Attorney Grievance Commission v. Culver

PIARRELL, Judge. In this attorney disciplinary action, the Attorney Grievance Commission of Maryland, Petitioner, acting through Bar Counsel and at the direction of the Review Board, see Maryland Rule 16-709, 1 filed a Petition for Disciplinary Action ²⁶⁸ against Allan J Culver, Jr., Respondent, charging him with violations of Maryland Rules of Professional Conduct (“MRPC”) 1.5(c)(Fees) 2 and 1.15(c)(Safekeeping Property), 3 as adopted by Maryland Rule 16-812. Respondent also was charged with violating Maryland Rule 16-607(b)(2) (Commingling of Funds). 4 We referred the case to the Honorable Emory A. Plitt, Jr. of the Circuit Court for Harford County to ²⁶⁹ conduct a hearing 5 and to make findings of fact and draw conclusions of law. 6 Judge Plitt concluded from the facts found that the Respondent violated MRPC 1.5(c) and Rule 16-607(2)(b). As to the charge regarding MRPC 1.15(c), he concluded that, on the facts as he found them to be, the rule overlapped with Rule 16-607(b)(2), and that a finding of violation of the latter rule only was more appropriate.

I. This case arises out of Respondent’s representation of Mr. and Mrs. James D. Blum, III, in a residential landlord-tenant dispute and a subsequent related matter. The Blums initially retained Respondent in September of 1993 to defend them in a rent escrow action brought in the District Court of Maryland by the tenants, the Walkers. The Walkers and Mrs. Blum entered into a written one-year lease on 18 November 1992. According to the record, Mrs. Blum was the sole lessor of the single-family property. 7 On 15 April 1993, the Walkers wrote ²⁷⁰ to Mrs. Blum and demanded that they be allowed to terminate the lease and vacate the premises.

Mrs. Blum refused. Later that same month, the Walkers filed a rent escrow proceeding in the District Court of Maryland. On 10 May 1993, Mrs. Blum, in response, sought repossession of the leasehold premises for the Walkers’ alleged failure to pay rent and water and sewage expenses. The Walkers vacated the leased premises in September, allegedly still owing the back rent and water and sewage expenses.

The District Court dismissed in November 1993 the rent escrow proceedings filed by the Walkers. On 29 November 1993, the Blums initiated a suit against the Walkers, and the Walkers’ attorney from the rent escrow case, alleging breach of contract and abuse of process in bringing and prosecuting the rent escrow suit. This second suit was settled in January 1998 for $3,500.00 as to the claims against the Walkers. A default judgment was obtained against the Walkers’ former attorney.

Culver represented the Blums in both cases involving the Walkers. The Blums originally were represented in the rent escrow matter by other counsel, but, on approximately 8 September 1993, the Blums hired Culver to take over the matter. Although there was no written retainer agreement nor confirmatory writing of the representation received in evidence, it appears from the record that the financial terms of the representation were that Culver was to be paid a flat fee of $750 unless the case ran beyond a specified period of time, at which point billing would be on an hourly basis. 8 ²⁷¹ The litigation ran beyond the agreed period, and Respondent began billing the Blums sporadically. Working from the available bills and the ledger kept by the Respondent, Judge Plitt reconstructed the following financial transactions between Culver and the Blums.

Between 16 November 1993 and 12 March 1995, Respondent sent bills to Mrs. Blum on a periodic basis summarizing the tasks performed, the time for each, and the amount due based on an hourly rate. The last bill sent to the Blums by Respondent was 1 August 1995. The ledger maintained by Respondent showed that between 8 September 1993 and 17 July 1995, Respondent was paid by the Blums a net total of $4,891.00, after deducting reimbursement for costs advanced of $323.50. There were no entries on the ledger between 14 September 1994 and the last entry of 17 July 1995.

The “trust funds” section of the ledger card contained no entries. In mid-1995, while the second suit was pending, a telephone conversation occurred between Mr. Blum and Respondent in which Mr. Blum initially informed Respondent that he and his wife wished to discontinue the action against the Walkers as its cost outweighed the potential gain. At the end of this conversation, it was agreed that the litigation and Culver’s representation would continue. Culver and the Blums disputed before Judge Plitt, however, what the financial terms of that continued representation were to be.

