Monday, October 22, 2007
Uncle Jerry Wants to ‘Kiss and Make Up’ With High Court Justices
By ROGER M. GRACE
The State Bar, after hearings that stretched over 11 years, finally had the goods on Uncle Jerry…Jerome B. Rosenthal, that is, the lawyer best remembered for the $26.4 million judgment actress/singer Doris Day got against him for mismanaging her business affairs. (My Aunt Ruth had been married to him from 1943-64.)
Jerry didn’t simply botch the role of financial impresario through ineptitude; he actively, knowingly, bilked Day. As I mentioned in my last column on Uncle Jerry, who died Aug. 15 without public note being taken, he was lucky not to have been prosecuted criminally. But the State Bar did go after him, and on Dec. 20, 1985, the decision of the local administrative committee was filed recommending disbarment.
There were 14 counts. They dealt largely with Cabana Management, Inc., created by Uncle Jerry in 1963 to manage the Dallas Cabana Hotel and the Palo Alto Cabana Hotel, in which Day and her husband, Marty Melcher, had the controlling interest. The management corporation, according to the findings, was Uncle Jerry’s alter ego. And….
“CABANA was a fraudulent device created and used for the purpose of claiming money from the management and/or operation of the Dallas and Palo Alto hotels. Such claims were, for the most part, contrived, a sham, fraudulent, exaggerated and, in some instances, duplicative of claims made by Respondent’s law firm for the same services.”
This would seem to go beyond run-of-the-mill malpractice.
Then there’s the matter of perjury. After Melcher died in 1968, and stepson Terry Melcher discovered that Jerry had drained the family finances virtually dry, adjustments had to be made. The Dallas Cabana—which, as you may well have surmised, was in Dallas, Texas—went into bankruptcy in 1969. According to the State Bar committee’s finding of facts:
“During the trial of the Dallas case, Respondent testified under oath on more than one occasion that his law firm had not received payment for legal services rendered to the DALLAS CABANA HOTEL. Such testimony was false and known by Respondent to be false. In truth and in fact, Respondent’s law firm had received $20,000.00 for services rendered to the DALLAS CABANA HOTEL.”
Day was in need of funds. Nonetheless, it was found, Jerry dragged out the proceedings in Dallas, using falsehoods and devices.
The State Bar’s Review Department on May 23, 1986, after hearing argument from Jerry, adopted the committee’s decision.
The brief the State Bar submitted in the Supreme Court calling for disbarment, dated Dec. 29, 1986, details events in connection with the Dallas hotel. Under a plan filed by Day and her son, the hotel was to be sold to the president of the Hyatt Corporation for $4.5 million. There was a contract of sale and a $100,000 deposit. Jerry, through Cabana Management, Inc. and his law firm, Rosenthal and Norton, as purported creditors, opposed the sale. He exaggerated the debt to those entities, creating the illusion that they held a majority interest. The hotel, Jerry proclaimed, was worth far more than $4.5 million, and there were ready buyers at a higher price. There weren’t.
The hotel was eventually sold at a price lower than that. Neither the committee findings nor the State Bar’s brief tells how much lower, but the Supreme Court’s disbarment opinion says that Jerry’s action resulted “in a substantial monetary loss to the bankrupt estate.”
In the brief, the bankruptcy judge is quoted as saying that Jerry was not only “an evasive witness, he was so insulting and rude, both to the court and opposing counsel, that I can only conclude that he was attempting to goad this court into error.”
Evasiveness was one of Uncle Jerry’s specialties.
The quotation continues:
“Observations by this Court of his obstinate and defiant conduct, the emphasis in his speech, his snide remarks, the tone of his voice, his frequent sarcasm toward this Court and opposing counsel, his convenient lack of memory and his alleged ‘inability’ to understand routine questions put to him, made it clear he was not telling the truth.”
Lying was another specialty.
A further example of his lying appears in other excerpts from the bankruptcy judge’s decision. Jerry’s excuse for not filing his own plan was that access to the hotel’s books and records had been denied him. False. The receiver had the documents, and they were available to him.
The next tall tale was that Day’s attorneys had seized the documents. No, they were still in the hands of the receiver.
Another effort: well, the receiver was 10 or 15 miles from Jerry’s office. The bankruptcy judge corrects that representation: “[T]he records were located in a warehouse almost directly across the street from Rosenthal’s law office.”
The brief also quotes the judge as providing this information:
“Sometime in 1963, Rosenthal embarked upon a scheme to alter the books and records of Dallas Cabana to reflect liabilities of that hotel to Rosenthal and Green and Cabana Management. His scheme was to be accomplished gradually over a period of time.”
I assume you get the picture. Uncle Jerry was a crook. He was a smooth, astute, skilled, crafty crook with a beguiling way about him.
But his misdeeds had caught up to him, and he was, in 1987, about to be disbarred. He undertook frenetic efforts to avoid that.
In a bid to deflect attention from himself, Jerry called a press conference to announce the filing of a lawsuit against the lawyers who succeeded him in representing Day. A “news alert” telling of the Thursday, June 4, 1987 event reads:
Because of bad legal advice by over-zealous bad faith attorneys who succeeded attorney Jerome B. Rosenthal, and collected an estimated two million dollars in legal fees from Doris Day, while insisting that the actress divest herself of her principal assets (under duress and forced sales at give-away prices) that would be worth in excess of 70 million dollars, Doris Day and her former attorney, Jerome B. Rosenthal, became dupes and innocent victims of her subsequent attorneys.
