client and omitted appropriate safeguards from the agreement. Because Frost had a history of ethics violations over the prior fifteen years, the court decided that Frost should be disbarred.