Inquiry Concerning a Judge No. 12-613 Re: Laura Marie Watson , 40 Fla. L. Weekly Supp. 354 ( 2015 )

Supreme Court of Florida
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No. SC13-1333
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INQUIRY CONCERNING A JUDGE, NO. 12-613
RE: LAURA MARIE WATSON.
[June 18, 2015]
PER CURIAM.
This matter is before the Court to review the determination of the Florida
Judicial Qualifications Commission (“JQC”) that Laura Marie Watson has violated
the Rules Regulating Professional Conduct and its recommendation that she be
removed from office. We have jurisdiction. See art. V, § 12, Fla. Const. Article
V, section 12(c)(1) of the Florida Constitution provides that we “may accept,
reject, or modify in whole or in part the findings, conclusions, and
recommendations of the commission . . . .” Further, section 12(c)(1) provides that
“[m]alafides, scienter, or moral turpitude on the part of a justice or judge shall not
be required for removal from office of a justice or judge whose conduct
demonstrates a present unfitness to hold office.” And, while we are mindful that
removal is the ultimate sanction, “we will impose that sanction when we conclude
that the judge’s conduct is fundamentally inconsistent with the responsibilities of
judicial office.” In re Hawkins, 151 So. 3d 1200, 1202 (Fla. 2014) (citing In re
Shea, 759 So. 2d 631, 638 (Fla. 2000)). For the reasons we explain below, we
conclude that the JQC’s findings and conclusions are supported by clear and
convincing evidence and agree with the JQC’s recommendation that Judge Watson
be removed from the bench.
FACTS AND PROCEDURAL HISTORY
At some point prior to 2002, the law office of Laura M. Watson, P.A. d/b/a
Watson & Lentner entered into a joint business plan with Marks & Fleischer, P.A.,
and Kane & Kane, acting through the firm principals, Gary Marks, Amir Fleischer,
Charles Kane, Harley Kane, Darin James Lentner, and Watson (collectively, “the
PIP attorneys”), to represent healthcare provider clients in numerous lawsuits
involving Personal Injury Protection (“PIP”) claims against Progressive Insurance
Company. The firms shared expenses for marketing and the procurement of
clients. Each firm maintained and managed its own clients and files, but entered
into joint representation contracts in which all of the firms agreed to represent the
clients and assume joint responsibility for the claims. The PIP attorneys alleged
that Progressive had systematically underpaid health care providers in a scheme
known as a “silent PPO.”
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The PIP attorneys retained the services of Slawson Cunningham Whalen &
Stewart, P.A., to initiate a bad-faith case against Progressive filed in the name of
Drs. Fisher & Stashak, M.D., P.A. d/b/a Gold Coast Orthopedics and Gold Coast
Orthopedics and Rehabilitation (“Gold Coast”). Todd Stewart was the attorney
working the case. When Todd Stewart left Slawson Cunningham, and formed
Todd S. Stewart, P.A., he elicited the help and expertise of his father, Larry
Stewart of Stewart Tilghman Fox & Bianchi, P.A.
In or about February 2002, the PIP attorneys met with Larry Stewart to
discuss the Gold Coast case and bad faith claims. Larry Stewart eventually asked
William C. Hearon to assist with the prosecution of the bad faith claims. (Todd
Stewart, William C. Hearon, and Larry Stewart are collectively referred to as the
“bad faith attorneys.”)
On or about April 24, 2002, the PIP attorneys and bad faith attorneys
reached an agreement concerning how the work would be handled and the fees to
be split. The clients were to receive sixty percent of the recovery and the
attorneys’ fees would amount to forty percent. Of the attorneys’ fees, the bad faith
attorneys were to receive sixty percent.
Initially, the Gold Coast case encompassed approximately 40 health care
providers, and it was contemplated that the bad faith claims would ultimately be
asserted on behalf of all the clients of the PIP attorneys once those claims became
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perfected, which was approximately 441 clients. This list of 441 clients was used
in settlement negotiations with Progressive.