The Blums claimed that Culver agreed to forgive the outstanding balance on their account of $2,618.50, owed as of August 1995, and continue representation in the second suit on a contingency fee basis, with 30% of any recovery going to Culver in full payment of his services. Culver claimed that he only agreed to defer collection of the hourly-driven, outstanding balance until after ²⁷² resolution of the Blums’ case against the Walkers and their former attorney, and that he merely offered to change his fee arrangements for services to be rendered prospectively to a contingency fee of 40% of any recovery. Culver’s position was that, although a discussion of a change to a contingency fee took place, no agreement was ever reached. In either event, the terms of a contingency fee arrangement never were reduced to writing.

On 30 January 1998, the second suit was settled as to the claims against the Walkers for $3,500.00, paid directly to Respondent by a check payable to “Trust Account of Allan Culver.” Respondent deposited the check in his escrow account on 2 February 1998. He sent no written statement to the Blums as to the disposition of the $3,500.00 settlement. After not receiving a satisfactory response from Culver regarding the disposition of the settlement funds, the Blums’ requested that an attorney-friend of theirs contact him. In response to that inquiry, Respondent sent the Blums a letter, dated 21 February 1998, informing them that it was his opinion that he was entitled to the entire $3,500.00 of the settlement and moreover, the Blums owed him an additional $516.50 for his services.

On the same date, Respondent disbursed to himself from his escrow account the entire $3,500.00. No portion of the $3,500.00 was ever paid to the Blums. Combining the $3,500.00 with the $5,214.50 already paid by the Blums as of 17 July 1995, Respondent received a gross amount of $8,714.50 for his overall legal services, leaving outstanding his claim to an additional $516.50. 9 Judge Plitt penultimately found that Respondent and the Blums agreed on a contingency fee modification to the fee ²⁷³ arrangement, but that such agreement was not reduced to writing.

II

From these facts, and others we shall discuss infra, Judge Plitt concluded, by clear and convincing evidence, 10 that Respondent violated MRPC 1.5(c) and Rule 16-607(b)(2). Respondent filed exceptions with this Court. Regarding Judge Plitt’s finding of a modification of the fee agreement from an hourly-driven fee to a contingency fee, Respondent essentially argues that: 1) because there is at least a dispute over the percentage of the contingency fee Judge Plitt should have found that there was no “meeting-of-the-minds” necessary to form a valid modification of the original fee agreement; and 2) there exist alternative interpretations of the facts as found by Judge Plitt which suggest that there never was a modification of the original fee agreement and that, while a change to a contingency fee had been discussed, the parties had not so agreed. The upshot of both arguments is that Respondent’s explanation for why the contingency agreement was not reduced to writing as required by MRPC 1.5(c) was that there was no contingency agreement.

III

This Court has original jurisdiction over all attorney disciplinary proceedings. See Attorney Grievance Comm’n v. Glenn, 341 Md. 448, 470 , 671 A.2d 463, 473 (1996). The responsibility to make final determinations of an attorney’s alleged misconduct is reserved to us. See Md. Rule 16-751(d); Glenn, 341 Md. at 470 , 671 A.2d at 473 : See also Attorney Grievance Comm’n v. Sheridan, 357 Md. 1, 17 , 741 A.2d 1143, 1152 (1999).

Additionally, as we recently pointed out in Attorney Grievance Comm’n v. Barneys, 370 Md. 566, 577 , 805 A.2d 1040, 1046 (2002) (citations omitted), “in attorney disei- ²⁷⁴ pline cases, we review the findings of the hearing judge to determine whether they are based on clear and convincing evidence, that the hearing court’s findings of fact are prima facie correct and will not be disturbed unless they are shown to be clearly erroneous.” Respondent’s first argument invites us to hold that a modification to an oral contract never can be found where the parties subsequently disagree as to the fee or price term in the alleged modification, as such a dispute would support equally a conclusion that no contract was ever formed due to a failure of the parties to reach the “meeting-of-the-minds” necessary to support the modification. We decline Respondent’s invitation to run this circuit with him, and point out that it is well established that a subsequent oral modification of a contract may be found if established by the applicable quantum of evidence. See Charles Burton Builders, Inc v. L & S Constr. Co., 260 Md. 66, 87 , 271 A.2d 534 (1970)(preponderance of the evidence in civil claim context); Seybolt v. Baber, 203 Md. 20, 27-28 , 97 A.2d 907, 910 (1953)(same).

