Attorney Grievance Commission v. Ellison

HARRELL, J. This attorney conduct matter arises out of the on-again / off-again / on-again legal representation of John P. Moody in a personal injury claim and the assignment of recovery proceeds from that claim to one Avraham Strulson, a physical therapist who treated Moody for injuries suffered in the underlying motor vehicle accident. The Attorney Grievance Commission of Maryland (AGC), Petitioner, acting through Bar Counsel, filed a Petition for Disciplinary or Remedial Action against Jared K. Ellison, Esquire, Respondent, charging him with violations of Maryland Rules of Professional Conduct (MRPC) 1.5(c) (Fees), 1 1.15(a), (b), and (c) (Safekeeping ⁶⁹³ Property), 2 8.1(a), (b) (Bar Admission and Disciplinary Matters), 3 and 8.4(c), (d) (Misconduct). 4 Petitioner also charged ⁶⁹⁴ Respondent with violations of Maryland Rules 16-606 5 and 16-609. 6 Pursuant to Rule 16-752(a), we referred this matter to the Honorable Melanie Shaw Geter of the Circuit Court for Prince George’s County to conduct a hearing and make findings of fact and proposed conclusions of law. Judge Geter concluded, from the facts found credible by her and to a clear and convincing standard, that Respondent violated MRPC 1.5(c); 1.15(a),(b); 8.1(b); and 8.4(c). She further concluded that Respondent violated Md. Rules 16-606 and 16-609.

Bar Counsel excepted to Judge Geter’s refusal to find a violation of MRPC 8.4(d) and, regardless of its exception, recommended disbarment as the appropriate sanction. Ellison excepted to each of Judge Geter’s conclusions of law and urged his version of the facts. In addition, Ellison excepted to a pre-hearing order rejecting his motion for an order compelling discovery regarding the Complainant, Strul-son. Respondent recommended, in light of his exceptions, that we dismiss Bar Counsel’s complaint, or, if we should find ⁶⁹⁵ grounds for any violations, they warranted no more than a reprimand.

I. We begin by considering Judge Geter’s findings based on our independent review of the record. Attorney Grievance Comm’n v. Stolarz, 379 Md. 387, 397 , 842 A.2d 42, 47 (2004) (citing Attorney Grievance Comm’n v. Garfield, 369 Md. 85, 97 , 797 A.2d 757, 763 (2002); Attorney Grievance Comm’n v. Wallace, 368 Md. 277, 288 , 793 A.2d 535, 542 (2002)). We have organized her findings in the following contexts for review: first, those relating to events occurring prior to Strulson’s complaint to the AGC; second, as revealed during the AGC’s investigation prior to the evidentiary hearing before her; and third, additional facts brought to light at the hearing. A. Moody was injured in an automobile accident on 10 July 2002.

He entered Strulson’s care, upon referral by his primary physician, on 7 August for treatment of injuries inflicted during the accident. Strulson, a Maryland-certified physical therapist, treated Moody until 4 October 2002. At the start of his treatment, Moody provided to Strulson only his automobile insurance provider, GEICO, as a source of payment for his care, although Moody had Medicare and Government Employees Hospital Association (GEHA) insurance coverage as well. When Moody completed the medical data form, he listed “uninsured” as the person responsible for payment of the treatment. 7 During and after his treatment of Moody, Strulson submitted Moody’s medical bills initially only to GEICO, Moody’s Personal Injury Protection (PIP) insurer.

At the conclusion of Moody’s treatment and after the exhaustion of Moody’s PIP coverage (which occurred on 18 Novem ⁶⁹⁶ ber 2002), Moody’s account with Strulson had a balance due of $1,022.00. On 11 October 2002 Moody signed a retainer agreement with the law firm of Donald M. Temple, P.C. (the Firm), to represent him in the personal injury matter. Ellison, a close friend of Moody’s since at least 2000, was employed by the Firm 8 and signed the Firm’s retainer agreement, on Firm letterhead stationary, as the “Responsible Attorney.” The retainer agreement also provided for a contingency fee of thirty-three and one-third percent of any recovery to be paid to the Firm should the claim be settled prior to litigation.

