Attorney Grievance Commission v. Harris

BATTAGLIA, J. The Attorney Grievance Commission of Maryland (“Petitioner”), acting through Bar Counsel and pursuant to Maryland Rule 16-751 (a), 1 filed a Petition for Disciplinary or Remedial Action against Respondent, Alan Edgar Harris, on November 1, 2006. Bar Counsel alleged that Respondent violated Maryland Rules of Professional Conduct (“MRPC”), 8.1(a) (Bar Admission and Disciplinary Matters), 2 and 8.4(a), (c) and (d) (Misconduct). 3 ¹⁴⁹ In accordance with Maryland Rules 16-752(a) and 16-757(c), 4 we referred the petition to Judge Dana M. Levitz of the Circuit Court for Baltimore County for an evidentiary hearing and to make findings of fact and conclusions of law. Judge Levitz held a hearing on June 27, 2007, and issued Findings of Fact and Conclusions of Law on August 7, 2007, in which he concluded by clear and convincing evidence that Respondent had violated Rule 8.4(c) by executing an authorization to transfer the ownership of a Washington Mutual Investors Fund account owed by Respondent and his former wife as tenants by the entireties prior to their divorce, based upon Respondent’s representation that he was entitled to sole possession. Judge Levitz did not conclude that there were violations of Rules 8.1(a) or 8.4(c) with respect to Respondent’s explanation to Bar Counsel that he titled the Fund in his ow name to hold the account in a “self imposed trust,” nor of Rule 8.4(a) or (d).

FINDINGS OF FACT I. Undisputed Facts “Pursuant to Rule § 16-757(c), this Court finds the following facts, which are undisputed, by clear and convincing evidence: ¹⁵⁰ 1. Respondent Alan Edgar Harris has been a member of the Maryland Bar since I960. 1 2. Mr. Harris was suspended from the practice of law in 2002, and has not been reinstated. 3. Mr. Harris was married to Frances M. Harris until they were divorced sometime in 1985. 4.

The divorce was filed in Baltimore City and as a result Ms. Harris received the marital home, located at 1 Charles Ridge Garth in Towson; she also retained a mutual fund, unbeknownst to Mr. Harris, named “Washington Mutual Investors Fund-Class A” (“the Fund”). 5. The Fund was owned by both Mr. and Ms. Harris as tenants by the entireties until, as a result of the divorce, their respective interests were automatically changed to tenancies in common by operation of law. 6. Carroll Klingelhofer, III, esq., was retained by Ms. Harris in 1988 to prepare a will for herself. 7. Ms. Harris resided at 1 Charles Ridge Garth until her death on June 3, 2005; her will was found soon after her death. 8.

In the subsequent probate proceeding, Mr. Klingelhofer represented the estate and Meryk Jankowski was named personal representative. 9. Mr. Harris had been given the original will by the person who found it, and he in turn gave the will to Mr. Klingelhofer. 10. During the course of investigating the nature and extent of Ms. Harris’ assets, Mr. Klingelhofer discovered a quarterly statement from the Fund, which listed the owners of the Fund, Mr. and Ms. Harris, as tenants by the entire-ties, and had a value of approximately $97,514.00. 11. Mr. Klingelhofer sent Mr. Harris a letter dated July 21, 2005, which informed Mr. Harris that the Fund was, by ¹⁵¹ operation of law, now held by Mr. Harris and Ms. Harris as tenants in common (Exhibit # 1). 12.

Mr. Harris, in the middle of August, 2005, executed a transfer authorization/stock assignment that had the effect of changing the title of the Fund from being held by Alan E. Harris and Frances Harris as tenants by the entireties to sole ownership in the name of Alan E. Harris (Exhibit # 4). 13. On or about August 16, 2005, Mr. Klingelhofer discovered that Mr. Harris had initiated the transfer that gave Mr. Harris sole ownership of the Fund. 14. On or about September 28, 2005, at Mr. Klingelhofer’s suggestion, American Funds froze the account that held the Fund, pending a determination of ownership. 15. In March of 2007, the estate of Ms. Harris received one half of the Fund from Mr. Harris. 16.

From the time Mr. Harris indirectly transferred ownership of the Fund to himself, in August of 2005 to March of 2007, Mr. Harris never depleted the Fund and any dividends earned were reinvested into the Fund. 17. Mr. Harris cited concern regarding income taxes assessed against the Fund as the reason for making the transfer. He also expressed the view that he did not trust Mr. Klingelhofer and was suspicious of his motivation for asking questions about this asset and his divorce. 18. Mr. Harris misled Mr. Klingelhofer by saying that he would check the ownership status of the Fund by reviewing divorce papers from 1985; instead of reviewing divorce files, Mr. Harris used this opportunity to cause the transfer of the Fund to himself.

