Attorney Grievance Commission v. Parker

WILNER, J. The Attorney Grievance Commission, through Bar Counsel and in conformance with Maryland Rule 16-751, filed a Petition for Disciplinary or Remedial Action against respondent, Virgil Duane Parker, alleging violations of Maryland Rules of Professional Conduct (MRPC) 1.4(b), 1.5(a) and (b), 1.7(b), 1.8(a), and 8.4(b), (c), and (d). We referred the petition to Judge Michael Loney, of the Circuit Court for Anne Arundel County, to conduct a hearing and submit to this Court his proposed findings of fact and conclusions of law. Judge Loney conducted a hearing and, on March 2, 2005, submitted his findings and conclusions. He concluded that respondent had violated MRPC 1.5(a) and 1.8(a)(2), made no finding as to MRPC 1.7, and concluded that respondent had not violated the other MRPC provisions alleged by Bar Counsel.

Bar Counsel excepts to Judge Loney’s failure to find violations of MRPC 1.4(b), 1.8(a)(1), 1.7(b), and 8.4(c) and (d). Respondent excepts to the judge’s finding of a violation of MRPC 1.8(a)(2). BACKGROUND Respondent was admitted to the Maryland Bar in 1985 and to the Tennessee Bar in 1993. He is presently on a voluntary inactive status in Tennessee, where he now resides.

Prior to ¹⁴⁷ moving to Tennessee, he practiced law and operated a real estate brokerage firm in Easton, Maryland. For a time, he served as counsel to the town Planning and Zoning Commission and handled real estate and contract matters for the Commission. He was regarded by colleagues who testified in his favor as being “very organized,” having a “good knowledge about his cases,” and being “a Nervous Nellie when it came to doing things the right way.” Commencing in 1993, respondent provided a variety of legal services to Reverend and Mrs. G. David McPeake, an elderly couple who, at the time, lived in Cambridge. The matter before us concerns his representation of the McPeakes in connection with the sale of a farm owned by them in Jackson, Tennessee.

Respondent began advising the McPeakes with respect to the matter in June, 1993. Indeed, that was the initial purpose of his representation. His written agreement with them was to charge $100 an hour for his services, and he billed them at that rate in June, 1993 and in June through December of 1998. There were no billings between June, 1993 and June, 1998, because there was little or no activity regarding the farm.

In October, 1998, when efforts to sell the farm recommenced, the McPeakes, upon respondent’s suggestion, entered into a management contract with First American National Bank in Tennessee to manage the property until sold. Under that agreement, which respondent had, in part, negotiated with the bank, the bank was entitled to a fee of 5% of the gross sale price of the property. At about that same time, according to respondent, he and the McPeakes orally agreed that, in place of his hourly charges, he, too, would receive a fee equivalent to a 5% commission on the sale of the property. Notwithstanding that oral modification, respondent continued to bill the McPeakes on an hourly basis for legal services through April, 2002. 1 He explained that the arrangement somehow reverted to hourly billing after July, 1999. ¹⁴⁸ The farm, consisting of between 70 and 100 acres of basically raw land, was sold in three parcels — the first in July, 1999, for $325,000; a second in January, 2001, for $311,125; and the third in January, 2002, for $325,000.

All commissions or fees based on the total sales price were paid when the first parcel was sold in July, 1999. The Department of Housing and Urban Development (HUD) Settlement Sheet for that sale shows, as a Settlement Charge to the Seller, $48,056 paid to the bank. That charge represents 5% of the aggregate $961,125 purchase price for all three parcels. Nothing is shown on the settlement sheet as being paid to respondent.

Nonetheless, on July 7, 1999, McPeake sent respondent a check for $49,477, representing an equal 5% commission on the entire $961,125 plus $1,420.75 in travel expenses charged by respondent. The HUD Settlement Sheets for the sales of the other two parcels show no commissions or fees paid to either the bank or to respondent. After the sale of the first parcel, respondent and the McPeakes discussed the prospect of the McPeakes lending $70,000 to respondent, to help finance the purchase of property in Tennessee, where respondent intended to relocate. The loan was to be secured by a mortgage on property in Talbot County, Maryland owned by respondent and his wife.

Respondent suggested that McPeake speak with a mutual friend, Harold Robbins, who was the President of the Bank of the Eastern Shore. Robbins was never made aware of the purpose or terms of the proposed loan, but he did attest to respondent’s trustworthiness and advised the McPeakes about current interest rates. Respondent did not advise the McPeakes to seek independent legal counsel regarding the prospective loan. ¹⁴⁹ In October, 2000, the loan was made. Respondent borrowed $70,000 at 8% annual interest.