On 14 October, Ellison, on Firm letterhead stationery, informed Strulson that “[t]his office has been retained” to represent Moody and requested a copy of Moody’s medical bills and records. Strulson offered to send the bills and records after Moody and Ellison signed an Assignment and Authorization form (the Assignment) and paid a $50 administrative charge. The Assignment form authorized and directed Moody’s attorney “to immediately pay all bills received from Avi Strulson, PT, from the proceeds of any recovery on [his] case” as soon as the funds were received. The Assignment also contained a clause purporting to require “any attorney to whom [Ellison] referred] this case, within or outside the firm, to honor this Assignment, as a condition of the referral.” Ellison responded to the request by sending a personal check to Strulson for $50 and then signed and faxed to him a copy of the fully executed Assignment on 4 November.

Moody then picked up the records from Strulson’s office. The Firm and Ellison’s representation were terminated by a letter dated 6 November 2002 sent by Moody to Ellison. 9 The ⁶⁹⁷ letter stated that Moody was terminating the Firm’s representation of his claim and implied that he would be handling his own claim. In a letter dated 7 November 2002, also on Firm stationery, Ellison informed Strulson that “our Firm no longer” represented Moody and the Assignment was “now null and void.” Some time in mid-to-late November, Strulson returned a phone call from Ellison regarding the account balance for Moody. Strulson claimed that he merely told Ellison the account balance and that there was no discussion about whether Moody’s personal injury claim was settled (nor, according to this record, was there any discussion about Ellison’s letter of 7 November).

Strulson treated Moody on 7 January 2003 for an injury unrelated to the personal injury claim and learned during this session that the personal injury claim had been settled. He called Ellison the same day. Strulson stated that Ellison claimed during this phone conversation that he no longer represented Moody, there had been no settlement of Moody’s claim, Ellison did not owe Strulson any money, and Strulson should bill Medicare for the balance due on Moody’s account. On or about 11 January 2003, Strulson received a letter, dated 9 January 2003, from Ellison stating that the Firm no longer represented Moody and that “it [had! been brought to my attention, [sic] that my first letter [the letter dated 7 November 2002] informing your office that we longer represent Mr. Moody was not received.” Strulson filed a complaint with the AGC on 10 February 2003, against Ellison as a member of the Firm. 10 Strulson claimed that Ellison, while ⁶⁹⁸ acting on behalf of Moody as his attorney, violated the terms of the Assignment by not paying the balance due on Moody’s account from the proceeds of the settlement.

B. Bar Counsel sent a letter to Ellison at his home address on 21 February 2003 requesting a response to Strulson’s complaint. In a letter on Firm stationery dated 25 February 2003, Ellison responded that Moody “terminated the representation of our law office” and that Strulson’s Assignment and his subsequent complaint concerning unpaid medical bills were invalid and unmerited, respectively. Attached to his letter were copies of the retainer agreement between the Firm and Moody; Moody’s termination letter as to the representation; two letters allegedly sent from the Firm in November 2002 and January 2003 to Strulson informing him that the Firm no longer represented Moody; a copy of the Assignment between Strulson, Ellison, and Moody; and an affidavit by Moody. Ellison also attached a letter, dated 24 February 2003, from Donald Temple which stated that “all documents that [the Firm] has relating to Mr. John P. Moody” were enclosed.

