Attorney Grievance Commission of Maryland v. McCulloch

BELL, C.J. Bar counsel, acting on behalf, and with the approval, of the petitioner, the Attorney Grievance Commission of Maryland, filed in this Court, pursuant to Maryland Rule 16-751, 1 a Petition for Disciplinary or Remedial Action charging the respondent, Carol Long McCulloch, with violations of various of the Maryland Rules of Professional Conduct, as adopted by Maryland Rule 16-812, namely, Rules 1.1, Competence, 2 1.2, Scope of Representation, 3 1.3, Diligence, 4 1.4, Communication, 5 ⁶⁷⁷ 1.5, Fees, 6 1.15, Safekeeping Property, 7 1.16, Declining or Terminating Representation, 8 8.1, Bar Admission and Disci ⁶⁷⁸ plinary Matters, 9 8.4, Misconduct, 10 and Maryland Rule 16-604, Trust Account Required Deposits. 11 The petition also alleged that the respondent violated Maryland Code (2004, 2006 Cum.Supp.) §§ 10-304, Deposit of trust money, 12 and 10- ⁶⁷⁹ 306, Misuse of trust money, 13 of the Business Occupations and Professions Article. 14 We referred the case, pursuant to Rules 16-752(a), 15 to the Honorable Thomas F. Stansfield, of the Circuit Court for Carroll County, for hearing pursuant to Rule 16-757(c). 16 After a hearing, at which the respondent appeared and participated, the court found the following facts by clear and convincing evidence. The respondent was retained by Jeffrey A. Connelly, the complainant, to represent him in his pending divorce action. ⁶⁸⁰ The retainer agreement provided for the respondent to be paid at the rate of $180.00 an hour for her services and an initial retainer of $2,500.00, against which the respondent’s hourly rate billing would be charged. The complainant paid the retainer by check. On the same day she . received the retainer check, the respondent deposited that check in her operating account, even though not all of the retainer had then been earned.

Subsequently, beginning about two weeks after the retainer was paid, the complainant began a series of emails to the respondent, urging her to “move forward on his case.” Despite these e-mail urgings, it was not until July 16, 2004, about a month later, that the respondent informed the complainant that “the documents required to file his divorce action were in progress.”[ 17 ] Thereafter, by e-mail dated August 5, 2004, the complainant “discharged” the respondent, indicating that he would “seek other counsel” and “requesting a complete refund to be paid to him by August 12, 2004.” Despite sending the complainant a letter, dated the same day, August 5, containing copies of a letter and the original Complaint she had prepared and a bill showing a credit of $ 1,474.00 due the complainant, sans check, on August 7, 2004, the respondent sent the complainant an e-mail in which she asked that he reconsider his decision to discharge her. Other than an inconclusive exchange of e-mails—the complainant stating his “desperate” need for the refund and the respondent conceding that he “would be better off with someone who ⁶⁸¹ would give him the same consideration he had given” her— almost three months passed before there was any other communication with the respondent with respect to the case. 18 The complainant filed his complaint with the petitioner, which complaint bar counsel forwarded, by letter dated November 1, 2004, to the respondent, with the request that she respond to it within 15 days. The respondent did not respond to that letter or to the two subsequent letters, one sent by certified mail, made necessary by that failure, until March 30, 2005. By that time, in addition to the bar counsel letters just mentioned, the complainant had written directly to the respondent, seeking a refund of the $1,474.00 the respondent had advised him he was due, and bar counsel had written yet another letter to the respondent, this time, in addition, seeking copies of her trust account and her client cards.

When the respondent responded, she also included with her response to the complaint an amended bill for the client. According to that bill, the credit due the complainant was $880.00, some $594.00 less than reflected on the prior bill. The respondent refunded that amount to the complainant “directly from her trust account,” after she settled an unrelated personal injury case, as to which she received a fee of $960.00. The respondent’s operating account balance in June 2004 was a negative one, and it remained a negative balance “at the time a refund of at least Eight Hundred Eighty Dollars ($880.00) was clearly due the Complainant.” From the foregoing facts, the hearing court concluded, by clear and convincing evidence, that the respondent violated Rules 1.4(a)(3), 1.15(a), 1.16(d), 8.4(b), (c) and (d) of the Rules ⁶⁸² of Professional Conduct, Rule 16-604 and §§ 10-304 and 10-306 of the Business Occupations and Professions Article.