Respondent prepared the mortgage intended to secure the loan. Although he was an experienced real estate attorney and knew that the property was owned by himself and his wife, as tenants by the entireties, respondent neglected (1) to include in the mortgage a description of the property or even a reference to the liber and folio where the deed by which he and his wife obtained the property was recorded, or (2) to include his wife as a borrower or have her sign the mortgage. 2 The mortgage thus provided no security at all for the loan. He gave the mortgage, in its defective form, to McPeake. It was never recorded.

The mortgage, which presumably recited the terms of the loan, obligated respondent to repay the loan in equal monthly installments of $510.23, beginning November 2, 2000, and continuing until November 1, 2002, at which time the balance would be due. Respondent made none of the monthly payments. In January, 2002, following settlement on the final parcel, of the McPeake Tennessee farm respondent prepared a Statement of Mortgage showing a full discharge of the mortgage on the Talbot County property. The Statement showed payments as follows: Date of Loan: 10/02/00 $70,000 Payment applied to principal: 01/01/01 -$31,113 Payment applied to interest: 10/02/00-03/31/01 $ 2,400 Balance on Mortgage: 04/01/01 $38,887 Interest Accrued to 12/31/01 + $ 2,462 Balance Outstanding 12/31/01 $41,349 Payment applied to Principal: 12/31/01 -$32,500 Payment applied to Principal: 12/31/01 -$ 6,387 Payment applied to Interest: 12/31/01 $ 2,462 Interest paid on Loan: 12/31/01 $ 8,849 Balance on Mortgage: 12/31/01 0 None of those payments, of interest or principal, were made by respondent.

The $31,113 and the $32,500 represented ¹⁵⁰ commission/fees of 10% on the purchase prices for the second and third parcels ($811,125 and $325,000, respectively) of the McPeakes’ farm and the other amounts represented what respondent believed were legal fees or expenses in connection with other work done for the McPeakes. There is no explanation in the record of why respondent was entitled to anything more from the sale of the last two parcels, his having already received 5% of the entire $961,125 purchase price and his having continued to bill the McPeakes at an hourly rate for services related to the sales, or why, if he was entitled to any additional percentage fee based on those sales, it would be 10% rather than 5%. Respondent advised the McPeakes that the mortgage had been discharged and sent a copy of the Statement to their accountant. Notwithstanding respondent’s prior crediting of the $63,613 against his mortgage debt, in August, 2002 — eight months later — respondent requested and McPeake sent two checks to Parker Realty, respondent’s real estate company, in the amounts of $31,113 and $32,500, respectively — a total of $63,613.

McPeake referred to the checks as “Commissions” paid on the respective sales prices. Respondent deposited the two checks. On the same day, he sent a check for $70,000 to McPeake, to “memorialize” the fact that he had paid the mortgage, and had the McPeakes sign a release of the mortgage, which was discussed in respondent’s testimony but which we cannot locate in the record. All of this began to unravel when respondent sent McPeake’s accountant a copy of his Mortgage Statement showing an interest payment in 2001 of $8,849.

The accountant included that amount as income on the McPeakes’ 2001 Federal Income Tax Return. The McPeakes’ daughter, knowing that her parents had not received such a payment, questioned the amount and consulted counsel, who eventually filed suit against respondent and made a complaint to Bar Counsel. At that point, respondent acknowledged that he was not entitled to the $63,613, and he repaid that amount to McPeake, from the Parker Realty account, along with interest on the ¹⁵¹ $70,000 and interest on the $63,613 at the rate of 8% per annum. DISCUSSION In proceedings involving attorney discipline, this Court has original and complete jurisdiction, and, although, in conformance with Maryland Rule 16-752, we traditionally refer petitions to a Circuit Court judge to convene a hearing and present to us proposed findings of fact and conclusions of law, we conduct an independent review of the record and draw our own conclusions.

See Attorney Grievance Comm’n v. Zuckerman, 386 Md. 341, 363 , 872 A.2d 693, 706 (2005). We ordinarily accept the hearing judge’s findings of fact unless we determine that they are clearly erroneous. Attorney Grievance Comm’n v. Gore, 380 Md. 455, 468 , 845 A.2d 1204, 1211 (2004). As to conclusions of law — whether provisions of MRPC were violated — however, our consideration is essentially de novo.

Attorney Grievance Comm’n v. Cherry-Mahoi, 388 Md. 124, 152 , 879 A.2d 58, 76 (2005); Attorney Grievance Comm’n v. McLaughlin, 372 Md. 467, 483 , 813 A.2d 1145, 1160 (2002). The first violation alleged by Bar Counsel was of MRPC 1.4(b), which requires that a lawyer “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Judge Loney, finding that the McPeakes were “well-informed as to the nature of Respondent’s representation” and “were also kept informed of the many professional services Respondent performed,” concluded that respondent had not violated that Rule. In his exception, Bar Counsel notes respondent’s failure to disclose that the supposed security on the $70,000 loan was a sham,