II

Disputed Facts Although the following facts are disputed, this Court has heard evidence from both parties and finds these facts, pursuant to Rule § 16-757(c), by clear and convincing evidence: 19. Mr. Harris knew, when he took possession of the entire Fund, that he did not have the right to transfer the Fund to ¹⁵² himself. Mr. Harris testified that when he received the letter dated July 21, 2005, he did not know what tenancy in common was. He claims that when he transferred the Fund into his name in the middle of August, 2005, he thought that he was entitled to ownership of the Fund as a result of the death of Ms. Harris.

This Court finds Mr. Harris’ testimony regarding his lack of legal knowledge to be unconvincing. Mr. Harris knew that the Fund’s ownership had been converted to tenancy in common. In the letter Mr. Klingelhofer implied that Mr. Harris does not have the sole proprietary right to the Fund if Mr. Harris and Ms. Harris owned the Fund as tenants in common {See exhibit # 1). Having been an attorney for more than 40 years, it is more than likely that Mr. Harris had a basic knowledge of property law when he transferred the Fund to himself.

A first year law student is taught that tenants in common do not have the right of survivorship; when one tenant in common dies, her interest in the property goes to her estate, not to the other tenant in common. Mr. Harris knew what his interest in the Fund was, and if he had forgotten, the July 21 letter put him on notice that he did not own 100% of the Fund. 20. Mr. Harris had no reasonable basis for the belief that Mr. Klingelhofer was trying to defraud him with regard to the Fund. Mr. Harris, in a rambling quasi-monologue, testified that he believed that Mr. Klingelhofer was trying to hide the Fund from him.

At the hearing Mr. Harris contended that this alleged fraud was the reason that he transferred the Fund to himself. Mr. Harris testified that he believed that he would have waived a claim for fraud against the estate if he did not take possession of the Fund. Mr. Harris argued that he was simply putting the Fund in a “trust” pending future litigation against the estate. This Court finds these contentions to be unconvincing.

Mr. Harris, who practiced law for 40 years, could not have believed that a claim for fraud against Ms. Harris’ estate would be waived if he did not take full possession of the Fund. Even if Mr. Harris did actually believe in this Ma ¹⁵³ ehiavellian rule of waiver, no reasonable attorney would believe it. Thus, Mr. Harris’ fear of waiving a fraud claim is not a reasonable excuse for transferring the Fund to himself when he knew he was only entitled to half of its value. 21. Mr. Harris did not intend to defraud the estate of Ms. Harris when he transferred the Fund to himself.

The Attorney Grievance Commission alleges that Mr. Harris sought to keep and use the value of the Fund for himself when he took possession of 100% of the Fund. The Commission did not present evidence that would support this inference, however. Mr. Harris claims that he was concerned about his own tax liability concerning the Fund. Mr. Klingelhofer, the Commission’s only witness, conceded that the value of the Fund was not depleted when it was in Mr. Harris’ possession.

Furthermore, Mr. Klingelhofer testified that all the dividends from the Fund were reinvested during Mr. Harris’ possession of the Fund. Mr. Harris’ actions during the time period that he held the Fund, ie. August of 2005 to March of 2007, do not suggest that he wanted to convert the money to his own use. Mr. Harris never used the value of the Fund at all: not as collateral, cash, or otherwise.

Mr. Harris simply wanted to control the Fund, so that he would not be personally liable for anything the estate of Ms. Harris did, or did not do, regarding the Fund. In March of 2007, the estate of Ms. Harris received every penny that it was entitled to from the Fund. The fact that American Funds froze the account, does not help to prove that Mr. Harris had the intent to convert the Fund to his own use or otherwise defraud the Estate of Ms. Harris. 22. Mr. Klingelhofer acted ethically at all times in this matter.

Mr. Harris has made many and varied allegations of fraud and misconduct against Mr. Klingelhofer. Mr. Harris never presented any support for these allegations besides his own testimony. Mr. Harris’ testimony regarding Mr. Klingelhofer’s motives regarding the Fund was implausible, to say the least. Mr. Klingelhofer acted as any reasonable estate attorney would when he inquired about Mr. Harris’ ¹⁵⁴ divorce.