In this case the hearing judge found by clear and convincing evidence that in mid-1995 a contingency agreement came into existence between Respondent and his clients. We shall summarize that evidence. Of greatest weight to Judge Plitt were Respondent’s own words. After the Blums attorney-friend contacted Respondent about the settlement proceeds from the second suit, Respondent sent the Blums a letter, dated 21 February 1998, in which he stated: “My notes reflect that I agreed to continue on a contingent basis____” The letter continued: “A further review of my file does not reflect that I ever submitted a contingent fee contract to you.” Attached to this same letter was a document allegedly supporting Respondent’s calculations as to the monies he felt remained due him.

An entry on this document, dated 3 May 1996, described the billing arrangement as a contingency. Finally, in a letter of 1 June 1998 to the Assistant Bar Counsel investigating the Blums’ complaint, Respondent admitted that he entered into a contin ²⁷⁵ gency agreement with the Blums. In a subsequent letter to Assistant Bar Counsel, dated 25 April 1999, Respondent again admitted to the existence of an oral contingency agreement, but that it had not been reduced to writing. Also relevant to Judge Plitt’s finding regarding the contingency fee were Respondent’s billing records, or lack thereof.

Respondent failed to produce contemporaneously-made time records reflecting an hourly fee arrangement throughout his representation of the Blums. There were no payment entries on Respondent’s ledger card after 17 July 1995, despite the fact that the second litigation continued until 30 January 1998. There were no bills sent by Respondent after 15 August 1995. These facts support an inference of a fee agreement change to a contingency agreement, considered together with the previously discussed evidence.

With such evidence in the record, we are unable to conclude that the hearing judge erred in concluding that Respondent violated Rule 1.5(c). Nor is there any rational basis for asserting that the hearing judge’s findings in this regard were clearly erroneous. We therefore overrule Respondent’s exceptions as to the violation of Rule 1.5(c). Respondent’s argument that he should not have been found to have violated Rule 16-607(b)(2) is equally unpersuasive.

Respondent argues that because, in his view, there can be no finding that a contingency fee agreement was ever made, the evidence must support the conclusion that he was engaged on an hourly fee basis, and therefore, by his calculations, was merely removing money from his escrow account to which he was entitled. This argument represents a fundamental lack of understanding of the meaning of Rule 16-607(b)(2). The rule clearly states that “any portion [of the funds] disputed by the client shall remain in the account until the dispute is resolved.” As was pointed out by the District of Columbia Court of Appeals when interpreting their version of Rule 16-607: The test, however, is not whether, when examining the circumstances objectively, one would conclude that respon ²⁷⁶ dent was legally entitled to the amount claimed; rather the test should be whether there was in fact a fee disagreement between the parties concerning respondent’s entitlement to the amount withdrawn at the time of the withdraw. The rule is unambiguous: an attorney may not withdraw a portion of the deposited funds when the attorney’s right to receive that portion is “disputed” by the client.

In re Haar, 667 A.2d 1350, 1353 (1995). 11 In the case of Respondent, the hearing judge’s recitation of Respondent’s testimony in this regard is telling: Respondent by his own admission did nothing about the contingency fee from the date he deposited it until after getting a ‘shot across the bow’ from other counsel on Mr. Blum’s behalf. Then, instead of contacting the Blums to attempt to resolve the matter, Respondent just kept the entire $3,500.00 and sent the Blums a letter telling them why ... Based on the facts as found by Judge Plitt, Respondent, by this conduct, violated Rule 16 — 607(b)(2). Therefore, we overrule Respondent’s exceptions and hold that the hearing judge’s findings are not clearly erroneous.

VI

Turning to consideration of the appropriate sanction in this case, Petitioner points out that Respondent previously received a reprimand from this Court for violations of Rules 1.3, 1.4 and 8.4(d). In light of that and the circumstances of the present case, Petitioner recommends that we impose an indefinite suspension here. For his part, Respondent proposes that, were we to overrule his exceptions, we issue a reprimand. In support of this recommendation, he points to his 24 years of law practice (Respondent was admitted in Maryland on 21 June 1978) with only the one prior reprimand. ²⁷⁷ We are mindful that the purpose of the sanction imposed on an attorney in disciplinary proceedings is the same as for the proceedings themselves, which is to protect the public. 12 As we explained in Attorney Grievance Comm’n v. Garfield, [t]he public interest is served when this Court imposes a sanction which demonstrates to members of this legal profession the type of conduct that will not be tolerated.

