Attorney Grievance Commission v. DiCicco

HARRELL, J. Pursuant to Maryland Rule 16-709(a), 1 Bar Counsel, on behalf of the Attorney Grievance Commission (“Petitioner”), and at the direction of the Review Board, filed a petition with this Court initiating disciplinary proceedings against Robert ⁶⁶⁵ A. DiCicco, Esquire (“Respondent”), a member of the Maryland Bar since November 1964. In the petition, Bar Counsel alleged violations of Maryland Rules of Professional Conduct (“MRPC”) 1.15 (safekeeping property) and 8.4 (misconduct); Maryland Rules 16-607 (commingling of funds) and 16-609 (prohibited transactions); and Maryland Code (1989, 2000 RepLVol., 2001 Supp.), Business Occupations and Professions Article, § 10-806 (misuse of trust money). 2 Petitioner’s initial investigation of Respondent stemmed from two unrelated complaints initiated by Chiroplus of Fullerton, a medical provider, and P. Dianne Hite, a former client of Respondent. After an analysis of Respondent’s trust account records for the period of 1997-1999, however, Petitioner alleged additional violations, unrelated to the complaints, based on Respondent’s general trust account activity. In accordance with Md. Rule 16-706(d), 3 an inquiry panel hearing was scheduled.

Respondent, following the advice of his counsel, waived his right to a panel review after Respondent’s counsel was unable to obtain a postponement in order to review documents and prepare a defense. We referred the matter to Judge Robert E. Cahill of the Circuit Court for Baltimore County to conduct an evidentiary hearing and make findings of fact and conclusions of law in accordance with Md. Rules 16-709(b) 4 and ⁶⁶⁶ 16-711(a). 5 Following a two-day evidentiary hearing, at which Respondent was present and represented by counsel, the hearing judge concluded, by clear and convincing evidence, that Respondent violated MRPC 1.15(a) & (c), MRPC 8.4(a), and Md. Rules 16-607(a) and 16-609. The hearing judge further concluded that Respondent did not violate MRPC 1.15(b), MRPC 8.4(c), or § 10-306. Petitioner, pursuant to Md. Rule 16-711(b)(2), 6 filed with this Court exceptions to the hearing judge’s findings of fact and conclusion of law that Respondent did not violate MRPC 8.4(c), and recommended Respondent’s disbarment as the appropriate sanction.

Respondent filed a reply to Petitioner’s exceptions and recommendation for sanction, urging a short period of suspension as the appropriate sanction, but took no written exceptions of his own. I. A. Background After filing a petition for disciplinary action with this Court, Petitioner also referred the matter of Respondent’s alleged misconduct to the State’s Attorney for Baltimore County for criminal investigation. On 22 January 2001, Respondent, pursuant to Md. Rule 2-403, 7 requested a protective order to stay ⁶⁶⁷ temporarily the disciplinary proceedings until the conclusion of the criminal investigation. This motion was denied.

On 28 March 2001, Petitioner deposed Respondent as part of its investigation. Respondent’s counsel advised Respondent, in light of the pending criminal investigation, to decline to answer substantive questions, pursuant to the Fifth Amendment to the United States Constitution. 8 Respondent followed the advice of his counsel at the deposition. At the start of the evidentiary hearing before the hearing judge on the petition for disciplinary action, counsel for Respondent again raised the Fifth Amendment issue. The parties came to an agreement, which the hearing judge summarized as follows: [Petitioner] had intended to call the Respondent as part of his case.

He was informed by [Respondent’s counsel], however, that he expected his client to follow his recommendation to exercise his right under the Fifth Amendment to decline to answer substantive questions. The Respondent proposed that he be permitted to do that in a pre-hearing deposition and, in return, waive his right to testify in his own defense. The Commission then would offer the deposition as evidence, without objection, thereby avoiding the Respondent having to testify in open court and risk further health problems. 9 Petitioner presented the testimony of William M. Ramsey, its investigator assigned to this matter. Petitioner also offered the testimony of John DeBone, a paralegal in Bar Counsel’s office who, after subpoenaing and reviewing Respondent’s bank records, conducted a computerized analysis of ⁶⁶⁸ those records for the period 1 January 1997 through 23 February 2000.

