Attorney Grievance Commission v. Harmon

PER CURIAM. Petitioner, the Attorney Grievance Commission (“AGC”), acting through Bar Counsel, filed, in accordance with Maryland Rule 16-751, 1 a Petition for Disciplinary or Remedial Action (“the Petition”) against Anthony Maurice Harmon (“Respondent”) for violations of the Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”). Petitioner contends that Respondent commingled funds and failed to properly maintain an attorney trust account and related financial records, in violation of MLRPC 1.15 (Safekeeping Property) 2 and 8.1(b) (Bar Admission and Disciplinary Matters), 3 as well as Maryland Rules 16-606.1 (Attorney Trust Account Record-Keeping), 4 16-607 (Commingling Funds), 5 and 16-609 (Prohib ⁶¹⁷ ited Transactions). 6 , 7 In accordance with Maryland Rule 16-752(a), 8 we referred the Petition to the Honorable Toni E. Clarke of the Circuit Court for Prince George’s County for an evidentiary hearing and to make findings of fact and conclusions of law in accordance with Maryland Rule 16-757. 9 ⁶¹⁸ I. Procedural History Respondent was personally served with the Petition on November 22, 2010. He did not file an answer within fifteen days of service, as required by Maryland Rule 16-754. 10 The same day Respondent was served with the Petition, he was served with Petitioner’s Requests for Admission of Facts and Genuineness of Documents.

Harmon did not respond either to those requests. Because Harmon did not file an answer, Petitioner filed, on March 1, 2011, a Motion to Extend Time for Judicial Hearing with this Court, see generally Md. Rule 16-757(a) (requiring a hearing to be “completed within 120 days after service on the respondent of the order designating a judge,” unless otherwise ordered by the Court of Appeals), so that the Circuit Court could enter an order of default. See Md. Rule 16-754(c) (“If the time for filing an answer has expired and the respondent has failed to file an answer ... the court shall treat the failure as a default and the provisions of Rule 2-613 shall apply.”); Md. Rule 2-613 (permitting a court to enter an order of default if no responsive pleading is filed). We granted Petitioner’s motion, thus extending the time for completion of the hearing until April 12, 2011.

Petitioner filed a Motion for Order of Default with the Circuit Court on March 4, 2011, which was granted by Judge Clarke on March 9, 2011. The Order of Default and notice that a hearing was scheduled for April 12, 2011 were mailed to the three known addresses of Harmon. Maryland Rule 2-613(d) provided Respondent with thirty days to move to vacate the Order of Default or otherwise respond to the Notice of Order of Default. Respondent did not take any action during this time.

Respondent appeared at ⁶¹⁹ the April 12 hearing, however, with an Opposition to the Motion to Default 11 and an Answer to the Petition. Respondent argued that his failure to timely file an Answer was due to family and personal problems, including divorce, foreclosure, and the death of a family member. Finding that Respondent did not satisfactorily substantiate any averment meeting the standard for vacating the Order of Default under Maryland Rule 2-613(d), 12 the Circuit Court denied Respondent’s motion. The factual averments made in the Petition were, therefore, deemed admitted, see Md. Rule 2-323(e) (“Averments in a pleading to which a responsive pleading is required ... are admitted unless denied in the responsive pleading....”); Attorney Grievance Comm’n v. Lee, 390 Md. 517, 524 , 890 A.2d 273, 277 (2006), as were the matters contained in the Requests for Admission of Facts and Genuineness of Documents previously served on, but never responded to by, the Respondent.

See Md. Rule 2-424(b) (“Each matter of which an admission is requested shall be deemed admitted unless ... the party to whom the request is directed serves a response.... ”). Following the evidentiary hearing, at which Respondent was permitted to participate, Judge Clarke issued her Findings of Fact and Conclusions of Law, in which she concluded, by clear and convincing evidence, that Respondent violated MLRPC ⁶²⁰ 1.15 and 8.1(b), and Maryland Rules 16-606.1, 16-607, and 16-609. Harmon filed with this Court, one day before oral argument, an Opposition to the Petitioner’s Recommendation for Sanction. Petitioner did not receive a copy of Harmon’s Opposition until the day of oral argument, and accordingly asked this Court to strike Harmon’s Opposition as untimely.

