Attorney Grievance Commission v. Ober

CHASANOW, Judge. At the direction of the Review Board, the Attorney Grievance Commission of Maryland (Petitioner) through Bar Counsel filed a petition for disciplinary action against William Ober (Respondent) pursuant to Maryland Rule 16-709. In the petition, it is alleged that Respondent engaged in misconduct, as defined in Maryland Rule BVlk, now Md. Rule 16-701k. We ordered that this matter be transmitted to Judge Lawrence R. Daniels of the Circuit Court for Baltimore County for a hearing. ⁶¹⁹ FINDINGS OF FACT AND CONCLUSIONS OF LAW After a hearing on the merits, Judge Daniels made the following findings of fact: “1.

The Respondent, William Ober, was admitted to the Maryland Bar on December 21,1977. A. Complaint of Anthony Raymond, Jr. 2. The Respondent had a social relationship with Anthony Raymond, Jr., dating back to the mid-1980’s. The Respondent and Mr. Raymond regularly played backgammon and frequently gambled on the outcome of their games. 3.

Over the years of their social relationship, the Respondent also represented Mr. Raymond at various times in several legal matters. One such matter was a Pennsylvania bankruptcy proceeding in which Mr. Raymond had a claim as a creditor against the bankruptcy petitioners, Seymour and Wendy Kilstein. The Respondent’s representation of Mr. Raymond in the Kilstein bankruptcy matter commenced in 1990 and was ongoing throughout 1992 and 1993. 4. The Respondent received no fee for his representation of Mr. Raymond in the Kilstein case. 5.

On August 24, 1992, the Respondent accepted a no-interest loan of $1,800.00 from Mr. Raymond, as evidenced by Petitioner’s Exhibit No. 8. The Respondent did not advise Mr. Raymond to seek advice of independent counsel in connection with this transaction. The Respondent was unable to produce any documentation or other evidence that he repaid this loan to Mr. Raymond, who maintains that the loan was not repaid. 6. Respondent provided competent representation to Mr. Raymond in the Kilstein case. 7.

On or about December 23, 1993, the Respondent received a check in the amount of $8,673.35, made payable to the Respondent, from the Kilstein bankruptcy trustee. That check was issued in partial settlement of Mr. Raymond’s creditor’s claim and constituted client funds received by the Respondent on behalf of Mr. Raymond. On December 23, 1993, the Respondent deposited the bankruptcy ⁶²⁰ trustee’s check into his attorney escrow account at Mercantile Safe Deposit and Trust Company. 8. On December 31, 1993, the Respondent issued Check No. 1247 from his escrow account, payable to Mr. Raymond in the amount of $2,000.00 as a partial distribution of the Kilstein bankruptcy settlement proceeds the Respondent had received.

Mr. Raymond negotiated the escrow check, which cleared the Respondent’s account on January 4, 1994. 9. On December 31, 1993, the Respondent also issued Check No. 1246 from his escrow account, payable to himself, in the amount of $1,500.00. The Respondent negotiated that check for cash on the same date. The Respondent maintains he gave Mr. Raymond $500.00 in cash on December 31, 1993, along with Check No. 1247 for $2,000.00.

Mr. Raymond acknowledged receipt of Check No. 1247, plus $500.00 in cash, when he signed a written distribution sheet (in evidence as Petitioner’s Exhibit No. 9) on January 21, 1994. 10. With respect to the balance of the Kilstein bankruptcy funds the Respondent was holding, the Respondent maintains he entered into an agreement with Mr. Raymond whereby Mr. Raymond agreed to lend the balance, in the amount of $6,173.35, to the Respondent for the purpose of allowing the Respondent to use the money to gamble on backgammon. In addition to the $1,000.00 he received from cashing Check No. 1246, the Respondent withdrew the remaining trust funds from his escrow account by writing the following checks payable to himself: a. Check No. 1248 (dated Jan. 5,1994) $2,000.00 b.

Check No. 1249 (dated Jan. 7,1994) $2,300.00 c. Check No. 1250 (dated Jan. 13,1994) $ 500.00 d. Check No. 1251 (dated Jan. 14,1994) $ 400.00 $5,200.00 11. The Respondent removed $6,200.00, including $6,173.35 in client funds received by the Respondent on behalf of Mr. Raymond, from his escrow account over a two-week period from December 31, 1993 to January 14, 1994.