Temple’s letter confirmed that he believed the Firm’s representation of Moody was terminated by the 6 November 2002 letter from Moody and that Strulson’s claim was “specifically designed to harass this law firm and Mr. Ellison. He is duly aware that we have no responsibility for Mr. Moody’s medical bills.” John W. Reburn, Bar Counsel’s investigator assigned to the complaint, conducted an investigation of Ellison. Bar Counsel received a letter dated 2 April 2003 from Ellison, on Firm stationery, stating that Moody had informed Ellison that Strulson was paid in full. On 8 April 2003, Rebum contacted GEICO by telephone and learned that a $5,000.00 settlement ⁶⁹⁹ check had been issued on 15 November 2002 in settlement of Moody’s personal injury claim. 11 Rebum learned that Ellison continued to represent Moody in his personal claim and that the settlement check was drafted in both of their names and had been mailed to Ellison’s home address.

The PIP coverage, which Strulson had been billing for Moody’s care, became exhausted at or about the same time the settlement check was issued. On 15 April 2003, Rebum met with Ellison to review Ellison’s documents regarding Moody’s representation and discuss further the investigation. Ellison claimed initially that his “file” was unavailable because the Office of Bar Counsel for the District of Columbia had it. Over the course of the interview, Ellison admitted that he had represented Moody throughout the pendency of his claim and had negotiated the settlement with GEICO.

Reburn also asked Ellison about the settlement check. Ellison stated that he paid the funds he received from GEICO to Moody. When Reburn asked if he had received a fee for his services, Ellison replied, “I paid it to Mr. Moody.” Ellison also stated that he either had not prepared or retained a copy of the settlement sheet for Moody’s settlement funds. Reburn concluded the interview by requesting information regarding the settlement funds received and disbursed, the demand letter sent to GEICO, and the medical records and source of the $50 fee sent to Strulson at the time the Assignment was executed.

Ellison responded to Reburn on his personal stationery by letter of 16 April 2003. He stated that he was not able to locate a copy of the actual demand letter sent to GEICO, but enclosed an unexecuted copy while he continued to search for a copy of the original. Ellison also explained that the $50 fee ⁷⁰⁰ paid to Strulson “came from Mr. Moody” and was not from his escrow account. He concluded by stating that “the settlement check of five thousand dollars ($5,000.00) from GEICO was endorsed by myself and Mr. Moody and was deposited into my IOLTA account and I then paid Mr. Moody.” Reburn followed with a letter dated 1 May 2003.

He requested a full accounting of the funds received and disbursed on behalf of Moody, copies of all bank statements and cancelled checks regarding Moody’s funds, and an accounting of how Ellison paid the $50.00 fee to Strulson for the medical records. He further requested an explanation as to why Ellison did not disclose his continued representation of Moody in his initial response to Bar Counsel’s initial inquiry in February 2003 and whether the Firm knew that Ellison continued to represent Moody after 6 November 2002. Ellison “finally explained” in a letter dated 13 May 2004 that he had represented Moody in his settlement and received a fee for his services. His enclosed bank statements and checks revealed that he deposited the $5,000.00 check on 2 December 2004 in an account labeled “Jared K. Ellison, Esq.

IOLTA” 12 and that he had disbursed $1,715.00 to himself on 3 December for “legal services rendered.” He then distributed $3,285.00 to Moody from the account, by check, on 4 December 2002. He also stated that the $50.00 “received from Mr. Moody to pay Avi Strulson went directly to Avi Strulson.” The letter continued that the Firm did not know that Ellison continued to represent Moody after 6 November 2002. He did not disclose his continuing representation of Moody in response to Bar Counsel’s initial inquiry because he “honestly believed that all agreements with Avi Strulson terminated because [he] signed the authorization and assignment while handling Mr. Moody’s case on behalf of the firm.” Ellison further asserted that he believed that Bar Counsel merely ⁷⁰¹ wanted to know when the Assignment “was terminated which I believed ended any obligation that I had to Avi Strulson.” Reburn continued his correspondence with Ellison with a letter dated 20 May 2003. He requested the Firm’s and Ellison’s personal injury case file for Moody, a copy of Ellison’s written contingent fee agreement with Moody, and an explanation as to why Ellison did not inform Temple that he continued to represent Moody after 6 November 2002.