By imposing such a sanction, this Court fulfills its responsibility to insist upon the maintenance of the integrity of the Bar and to prevent the transgression of an individual lawyer from bringing its image into disrepute. Therefore, the public interest is served when sanctions designed to effect general and specific deterrence are imposed on an attorney who violates the disciplinary rules. 869 Md. 85 , 98, 797 A.2d 757, 764 (2002)(quoting Attorney Grievance Comm’n v. Dunietz, 368 Md. 419, 428 , 795 A.2d 706, 711 (2002)(internal quotations omitted)(quoting Attorney Grievance Comm’n v. Wallace, 368 Md. 277, 289 , 793 A.2d 535, 542-43 (2002) (citations omitted))). See also Attorney Grievance Comm’n v. Harris, 366 Md. 376, 405 , 784 A.2d 516, 532-33 (2001); Attorney Grievance Comm’n v. Zdravkovich, 362 Md. 1, 31-32 , 762 A.2d 950, 966 (2000). That sanctions are important in deterring attorneys from violating the disciplinary rules has been well established by this Court.

The decision to issue sanctions must take into ²⁷⁸ account the facts and circumstances of the case, Attorney Grievance Comm’n v. Tolar, 357 Md. 569, 585 , 745 A.2d 1045, 1053 (2000), including “the nature and gravity of the violations and the intent with which they were committed.” Attorney Grievance Comm’n v. Awuah, 346 Md. 420, 435 , 697 A.2d 446, 454 (1997). 13 Also relevant is the attorney’s prior grievance history, whether there were prior disciplinary proceedings, the nature of the misconduct involved in those proceedings, and the nature of any sanctions imposed, as well as any facts in mitigation. Attorney Grievance Comm’n v. Franz, 355 Md. 752, 762-63 , 736 A.2d 339, 344 (1999); Maryland State Bar Ass’n v. Phoebus, 276 Md. 353, 362 , 347 A.2d 556, 561 (1975). The attorney’s candor and remorse for the conduct, Attorney Grievance Comm’n v. Hayes, 367 Md. 504, 520 , 789 A.2d 119, 129 (2002); Attorney Grievance Comm’n v. Wyatt, 323 Md. 36, 38 , 591 A.2d 467, 468 (1991), and the likelihood of the conduct being repeated are also relevant factors. Attorney Grievance Comm’n v. Freedman, 285 Md. 298, 300 , 402 A.2d 75, 76 (1979). 14 In determining the appropriate sanction in the present case, we note at the outset that the Respondent was not charged with a violation of MRPC 8.4, or more specifically MRPC 8.4(c). 15 In addition to a violation of Rule 1.5(c), ²⁷⁹ Respondent was charged with violations of Rule 1.15(c) and Rule 16-607(b)(2).

While we do not agree necessarily with Judge Plitt’s apparent belief that MRPC 1.15(c) and Rule 16-607(b)(2) could not both apply to the proven conduct in the present case, we note that he found that the provisions of these rules essentially overlap on the facts of this case. He concluded that Respondent’s conduct violated Rule 16-607(b)(2), but eschewed finding a violation also of MRPC 1.15(c). These distinctions are noted because they become relevant to our placement of Culver’s sanction along the sanctions continuum charted by our cases. 16 In the case of Attorney Grievance Comm’n v. Powell, 369 Md. 462 , 800 A.2d 782 (2002), the respondent was found to have violated MRPC Rules 1.15(a), 8.1(a), and 8.4(c), as well as Rule 16-607. Powell also was found to have failed to cooperate with Bar Counsel.

He previously had been suspended indefinitely for misappropriation of client funds. In resolving that the appropriate sanction was disbarment, we reasoned that: It has long been the position of this Court that disbarment is the appropriate sanction for intentional dishonest conduct. See Attorney Grievance Commission v. Vanderlinde, 364 Md. 376 , 773 A.2d 463 (2001). In cases warranting disbarment, such as those involving intentional dishonesty, fraud, ²⁸⁰ misappropriation and the like, we will not accept as compelling extenuating circumstances “anything less than the most serious and utterly