II

Hearing Judge’s Findings of Fact and Conclusions of Law Harmon maintained an attorney trust account at Bank of America. On or about June 10, 2009, Harmon authorized the transfer of $500 from his attorney trust account to a personal account of his. At the time the transfer was authorized, however, the attorney trust account did not have sufficient funds. As a result, the attorney trust account was overdrawn in the amount of $101.50.

On or about July 22, 2009, Bar Counsel 13 mailed a letter to Respondent to inform him of the overdraft and request that Respondent provide an explanation for the overdraft and copies of his financial records. Harmon did not respond to Bar Counsel’s request. Bar Counsel mailed a second letter to Harmon on or about August 19, 2009, regarding the overdraft. On or about August 22, 2009, Harmon responded to Bar Counsel’s inquiry, stating that the overdraft occurred after he deposited a retainer check from a client and subsequently transferred $500 to his business checking account to pay rent for his office space.

He also provided records indicating that, on June 8, he deposited $200 in his attorney trust account. On June 10, however, a $200 charge-back was made to the account. On or about September 14, 2009, Bar Counsel mailed a third letter to Harmon, asking for further information regarding the transactions leading to the June 10 overdraft. Specifically, Bar Counsel requested a copy of the $300 payment to the ⁶²¹ attorney trust account constituting the difference between the $200 deposited on June 8 and the $500 transferred on June 10.

Harmon did not respond. On October 7, Bar Counsel mailed a fourth letter, asking Harmon to respond within seven days. Harmon, again, failed to respond. On or about November 13, 2009, Bar Counsel mailed a fifth letter to Harmon, informing him that the matter was upgraded to a docketed case and requesting a response within fifteen days.

Harmon did not respond. Bar Counsel mailed another letter on or about December 17, by both certified and first-class mail. Although the letter sent by certified mail was returned as “unclaimed” to Bar Counsel by the postal service, the letter sent first-class was not. On January 25, 2010, an investigator for Bar Counsel delivered to Harmon a copy of an investigative subpoena, issued to Bank of America, for production of Harmon’s trust account records.

At that time, Harmon gave to the investigator a letter for Bar Counsel dated September 22, 2009. Bar Counsel had not previously received the letter. On January 25, Harmon spoke to an Assistant Bar Counsel by telephone. During that conversation, he confirmed that his mailing address was a post office box in Largo (to which Bar Counsel had previously mailed its correspondence), and stated that he generally retrieved his mail from the post office box two or three times a week.

On or about February 1, 2010, Harmon wrote to Bar Counsel and explained that, in addition to the $200 deposited into his attorney trust account on June 8, he had also received and deposited $300, purportedly for legal services already rendered, from another client named Goldsmith. According to the Bank of America records received by Bar Counsel, however, the $300 was received by Harmon from an individual named William Phillips. Moreover, the Bank of America records showed that Harmon made occasional transfers from personal Bank of America accounts into his attorney trust account. For example, on September 2, 2009, Harmon made two separate transfers into ⁶²² his attorney trust account, in the amount of $900 and $1,700, from a personal account.

He also deposited, on at least two occasions into his attorney trust account, funds received by him as rental payments on property that he owned personally. On at least one occasion, a counter debit on March 25, 2009, Harmon withdrew funds in cash from his attorney trust account. Additionally, the hearing judge noted that Harmon failed to maintain records, made contemporaneously with the disbursements and deposits from and into his attorney trust account, showing “the date of the transaction, the amount, the payee, the identity of the client or third person for whom the disbursement/deposit was made and the purpose of the disbursement/deposit.” The hearing judge found, by clear and convincing evidence, that Harmon’s handling of his attorney trust account and subsequent failure to cooperate with Bar Counsel violated MLRPC 1.15 and 8.1(b), as well as Maryland Rules 16-606.1, 16-607, and 16-609. Specifically, Judge Clarke noted that, with respect to MLRPC 1.15 and Rules 16-601.1, 16-607, and 16-609, Harmon failed to maintain accurate and complete records for his attorney trust account, as demonstrated by his incorrect identification of the source of the June 8 deposit of $300, improperly commingled his personal funds with his client funds by transferring funds from personal accounts into his attorney trust account, and improperly made cash withdrawals from his attorney trust account.