Ellison responded via letter dated 28 May 2003. He stated that he “submitted to [Reburn] all the documents that I have relating to Mr. John Moody.” Contrary to his previous assertion at the 15 April 2003 interview when he stated the Moody file was still in the possession of the Office of Bar Counsel for the District of Columbia Bar, he also stated that his personal Moody file was the same file the Firm had. Ellison could not locate a written contingency fee agreement, but forwarded an “exact duplicate of the retainer agreement that Mr. Moody would have signed.” He did not inform the Firm that he was continuing to represent Moody after 6 November because he “was doing a favor for Mr. Moody ...” because “Mr. Moody was a neighbor of mine.” Temple stated at his pre-hearing deposition that Ellison was free to represent other clients outside of the Firm, although he did not know of any that Ellison had so represented in 2002. 13 Temple acknowledged his understanding that the Firm had been retained by Moody, but that Moody later terminated the representation. With regards to Ellison’s representation of Moody, Temple averred that he did not know that Ellison continued to represent him until Bar Counsel commenced its investigation.

Temple also stated that he did not know Ellison received a fee from Moody, but that fact did not bother him “in the slightest.” He did not believe the Firm was owed any portion of ⁷⁰² the fee from the settlement. Finally, in Temple’s opinion, Ellison did nothing wrong in this matter. C. At the two-day hearing on 8 and 9 July 2004 before Judge Geter, Ellison testified. Judge Geter weighed his testimony in the following manner: At the hearing, Respondent acknowledged that the retainer agreement he had Moody sign was on “Temple Law letterhead,” and although it listed him (Respondent) as the responsible attorney, the agreement was “between Moody and Donald M. Temple, P.C.” Respondent also testified, however, that Moody was never a client of the Temple Law Office, and that it was a “mistake” for him to use the firm’s letterhead because “it made it seem as [though] Temple Law Offices was representing Moody, when Temple Offices did not represent Moody.” Respondent further testified that Moody understood that he was not retaining the firm because “Moody was [Respondent’s] client prior to [Respondent] going to [work at] Temple Law Offices.” Respondent also testified that he “did not recall Moody signing another agreement” once Respondent began representing Moody after the termination.

Respondent further testified that he did not “ever recall giving Moody [a written statement] and he signing it” once Respondent received the settlement from GEICO in Moody’s case. Respondent explained that assuming arguendo he never executed a second retainer agreement between himself and Moody, it was because he and Moody verbally agreed to the same terms as those contained in the previous agreement, including the same percentage for the contingency fee. After Respondent received the settlement check in Moody’s case, he admittedly did not call Strulson to notify him that a settlement had been received. Respondent testified that during a telephone conversation initiated by Strulson in late November of 2002, Strulson informed Respondent that he was already aware that Moody’s case had been settled. ⁷⁰³ Strulson did not tell Respondent how he had obtained the information.

Although Strulson likewise testified that he returned a call from Respondent in mid to late November of 2002, he also testified that the conversation was only regarding Moody’s account balance for treatment rendered and Respondent made no mention of a settlement having been received. In fact, Strulson testified that he did not find out that the case had been settled until January 7, 2003, when Moody was referred back to him for treatment of an old military injury. Respondent acknowledged that at the time he disbursed the settlement funds to himself and Moody in early December of 2002, he had not received information, and had not taken any steps to find out, whether Medicare had paid Strulson. Strulson said that he asked Moody about his personal injury case, at which point Moody informed him that the case had been settled.

Strulson further testified that he immediately called Respondent to inquire about the settlement and to inform him that there was a balance on Moody’s account that Respondent was obligated to pay in accordance with the [Assignment]. According to Strulson, Respondent told him that he was no longer representing Moody, there had been no settlement in the case, that he (Respondent) did not owe Strulson any money, and to bill Medicare for the balance owed.