Consistent with the aforementioned “agreement,” Petitioner also introduced, as its Exhibit No. 2, a transcript of Respondent’s pre-hearing deposition. Respondent’s sole witness was Henry A. Grandizio, C.P.A., who reviewed and commented on Mr. DeBone’s analysis of the trust account records. 10 B. Evidence Produced at the Hearing i. The Chiroplus Complaint The Chiroplus complaint arose from Respondent’s representation of Brian Gerhold in a negligence suit stemming from a traffic accident. Gerhold received medical treatment from Chiroplus for injuries sustained in the accident.

Gerhold subsequently discontinued his treatment with Chiroplus due to a dispute over insurance coverage. In 1997, Gerhold’s negligence claim settled for $7,000. The settlement proceeds were deposited into Respondent’s escrow account. In accordance with Gerhold’s instructions, Respondent paid the client’s outstanding medical bills from the escrow account, with the exception of the Chiroplus bill for $4,326, which was disputed by the client.

The dispute between Chiroplus and Gerhold eventually settled in 1999 for $3,500, at which time Respondent paid Chiroplus that amount from his escrow account. Chiroplus complained to Petitioner about the Respondent’s alleged failure to make prompt payment to it following settlement of Gerhold’s negligence claim. The hearing judge summarized Mr. DeBone’s analysis of Respondent’s trust account regarding the Chiroplus complaint as follows: [O]n April 2, 1997[,] a $7,000 settlement draft from State Farm Insurance Company was deposited in the escrow ⁶⁶⁹ account on behalf of Brian Gerhold. Two years later, on May 4, 1999, check number 2794 for $3,500 was sent to Chiroplus.

On numerous occasions during that two-year period, the trust account balance fell below not only the $4,326 claimed by Chiroplus but also the $3,500 ultimately disbursed to Chiroplus. Petitioner’s Exhibit 6 is a copy of the bank statement for June, 1997. It reflects a balance on June 30, 1997 of $239.01. Mr. DeBone testified that on every day between August 6 and August 25, 1997 the balance was below the $3,500 paid to Chiroplus as well as the $4,326 it had been claiming for the services to Mr. Gerhold.

Based on Investigator Ramsey’s testimony regarding his interview with Mr. Gerhold, the hearing judge noted that Mr. Gerhold expressed “satisflaetion] with the representation of the Respondent even though he didn’t receive any proceeds from the settlement after the medical bills were paid and the Respondent settled the Chiroplus claim for $3,500.” ii. The Hite Complaint Ms. Hite engaged Respondent to represent her in a personal injury claim arising from a traffic accident in 1997. Ms. Hite filed a complaint with Petitioner in November 1999 alleging difficulty in obtaining the proceeds of the October 1999 settlement of her claim. The hearing judge summarized Investigator Ramsey’s testimony regarding the Hite complaint as follows: [Ms. Hite] filed her complaint on November, 10, 1999, apparently alleging that after her personal injury claim was settled by the Respondent he had not responded to her numerous calls requesting disbursement of the net proceeds.

The Respondent told Mr. Ramsey that he had disbursed the proceeds to Ms. Hite in November, 1999. On cross-examination, Mr. Ramsey acknowledged that it was “his understanding” that Ms. Hite was paid “within weeks of making the complaint”. ⁶⁷⁰ Respondent’s Exhibit 9 is a copy of his December 1, 1999 letter to [Petitioner] detailing the facts concerning his representation of Ms. Hite and enclosing copies of her Settlement Disbursement Record and his letter transmitting it to her on November 5, 1999-two weeks after she had endorsed the settlement draft. She approved the Disbursement Record by signing and returning it to the Respondent on November 13, 1999. She received the net proceeds on November 15, 1999-five days after she filed her alleged complaint. in.