The Rule 1.4(a)(3) and the Rule 8.1(b) violations relate to the respondent’s failure to respond, to bar counsel and to the complainant. While its conclusion with respect to bar counsel and Rule 8.1 is clear and straight-forward, the hearing court explained, as to the complainant’s request and Rule 1.4(a)(3): “[T]he gravamen of [bar counsel’s] contention is that if the e-mail were included with a letter of November 1, 2004, which the Respondent admitted she had not read, and even after becoming aware of it on December 1, 2004, did not respond to it, the Rule requires some type of response when a client asks that you either continue the representation and presumably actively pursue the matter for which the attorney had been engaged, or refund the retainer. The Court believes that there is an inherent requirement in this Rule that such a response be reasonably prompt. While facts and circumstances may justify days or even weeks in responding, certainly the length of time involved here is sufficient to find a violation of this Rule by clear and convincing evidence.” With regard to the Rules 1.15 and 16-604 and § 10-304 violations, it was clear to the hearing court that the respondent received the retainer, deposited the unearned portion in her operating account rather than her escrow account and, “[c]ompounding the problem,” did not provide an explanation for not timely depositing it in escrow.

In addition, the hearing court observed that “a review of the Respondent’s bank records clearly indicates that she commingled the Complainant’s unearned retainer with her own funds, and she exhausted the same prior to having performed the work she promised to do for him.” It did not find credible, and therefore rejected, the respondent’s explanation for not depositing the retainer in her escrow account, “to verify that the check [was] good, presumably before she would continue to perform work on behalf of the Complainant.” ⁶⁸³ Acknowledging that the respondent eventually refunded the unearned fee, the hearing court concluded that Rule 1.16(d) was violated nonetheless when she did not do so promptly. Addressing the discrepancy between the two bills that the respondent generated, each showing a different credit due the complainant, the court said: “Although the difference in the two statements provided to the Complainant and the difference between the credit balance amounts could raise a question of why there was a revision of the bill or how some item was not included in calculating the credit balance due the Complainant, we are left with the fact that the Respondent testified concerning problems obtaining bookkeeping and assistance services during that period of time and explained the error that resulted in this change. Further, the Complainant accepted the check sent by the Respondent in the lower amount, presumably in full payment of his refund.” With regard to the Rule 8.4 violations and the § 10-306 violation, the hearing court concluded: “There is no question that the Respondent, after having deposited the Complainant’s retainer into her operating account, spent it. She clearly had to secure funds from another matter some six (6) months later in order to have sufficient funds from which to send a refund to the Complainant.

There is no other inference to be drawn from the evidence other than the Respondent spent the funds improperly for personal purposes.” On the other hand, it rejected the petitioner’s argument that the respondent had committed theft, explaining: “There was a dispute as to the amount of the refund due until the Complainant accepted the refund check tendered by Respondent. While the Court feels that these rules and statutes [sic] have been violated by clear and convincing evidence, the Court does not find that these actions resulted from the requisite criminal intent to constitute Theft.” The hearing court also commented on “issues in the Respondent’s testimony,” as follows: ⁶⁸⁴ “In the first place, she testified that essentially she had trouble engaging adequate or any assistance with the bookkeeping functions in her office, and was further plagued with extensive problems surrounding the death of her friend, who also functioned as an investigator. Tragically, it appears that that death occurred under very suspicious circumstances, and while we are not privileged to the criminal nature of these circumstances, the bottom line is that the Court finds no evidence to dispute the Respondent’s testimony in this regard. However, the practice of law, especially in the Family Law area, most often requires an attorney to prioritize the needs of the various clients in order to attend to all matters related to all of the clients in the attorney’s practice.

