In Re Runco - Case Law

Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh

Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman

____________________________________________________________________________________________________________________________

FILED JANUARY 17, 2001

In re HONORABLE WILLIAM J. RUNCO,

No. 116565

________________________________

PER CURIAM

The Judicial Tenure Commission has asked this Court to

enter a public censure of 19th (Dearborn) District Judge

William J. Runco. We accept the recommendation of the

commission, and we enter this opinion, which will stand as our

censure.

Our review of this matter is de novo. In re Ferrara, 458

Mich 350, 358; 582 NW2d 817 (1998). Having examined the

record and considered the arguments of the parties, we adopt

the following facts, as found by the commission:1

Gerald and Ilene Trifan were the owners of a

bowling alley in Melvindale, Michigan, which they

had acquired for $60,000 in 1984. Respondent Runco

1
As its findings of fact, the commission adopted the

facts found by the master. Thus, the quoted material was

authored by the master.

did the legal work for the Trifans in the purchase

of the property. The building became damaged and

condemned by the City of Melvindale in 1986. The

Trifans could not afford to remove it, therefore,

the City removed it and filed a lien against the

property for the cost of the removal. As of

November 1986, the liens against the property were

approximately $36,000.

The Trifans were interested in purchasing a

bowling alley in Allen Park, Michigan, since their

building had been destroyed, and were negotiating

for its purchase in 1986. Mr. Trifan engaged

Respondent Runco regarding this purchase. The

Trifans had limited resources as a result of the

closing of the Melvindale bowling alley, their sole

source of income at that time, and needed money

from the sale of that property in order to purchase

the Allen Park bowling alley.

The Trifans had listed the Melvindale property

for sale with a multiple listing service for

$49,000. Little Caesar’s restaurant chain made a

written offer of $49,500, $500 more than the

listing agreement price. Mr. Trifan brought this

offer to Respondent Runco and asked him to review

the terms of the purchase.

Respondent Runco advised Mr. Trifan of

contingencies in the Little Caesar’s offer. He

suggested that there were so many contingencies

that the purchaser would be able to back out

without completing the sale. He then told Mr.

Trifan that he had a friend, Raymond Trudeau, who

had developed various properties in the area, and

that he might be interested in the Melvindale

property. Respondent Runco was aware that Trudeau

had developed a Meineke Muffler Shop on similar

property that he owned in Lincoln Park. Respondent

Runco obtained Mr. Trifan’s permission to discuss

the property with Trudeau. The property now

consisted of seven vacant lots. Respondent Runco

did not suggest or recommend that the Trifans

either make a counteroffer to Little Caesar’s or

negotiate to remove some of the unacceptable

contingencies. Instead, he brought the property to

Mr. Trudeau’s attention.

In the first conversations with Trudeau,

Respondent Runco indicated that he would like to be

part of the developments Trudeau was working on.

He indicated his interest in becoming a partner in

the development of the Trifan’s Melvindale

property. During the course of these conversations

and before the purchase of the Trifan’s property,

it was agreed between Trudeau and Respondent Runco

that they would work together on the Trifan

property, with Trudeau doing all of the developing

and investing all of the money and Respondent Runco

doing all of the legal work in the development and

sale of the property. Trudeau agreed that they

would share the profits equally. Respondent Runco

admitted there was an agreement, but claimed it was

entered into after the sale of the Trifan’s

property on March 31, 1987. Even the disclosure of

Respondent’s interest in the sale after March 31,

1987, however, would give the appearance of

impropriety.

. . . Mr. Trudeau testified more credibly in

this regard. Unlike Respondent Runco, Mr. Trudeau

had no apparent motive to provide false testimony.

Memoranda was [sic] presented which indicated

payments to Respondent Runco as a “finders fee.”

The Trifans received no information about this

informal partnership before or after the sale.

Respondent Runco, on several occasions, indicated

to Trudeau that his financial interest in this

property should not be disclosed to anyone. As a

result, Trudeau did not disclose this to anyone

except his wife, who was a partner in their

development partnership known as VI Properties, and

Joe Guido, a business associate. Trudeau and

Respondent Runco obtained the zoning variance to

permit the construction of an oil lube and muffler

business on the Melvindale property before the

purchase of the property.

Trudeau, on behalf of the Trudeau/Runco

partnership, made an offer of $46,000, which was

accepted by the Trifans and the deal was closed on

March 31, 1987, the same day that the Trifans

closed on the purchase of the Allen Park property.

The deal was closed in Respondent Runco’s office.

In November of 1987, Trudeau was

“flabbergasted” when he received an offer for

$133,000 for four of the seven lots as a site to

build a Jiffy Lube. After negotiation, the

property was sold for that amount. The transaction

closed on January 19, 1988, and Trudeau and

Respondent Runco shared the profits equally.

Shortly thereafter, the remaining three lots were

sold for $20,000. The two partners, again, shared

the profits equally. Respondent Runco admitted on

the witness stand that he received a total on the

two sales of $41,000 and deposited those sums in

his brokerage account. At no time did Respondent

Runco or Trudeau ever advise the Trifans of the

secret partnership between them.

Respondent Runco’s attorneys tried to

introduce many irrelevant facts regarding Mrs.

Runco’s campaign for a State Senate seat. During

this campaign, certain Dearborn businessmen had

circulated derogatory statements about Mrs. Runco.

Trudeau was never found to have participated in nor

been responsible for any activity in this regard.

This testimony, therefore, did not impeach

Trudeau’s credibility.

Near the end of its recommendation, the commission

offered a concluding paragraph that well summarizes the

misconduct involved in this case:

The Commission would further state that the

Master, who heard the testimony and observed the

witnesses, was in a better position to determine

the credibility of the witnesses and that he

rejected Respondent’s version of the facts.

