Weekly Update January 15, 2023

I went to law school, not math school

Have you ever wondered what the equivalent of an indefinite suspension from the practice of law in Maryland would be in Vermont? SCOV’s January 10, 2023 Entry Order answers this burning question. Respondent was licensed in Maryland and is (well, was) licensed in Vermont. He was suspended from practice in Maryland indefinitely with no apparent path to reinstatement (Maryland’s rules provide for reinstatement no sooner than the time of expiration of the suspension but there’s no end of suspension specified in this case). In Vermont, the equivalent of this kind of indefinite suspension is disbarment. That’s because, SCOV reasons, we only do suspensions up to three years. Once one hits the six-month-suspension threshold, one has to apply to be reinstated. Disbarred attorneys can apply for reinstatement after five years. Thus, an “indefinite” suspension with no timeline specified for potential reinstatement is effectively the same as a Vermont disbarment (with the twist that the way this sets up, respondent would probably be eligible to apply for reinstatement in Vermont before Maryland). Because Vermont follows reciprocal discipline, respondent is disbarred in Vermont. In re Spangler, 2023 VT 3 (mem.)  

We’ll call this week’s full-on opinion a debt-collection case. Maybe “secured transactions” would be more accurate. Brother helped secure sister’s business loan, presumably pledging his interest in his Merrill Lynch investment-management account as part of a commercial pledge agreement. A couple issues with this commercial pledge, however. First, brother’s wife is a co-owner of the Merrill Lynch account. She didn’t sign. Second, Merrill Lynch didn’t sign off on a proposed control agreement. Bank still provided the loan. As you’ve probably guessed already, we wouldn’t be talking about this if something hadn’t happened with the loan. Sister defaulted and bank sued brother and sister. Brother moved for summary judgment and bank cross moved. Bank got judgment against sister but brother got summary judgment in his favor on the basis that plaintiff bank never perfected its interest and thus, under the UCC, the secured interest never existed. This is because the agreement between brother and bank provided that the collateral was property that bank/lender at any time possessed or controlled. Neither possession nor control ever happened here. On appeal, SCOV explains: “Plaintiff created this problem for itself by incorporating the condition of possession or control into the description of the collateral.” Without that condition being met, the security interest never existed despite brother’s intent to create it (indeed, had Merrill Lynch signed off on the proposed control agreement, that would have done the trick). I expect this one will be on this or next year’s bar exam. Berkshire Bank v. Kelly, 2023 VT 2.