On Friday, September 22, 2023, the Disciplinary Review Board of the Supreme Court of New Jersey issued a Letter of Admonition to attorney Edward Joseph Hovatter, as a result of his improper business transaction with a client, John Costello. The Board found that Hovatter violated the New Jersey Rule of Professional Conduct by obtaining a $50,000 loan from Costello without observing the required safeguards.
The case is entitled “In the Matter of Edward Joseph Hovatter,” with case no. 23-147.
According to the Letter of Admonition, Hovatter represented to Costello that the loan would be secured by a purchase money mortgage on a property Hovatter owned in Hammonton and that it would have priority over existing mortgages. However, Hovatter did not provide written notice to Costello regarding the desirability of seeking independent counsel, nor did he obtain Costello’s written informed consent, as required by Rule 1.8(a)(2).
The loan was payable upon the sale of the Hammonton Property, and in November 2019, Hovatter filed for Chapter 11 bankruptcy. His reorganization plan provided that Costello would be paid the principal and interest at 6% per annum, instead of the 12% rate contracted for. Costello voted in favor of the plan to avoid additional litigation expenses, and on June 5, 2020, the Hammonton Property was sold. Costello received a disbursement of $54,080.37, which exceeded the principal of the loan by $4,080.37.
The Board found that Hovatter’s conduct adversely reflected not only on him but also on all members of the bar, and accordingly, directed the issuance of an admonition to him. The Board also directed that the costs of the disciplinary proceedings be assessed against Hovatter.
In mitigation, the Board considered Hovatter’s unblemished disciplinary history in more than thirty years at the bar and the difficult circumstances in his life that may have led to his poor judgment at the time of his misconduct. The Board also determined that there was insufficient evidence to conclude that Hovatter intentionally deceived Costello regarding whether his loan was secured by a purchase money mortgage.
The letter of admonition states:
“Additionally, the Board determined that there is insufficient evidence to conclude that you intentionally deceived Costello regarding whether his loan was secured by a purchase money mortgage.”
According to avvo.com, Mr. Hovatter is a real estate attorney in Moorestown, New Jersey. He acquired his law license in New Jersey in 1992.
A copy of the original filing can be found here.