II

A. Before proceeding to the exceptions to Judge Geter’s written findings and conclusions, we address Ellison’s contention regarding the denial of his pre-hearing motion to compel discovery from Strulson. 14 Ellison believes that Strulson used ⁷⁰⁴ the attorney grievance process as an unlawful means to leverage Ellison and Moody into overpaying for Moody’s medical treatment. Therefore, his request to inquire further into that suspicion was denied improperly. Strulson received a subpoena duces tecum to appear for deposition with all documentation concerning: complaints against Strulson before any licensing body; any contact Strul-son had with the AGC regarding Ellison or any other lawyer; and any civil suit or AGC grievance complaint for any violations of assignment payment terms between Strulson and any other lawyers. Strulson attended the deposition, but without these documents, if any existed.

Strulson also did not file an objection to the subpoena or a motion for a protective order as generally prescribed by Md. Rules 2 — 510(f) and 2-403. 15 On 24 May 2004, Ellison filed his motion pursuant to Rule 2-432(b)(G). 16 In his memorandum in support of the motion, Ellison argued that Strulson’s complaint to the AGC was nothing more than a bill-collecting strategy using the AGC and Bar Counsel as a means to compel payment for his services. It was hypothecated that discovery likely would show Strulson’s technique of bringing complaints against lawyers through Bar Counsel as a means to obtain payment of his billings. If so demonstrated, it was posited that this would reflect negatively upon Strulson’s character and credibility in the present case. ⁷⁰⁵ Bar Counsel responded to Ellison’s motion with its own motion in limine and request to limit the scope of discovery. In its motion, Bar Counsel noted that discovery of Strulson’s extrinsic conduct was unrelated and irrelevant to Ellison’s conduct regarding the Assignment and Moody’s representation.

Strulson’s conduct, which was not subject to an investigation by Bar Counsel, was also not the subject of the petition in the present case. Furthermore, information relating to other Bar Counsel investigations initiated by Strulson’s complaints, if any, would be confidential and generally protected from discovery by Rule 16-723(b). The hearing judge refused to accord relief to Ellison. Ellison relies on Attorney Grievance Comm’n v. Stolarz, 379 Md. 387 , 842 A.2d 42 (2004) on this issue.

We, however, did not part so broad a swath in the ocean of prohibited attorney conduct in Stolarz as Ellison conceives. First, Ellison points out that we stated in Stolarz that use of a grievance against an attorney as a means to collect a debt “is certainly not a legitimate or appropriate use of the grievance procedures of this state.” Id. at 396 , 842 A.2d at 46 . Although we undeniably included those words in Stolarz , a review of that sentence fragment in context with the rest of the paragraph of which it was a part in that opinion reveals that we merely were restating the hearing judge’s conclusions of law as he discussed Stolarz’s argument as to why he threatened the complainant in that case with a defamation lawsuit: Stolarz maintains that he believes the Complainant threatened to bring this action in an effort to collect his client’s debt, which is certainly not a legitimate or appropriate use of the grievance procedures of this state.... Based upon the aforementioned reasons this Court [referring to the hearing judge] finds by clear and convincing evidence that Respondent did not act unreasonably in warning Complainant that a defamation claim would be asserted when he rationally believed that Complainant would defame him.

Id. at 396 , 842 A.2d at 46-47 . The hearing judge in that case ultimately concluded that Stolarz’s warning of a defamation claim against the complainant did not rise to a violation of ⁷⁰⁶ MRPC 8.4(d). Our actual holding was quite succinct and limited solely to Bar Counsel’s exception to the hearing judge’s conclusion regarding Bar Counsel’s inability to prove by clear and convincing evidence a violation of MRPC 8.4(d); “[t]his finding is not clearly erroneous based on the limited record in this case and we therefore decline to overrule it.” Id. at 401 , 842 A.2d at 50 (footnote omitted). Ellison also claimed in his motion that he did not believe Strulson had a valid interest in the settlement proceeds and that, even if he did, the amount due was clearly in dispute.

