Attorney Grievance Commission v. Goodman

BELL, C.J. On December 9, 2008, the Attorney Grievance Commission of Maryland (“AGO”), the petitioner, acting through Bar Counsel, filed, against Bruce E. Goodman, the respondent, a Petition for Disciplinary or Remedial Action, which alleged that the respondent violated the following: Maryland Rules of Professional Conduct (“MRPC”) 1.3 Diligence, 1 1.15(a), (d) and (e) Safekeeping Property, 2 and 8.4(b), (c), and (d) Misconduct, 3 ¹²¹ Maryland Rules 16-603 Duty to Maintain Account, 4 16-604 Trust Account-Required Deposits, 5 and 16-609(a) Prohibited Transactions; 6 and the Maryland Code (1989, 2010 Repl.Vol., 2011 Supp.) Business Occupations and Professions Article § 10-306. 7 These allegations stem from Goodman’s failure to maintain a client trust account, his deposit of client settlement ¹²² funds into his operating account without authorization, and his failure to pay two clients’ medical bills (which remain outstanding), despite Goodman’s prior agreement to pay those bills from any monetary recoveries obtained for his clients. I. FACTS Pursuant to Maryland Rule 16-752(a), 8 we referred the case to the Honorable Melanie M. Shaw Geter of the Circuit Court for Prince George’s County, to conduct an evidentiary hearing and to make findings of fact and draw conclusions of law, pursuant to Maryland Rule 16-757(c). 9 The hearing was held on June 30, 2009. The respondent appeared at, and participated in, the hearing, after which the hearing judge, using the clear and convincing evidence standard, made findings of fact and drew conclusions of law, which we summarize, as follows: In November 2003, Nellie Spearman (“Spearman”) and Noah Silver (“Silver”) sustained injuries in an automobile accident. They retained the respondent to prosecute personal injury claims on their behalf.

On November 14, 2003, Spear-man and Silver executed authorizations for the respondent to pay, from the proceeds of any recovery, the Upper Marlboro Physical Therapy and Wellness Center (“UMPTWC”), which ¹²³ provided health care for their injuries. The respondent sent a letter, dated July 28, 2004, to the UMPTWC, requesting that the UMPTWC reduce the medical bills for Spearman’s and Silver’s treatments. The UMPTWC’s billing agency, Premier Billing, agreed to reduce each client’s bill by $400.00. At some point thereafter, the respondent disbursed the settlement funds due to Spearman and Silver; however, the UMPTWC never received payment for the agreed-upon sums.

In 2006, Spearman and Silver realized that the respondent had not paid their medical bills. Spearman received several letters from a collection agency regarding her outstanding medical bill owed to the UMPTWC. After she was unable to reach the respondent by telephone, Spearman went to his office to inquire about the unpaid medical bill. The respondent’s response to her inquiry was that he was “fairly sure that he had paid the bill.” Silver also inquired of the respondent, several times over a two-month period, about his outstanding bill with the UMPTWC.

At the hearing before Judge Shaw Geter, Silver testified, “the respondent thought he had paid it[;] he was not sure,” and that the respondent was still checking into the unpaid bill. Both Spearman and Silver testified that the respondent assured them that “he would take care of the matter.” Approximately two years later, in 2008, Spearman received another collection agency letter regarding the UMPTWC bill, which prompted Spearman and Silver to file a complaint with the AGC about the respondent. The UMPTWC medical bills remained unpaid as of the hearing. The respondent, admitted to practice in Maryland in June 1989, maintains (since 2002) a solo general practice with an office in Upper Marlboro, Maryland.

Although the respondent corroborated Spearman’s and Silver’s testimony, he continued to maintain that he “believes that he paid the bill.” The respondent also stated that he does not maintain a client trust account, that he placed Spearman’s and Silver’s settlement proceeds into his operating account, and that he had no financial records because “they were lost during [his] divorce proceedings.” ¹²⁴ The hearing judge concluded, by clear and convincing evidence, see Md. Rule 16-757(b), 10 that the respondent violated the Maryland Rules of Professional Conduct, Maryland Rules, and Maryland Code, Business Occupations and Professions Article Section as charged by the AGC in its petition.

II

STANDARD OF REVIEW “ ‘This Court has original and complete jurisdiction over attorney discipline proceedings in Maryland.’ ” Att’y Griev. Comm’n v. Stern, 419 Md. 525, 556 , 19 A.3d 904, 925 (2011) (quoting Att’y Griev. Comm’n v. Nwadike, 416 Md. 180, 192 , 6 A.3d 287, 294 (2010)). In instances where neither the petitioner nor the respondent files exceptions to the findings of fact, as is the case here, this Court “may treat the findings of fact as established for the purpose of determining appropriate sanctions, if any,” which we shall do.