Miscellaneous Trust Account Discrepancies Recounting Mr. DeBone’s testimony regarding further discrepancies revealed during his review of Respondent’s trust account records, Judge Cahill noted the following: [F]or client William Schlmalzer there was a deposit on January 9, 1997 of $7,500. The client was paid the sum of $4,599 on March 17,1997. Between January 9th and March 17th the balance in Respondent’s trust account fell below [$4,599] on nine occasions. [O]n June 9, 1998 (sic.1997) an insurance check for $9,500 was deposited on behalf of Delores Melchoir and on July 25, 1997 she negotiated a check for her share of $6,103.67. On ten days between those two dates the balance in the account was below $6,103.67. [S]imilar deficiencies [were found] in Respondent’s trust account with respect to client Rae Spaugh, Dianne Kinzer, Catherine Hall, Brenda Rimgus, Samantha Fuller, John and Dorris Requardt, Dawn Smith, Ruth Beitler and several others. [Mr. DeBone] also noted that the lowest positive balance in the account was $3.55 on July 24, 1998, followed by negative balances of $3,098.64 on September 15, 1998, $782.64 on September 21, 1998 and $482.64 on October 6, 1998.

With respect to client Patrick DeBorde there were disbursements from the account totaling $27,872.49 between June 16,1997 and May 11,1999, but no deposits attributable ⁶⁷¹ to Mr. DeBorde. Additionally, on July 7, 1999, there was a $16,999.90 deposit, followed by a disbursement to the Respondent of $23,000 the next day. Mr. DeBone did not understand these transactions. Moreover, the hearing judge recounted that Mr. DeBone also testified that there were disbursements from Respondent’s trust account that appeared to be unrelated to any of Respondent’s clients, including checks written to the Maryland Unemployment Insurance Fund, Maryland Comptroller of the Treasury, Internal Revenue Service, Ford Motor Company, Baltimore Gas & Electric, the Clients’ Security Trust Fund of Maryland, Cooks Fuel, Rosedale Federal, and the Baltimore County Bar Association.

Respondent argued that Mr. DeBone’s analysis of the trust account was flawed in three respects. First, Respondent argued that the analysis failed to recognize the connection between a Mr. Ben Cadwalader and DiCicco’s client Patrick DeBorde. As a result, the analysis incorrectly assigned transactions to an account for Mr. Cadwalader when in fact these transactions applied to the DeBorde account. Next, Respondent claimed that a transaction appearing as a $14,703.14 debit in Mr. DeBone’s analysis was in actuality an unauthorized electronic check.

Finally, Respondent argued that Mr. De-Bone’s analysis failed to take into consideration that the bank erroneously failed to credit Respondent’s trust account with a $10,000 deposit in 1997. Regarding the DeBorde matter, Judge Cahill summarized the cross-examination of Mr. DeBone as follows: Mr. DeBone’s analysis included a client account under the name Ben Cadwalader. That account, ID Code No. 127, reflected a deposit of approximately $67,000, deductions for payments to Baltimore County and a substantial positive balance, as to which there is no record of a further payment. Mr. DeBone conceded that, if the transactions he attributed to Cadwalader, in fact, related to DeBorde (I.D.Code 131), that would impact on his conclusion that the DeBorde account was out of trust. ⁶⁷² Commenting on Respondent’s evidence concerning this matter, the hearing judge noted: Respondent’s Exhibit 10, which allegedly consists of copies of some of the records produced at Respondent’s deposition, shows that the $67,000 that Mr. DeBone had credited to the Cadwalader account had been disbursed by Cadwalader to the Respondent as Trustee for Patrick DeBorde.

Other documents in the exhibit are various accountings made by the Respondent to [the Circuit Court] for trust monies he had received since the trust was established in 1985. A true test copy of the Petition and Order of the Circuit Court reflects that the trust was dissolved and the proceeds distributed to the beneficiary, who certified that the accounting was true, accurate and accepted by him. Regarding the factual dispute whether Mr. DeB one’s analysis with regard to a debit of $14,703.14 was actually an unauthorized electronic check as alleged by Respondent, the hearing judge observed: Mr. DeBone was questioned about another item in his analysis-a debit of $14,703.14 in June, 1997. The bank statement lists that item as check number 2695.

However, Resp. Ex. No.4 shows that it is not an escrow check; it is an electronically generated check, bearing number 2695 and dated June 26,1997. It also bears the Respondent’s printed name but shows an address other than his law office.