Under this theory, discovery might reveal that Strulson had used the AGC or other civil remedies to obtain payments for other “invalid” interests or “disputed” balances under assignments from other attorneys and their clients. Once again, Ellison relies incorrectly on Stolarz , this time employing it in an exercise in inverse logic. In Stolarz , we stated, evaluating a claimed violation of MRPC 1.15(b), that “[i]f the creditor’s claim is a valid interest and the amount of that interest is undisputed, then the lawyer should disperse directly to the creditor from the settlement proceeds.” Id. at 400 , 842 A.2d at 49 . Stolarz had signed an assignment to a client’s lender in the amount of $800.00 and then, by innocent oversight, failed to pay the assignment when he received and disbursed the settlement proceeds.

What we did not state in Stolarz , and what we can only conclude that Ellison appears to rely on, is the inverse — when there is a dispute as to the amount of the claim, the lawyer has no obligation either to pay the assignment or ascertain the correct amount due under the assignment. Such a reading of Stolarz as Ellison urges is irreconcilable with the directions of MRPC 1.15(b) that place an affirmative burden on the attorney both to notify the third party assignee upon receipt of burdened funds and deliver the proper amount due to the third party. Lastly, as Bar Counsel correctly stated in its motion, records of an investigation by Bar Counsel are confidential generally. None of the recognized exceptions to this confidentiality are argued to be applicable here.

Thus, any Bar Counsel investigation of attorneys initiated by complaints by ⁷⁰⁷ Strulson ordinarily would not be discoverable under Rule 16-723(b). Ellison’s exception in this regard is overruled. B. We turn to review of the exceptions of Ellison and Bar Counsel, in turn, to Judge Geter’s written findings and conclusions. “ ‘[W]e 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.’ ” Attorney Grievance Comm’n v. Culver, 371 Md. 265, 274 , 808 A.2d 1251, 1256 (2002) (quoting Attorney Grievance Comm’n v. Barneys, 370 Md. 566, 577 , 805 A.2d 1040, 1046 (2002) (citations omitted in original)). When the findings are not clearly erroneous, exceptions will be overruled.

Attorney Grievance Comm’n v. Brown, 380 Md. 661, 669 , 846 A.2d 428, 432-33 (2004) (citing Attorney Grievance Comm’n v. McCoy, 369 Md. 226, 234-35 , 798 A.2d 1132, 1137 (2002)). “Our review of the hearing judge’s conclusions of law is de novo.” Stolarz, 379 Md. at 397 , 842 A.2d at 47 (citing Attorney Grievance Comm’n v. McLaughlin, 372 Md. 467, 493 , 813 A.2d 1145, 1160 (2002); Attorney Grievance Comm’n v. Dunietz, 368 Md. 419, 428 , 795 A.2d 706, 711 (2002)). Ellison excepts to the supporting findings and conclusion that a violation of MRPC 1.5(c) occurred. He maintains that the written contingency fee retainer agreement signed by Moody with the Firm satisfied his obligation under MRPC 1.5(c). Furthermore, he asserts that an itemized settlement statement was unnecessary when he disbursed the settlement proceeds because Ellison believed there was no third party assignee to pay, notwithstanding the Assignment to Strulson.

Judge Geter found, contrary to Ellison’s contentions, that Moody retained the Firm with regard to his personal injury claim and then terminated that representation with his >6 November 2002 letter. The now-invalid contingency fee arrangement with the Firm did not meet the requirement for a ⁷⁰⁸ written fee arrangement between Ellison, acting outside the Firm, and Moody. Although Judge Geter credited Ellison with having an oral arrangement with Moody for a contingency fee, her findings that there was neither a written contingency fee agreement nor a written settlement statement are not clearly erroneous. This exception is overruled.

Ellison excepts to the findings and conclusions as to the violation of Rule 16-606, for not properly designating his attorney trust account;