However, even if Respondent’s version of the facts

were accepted as true, Respondent would still be

guilty of professional misconduct. Respondent’s

actions, as an attorney, created a breach of his

fiduciary duty to his clients, the Trifans.

Further, Respondent’s actions constituted a

conflict of interest, or at least the appearance of

same relative to his clients, the Trifans. This is

not a situation where Respondent acquired

information about his clients’ property

independently, after the fact, and subsequently

acquired an interest in it pursuant to some

business arrangement with an unrelated third party.

Instead, Respondent acquired information from his

clients while he was representing them; he

introduced the purchaser to his clients and

essentially brokered the deal. Without

Respondent’s involvement, there is no likelihood

whatsoever that this transaction would have been

consummated. Almost immediately thereafter, under

Respondent’s version, he became involved in a

business relationship with his handpicked purchaser

and acquired an interest in the property, which

translated very quickly into a substantial profit.

Given Respondent’s role in the initial transaction,

and the proximity in time between his

representation of the Trifans and his business

arrangement involving the property, accepting his

version of the sequence of events, he should have

been put on notice that his actions constituted

self-dealing or the appearance of self-dealing and

monetary benefit at the expense of his clients.

The commission also found that Judge Runco committed

judicial misconduct by failing to file a timely answer to the

formal complaint:

Respondent failed to file an answer to the

Formal Complaint containing a full and fair

disclosure of all facts and circumstances

pertaining to the alleged misconduct, as required

by MCR 9.209(A), and failed to comply with a

Commission Order requiring that he “file and serve

his answer to the Formal Complaint on or before the

close of business on January 8, 1999,” despite a

warning from the Master that he would be in default

if he failed to comply.[2]

Throughout the pendency of this matter, the parties have

disputed whether this matter should be dismissed on the basis

of laches, or some similar theory.3 On this record, we are

2
The formal complaint was filed on November 23, 1998.

In response, Judge Runco filed on December 7, 1998, a document

entitled “Answer to Complaint,” but which specifically stated

that “Respondent is not at this time filing an Answer to the

Formal Complaint as contemplated by MCR 9.209.” Instead,

Judge Runco filed a complaint for mandamus under MCR 7.304(A),

seeking to have this Court exercise superintending control

over the Judicial Tenure Commission and dismiss the formal

complaint in part on the basis of laches. As the commission

noted in its opinion, Judge Runco also ignored a December 15,

1998, order directing him to file an answer.

Even assuming without deciding that the filing of the

complaint for mandamus tolled the fourteen-day period in which

Judge Runco’s answer was due under MCR 9.209(A), Judge Runco

still did not file an answer until July 26, 1999, more than

two months after this Court dismissed his complaint and lifted

the stay of proceedings that had been entered.

In response to Judge Runco’s complaint for

superintending control, we directed the parties in March 1999

to brief “the questions whether (a) a formal complaint may be

defended on a ground in the nature of a statute of

satisfied that, even if such a defense were available in this

case (a question we do not decide), there would be no basis

for its application here. As the commission observed, the

heart of this dispute concerns the timing of the agreement

between Judge Runco and Mr. Trudeau. Each testified at

length, and we accept the commission's determination that the

materials that had become unavailable over time did not

include any that were necessary for resolution of the central

issues.

The commission found that a public censure was an

appropriate sanction in this case:4

In considering what sanction to recommend to

the Supreme Court, the Commission notes that

Respondent committed the acts underlying Formal

Complaint No. 61 over 12 years ago, when he was a

fairly young, inexperienced attorney, and the book

has yet to be closed as Respondent's former client

has a pending civil action for money damages.

Furthermore, there is no record of any disciplinary

limitations, (b) whether such a defense, if accepted, should

be developed as a court rule, or as an application of laches

or due process, or in some other manner, (c) whether such a

defense, if accepted, should include a tolling or discovery

provision, and (d) how such a defense, if accepted, pertains

to the present case.” 590 NW2d 288 (1999). After hearing

oral argument, we entered an order that provided:

Counsel for the Judicial Tenure Commission

having represented at oral argument that,

consistent with MCR 9.205(E), the commission must

consider all circumstances, including equitable

defenses, in deciding whether to take action, and

further that the master is authorized to recommend

dismissal at any time during the proceedings, the

complaint for superintending control is dismissed.

[459 Mich 1251 (1999).]

Three members of the commission dissented in part,

urging this Court to impose a thirty-day suspension without

pay.

action against Respondent as a judge, a position he

held for eight years prior to this proceeding.

We agree with the commission’s finding that Judge Runco

committed misconduct in violation of Const 1963, art 6, § 30,

and MCR 9.205(E) by engaging in self-dealing contrary to the

interests of his clients, and that Judge Runco’s failure to

file a timely answer to the formal complaint constitutes

additional grounds for discipline. MCR 9.209(A). We further

agree that a public censure is warranted. Accordingly, for

these reasons, we publicly censure the Honorable William J.

Runco, Judge of the 19th District Court. This written

judgment will stand as our censure.

CORRIGAN , C.J., and WEAVER , KELLY , TAYLOR , YOUNG , and MARKMAN ,

JJ., concurred.

S T A T E O F M I C H I G A N

SUPREME COURT

IN re HONORABLE WILLIAM J. RUNCO,

No. 116565

___________________________________

CAVANAGH, J. (concurring in part and dissenting in part).

I concur with the findings of fact and conclusions of law

in the per curiam opinion, but dissent from the sanction

imposed. I would impose the sanction recommended by the

dissenting opinion of the Judicial Tenure Commission, a

thirty-day suspension without pay.