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Commonwealth v. Pepyne

Appeals Court of Massachusetts

July 1, 2015

Commonwealth
v.
Edward W. Pepyne, Jr

Editorial Note:

This decision has been referenced in an "Appeals Court of Massachusetts Summary Dispositions" table in the North Eastern Reporter. And pursuant to its rule 1:28, As Amended by 73 Mass.App.Ct. 1001 (2009) are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 N.4, 881 N.E.2d 792 (2008).

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

A Superior Court jury convicted the defendant, Edward W. Pepyne, Jr., of one count of larceny over $250 from two persons over sixty years of age, relating to the theft of approximately $185,000, from settlement proceeds the defendant had received as the victims' lawyer. The defendant appeals, arguing that error in the jury instructions and improper admission of bad acts and character require a new trial. We affirm.

Facts.

The jury could have found the following facts. On January 15, 2006, Roger and Marion Pearce were involved in a serious motor vehicle accident and sustained significant injuries.[1] At the time of the accident, Marion was approximately seventy-two years old and Roger was approximately seventy-seven years old. The defendant, an attorney in Franklin County who primarily handled personal injury cases, contacted Roger Pearce.[2] He had known Roger for many years and Roger considered him a friend. Shortly thereafter, Roger agreed to have the defendant represent him in the personal injury action related to the accident and signed a contingency fee agreement on February 9, 2006. The agreement provided that the defendant would receive one-third of any settlement. Apparently on the same day, the defendant also visited Roger's wife, Marion, at the rehabilitation center where she was recuperating from her injuries and she too signed the contingency fee agreement.

On March 28, 2006, approximately seven weeks after taking on the Pearces as clients, the defendant sent a demand letter to Zurich American Insurance Company (Zurich), the company that insured the responsible party, seeking over $1 million in damages.[3] In early April, the defendant reached a settlement with Zurich that provided compensation in the amount of $225,000 to Roger and $437,500 to Marion, for a total of $662,500. The defendant obtained a release from each client on April 18, and provided them to Zurich. Zurich, however, would not issue the settlement check until it received two additional releases from Medicare for liens for medical bills paid on behalf of each victim totaling $5,523.08.[4] Zurich paid this sum and upon obtaining the release of liens, issued two checks for the balance of the settlement to each victim, totaling approximately $657,000. The defendant deposited both checks in his IOLTA (interest on lawyers' trust) account on June 8.

On June 15, 2006, the defendant met with Roger, Marion, and their adult daughter at the Pearces' home to discuss the disbursement of the settlement funds.[5] The defendant took out a piece of notebook paper and wrote at the top, " Rough Numbers." Beneath that title, he wrote the number " 662," explaining that this was the settlement amount; below " 662" he wrote the number " 220," and said this was his fee, with the difference noted by the number " 442," which he also wrote on the paper. The defendant explained that there were additional medical bills that totaled $202,000 and wrote the number " 202" directly below " 442," to represent those bills. Next to that number he made a notation, " doctors and hospitals 4-19-2006," and he then wrote the number " 240," explaining that the latter figure was the balance of the settlement after legal and medical bills were paid. Under this balance the defendant wrote, " up to $250 quarter of a million and lawyer and medical providers fight over the rest."

According to Roger and his daughter, this document outlined how the settlement proceeds would be used, and summarized the following conversation with the defendant. Because it was clear from the figures on the paper that if the victims received $250,000, only $192,000 would be left to cover medical bills purportedly totaling $202,000, the defendant explained that he would " negotiate the hospital bill down a little" and that " he was going to use [the remainder] to pay hospital bills, doctor bills, or medical bills of any kind." Roger testified that from this conversation he understood that the defendant would give them $250,000 as their settlement. The daughter testified that the defendant said " there wasn't going to be money left" because the amount remaining " would hopefully cover all of the medical bills," an understanding her father shared. She also testified that the defendant said that he would take a portion of his fee if necessary in order to insure that the victims would get $250,000.

After this discussion, the victims agreed to the settlement figure of $250,000 written on the paper and the defendant had both victims initial it. Both Roger and his daughter testified that they believed the paper was an explanation of where the money was going, not an amendment or change to the original contingency fee agreement. The defendant went from this meeting to his office to retrieve the settlement check, and returned the same day and gave the Pearces a check for $250,000.

At the time of the June 15 meeting, however, when the defendant represented that there were $202,000 in outstanding medical bills, the evidence shows that virtually all of the bills he was aware of had been paid in full or otherwise satisfied. For example, Medicare had already provided releases, and the largest medical bill for Marion from Baystate Medical Center (over $117,000) showed a zero balance. Nor was any evidence adduced that the defendant had received other insurer liens or subrogation requests, or that he was aware of any.

After the defendant issued the settlement check, he paid one medical bill for approximately $952 and over the next five weeks took the more than $400,000 that remained for himself. The Pearces also received several additional small medical bills totaling between $2,000 and $3,000 after the case had been settled, but, as Roger testified, he paid them because he " didn't think there was enough in escrow to pay all the bills."

The defense was presented primarily through the defendant's testimony. He claimed that the victims wanted to settle the case quickly and in exchange for increasing the amount of their settlement by $10,000, the defendant assumed the risk of paying all of the outstanding medical bills. He explained that under this agreement if the bills exceeded the amount in escrow he would pay them from his fee, and if they were less than the escrow he would keep the extra money. The defendant did not dispute that he took virtually the entire remaining balance for his personal use, but maintained that he was entitled to it because the notations on the paper initialed by the victims constituted an amendment to the original contingency fee agreement under which he assumed the risk of paying any and all additional medical bills in exchange for the right to keep any outstanding balance.

Discussion.

1. Jury ...


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