The bad faith attorneys participated in extensive discovery in which they
were successful in obtaining an order compelling Progressive to produce internal
documents. During this time, the PIP attorneys continued to encourage the bad
faith attorneys to pursue their claims by joining in the bad faith claims, or by
settling the PIP claims while preserving the bad faith claims. Due to the pressure
placed on Progressive by the bad faith attorneys over the following two years,
Progressive commenced settlement negotiations with both sets of attorneys. On
numerous occasions, the PIP attorneys referred settlement negotiations of the bad
faith claims to the bad faith attorneys and gave full authority to the bad faith
attorneys to negotiate a global settlement of all of the bad faith claims, including
the ones filed through the PIP attorneys.
On January 21, 2004, the bad faith attorneys met with Progressive and
demanded $20 million to settle all of the bad faith claims and reported this to the
PIP attorneys. Progressive counter-offered with a $3.5 million settlement of all the
bad faith claims, but the bad faith attorneys did not accept the offer and no
settlement was reached. The bad faith attorneys continued to pressure Progressive
to produce more documents.
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On May 14, 2004, the PIP attorneys accepted an aggregate settlement offer
from Progressive in an undifferentiated amount of $14.5 million to settle the PIP
claims as well as all bad faith claims, perfected or potential, without notifying the
bad faith attorneys. After the settlement was accepted, Progressive and the PIP
attorneys drafted a memorandum of understanding (“MOU”), which made clear
that the settlement applied to all PIP claims and bad faith claims irrespective of
whether they were perfected.
The MOU did not allocate any recovery to the bad faith claims, but required
the release of those claims. After learning of the MOU, the bad faith attorneys
objected. The PIP attorneys amended the MOU to award $1.75 million to the bad
faith claims.
The PIP attorneys then notified their clients, via letter, of the settlement but
did not disclose the conflicts of interests, provide closing statements, or advise the
clients of the material facts necessary to make an informed decision about their
cases or execution of the releases.
On or about June 22, 2004, the PIP attorneys received funds from
Progressive, which were placed in the attorneys’ respective trust fund accounts.
Watson’s firm received $3,075,000, from which $361,470.30 was paid to clients.
The clients still did not receive closing statements.
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The bad faith attorneys notified the PIP attorneys that, in accordance with
The Florida Bar rules governing claims of disputed property, all of the attorneys’
fees should be held in a separate escrow account. The PIP attorneys did not hold
the funds.
The bad faith attorneys subsequently sued the PIP attorneys for fraudulent
inducement and in quantum meruit for the work they performed. During the bench
trial, Judge David Crow carefully reviewed all of the facts and circumstances
surrounding the joint business plan between the PIP attorneys and the bad faith
attorneys.
In April 2008, the trial court found that the actions taken by the PIP
attorneys, including the settlement of the bad faith claims without notifying the bad
faith attorneys or notifying the clients with bad faith claims that their claims would
be released and they would be receiving little to no compensation for those claims,
violated several rules of professional conduct. The trial court also found that the
PIP attorneys exaggerated the number of hours they spent working on these PIP
and bad faith claims. Ultimately, the trial court awarded the bad faith attorneys
additional attorneys’ fees due to an unjust enrichment the PIP attorneys received
and for the cost of the work performed by the bad faith attorneys during the two-
year span. Additionally, Judge Crow sent a copy of his order to The Florida Bar.
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The Florida Bar began grievance proceedings against the PIP attorneys. In
her response, Watson requested that the prosecution be deferred until after she
finished appealing Judge Crow’s April 2008 final judgment. The Fourth District
Court of Appeal affirmed the trial court’s judgment on February 29, 2012, see
Kane v. Stewart Tilghman Fox & Bianchi, P.A., 85 So. 3d 1112, 1113 (Fla. 4th
DCA 2012), and the Bar proceeded with its investigation.
In June 2012, Watson was advised that her case was being referred to a
grievance committee for probable cause review, and then in October 2012, she was
advised that the grievance committee had found probable cause. In November
2012, Watson was elected to the Seventeenth Judicial Circuit; she assumed office
in January 2013. Accordingly, The Florida Bar forwarded its file to the JQC;
additionally, Larry Stewart filed a formal complaint.