The Respondent used those funds to gamble on backgammon with Mr. Raymond. ⁶²¹ 12. On January 21,1994, Mr. Raymond signed the distribution sheet (Petitioner’s Exhibit No. 9) indicating that there had been an agreement to lend $6,173.35 to the Respondent ‘for the period of three weeks for his personal use’ and that the Respondent had Mr. Raymond’s ‘full permission and consent to withdraw the sum of $6,173.35, ... , from his escrow account for his personal use.’ Mr. Raymond acknowledged receipt of two personal checks from the Respondent on January 21, 1994, repaying the principal of the loan, plus $28.40 in interest. 13. The Respondent did not advise Mr. Raymond to seek the advice of independent counsel in connection with the loan of the Kilstein bankruptcy settlement funds. 14. Mr. Raymond, who has an undergraduate degree in business, as well as a master’s degree, is a person savvy in business matters. 15.

Had Respondent advised Mr. Raymond to seek the advice of independent counsel concerning the loan, Mr. Raymond would not have sought such advice. 16. In response to Bar Counsel’s investigation of Mr. Raymond’s complaint, the Respondent was unable to produce any escrow account records related to his receipt and disbursement of Mr. Raymond’s client funds received in December, 1993 from the Kilstein bankruptcy trustee. At an Inquiry Panel hearing on October 9, 1996, for which a subpoena was issued to Respondent to produce such records, the Respondent admitted that he did not have any records relating to the Kilstein bankruptcy funds deposited into his escrow account.[ 1 ] 17. Respondent and Mr. Raymond have not played backgammon for money with each other since the events giving rise to the instant complaint, or shortly thereafter.” ⁶²² Judge Daniels concluded that Respondent violated Maryland Lawyers’ Rule of Professional Conduct 1.8(a) 2 by “entering into financial transactions with Mr. Raymond without advising him to seek the advice of independent counsel.” Judge Daniels also concluded that Respondent violated former Maryland Rule BU9 3 by “borrowing client funds required to be deposited in an attorney trust account.” Judge Daniels further concluded that, by “failing to preserve complete trust account records related to his receipt of client funds on behalf of Mr. Raymond for a period of five years after termination of the representation,” Respondent violated Rule of Professional Conduct 1.15(a) which provides: “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 [Subtitle BU] 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.” ⁶²³ With regard to the second complaint against Respondent, Judge Daniels made the following findings of fact: “B. Complaint of Carolyn Grooms 18. In 1986, the Respondent began representing Carolyn Grooms in a workers’ compensation case arising from an accidental injury Ms. Grooms sustained at work on December 31, 1985.

Ms. Grooms initially hired another attorney, but the Respondent assumed responsibility for the representation when that attorney joined the law firm with which the Respondent was associated at the time. The Respondent left that law firm in August of 1989, but Ms. Grooms later asked the Respondent to resume representing her, and he agreed to do so. 19. At some point during Respondent’s representation of Ms. Grooms, he requested a hearing before the Workers’ Compensation Commission to consider the issue of nature and extent of permanent disability. Although a hearing was scheduled in 1992 as part of a regular docket at the Workers’ Compensation Commission, the Respondent wanted to have Ms. Grooms’ physician testify in person, necessitating a postponement to have the case specially set.

From that point forward, the Respondent did not take reasonably diligent steps to have that hearing rescheduled. 20. During a period of time Ms. Grooms alleges she had no contact from Respondent, Ms. Grooms admits that she was in regular contact with Respondent concerning an unrelated real estate matter which Respondent successfully handled for Ms. Grooms. 21. In July 1994, the Respondent left the private practice of law to go to work for the Injured Workers’ Insurance Fund. He did not notify Ms. Grooms of his new address or phone number. 22.

Sometime after leaving his private practice office in 1994, the Respondent lost Ms. Grooms’ file. 23. In January 1995, Ms. Grooms consulted another attorney, Richard Hackerman, Esquire about taking over her case. Mr. Hackerman agreed to look at the case and ⁶²⁴ attempted on several occasions throughout 1995 to contact the Respondent, both by writing to him and by making phone calls. Both Ms. Grooms and Mr. Hackerman sent correspondence to Respondent in January, 1995, but the correspondence was sent to the wrong address (Respondent was still using his old office as a mailing address, but the letters were addressed to a Randallstown zip code rather than the correct Baltimore zip code), and Respondent never received either correspondence.

In a letter dated January 24, 1995, Ms. Grooms attempted to notify the Respondent that she was terminating his representation. At one point, the Respondent agreed to meet with Mr. Hackerman and to bring Ms. Grooms’ file to go over it, but he never did so. The Respondent did not initially tell Mr. Hackerman that he could not locate Ms. Grooms’ file. 24. At an Inquiry Panel hearing on October 9, 1996, the Respondent admitted that he could not locate Ms. Grooms’ file, which he had been subpoenaed to produce at the hearing. 25.