That is very demanding at times and is often easier said than done, but errors in time frames for response, refunds, or other matters of this type, certainly should not be allowed to drift into the excessive time frame outlined in this case, not only for the efficient handling of clients’ matters, but also for the proper functioning of a law practice. While there may be considerations of the mitigating factors in this case by the Court of Appeals, this Court does not see any of the arguments advanced by the Respondent in her proposed Findings of Fact and Conclusions of Law as sufficient to rise to the level that the Findings of this Court made by clear and convincing evidence are correct.” Neither the petitioner nor the respondent took exceptions to the findings and conclusions of the hearing court. The petitioner, however, did file Petitioner’s Exceptions to Findings of Fact and Recommendation for Sanction, in which it recommended that the respondent be disbarred. It relies on Attorney Grievance Comm’n v. Vanderlinde, 364 Md. 376 , 773 A.2d 463 (2001); Attorney Grievance Comm’n v. Blum, 373 Md. 275 , 818 A.2d 219 (2003); Attorney Grievance Comm’n v. Duvall, 384 Md. 234 , 863 A.2d 291 (2004); Attorney Grievance Comm’n v. Roberts, 394 Md. 137 , 904 A.2d 557 (2006). ⁶⁸⁵ In Vanderlinde , we reiterated and reemphasized the well settled principle that “Misappropriation of funds by an attorney is an act infected with deceit and dishonesty and ordinarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanction.” Vanderlinde, 364 Md. at 406 , 773 A.2d at 480 , quoting Attorney Grievance Comm’n v. Bakas, 323 Md. 395, 403 , 593 A.2d 1087, 1091 (1991), which, in turn, cited Attorney Grievance Comm’n v. Ezrin, 312 Md. 603, 608-09 , 541 A.2d 966, 969 (1988).

We then stated, emphatically: “Accordingly, we reiterate once again the position we announced in Kenney. Moreover, we expound upon it by holding that, in cases of intentional dishonesty, misappropriation cases, fraud, stealing, serious criminal conduct and the like, we will not accept, as ‘compelling extenuating circumstances,’ anything less than the most serious and utterly debilitating mental or physical health conditions, arising from any source that is the ‘root cause’ of the misconduct and that also result in an attorney’s utter inability to conform his or her conduct in accordance with the law and with the MRPC. Only if the circumstances are that compelling, will we even consider imposing less than the most severe sanction of disbarment in cases of stealing, dishonesty, fraudulent conduct, the intentional misappropriation of funds or other serious criminal conduct, whether occurring in the practice of law, or otherwise.” Vanderlinde, 364 Md. at 413-14 , 773 A.2d at 485 . Underlying the rule is the recognition that “[ujnlike matters relating to competency, diligence and the like, intentional dishonest conduct is closely entwined with the most important matters of basic character to such a degree as to make intentional dishonest conduct by a lawyer almost beyond excuse.” Id. at 418 , 773 A.2d at 488 .

Thus, Vanderlinde and its progeny make clear that “[djisbarment ordinarily should be the sanction for intentional dishonest conduct.” Id. See Attorney Grievance Comm’n v. Pennington, 387 Md. 565, 597 , 876 A.2d ⁶⁸⁶ 642, 661 (2005); Attorney Grievance Comm’n v. Lane, 367 Md. 633, 646 , 790 A.2d 621, 628 (2002). In Vanderlinde , the respondent attorney, as she freely acknowledged, had “on many occasions over a period of time [ ] misappropriated money of the Association [her employer] for her own use.” 364 Md. at 381 , 773 A.2d at 466 . Therefore, there simply was no issue of the intention with which she acted; she offered only mitigation, “the pressures of her life and the impairment of her mental faculties, including her periods of depression,” id., hoping thereby to moderate the sanction.

This Court rejected that mitigation. Id. at 414-15 , 773 A.2d at 485-86 . Blum was found to have violated, in the representation of several clients, numerous Rules and Rules of Professional Conduct, including, inter alia, Rule 8.4(c), and statutes including § 10-306, involving client funds and misrepresentation. Among the misconduct sanctioned were the deposit of unearned retainers in his operating account, the use of those unearned fees before they were earned and the failure to return the unearned portion of a fee to a client.

There were no mitigating facts offered or found. 373 Md. at 304 , 818 A.2d at 236 . In summarizing the basis for the disbarment sanction, the Court said: “Blum refused to return Ms. Dianat’s money to her when she terminated his representation, and then altered a check, which he provided to her new attorney, in order to create the illusion that he had paid her. Blum also took funds that clients had given to him in anticipation of future services and deposited such funds into his personal and operating accounts for his own benefit, before he had earned those funds. Behavior such as this, in and of itself, ‘in the absence of mitigating circumstances, ordinarily warrants disbarment.’ ” 373 Md. at 303 , 818 A.2d at 236 .

In Duvall , the respondent attorney had been “found by the hearing court to have ‘committed multiple violations of the Rules of Professional Conduct,’ including failing to account for ⁶⁸⁷ the unearned portion of a retainer, failing, despite being requested to do so to refund that unearned portion to the client and using those funds, which constituted trust funds, for a purpose other than that for which it was entrusted to the respondent,” and previously had been disciplined. 384 Md. at 241 , 863 A.2d at 295 . We determined that