On July 24, 2013, the JQC filed a Notice of Formal Charges against Judge
Laura Marie Watson alleging that she violated Canons 1 and 2A of the Code of
Judicial Conduct and violated Florida Rules of Professional Conduct 3-4.2, 3-4.3,
4-1.4(a), 4-1.4(b), 4-1.5(f)(1), 4-1.5(f)(5), 4-1.7(a), 4-1.7(b), 4-1.7(c), 4-1.8(g), 4-
8.4(a), 4-8.4(c), and 5-1.1(f).
At the conclusion of its proceedings, the JQC determined that:
Watson and the others hired Larry Stewart, who warned them in
advance that the PIP claims and bad faith claims were adverse,
requiring careful handling throughout settlement negotiations, with
full client transparency. When Progressive dangled a pot of money,
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ethical restraints were swept aside. Watson and the PIP lawyers (at
Progressive’s insistence) excluded the only attorney sufficiently
experienced and knowledgeable to see them through settlement
negotiations, and reached a quick (and ethically flawed) settlement
agreement.
“Watson never told her PIP clients that Progressive paid funds to settle the bad
faith claims, and they weren’t allowed to participate in that recovery, despite the
fact they were required to release these claims.” The JQC concluded that Watson
unilaterally decided that those clients had no interest in the bad faith case and that
they had no duty to pay or include unknown people who may or may not someday
have a claim. Additionally, the JQC concluded that Watson “entered into an
undisclosed side deal with Gold Coast, contrary to the interests of the other bad
faith claimants,” and further concluded that Watson failed to disclose material
information to her clients, including the conflicts of interest and the methodology
of allocating funds between the PIP and bad faith claims that substantially
decreased the funds available for distribution to the clients. Under this
methodology, the PIP attorneys took $10,960,000 in fees in addition to their
portion of the Gold Coast attorneys’ fees.
Based on these facts, the JQC concluded that
attorney Watson violated R. Reg. Fla. Bar 3-4.2 (violating Rules of
Professional Conduct); 3-4.3 (commission of acts contrary to honesty
or justice); 4-1.4(a) (failing to keep clients informed about the status
of a matter); 4-1.4(b) (failing to explain matter to the extent
reasonably necessary to permit clients to make informed decision
regarding the representation); 4-1.5(f)(1) (failing to provide written
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statement to bad faith clients stating the outcome of the matter, the
remittance to the client, and the method of its determination); 4-
1.5(f)(5) (failing to provide closing statements to bad faith clients
reflecting an itemization of costs and expenses, together with the
amount of fees received by participating lawyers or firms); 4-1.7(a)
(representing clients with directly adverse interests); 4-1.7(b)
(representing clients where representation was materially limited by
lawyers’ responsibilities to other clients, third persons, and the
lawyers’ own interests); 4-1.8(g) (making an aggregate settlement of
the claims of two or more clients without requisite disclosure or
consent); 4-8.4(a) (violation of the Rules of Professional Conduct by
herself, and through the acts of others); 4-8.4(c) (engaging in conduct
involving deceit); and 5-1.1(f) (failing to treat disputed funds as trust
property).
Additionally, the JQC concluded that “[t]here was no clear and convincing
evidence presented, and Judge Watson is not guilty of violating Rule 4-1.7(c) . . . .”
Based on these findings and conclusions, the JQC determined that Judge
Watson “sold out her clients, her co-counsel, and ultimately herself. This conduct
is ‘fundamentally inconsistent with the responsibilities of judicial office,’ and
mandates removal.”
ANALYSIS
In judicial disciplinary proceedings, this Court reviews the findings of the
JQC to determine if they are supported by clear and convincing evidence, and
reviews the recommendation of discipline to determine whether it should be
approved. In re Andrews, 875 So. 2d 441 (Fla. 2004). Clear and convincing
evidence is “ ‘a standard which requires more proof than a “preponderance of the
evidence” but less than “beyond and to the exclusion of a reasonable doubt.” ’ ” In
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re Henson, 913 So. 2d 579, 589 (Fla. 2005) (quoting In re Graziano, 696 So. 2d
744, 753 (Fla. 1997)). In In re Davey, 645 So. 2d 398 (Fla. 1994), this Court
fleshed out its standard of review in JQC inquiries:
This intermediate level of proof entails both a qualitative and
quantitative standard. The evidence must be credible; the memories
of the witnesses must be clear and without confusion; and the sum
total of the evidence must be of sufficient weight to convince the trier
of fact without hesitancy.