Respondent did, however, reconstruct the file and personally handed it to Ms. Grooms on November 18, 1996. 26. Ms. Grooms then gave the file to Mr. Hackerman who presently still has it and represents Ms. Grooms in her workers’ compensation claim. 27. The reconstructed file turned over to Ms. Grooms by Respondent is complete and in good order. 28. No prejudice has accrued to Ms. Groom[s’]rights in her workers’ compensation claim by virtue of the delay in Respondent getting the file to her. 29.

Even though Mr. Hackerman has had the file for almost one full year, Mr. Hackerman has not yet requested a hearing before the Maryland Workers’ Compensation Commission.” Judge Daniels concluded that Respondent failed to act diligently with regard to Ms. Grooms’s workers’ compensation claim and thus violated Rule of Professional Conduct 1.3 which provides that a “lawyer shall act with reasonable diligence and ⁶²⁵ promptness in representing a client.” In addition, Judge Daniels concluded that Respondent violated Rule of Professional Conduct 1.16(d) 4 by failing to provide Ms. Grooms or her new attorney, Mr. Hackerman, with her case file upon request after Ms. Grooms notified or attempted to notify Respondent that she was terminating his representation. Finally, Judge Daniels concluded that, by losing Ms. Grooms’s file and then failing to promptly find or reconstruct the file, Respondent violated Rule of Professional Conduct 1.1 which provides that a “lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” RESPONDENT’S EXCEPTIONS Respondent filed exceptions to Judge Daniels’s findings of fact and conclusions of law. “ ‘To be sustained, the findings of fact of a hearing court must be supported by clear and convincing evidence.’ Attorney Griev. Comm’n. v. Kemp, 335 Md. 1, 9 , 641 A.2d 510, 514 (1994).

Because this Court has original jurisdiction over disciplinary proceedings, we will make an ‘independent, detailed review of the complete record with particular reference to the evidence relating to the disputed factual finding.’ Bar Ass’n v. Marshall, 269 Md. 510, 516 , 307 A.2d 677, 680-81 (1973).” Attorney Griev. Comm’n v. Alison, 349 Md. 623, 629 , 709 A.2d 1212, 1214-15 (1998). The findings made by the hearing court, however, are “prima facie correct and will not be disturbed unless clearly erroneous.” Attorney Griev. Comm. ⁶²⁶ v. Glenn, 341 Md. 448, 470 , 671 A.2d 463, 474 (1996).

For the reasons set forth below, we conclude that there was clear and convincing evidence to support Judge Daniels’s findings, and thus, they were not clearly erroneous. Complaint of Anthony Raymond, Jr. Respondent argues that the transactions between Respondent and Mr. Raymond are not of the type contemplated by Rule of Professional Conduct 1.8(a) because he and Mr. Raymond were close personal friends and the transactions were not directly related to the attorney-client relationship. In support of his contention, Respondent cites Attorney Grievance Comm’n v. Powell, 328 Md. 276 , 614 A.2d 102 (1992). In Powell , this Court left open the question of whether the conduct of a lawyer falls within the scope of Rule of Professional Conduct 1.8(a) where the lawyer enters into a business transaction with a client who also is a personal friend. 328 Md. at 297 -98 n. 23, 614 A.2d at 113 n. 23.

The trial judge “found that the loan Vas a fair and equitable personal loan to a close friend’ ” and implicitly found that the lawyer advised the friend/client to seek the advice of independent counsel. Powell, 328 Md. at 296 , 614 A.2d at 112-13 . Without addressing the merits of Powell’s argument that Rule of Professional Conduct 1.8(a) did not apply because the loan came from a close friend, we concluded that the record supported the hearing judge’s finding that Powell’s actions met the requirements of Rule of Professional Conduct 1.8(a). Powell, 328 Md. at 297 -98 n. 23, 614 A.2d at 113 n. 23.

For the following reasons, we conclude that Respondent’s conduct in the instant case falls within the scope of Rule of Professional Conduct 1.8(a). Rule of Professional Conduct 1.8(a) provides that “[a] lawyer shall not enter into a business, financial or property transaction with a client ...” unless certain conditions are met. (Emphasis added). Where, as in the instant case, an attorney enters into a transaction with a client using the client’s escrow funds held by the attorney during a period in which