An attorney representing an estate in this situation has a duty to find out who is entitled to any significant financial asset owned by the decedent. Mr. Klingelhofer had a duty to discover who had what ownership interest in the Fund; asking Mr. Harris about his divorce settlement was the most logical way to achieve this end. CONCLUSIONS OF LAW There is no doubt that Mr. Harris violated Rule 8.4(c) of the Maryland Rules of Professional Conduct 2 when he executed the transfer order that gave him sole ownership of the Fund. Mr. Harris knew that he was not entitled to 100% of the Fund, yet he still requested the transfer.

The requested transfer was a misrepresentation of the ownership of the Fund to American Funds, whose employees did not know that the ownership of the Fund had been converted to tenancy in common by Mr. and Ms. Harris’ divorce. Mr. Harris indirectly represented, by making it look like he was entitled to sole possession of the Fund, that he and Ms. Harris were still married. He allowed American Funds employees to believe that he and Ms. Harris still owned the Fund as tenants by the entireties, and so he could take full possession of the Fund when Ms. Harris died. An honest attorney would not have allowed this misconception to remain uncorrected.

Mr. Harris argues that he never directly stated that he and Ms. Harris were still married when he requested the transfer. Nevertheless, any competent attorney would know that that was what was implied. Thus, Mr. Harris violated Rule 8.4(c) when he requested the August 2005 transfer of the Fund to himself. Mr. Harris did not violate Rule 8.4(d), 3 however, by his actions regarding the Fund.

Misconduct that is so extreme that it inherently harms the administration of justice is ¹⁵⁵ considered prejudicial to the administration of justice. Attorney Grievance Commission v. Link, 380 Md. 405, 429 , 844 A.2d 1197 (2004). Mr. Harris’ misconduct does not rise to this standard. Mr. Harris certainly did not show good faith, and was certainly dishonest, when he caused the Fund to be transferred to himself.

The type of dishonesty that was present in this case does not necessarily prejudice the administration of justice. Here, Mr. Harris was dishonest, but his conduct did not prejudice the administration of justice. While it is troubling that Mr. Harris would mislead another member of the Bar, this conduct was not while acting as an attorney. Mr. Harris’ actions and omissions occurred in his capacity as the ex-husband of Ms. Harris, not as an attorney representing one of the parties.

While this does not excuse his misconduct under the Maryland Rules of Professional Responsibility, it is a mitigating factor. Mr. Harris did not damage the legal process in a significant way by initiating the transfer of the Fund to himself. The estate of Ms. Harris got the value of half of the Fund in the end, just as it was entitled to. (emphasis in original) STANDARD OF REVIEW In proceedings involving attorney discipline, this Court has original and complete jurisdiction and conducts an independent review of the record.

Attorney Grievance v. Webster, 402 Md. 448, 459 , 937 A.2d 161, 167 (2007); Attorney Grievance v. Nussbaum, 401 Md. 612, 632 , 934 A.2d 1, 12 (2007); Attorney Grievance v. Lawson, 401 Md. 536, 571-72 , 933 A.2d 842, 863 (2007); Attorney Grievance v. Mininsohn, 380 Md. 536, 564 , 846 A.2d 353, 369-70 (2004); Attorney Grievance v. Awuah, 374 Md. 505, 520 , 823 A.2d 651, 660 (2003). In our ¹⁵⁶ review of the record, the hearing judge’s findings of fact generally will be accepted unless they are clearly erroneous. Maryland Rule 16-759(b)(2); 5 Webster, 402 Md. at 459-60 , 937 A.2d at 167-68 ; Nussbaum, 401 Md. at 632 , 934 A.2d at 12 ; Lawson, 401 Md. at 572 , 933 A.2d at 863 ; Attorney Grievance v. Goff, 399 Md. 1, 28 , 922 A.2d 554, 570 (2007); Attorney Grievance v. Gore, 380 Md. 455, 468 , 845 A.2d 1204, 1211 (2004); Attorney Grievance v. Potter, 380 Md. 128, 151 , 844 A.2d 367, 380-381 (2004). As to the hearing judge’s conclusions of law, such as whether provisions of the MRPC were violated, our consideration is essentially de novo.

