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Catonsville lawyer disciplined for conflict of interest in commercial lease deal

Catonsville lawyer disciplined for conflict of interest in commercial lease deal

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Justice Michele D. Hotten (The Daily Record/File Photo)
Justice Michele D. Hotten (The Daily Record/File Photo)

A Catonsville attorney who provided legal advice to a prospective commercial tenant without disclosing his ownership stake in the property where the tenant wished to move received a fully stayed 60-day suspension from Maryland’s Supreme Court this week.

Ali M. Kalarestaghi will instead serve a 6-month probationary period, during which he can continue practicing law, in lieu of the suspension. Maryland’s top court concluded the stayed suspension was an appropriate penalty for Kalarestaghi’s violations of the Maryland Attorneys’ Rules of Professional Conduct.

The 62-page majority opinion, authored by Justice Michele D. Hotten, concludes that Kalarestaghi had an attorney-client relationship with the prospective tenant, an optometry practice called Catonsville Eye Associates LLC.

Catonsville Eye wished to explore moving to a new location at 6567 Baltimore National Pike, which Kalarestaghi owned with his father and brother through an entity called MAH Mountain LLC, according to the opinion.

First, however, Catonsville Eye needed help getting out of its existing lease for a commercial space on Rolling Road in Catonsville. Dr. Erick Gray, who handled the administrative aspects of the optometry business, wished to avoid paying double rent if he moved the business into the Baltimore National Pike location.

Kalarestaghi introduced himself to Gray as the attorney for his father but did not mention that he had a 30% interest in MAH Mountain, according to the opinion.

He agreed to review Catonsville Eye’s existing lease to determine if the business could terminate it early and offered his opinion in an email that the business was obligated to stay at the Rolling Road location through August 2017.

“This is legal advice, it is subject to attorney-client privilege, I cannot even share this review with my father, although you can,” Kalarestaghi wrote in the email.

“In my very experienced legal opinion, the Landlord has ZERO basis for claiming that your lease ends December 31, 2017,” he continued.

Kalarestaghi then proposed a deal in which he would help negotiate an agreement to end Catonsville Eye’s current lease early. The business’s lease at the new location would include “up to $5,000 in free legal services” to work out that agreement.

Gray agreed to pay a $1,000 deposit to MAH Mountain contingent on Kalarestaghi’s success in ending Catonsville Eye’s current lease early, according to the opinion. Gray ultimately signed a lease for the Baltimore National Pike location, despite there still being some terms of the written lease that needed to be updated.

Gray believed his business would not need to begin paying rent until November 2017, according to the opinion. But MAH Mountain, represented by Kalarestaghi, ultimately sued Catonsville Eye in Baltimore County District Court for rent from July through December 2017.

Catonsville Eye had Kalarestaghi disqualified from serving as MAH Mountain’s lawyer because of a conflict of interest and ultimately countersued, according to the opinion.

Baltimore County Circuit Judge Wendy S. Epstein heard Kalarestaghi’s attorney grievance case and concluded that Kalarestaghi violated ethics rules by failing to disclose his conflict of interest when he represented Catonsville Eye.

Epstein found that there was an attorney-client relationship between Kalarestaghi and Catonsville Eye, and the Maryland Supreme Court declined to overrule that finding.

Hotten wrote: “We agree with the hearing judge that respondent’s representation of Catonsville Eye created a conflict of interest because Catonsville Eye and MAH Mountain were in a directly adverse relationship during lease negotiations. Respondent’s failure to adequately explain the conflict deprived Catonsville Eye of the ability to make informed decisions.”

Maryland Bar Counsel requested an indefinite suspension with the right to petition for reinstatement after six months, while Kalarestaghi sought a reprimand.

Hotten concluded that a stayed suspension was appropriate because the court did not find evidence that Kalarestaghi was intentionally dishonest or deceitful. He also has no prior history of discipline since his entrance to the bar in 2007. Epstein, the hearing judge, also found that Kalarestaghi offered sincere testimony and did not believe there was a conflict of interest.

Kalarestaghi’s lawyer, David G. Mulquin, declined to comment. Bar Counsel Lydia E. Lawless also declined to comment.

In a concurring and dissenting opinion, Justice Steven B. Gould disagreed with the majority about the scope of the attorney-client relationship between Kalarestaghi and Catonsville Eye. The relationship only included Kalarestaghi’s review of Catonsville Eye’s existing lease, not a plan to negotiate the business’s early withdrawal from the lease, Gould wrote.

Chief Justice Matthew J. Fader and Justice Brynja M. Booth joined in the concurring and dissenting opinion.

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