[C]lear and convincing evidence requires that the
evidence must be found to be credible; the facts to which
the witnesses testify must be distinctly remembered; the
testimony must be precise and explicit and the witnesses
must be lacking in confusion as to the facts in issue. The
evidence must be of such weight that it produces in the
mind of the trier of fact a firm belief or conviction,
without hesitancy, as to the truth of the allegations sought
to be established.
Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).
Id. at 404; see also In re Holloway, 832 So. 2d 716, 726 (Fla. 2002).
Additionally, this Court has noted that any conflicts in the evidence should
be resolved in favor of the JQC’s findings. In re Henson, 913 So. 2d 579, 591-92
(Fla. 2005) (“Resolving conflicts in the evidence in favor of the Hearing Panel’s
findings, we conclude that the accusation . . . is supported by clear and convincing
evidence.”). According to article V, section 12(c)(1) of the Florida Constitution,
this Court has discretion to either accept, reject, or modify the commission’s
findings and recommendation of discipline. Although this Court gives the JQC’s
findings and recommendations great weight, the ultimate power and responsibility
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in making a determination to discipline a judge rests with this Court. In re Angel,
867 So. 2d 379 (Fla. 2004).
We have emphasized that the object of these “proceedings is not for the
purpose of inflicting punishment, but rather to gauge a judge’s fitness to serve as
an impartial judicial officer.” In re McMillan, 797 So. 2d 560, 571 (Fla. 2001).
“In making this determination, judges should be held to higher ethical standards
than lawyers ‘by virtue of their position in the judiciary and the impact of their
conduct on public confidence in an impartial justice system.’ ” In re Hawkins, 151
So. 3d at 1212 (citing In re McMillan, 797 So. 2d at 571).
Additionally, at the outset, we note that despite Judge Watson’s protestations
to the contrary, the JQC and this Court have jurisdiction over her conduct. See In
re Henson, 913 So. 2d at 588 (“Misconduct committed by an attorney who
subsequently becomes a judge falls within the subject-matter jurisdiction of this
Court and the JQC, no matter how remote. . . . JQC proceedings are
constitutionally authorized for alleged misconduct by a judge during the time he or
she was a lawyer.”); see also In re Davey, 645 So. 2d at 403 (“[T]he Commission
has constitutional authority to investigate pre-judicial acts and recommend to this
Court the removal (for unfitness) or reprimand (for misconduct) of a sitting
judge.”).
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We have reviewed the entire record of this proceeding and conclude that
clear and convincing evidence supports the JQC’s factual findings and conclusions
that Judge Watson violated Florida Rules of Professional Conduct 3-4.2, 3-4.3, 4-
1.4(a), 4-1.4(b), 4-1.5(f)(1), 4-1.5(f)(5), 4-1.7(a), 4-1.7(b), 4-1.8(g), 4-8.4(a), 4-
8.4(c), and 5-1.1(f). The JQC heard testimony from Larry Stewart and Laura
Watson; and as character witnesses, Thomas Lynch, IV, Terrence O’Connor, and
Lawrence Kopelman. Larry Stewart, in particular, testified at length regarding the
details of the agreement between the PIP attorneys and the bad faith attorneys.
Larry Stewart stated that he could only say that Watson was present for each of the
meetings he held with the PIP attorneys; he could not testify as to exactly what she
said. Nevertheless, Larry Stewart testified that Watson never objected or corrected
any of the agreements or understandings reached at those meetings. Stewart’s
interpretation of the meetings is bolstered in particular by one e-mail from Watson
wherein she congratulated Stewart on getting the favorable discovery ruling and
stated, “We need to keep our foot on their throat and not let them lose [sic].”
Watson’s argument that she was not involved in making the agreement with
Stewart’s firm, and in fact had no knowledge of any agreement with Larry Stewart
to pursue bad faith claims on behalf of any of her clients, including Gold Coast, or
that she was not aware that he was in settlement negotiations with Progressive is
not a reasonable inference from this record. Accordingly, Watson’s arguments
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were justifiably disregarded by the JQC. Watson’s primary contention that the PIP
attorneys never contracted with Larry Stewart’s firm is belied by her e-mail
correspondence with him and her admission that he won favorable rulings in the
Gold Coast case.