Moreover, Judge Clarke noted that a reasonable inference of Harmon’s repeated failure to respond to Bar Counsel’s request to produce the financial records of the transactions at issue was that the records had not been maintained properly and did not, in fact, exist. In determining that Harmon also violated MLRPC 8.1(b), Judge Clarke inferred that the letters mailed to Harmon by Bar Counsel (and not returned to Bar Counsel by the postal service) requesting information regarding Harmon’s attorney trust account were in fact received, (citing Fidelity & Casualty Co. v. Riley, 168 Md. 430, 433-34 , 178 A. 250, 252 (1935) (noting that a letter correctly stamped, addressed, and mailed ⁶²³ is presumed to have been delivered); Stiegler v. Eureka Life Ins. Co., 146 Md. 629, 647 , 127 A. 397, 404 (1925) (same)). Because Harmon received Bar Counsel’s requests, failed to acknowledge them, and did not request an extension of time to respond, Judge Clarke determined that Harmon knowingly failed to respond in a timely manner.

Moreover, because Bar Counsel’s letters referred to MLRPC 8.1, and warned that failure to respond constituted a violation of that Rule, the hearing judge determined that Harmon was aware of his obligation, and the consequences of his failure, to respond.

III

Analysis The Court of Appeals has “original and complete jurisdiction over attorney discipline proceedings in Maryland.” Attorney Grievance Comm’n v. Penn, 431 Md. 320, 333-34 , 65 A.3d 125, 133 (2013) (quoting Attorney Grievance Comm’n v. Rand, 429 Md. 674, 712 , 57 A.3d 976, 998 (2012)). Although we review the record independently, “we generally will accept the hearing judge’s findings of fact, unless those findings are clearly erroneous.” Attorney Grievance Comm’n v. Tanko, 408 Md. 404, 418 , 969 A.2d 1010, 1019 (2009). We review the hearing judge’s conclusion of law without deference, pursuant to Maryland Rule 16-759(b)(1). 14 Penn, 431 Md. at 334 , 65 A.3d at 133 -34 (citing Attorney Grievance Comm’n v. Jones, 428 Md. 457, 467 , 52 A.3d 76, 82 (2012) (per curiam)). Neither party filed exceptions to the hearing judge’s Findings of Fact and Conclusions of Law.

We therefore accept the facts as set forth by Judge Clarke. 15 Based on our indepen ⁶²⁴ dent review of the record and the findings of fact, we conclude that Judge Clarke was correct in concluding that Harmon violated Maryland Rules 16-606.1, 16-607, and 16-609, and MLRPC 1.15 and 8.1(b). A. The Attorney Trust Account We agree with Judge Clarke’s conclusion that Harmon violated the following provisions governing attorney trust accounts: Maryland Rules 16-606.1, 16-607, 16-609, and MLRPC 1.15. MLRPC 1.15, entitled “Safekeeping Property,” provides, in pertinent part: (a) A lawyer shall hold property of clients or a third person 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 ... and records shall be created and maintained in accordance with the Rules in [Title 16, Chapter 600 of the Maryland Rules].

Other property shall be identified specifically as such and appropriately safeguarded, and records of its receipt and distribution shall be created and maintained. Complete records of the account funds and of the other property shall be kept by the lawyer and shall be preserved for a period of at least five years after the date the record was created. MLRPC 1.15(a). Maryland Rule 16-606.1, entitled “Attorney Trust Account Record-Keeping,” requires attorneys to create and maintain records for all transactions regarding his or her attorney trust account, including “ledgers showing all deposits and disbursements” from the account.

Md. Rule 16-606.1; Attorney Grievance Comm’n v. Van Nelson, 425 Md. 344, 361 , 40 A.3d 1039, 1048 (2012) (citing Attorney Grievance Comm’n v. Patterson, 421 Md. 708, 728 , 28 A.3d 1196, 1207-08 (2011)). Judge Clarke found, based on the averments deemed admitted in Petitioner’s Requests for Admissions, that Respondent failed to maintain accurate and complete records for his attorney trust account. Moreover, Judge Clarke noted that ⁶²⁵ Harmon’s misidentification of the client from whom he received the $300 check immediately prior to the overdraft (and his failure to produce any records to Bar Counsel) indicates that Harmon’s records were inadequate. We agree.