Md. Rule 16-759(b)(2)(A). This Court reviews de novo the hearing judge’s conclusions of law. Md. Rule 16 — 759(b)(1); see also Stern, 419 Md. at 556 , 19 A.3d at 925 .

III

DISCUSSION Based upon the findings of fact, we conclude that the respondent violated MRPC 1.3, 1.15(a), (d), and (e), and 8.4(b), (c) and (d); Maryland Rules 16-603, 16-604, and 16-609(a); and the Maryland Code, Business Occupations and Professions Article § 10-306. Our analysis is straightforward; the respondent admitted that he does not maintain a client trust account and that he deposited client settlement funds into his operating account without authorization. This, our precedents establish, plainly, is unacceptable attorney conduct. Further, the respondent “lost” his practice’s financial records (such as they may have been) and then failed to retrieve bank records ¹²⁵ that he claimed would refute Premier Billing’s claims that his clients’ medical bills remained unpaid.

A. MRPC 1.3 Diligence The respondent’s failure to pay promptly his clients’ medical bills violated MRPC 1.3. An attorney who agrees to pay client medical bills from recoveries in connection with his/her representation, and fails to do so in a timely manner after receipt of settlement or judgment funds, acts without reasonable diligence and promptness. Att’y Griev. Comm’n v. Roberts, 394 Md. 137, 163-64 , 904 A.2d 557, 573 (2006) (holding that attorney who delayed settlement disbursement to client and client medical providers for approximately four months violated MRPC 1.3); Att’y Griev.

Comm’n v. Zuckerman, 386 Md. 341, 357-58 , 872 A.2d 693, 703 (2005) (holding that attorney who was several years late in paying client’s medical bills violated MRPC 1.3); see also Att’y Griev. Comm’n v. Singleton, 311 Md. 1, 13 , 532 A.2d 157, 163 (1987) (holding that attorney who failed to pay client medical bills by time of hearing violated former Md. Disciplinary Rule 6-101, Failing to Act Competently). Here, the hearing judge found that the respondent did not pay the UMPTWC medical bills and that the bills remain unpaid, a clear violation of MRPC 1.3. B. MRPC 1.15 The respondent failed to maintain a client trust account, in violation of MRPC 1.15(a).

This Rule mandates that attorneys keep client or third-person funds in a separate trust account. An attorney’s failure to maintain such a separate account violates Rule 1.15(a). Att’y Griev. Comm’n v. Mitchell, 386 Md. 386, 398 , 872 A.2d 720, 727 (2005) (stating that an attorney’s failure to establish and maintain an attorney trust or escrow account constituted a violation of MRPC 1.15(a)); Att’y Griev.

Comm’n v. Prichard, 386 Md. 238, 247 , 872 A.2d 81, 86 (2005) (stating that respondent violated MRPC 1.15 by “failing to hold property of clients or third persons that was in his possession in connection with a representation separate from his own property, including monetary funds which were ¹²⁶ not kept in a separate account”). In Prichard , the attorney acknowledged that he failed to maintain an escrow account and deposited settlement proceeds into his firm’s operating account, 386 Md. at 245, 872 A.2d at 85, as did the respondent here. The respondent violated MRPC 1.15(a). The hearing judge concluded that the respondent did not pay his clients’ medical bills after receiving their settlement funds, which violated MRPC 1.15(d)’s mandate to do so promptly. “[A]n attorney who fails to notify the lender of his receipt of a settlement check and does not pay a client’s debts from settlement funds, violates Rule 1.15(b),” which became present MRPC 1.15(d), through a Rules Order filed in 2005.

Zuckerman, 386 Md. at 370 , 872 A.2d at 710 (citing Att’y Griev. Comm’n v. Stolarz, 379 Md. 387, 399-400 , 842 A.2d 42, 49 (2004)). In Roberts , the attorney withheld payment from settlement funds to his client’s medical providers for four months, which constituted a violation of then MRPC 1.15(b). 394 Md. at 163-64 , 904 A.2d at 572-73 . The respondent failed entirely to pay his clients’ medical providers from settlement funds, as agreed to previously.

The respondent stated that he believed that he paid the medical bills. Even if he failed to pay them accidently, an inadvertent failure to disburse settlement funds to a third party violates MRPC 1.15(d). Stolarz, 379 Md. at 400-01 , 842 A.2d at 49 . Therefore, the respondent’s failure to pay his clients’ medical bills, whether accidentally or intentionally, violates MRPC 1.15(d).

The respondent’s failure to pay the outstanding medical bills promptly after negotiating the reduced amount owed violates MRPC 1.15(e). MRPC 1.15(e) requires an attorney, who, in the course of representing a client, possesses property in which two or more persons claim an interest, to distribute promptly all portions of that property as to which the interests are not in dispute. Att’y Griev. Comm’n v. Kendrick, 403 Md. 489, 503 , 943 A.2d 1173, 1180 (2008).