To recover Doris Day’s losses as well as his own, Rosenthal has filed a 30 million dollar lawsuit in the Los Angeles Superior Court for Breach of Fiduciary Duty, Intentional Infliction of Emotional Distress, and violations of Federal statutes, among other counts.
In his lawsuit, Rosenthal claims that the State Bar, acting in concert with Day’s said subsequent attorneys, illegally and unconstitutionally withheld vital documentary evidence from him during a period of 19 years until very recently, which newly acquired information gives rise to his present lawsuit. The lawsuit asks the court to allocate a proper portion of the recovery against the bad faith attorneys to the victimized actress.
Jerry’s rationale was that he and Marty Melcher had made long-term investments, and wise ones. The hotels had, since Day sold them, burgeoned in value, he proclaimed. The underlying fallacy was that Day had a choice; she didn’t. She lost one hotel through bankruptcy. The other was sold, as it had to be. It was losing money, and she had no more capital to pump into it.
With his lawsuit filed, Jerry proceeded to seek judicial action to put off the oral arguments in the disbarment case, scheduled to take place before the California Supreme Court in Los Angeles on Friday, June 12. Any such hearing, he contended, should await the outcome of his lawsuit, in which he contended a violation of his federal civil rights.
On Monday, June 8, he beseeched then-U.S. District Court Judge John Davies of the Central District of California to block the proceedings. The judge said “no.”
The next day, he sought a temporary restraining order in the Los Angeles Superior Court to prevent the California Supreme Court from going forward. Trial court judge Jerry Fields, predictably, did not restrain proceedings of the state’s high court.
The June 10 edition of the MetNews quotes Rosenthal as telling this newspaper that he included Day and her son as potential beneficiaries in the lawsuit because he felt “so sorry for Doris,” noting that he didn’t “feel any rancor toward her.” How magnanimous of him.
The article contains this paragraph:
“ ‘[Day] lost money by the actions of the new lawyers,’ Rosenthal said, ‘and she thought it was because of me.’ ”
How could she possibly have gotten that impression?
(In conversation, Jerry told our then-staff writer, Susan Stanton, that he had taught his ex-wife—my aunt—to play golf so she could snare her new husband. No, “Aunt Pookey” informed me; Jerry never instructed her on how to play golf…she’d never played the game.)
On Wednesday, June 10, Uncle Jerry sought reconsideration by Davies…to no avail.
He sought a stay, aimed at blocking the oral arguments, from the Ninth U.S. Circuit Court of Appeals. It was denied on June 11.
June 12, 1987, arrived, and oral arguments proceeded at the Supreme Court’s temporary courtroom in an office building (the Paramount Plaza) at 3580 Wilshire Blvd. (The Supreme Court and the Court of Appeal were there following earthquake damage to the old State Building on First Street and before erection of the Ronald Reagan State Building.)
Uncle Jerry represented himself. I viewed the proceeding, out of curiosity. I hadn’t seen Jerry for about 30 years…and was never to see him again. My daughter, Lisa, age 17, was there. She was spending her summer doing chores for the newspaper, including snapping the photo below as Uncle Jerry emerged from the courtroom. (She no longer takes pictures for us; she’s now publisher of her own newspapers, an attorney, and a real estate broker.)
Rosenthal emerges from courtroom after arguing against his disbarment.
Stanton wrote the news story, appearing Monday, June 15. It quotes Jerry as telling the justices:
“In my hyperactivity in the past month or so, I was, frankly and candidly, in fact proudly admit, that I was trying to escape the system if I can change it. And I don’t know yet whether I can change it. That system, I mean the rules of the State Bar….They’re aberrations.”
(His main beef with the State Bar was the long delay in a result being reached in his disciplinary case…a delay he had, himself, brought about.)
The article quotes Jerry as assuring the justices that “I was suing your honors to enjoin, of course for constitutional reasons,” proceedings which stemmed from the State Bar’s folly. It recounts that he told the panel:
“I don’t know if we kissed and made up or not, but I did my best. I tried to explain my reasons.”
No member of the panel asked any questions.
Absent were then-Chief Justice Malcolm Lucas and Justice Stanley Mosk (since deceased). Lucas had recused himself, at Uncle Jerry’s request. As a federal District Court judge, he had rebuffed Jerry’s effort to require appointment of free counsel for him based on his supposedly shaky finances. Mosk bowed out, Jerry told Stanton, for personal reasons…possibly because he and Jerry had been classmates in law school at the University of Chicago and had some contacts after both came to California.
Court of Appeal Presiding Justices Vaino Spencer (now retired) and Mildred Lillie (who is deceased) sat as pro tems.
The opinion in the case is a mundane, matter-of-fact one, designated as being “By the Court.” The long and the short of the opinion is that the established facts permitted no result other than disbarment.
So, Uncle Jerry had no law license. That didn’t keep him from practicing law in the state courts, however. He didn’t recognize the validity of the disbarment. Lucas had signed the order denying a rehearing, and the chief justice had earlier recused himself from participating in the case. Five months later, a second order was signed by Acting Chief Justice John Arguelles (now back in law practice), and Jerry then conceded the fact of his expulsion...though contesting it in federal court.
He continued representing clients in the federal courts, however. The disbarment only stripped him of his right to practice in state court, he explained. The U.S. Supreme Court suspended him from practice before it on Oct. 13, 1987, and disbarred him on March 21, 1988. Disbarment by the Ninth U.S. Circuit Court of Appeals followed on Aug. 19, 1988.
Jerry continued to practice through the years, representing himself. He was a client with a fool for a lawyer.
I’ll recount his post-disbarment years another time.
Copyright 2007, Metropolitan News Company