As it relates to them, the clients were provided with a form release letter to
sign that only disclosed the amount they would receive. The settlement was
structured so that the clients would receive the PIP payment they were due from
Progressive, and little or nothing towards the bad faith recovery. In exchange the
bad faith claims were released. The clients were never informed of the entire
amount of the offers of settlement received from Progressive, or even that there
had been multiple offers. The clients were also not informed of the amount of the
settlement that would be retained by the attorneys. In response to this allegation,
Watson only offers that she complied with the contracts she had with her clients,
which only provided for the PIP claim recovery. Additionally, the clients were
never fully informed that the bad faith claims were not compatible with the PIP
recovery claims. It is undisputed that Watson failed to provide closing statements
to any of the clients. In fact, Watson stated that it is common practice for these
types of cases not to have closing statements. Furthermore, it is undisputed that no
client was aware of the aggregate settlement. Likewise, Watson did not obtain
written consent for aggregate settlement.
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Finally, after the bad faith attorneys disputed the settlement agreement, the
PIP attorneys placed $710,000 in escrow in connection with the settlement of the
Gold Coast case. The escrow account was created for the purpose of setting aside
the forty percent attorneys’ fees in that case. On or about May 31, 2006, Watson
transferred $515,000 to the law firm of Stewart Tilghman Fox & Bianchi, P.A.,
leaving the remainder in dispute. Watson therefore agreed to disburse the balance
subject to court control. On June 1, 2006, Judge Crow ordered that no further
distributions from the account be made without further order of his court. On June
5, 2006, the bad faith attorneys executed a settlement agreement with all the PIP
attorney firms except Watson & Lentner. Because the dispute between Watson
and Stewart was not resolved until either Judge Crow entered his order in April
2008, or the appeal from his order become final in 2012, the JQC’s finding is
supported by clear and convincing evidence.
CONCLUSION
As stated by Judge David Crow of the Fifteenth Judicial Circuit in and for
Palm Beach County, the complex facts of the underlying case “could be a case
study for a course on professional conduct involving multi-party joint
representation agreements. . . .” We have previously found that a pattern of deceit
and deception “casts serious doubt on [a judge’s] ability to be perceived as truthful
by those who may appear before her in her courtroom.” In re Ford-Kaus, 730 So.
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2d 269, 277 (Fla. 1999). Further, “[s]uch conduct diminishes the public’s
confidence in the integrity of the judicial system.” Id. at 277. Under these
circumstances, “removal from judicial office is the appropriate sanction,” because
Judge Watson’s “conduct is fundamentally inconsistent with the responsibilities of
judicial office.” Id. at 276. Additionally, this Court has previously removed a
judge from office for conduct that occurred, in part, while she was still a practicing
attorney. See In re Hapner, 718 So. 2d 785 (Fla. 1998).
Based on the foregoing, we find that Judge Watson’s actions while a
practicing attorney, and her demeanor during these proceedings “cast[ ] serious
doubts” on her “ability to be perceived as truthful by those who may appear before
her in her courtroom.” Accordingly, we find that removal is the appropriate
sanction.
It is so ordered.
LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, CANADY, POLSTON,
and PERRY, JJ., concur.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
Original Proceeding – Judicial Qualifications Commission
Ricardo Morales, III, Chair, and Michael Louis Schneider, General Counsel,
Tallahassee, Florida; Judge Kerry I. Evander, Hearing Panel Chair, Daytona
Beach, Florida; Lauri Waldman Ross of Ross & Girten, Hearing Panel Counsel,
Miami, Florida; Marvin E. Barkin and Lansing Charles Scriven of Trenam,
Kemker, Scharf, Barkin, Frye, O’Neil & Mullis, P.A., Special Counsel, Tampa,
Florida,
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for Judicial Qualifications Commission, Petitioner
Robert A. Sweetapple and Alexander Demetrios Varkas, Jr., of Sweetapple,
Broeker & Varkas, PL, Boca Raton, Florida; and Colleen Kathryn O’Loughlin of
Colleen Kathryn O’Loughlin, P.A., Fort Lauderdale, Florida,
for Judge Laura Marie Watson, Respondent
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