The respondent negotiated a $400.00 reduction in both Spearman’s and Silver’s medical bills and then dispersed to Spearman and Silver their shares of the settlement funds regarding their personal injury ¹²⁷ claims, which indicates that there no longer was a dispute as to the money owed to the UMPTWC. See Roberts, 394 Md. at 150 , 904 A.2d at 564-65 . His subsequent failure to distribute promptly to the UMPTWC its share of the settlement proceeds violated MRPC 1.15(e). C. Maryland Rules 16-603 and 16-604 The same reasons that the respondent violated MRPC 1.15(a) — he acknowledged that he did not maintain a client trust account and deposited the clients’ funds, in excess of his earned fees, into his operating account — causes us to conclude that the respondent violated Maryland Rule 16-604.

Further, by accepting funds despite not having a client trust account, the respondent violated also Maryland Rule 16-603. D. Maryland Rule 16-609(a) and Maryland Code, Business Occupations and Professions Article § 10-306 Both Rules 16-609(a) and § 10-306 prohibit an attorney’s unauthorized use of client trust funds; the former couches the prohibition as “any unauthorized purpose” and the latter couches it as “any purpose other than the purpose for which the trust money is entrusted to the lawyer.” The respondent did not produce or maintain any relevant financial records regarding his operating account, yet claimed to have disbursed payment to the UMPTWC. Regarding a similar situation, this Court said, “Because of the specific, strict, and affirmative record-keeping obligations placed on attorneys in the maintenance and operation of their escrow accounts containing the trust funds of clients and third parties, the failure to maintain those records to document an attorney’s claim of how and when those funds were received and expended, as well as an attorney’s claimed authorization to make disbursements, may be disbelieved and an adverse inference drawn where such required corroboration is not forthcoming.” Nwadike, 416 Md. at 198 , 6 A.3d at 297 . When the respondent failed to produce financial records to corroborate his claim that he paid his clients’ medical bills— ¹²⁸ despite his specific, strict, and affirmative record-keeping obligations — he used those funds for an unauthorized purpose in violation of Rule 16-609(a) and § 10-306.

See Roberts, 394 Md. at 155-56 , 904 A.2d at 568 (holding that the logical conclusion, when the attorney deposits client settlement proceeds into his operating account and cannot account for those proceeds, is that the attorney used client funds). Even when faced with the prospect of disciplinary charges, the respondent elected not to pay $400.00 to have his bank reproduce copies of the financial records of his operating account. The respondent’s testimony in that regard was unworthy of belief, as the hearing judge implicitly found. E. MRPC 8.4(b), (c), and (d) An act prejudicial to the administration of justice is one that “tends to bring the legal profession into disrepute.” Att’y Griev.

Comm’n v. Rose, 391 Md. 101, 111 , 892 A.2d 469, 475 (2006). We have noted, on all too many occasions, that the commingling of personal and client funds, including the failure to maintain a separate trust account, is prejudicial to the administration of justice. Att’y Griev. Comm’n v. Carithers, 421 Md. 28, 56 , 25 A.3d 181, 197-98 (2011) (citing Att’y Griev.

Comm’n v. Clark, 363 Md. 169, 183 , 767 A.2d 865, 873 (2001)) (concluding that misappropriation of client funds and failure to maintain client trust account violated MRPC 8.4(d)). The hearing judge concluded that the respondent’s conduct violated MRPC 8.4(d). We agree. The respondent acknowledged that he did not maintain a separate client trust account and commingled client settlement proceeds with his operating account, a clear violation of MRPC 8.4(d).

Carithers, 421 Md. at 56-57 , 25 A.3d at 198 ; Zuckerman, 386 Md. at 374-75 , 872 A.2d at 713 . Further, the respondent’s inexplicable failure to pay his clients’ medical bills, in violation of his agreement to do so, exposed Spearman and Silver to potential lawsuits from the UMPTWC or anyone who might acquire the right to sue on debts. Such conduct erodes the public confidence in, and brings disrepute to, the legal profession and is, therefore, prejudicial to the administration of justice. ¹²⁹ Regarding MRPC 8.4(b) and (c), the hearing judge concluded that the respondent violated these rules also. Although the hearing judge did not explicate her rationale for these conclusions, in this case and under the circumstances, we engage the presumption that hearing judges know the law and correctly apply it.

Att’y Griev. Comm’n v. Jeter, 365 Md. 279, 288 , 778 A.2d 390, 395 (2001); see also Att’y Griev. Comm’n v. Keiner, 421 Md. 492, 508 , 27 A.3d 153, 163 (2011) (stating that hearing judge’s failure to mention certain facts does not mean he or she failed to consider those facts, and does