It is payable to Baltimore Gas & Electric and signed electronically by Baltimore Gas & Electric “as authority signatory for Robert DiCicco”. The next-to-last page of Respondent’s Exhibit 4A contains an undated, handwritten notation initialed by the Respondent stating: “This check out of sequence and not issued. I called bank and they said it was ‘electronic’ check to BGE. I never authorized such a check.

Bank said they would return money to account. Please follow up. RAD.” The Respondent offered no other documents relating to this transaction. ⁶⁷³ Finally, as to Respondent’s assertion that Mr. DeBone’s analysis neglected to recognize that the bank erred by failing to credit DiCicco’s trust account with a $10,000 deposit in 1997 and, therefore, had the alleged deposit of $10,000 been properly credited, the account would not have been out of trust, Judge Cahill explained: On cross-examination, Mr. DeBone was shown Respondent’s Exhibit 2A, alleged to have been part of the bank records produced by Respondent at the March 28, 2001 deposition, showing that $10,000 was deposited in the trust account on January 3, 1997. The second item of the Exhibit is an undated “Deposit Correction Notice” issued by the bank to advise the Respondent that an error was found regarding the deposit and that the error was corrected by crediting the account for $10,000.

Mr. DeBone said that these two documents were not amongst the subpoenaed bank records he got from the bank in February, 2000 and furthermore: “That $10,000 would have no bearing on what we went over this morning [during my direct].” Judge Cahill noted Mr.Grandizio’s testimony regarding this matter: Mr. Grandizio reviewed Mr. DeBone’s analysis, and the bank records and exhibits relating to the apparent failure to credit the account to reflect the $10,000 deposit, and the BG & E electronic withdrawal. In his opinion, had the missing $10,000 deposit been credited to the account, it would not have been out of trust. However, he conceded he made no inquiries of bank personnel about the missing $10,000 credit and did not prepare a report or analysis in support of his conclusion. C. Findings of Facts and Conclusions of Law Based on the evidence presented, the hearing judge made the following findings of fact and conclusions of law: ⁶⁷⁴ i.

The Chiroplus Complaint The hearing judge found that, although Respondent failed to deliver funds to Chiroplus until two years after the settlement of Gerhold’s negligence claim, he did so at the instruction of his client. The hearing judge further noted that the dispute with Chiroplus was settled ultimately for an amount less than the face value claimed by Chiroplus. Nonetheless, the hearing judge determined that Respondent did not keep the disputed funds separate and because, on numerous occasions in 1997, the balance of the escrow account fell below the $3,500 Respondent ultimately paid to Chiroplus in 1999, the account had been out of trust. Accordingly, Judge Cahill concluded that Respondent violated MRPC 1.15(c), discussed infra at 674-76. ii.

The Hite Complaint The hearing judge determined that Ms. Hite’s allegation that the Respondent ignored her inquiries about her settlement proceeds was “completely discredited by the Respondent’s letters to her before and immediately after she lodged her complaint.” The hearing judge thus concluded that “[t]he Commission failed to prove any ethical or statutory violations by the Respondent in his handling of the settlement of Mrs. Hite’s personal injury claim.” in. Violation of MRPC 1.15 Rule 1.15. Safekeeping property. (a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property.

Funds shall be kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and of other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation. ⁶⁷⁵ (b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

(c) When in the course of representation a lawyer is in possession of property in which both the lawyer and another person claim interests, the property shall be kept separate by the lawyer until there is an accounting and severance of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separate by the lawyer until the dispute is resolved. The hearing judge concluded that Respondent violated MRPC 1.15(a) by failing to hold property of clients or third persons separate from his own. Relying on the evidence presented by Petitioner, and further supported by adverse inferences drawn from Respondent’s refusal to answer certain questions at his deposition, 11 Judge Cahill determined that ⁶⁷⁶ Respondent, on occasion, “used [the escrow account] as if it also served as his personal bank account.” With regard to Petitioner’s allegation that Respondent failed to disburse prompt payment to Chiroplus, the hearing judge concluded that “[d]ue to the absence of any testimony from a representative of Chiroplus, the evidence [was] not clear and convincing that the Respondent violated Md. Rule of Professional Conduct l.[l]5(b).” As previously suggested, Judge Cahill found by clear and convincing evidence that, in regard to the Chiroplus matter, Respondent violated MRPC 1.15(c) by failing to keep the disputed funds separate until the matter between Gerhold and Chiroplus was resolved.