Maryland Rule 16—759(b)(1); 6 Webster, 402 Md. at 460 , 937 A.2d at 168 ; Nussbaum, 401 Md. at 632 , 934 A.2d at 13 ; Lawson, 401 Md. at 572 , 933 A.2d at 863 ; Attorney Grievance v. Mba-Jonas, 397 Md. 690, 700 , 919 A.2d 669, 675 (2007); Attorney Grievance v. McLaughlin, 372 Md. 467, 493 , 813 A.2d 1145, 1160 (2002); Mininsohn, 380 Md. at 564 , 846 A.2d at 370 ; Awuah, 374 Md. at 520 , 823 A.2d at 660 . DISCUSSION Respondent took exceptions to both the hearing judge’s findings of fact and conclusions of law, each of which we shall address. Petitioner also took exception to some of the hearing judge’s conclusions of law. ¹⁵⁷ A. Respondent’s Exceptions to Findings of Fact and Conclusions of Law 1. Exceptions to Findings of Fact We have reviewed the record and conclude that Judge Levitz’s findings of fact are supported by clear and convincing evidence, even though Respondent takes exception to most of the judge’s factual findings, each of which we will address and overrule.

Exception # 1: Respondent excepts to the hearing judge’s finding that he was suspended from the practice of law in 2002 and has not been reinstated. Respondent argues that this finding was unnecessary, as it was immaterial and irrelevant to any alleged violation of the MRPC. The issue of this finding’s relevancy is dictated by Rule 16-757(c), which states that the hearing judge “shall prepare and file or dictate into the record a statement of the judge’s findings of fact, including findings as to any evidence regarding remedial action, and conclusions of law.” It is clear that findings regarding Respondent’s status as an attorney are relevant and material to any “remedial action.” Respondent admitted, when he testified, that he has been suspended from the practice of law since 2002. We, therefore, conclude that the hearing judge’s factual findings are supported by clear and convincing evidence and overrule this exception.

Exception # 2: Respondent excepts to the hearing judge’s finding that the Fund was held by both Respondent and his ex-wife as tenants by the entireties until, as a result of their divorce, their respective interests were automatically changed to tenancies in common. Respondent argues that this finding is not supported by clear and convincing evidence because “[s]ome of the parties or witnesses below may have considered that the Fund was not held by the entireties, but as a joint asset.” Regardless, the hearing judge’s finding is an accurate expression of the applicable legal principle to the facts of this case. It is well settled that an asset owned as a tenancy by the entirety ¹⁵⁸ between a husband and wife becomes a tenancy in common in the event of divorce. McCally v. McCally, 250 Md. 541, 542 , 243 A.2d 538, 539 (1968); Tucker v. Dudley, 223 Md. 467, 469 , 164 A.2d 891, 893 (1960); Keen v. Keen, 191 Md. 31, 37 , 60 A.2d 200, 204 (1948).

We, therefore, conclude that the hearing judge’s factual findings are supported by clear and convincing evidence and overrule this exception. Exception #3: Respondent excepts to the finding that “During the course of investigating the nature and extent of Ms. Harris’ assets, Mr. Klingelhofer discovered a quarterly statement from the Fund, which listed the owners of the Fund, Mr. and Ms. Harris, as tenants by the entire-ties and had a value of approximately $97,514.00.” Respondent argues that Mr. Klingelhofer did not “discover” the Fund’s quarterly statement because Mr. Jankowski delivered the statement to him, and that Mr. Klingelhofer had knowledge of the Fund prior to Ms. Harris’ death. Respondent bases his argument on his belief that both Ms. Harris and Mr. Klingelhofer had planned to prevent Respondent from acquiring any part of the Fund. Consistent with the standard of review for factual findings in attorney discipline cases, we have iterated that the judge “may elect to pick and choose which evidence to rely upon.” Attorney Grievance v. Harris, 371 Md. 510, 543 , 810 A.2d 457, 477 (2002); Attorney Grievance v. Garfield, 369 Md. 85, 99 , 797 A.2d 757, 765 (2002); Attorney Grievance v. Hines, 366 Md. 277, 291 , 783 A.2d 656, 664 (2001); Attorney Grievance v. Sheridan, 357 Md. 1, 17 , 741 A.2d 1143, 1152 (1999).

With respect to this exception, Judge Levitz did just that. Although Respondent testified to his belief that Mr. Klingelhofer had knowledge of the Fund before his ex-wife’s death, Mr. Klingelhofer testified to the contrary, stating that he had “absolutely no knowledge whatsoever about the existence of this particular account in any way, shape or form until Mr. Jankowski handed me that piece of paper mid to late June of 2005.” ¹⁵⁹ Moreover, if Respondent is challenging the hearing judge’s choice of the word “discovered,” his argument is misplaced. Merriam-Webster’s Collegiate Dictionary 357 (11th ed.2005) defines discover as “to obtain sight or knowledge of for the first time.” From Mr. Klingelhofer’s testimony, it is evident that he found out about the Fund’s quarterly statement for the first time during his investigation of Ms. Harris’ assets after her death. We have reviewed the record and conclude that the hearing judge’s factual findings are supported by clear and convincing evidence and overrule this exception.