Had Harmon properly maintained records in accordance with MLRPC 1.15 and Maryland Rule 16-606.1, he would have been easily able to determine that the correct source of the funds was his client, Philips, rather than his client Goldsmith, as he informed Bar Counsel. Therefore, we conclude that Respondent violated MLRPC 1.15 and Maryland Rule 16-606.1. MLRPC 1.15 and Maryland Rule 16-607 prohibit attorneys from depositing personal funds in an attorney trust account. See MLRPC 1.15(a) (requiring a lawyer to “hold property of clients or third persons ... separate from the lawyer’s own property”); Md. Rule 16-607(a) (“An attorney or law firm may deposit in an attorney trust account only those funds required to be deposited in that account by Rule 16-604 or permitted to be so deposited by section b. of this Rule.”); Md. Rule 16-604 (requiring “all funds, including cash, received an accepted by an attorney ... from a client or third person ..., unless received as payment of fees owed the attorney by the client or in reimbursement for expenses properly advanced on behalf of the client, [to] be deposited in an attorney trust account in an approved financial institution”).

Judge Clarke found that Harmon deposited an earned fee to his attorney trust account on June 8, 2009, deposited personal funds received as rental payments on March 30 and August 14, 2009, and transferred funds from his personal account to his attorney trust account on September 2, 2009. See, e.g., Attorney Grievance Comm’n v. Moeller, 427 Md. 66 , 46 A.3d 407 (2012) (determining that attorney violated MLRPC 1.15(a) by commingling funds and withdrawing funds for his personal use from his attorney trust account); Attorney Grievance Comm’n v. Nwadike, 416 Md. 180, 199-200 , 6 A.3d 287, 298 (2010) (determining that attorney violated MLRPC 1.15(a) and Maryland Rule 16-607 by, among other things, failing to “keep her earned fees and reimbursed expenses in her attorney trust account separate from her ⁶²⁶ clients’ and third parties’ property”); Attorney Grievance Comm’n v. Nussbaum, 401 Md. 612, 638 , 934 A.2d 1, 16 (2007) (concluding that attorney’s commingling of client funds with personal funds in a trust account violated MLRPC 1.15(a)). We conclude, therefore, that, in addition to his MLRPC 1.15 violation, Harmon also violated Maryland Rule 16-607. The hearing judge additionally concluded that Respondent violated Maryland Rule 16—609(b), which prohibits cash disbursements.

The bank records subpoenaed from Bank of America, and admitted into evidence before Judge Clarke, show a cash withdrawal of $560.00 on March 25, 2009. We therefore agree that Respondent violated Maryland Rule 16-609(b). B. MLRPC 8.1(b) MLRPC provides, in relevant part, that “a lawyer ... in connection with a disciplinary matter, shall not ... (b) ... knowingly fail to respond to a lawful demand for information from ... [a] disciplinary authority....” Judge Clarke concluded that Respondent violated MLRPC 8.1, because Respondent repeatedly failed to respond to communications from Bar Counsel.

We agree. This Court has consistently stated that “repeated failures to respond to Bar Counsel’s investigative requests can be violative of Rule 8.1.” Van Nelson, 425 Md. at 362 , 40 A.3d at 1049 (citing Attorney Grievance Comm’n v. Bleecker, 414 Md. 147, 174 , 994 A.2d 928, 944 (2010); Attorney Grievance Comm’n v. Kreamer, 387 Md. 503, 530-31 , 876 A.2d 79, 95-96 (2005)). For example, we have noted that an attorney’s failure to respond to letters from Bar Counsel requesting a response constitutes a violation of the rule, see, e.g., Attorney Grievance Comm’n v. Tolar, 357 Md. 569, 582 , 745 A.2d 1045, 1052 (2000); Attorney Grievance Comm’n v. Milliken, 348 Md. 486, 500-01 , 704 A.2d 1225, 1232 (1998), as does an attorney’s failure to provide records requested by Bar Counsel. See, e.g., Attorney Grievance Comm’n v. Kenney, 339 Md. 578, 587 , 664 A.2d 854, 858 (1995). ⁶²⁷ Judge Clarke determined, and we agree, that Harmon’s repeated failure to respond to Bar Counsel’s inquiries constituted a violation of MLRPC 8.1.

In Bar Counsel’s first letter, dated June 22, 2009, Bar Counsel requested a response from Harmon within ten days after its receipt. Although Harmon did respond to Bar Counsel’s letter, he did not do so until August 22, 2009, and therefore failed to respond in a timely manner. He also did not provide all of the requested documentation, including copies of client ledgers, deposit slips, canceled checks, and monthly bank statements, to