The hearing judge noted, however, that the violation was “mitigated by the fact that Chiroplus voluntarily settled its claim not long after contacting Bar Counsel.” iv. Violation of MRPC 8.4 Rule 8.4. Misconduct. It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;....

With regard to Respondent’s violation of MRPC 8.4(a), the hearing judge concluded that “[i]t necessarily follows from the aforegoing conclusions that paragraph (a) of this Rule has been violated.” The hearing judge concluded that Respondent did not violate MRPC 8.4(c), rejecting Petitioner’s argument ⁶⁷⁷ that “multiple invasions of client funds can only be deemed to be intentional conduct.” (Emphasis omitted). The hearing judge noted that other factors should be considered when determining whether an attorney violated MRPC 8.4(c). Specifically, Judge Cahill considered that Respondent had not been charged with violating MRPC 8.1(b). The hearing judge explained his consideration of this factor: [Ojther factors should be considered in deciding if proven violations of the several rules or the statute relating to escrow accounts rise to the level of dishonest, fraudulent and deceitful misconduct.

Of importance, for example, is whether the attorney also was found to have violated Rule 8.1(b) by failing to cooperate with Bar Counsel during the investigation.... Bar Counsel elicited testimony from his witnesses about the Respondent not answering certain questions and not providing records, but I make no finding based upon that conduct since the Commission chose not to charge him with a Rule 8.1(b) violation. Judge Cahill also noted that “[tjhere is no evidence that a client sustained an actual loss.” The hearing judge further commented that “[wjhile [actual financial loss] is not a necessary element of the commingling violations, it does have relevance to the charge that the Respondent’s conduct involved dishonesty.” In addition, the hearing judge addressed the issue of adverse inferences with regard to Respondent’s violation of MRPC 8.4(c). Regarding Respondent’s refusal to answer a specific question at his deposition, Judge Cahill explained: Bar Counsel did ask the Respondent the following question at the conclusion of his deposition, knowing that the privilege would be claimed: Q. Okay.

When you were interviewed by Mr. Ramsey who is here today and Mr. DeBone, you promised to provide explanation for the problems in your trust account. Do you recall them making that request of you? ⁶⁷⁸ [A. Same answer. 12 ] The adverse inference I draw, as fact-finder, from his lawful refusal to respond to this question is that he could not “explain” why he knowingly commingled personal and escrow funds so as to cause his escrow account to be frequently out of trust. I do not infer that his answer would have been that it was because he knowingly and willfully misappropriated client funds. Bar Counsel could have, but did not, put that very question to him.

In fact, virtually every unanswered question during the deposition asked for an explanation-not an admission, making the permissible adverse inference difficult to conceptualize. The Respondent properly gave up his right to testify as to whether his conduct was willful when he claimed his Fifth Amendment privilege. However, he did not waive the requirement that the Petitioner prove by clear and convincing evidence, that the implied misappropriation of client trust funds was consciously and deliberately done for an unlawful purpose. The hearing judge summarized his conclusion of law regarding Petitioner’s charge that Respondent violated MRPC 8.4(c) as follows: In conclusion, unless the length of time that the commingling persisted, coupled with the frequency of the account being out of trust, is deemed to be sufficient proof that the Respondent willfully misappropriated trust funds, I would find that the Commission’s evidence does not prove that he violated Rule 8.4(c). v. Violation of Md. Rule 16-607 Rule 16-607.

Commingling of funds. a. General prohibition. An attorney or law firm may deposit in an attorney trust account only those funds re ⁶⁷⁹ quired to be deposited in that account by Rule 16-604 or permitted to be so deposited by section b. of this Rule. b. Exceptions. 1.

An attorney or law