Exception # 4: Respondent excepts to the hearing judge’s findings in paragraphs 11, 12, 13 and 14 “to the extent, if at all, that the content of those paragraphs, collectively or separately, had any binding legal effect on the manner in which the Fund was registered with American Funds, or were held, or were owned.” Exception # 5: Respondent excepts to the finding in paragraph 16 that he “indirectly transferred ownership of the Fund to himself’ when he submitted the transfer authorization form to American Funds. Exception # 9: Respondent excepts to the finding in paragraph 21 that he “transferred the Fund to himself’ when he submitted the transfer authorization form to American Funds. In order to clarify Respondent’s exceptions, it is necessary to reconcile what was actually said in the findings of fact. In paragraph 11, Judge Levitz found that Mr. Klingelhofer sent Respondent a letter dated July 21, 2005, which informed him that the Fund was, by operation of law, held by him and his ex-wife as tenants in common.

In paragraph 12, Judge Levitz found that Respondent, in the middle of August 2005, executed a transfer authorization that had the effect of changing the title of the Fund from being held by Respondent and his ex-wife to sole ownership in the name of Respondent. In paragraph 13, Judge Levitz found that on or about August 16, 2005, Mr. Klingelhofer discovered that Respondent had initiated the transfer that gave him sole ownership of the Fund. In ¹⁶⁰ paragraph 14, Judge Levitz found that on or about September 28, 2005, at Mr. Klingelhofer’s suggestion, American Funds froze the account that held the Fund pending a determination of ownership. In paragraph 16, Judge Levitz found that from the time Respondent transferred ownership of the Fund to himself, until March 2007 when the Estate of Ms. Harris received its share of the Fund, Respondent did not deplete the account and any dividends earned were reinvested into the Fund.

In paragraph 21, Judge Levitz found that Respondent did not intend to defraud the Estate of Ms. Harris when he transferred the Fund to himself. In Respondent’s exceptions, he argues that these factual findings were incorrect because “he did not transfer the Fund to himself, but only applied for its transfer, which was under the control of—and was accomplished by—American Funds____” Therefore, Respondent asserts, his actions did not have any binding legal effect on the manner in which the Fund was titled. However, the Fund was owned by both Respondent and his ex-wife as tenants by the entireties until, as a result of their divorce, their respective interests were automatically changed to tenancies in common. Then, in August 2005, Respondent submitted and executed a transfer authorization form that prompted his gaining sole ownership of the Fund.

The intent of Respondent’s execution and submission of the authorization to American Funds was to induce American Funds to transfer the Fund to him; Respondent would have us “parse” the language of the trial court, which we decline to do. We, therefore, conclude that the hearing judge’s factual findings are supported by clear and convincing evidence and overrule these exceptions. Exception # 6: Respondent excepts to the finding that “Mr. Harris misled Mr. Klingelhofer that he would check the ownership of the Fund by reviewing divorce papers from 1985; instead of reviewing divorce files, Mr. Harris used the opportunity to cause the transfer of the Fund to himself.” ¹⁶¹ Respondent argues that he did not mislead Mr. Klingelhofer because he only told him that he would locate, review and make copies of the divorce file, and that he did not use the opportunity to cause the transfer of the Fund to himself. However, Mr. Klingelhofer’s unrefuted testimony was that when Respondent contacted him in July 2005, Respondent told him that he would find the divorce file and check to determine whether the Fund was referenced in the settlement agreement or other stipulation.

Instead of reviewing the agreement and getting in touch with Mr. Klingelhofer, Respondent contacted American Funds and induced the transfer of the Fund to himself. The hearing judge’s factual findings are supported by clear and convincing evidence, and we overrule this exception. Exception # 7: Respondent excepts to the hearing judge’s finding that Respondent knew what his interest in the Fund was, and that if he had forgotten, the July 21, 2005, letter put him on notice that he did not own 100% of the Fund. Respondent argues that these findings are not supported by clear and convincing evidence because he believed the account was a “joint account.” Nevertheless, Respondent testified that at the relevant time, i.e. when he executed the transfer in August 2005, he had been told that the account was held by himself and Ms. Harris as tenants in common after their divorce.

After being notified of the Fund, Respondent testified that he sought the services of his broker, telling him that “I have this American Funds. And I’d