Attorney Grievance Commission v. Zdravkovich

HARRELL, Judge. Pursuant to Maryland Rule 16-709(a) 1 , Bar Counsel, on behalf of the Attorney Grievance Commission (AGC) (Petitioner), and at the direction of the Review Board, filed a petition with this Court for disciplinary action against Dushan S. Zdravkovich, Esquire (Respondent). In this petition, Bar Counsel asserted four complaints alleging violations of Rules 1.1 (competence), 1.3 (diligence in representation), 1.4 (communication with clients), 1.5 (fees), 1.15 (safekeeping property), 1.16 (declining or terminating representation), 3.1 (meritorious claims and contentions), 8.1 (disciplinary matters), and 8.4 (misconduct) of the Maryland Rules of Professional Conduct (MRPC), and Md.Code (1992, 1998 Repl.Vol.), § 10-306 of the Business Occupations and Professions Article (misuse of trust money). This Court referred the matter to Judge Pamela R. North of the Circuit Court for Anne Arundel County to conduct an evidentiary hearing and make findings of fact and conclusions of law in accordance with Maryland Rules 16-709(b) 2 and 16-711(a). 3 ⁶ I. Of the four complaints lodged against Respondent, two were voluntarily dismissed by Petitioner at the hearing before Judge North on 19 October 1999 due to insufficient evidence. 4 After the evidentiary hearing addressing the remaining two unrelated claims, Judge North found, by clear and convincing evidence, that Respondent violated MRPC 1.1, 1.3, 1.4, 1.5(a), 3.1, 8.4(a), and 8.4(d) during his attorney-client relationship with complainant Val Weaver. 5 Respondent, who has appeared pro se throughout these proceedings, filed with us extensive exceptions to the findings of fact and conclusions of law made by Judge North.

Petitioner, who does not take any exceptions to the findings of fact and conclusions of law, recommends that we suspend indefinitely Respondent from the practice of law for his misconduct. From the evidentiary record below, Judge North made the following findings of fact pertaining to Respondent’s conduct regarding Val Weaver: A. General Background 1. Respondent was admitted to practice law in the State of Maryland on 3 November 1981. He is also a member of the bar for the District of Columbia and the former Yugoslavia. ⁷ 2.

The conduct in question arose out of Respondent’s representation of Val Weaver and James Impero during litigation filed by North American Technologies Group, Inc. (NATG). At that time, Respondent and Weaver had known one another on a professional and personal level for over 20 years. 6 Weaver and Impero had enjoyed a professional and personal relationship for 12 years. 3. During his affiliation with NATG, Weaver was responsible for business developments and was a corporate liaison with government agencies and military services. Although referred to by NATG as Vice President of Marketing, Weaver maintains he was an independent consultant. 4.

Impero is a bio-chemist who was employed by NATG as a director and an officer of the company. 5. During the dispute, NATG attached Impero’s belongings and locked him out of his office. On 23 January 1995, Impero executed a letter of resignation and a letter of understanding with NATG without the benefit of counsel. Impero did not obtain counsel until 10 February 1995, when a Texas law firm informed NATG’s law firm of Impero’s representation.

Weaver, however, testified that Impero formalized an attorney-client relationship with Respondent sometime in or after January 1995. 6. By 13 March 1995, it became unclear whether the Texas firm still represented Impero. According to Weaver, Respondent agreed to serve as general counsel for Impero as of 23 March 1995, with the scope of the representation limited to assisting Impero with his resignation from NATG and the recovery of his personal property. He further testified that Respondent’s representation of Impero expanded when Impero became ⁸ involved in an arbitration proceeding, filed in Chicago, Illinois, between NATG and Biotrace International, Inc. 7 7.

In April 1995, NATG initiated litigation against Weaver and Impero in the Two-Hundredth-Eightieth Judicial District of Harris County, Texas. 8 The suit asserted numerous causes of action, including breach of contract, fraud, breach of fiduciary relationship, tortious interference with prospective business relations, negligent misrepresentation, slander, libel, tortious interference with existing business relations, deceptive trade practices, and fraudulent transfers. 8. The only evidence on the record establishing Respondent’s representation of either Impero or Weaver are two letters and an unsigned and undated copy of a retainer agreement. The first letter, dated 14 April 1995, is from Respondent and refers to Impero as “my client.” The second letter, dated 1 May 1995,' is from Respondent to Weaver and Impero, in which Respondent states “[t]his office will represent James Impero and Val Weaver in any proceeding in the States of Maryland[,] Texas, and Illinois at a single rate of $150 per hour.... ” See infra Fee Discussion. 9. Weaver testified that, as of April 1995, his role was that of a [sic ] “lightening rod” between Respondent and Impero and that, as a result, he received copies of all documents concerning Impero’s legal problems and communicated with both parties on a weekly basis. 9 ⁹ 10.

There is no evidence on the record of a retainer agreement between Respondent and Weaver. While Weaver initially stated that he never personally hired Respondent in the Texas matter, he later testified that Impero hired Respondent to represent Impero and Weaver, with Impero agreeing to pay all of Respondent’s fees. See infra Fee Discussion. Weaver indicated that he initially relied on Respondent’s statements that he represented both Weaver and Impero, but later hired Respondent individually when he became a party to the NATG dispute. 11.

Respondent hired local counsel in Texas to assist him with the Texas action; Weaver testified he was not certain if the local attorney represented him or Impero or both. B. Charles County, Maryland Action 1. On 22 July 1995, Respondent filed a complaint and jury demand on Weaver’s behalf in the Circuit Court for Charles County, Maryland. Respondent alleged that service of process for the Texas civil action on Weaver, through his wife, was improper because the Sheriffs affidavit was based on false and misleading information.

He also alleged that contractual obligations owed by NATG to the Weavers were never fully discharged, and that NATG owed the Weavers monies, stock options, and stock valued in excess of $2,000,000. Finally, the compliant alleged NATG made defamatory statements against Val Weaver in a New York Stock Exchange press release, published in Maryland, that stated that Weaver had breached the duties he owed NATG. 2. On 24 October 1995, Maryland counsel for NATG filed a Motion to Dismiss in the Charles County action. ¹⁰ 3. In a letter to Respondent from Weaver dated 27 October 1995, Weaver, indicating that a dismissal of the Charles County action was a prerequisite to the success of any mediation proceedings taking place in the Texas action, requested that Respondent dismiss the action without prejudice.

Respondent did not reply to or act upon Weaver’s request. 4. In a letter dated 7 November 1995, Weaver told Respondent that “[t]he state of affairs and apparent conflict now between us forces me to dismiss your legal representation from all activities and matters regarding me [specifically, the federal District Court action [and the Charles County action] and any issues involving Impero and NATG].” At the time he wrote this letter, Weaver did not know that Respondent had not filed the Motion to Dismiss in the Charles County action. 5. On 24 November 1995, Respondent filed a Motion to Withdraw Appearance in the Charles County action. The Charles County Circuit Court initially granted this motion on 13 December 1995.

The motion granting the withdrawal was later stricken on 5 January 1996, when the Circuit Court learned that Weaver did not consent to Respondent’s withdrawal because Weaver did not know that Respondent had not filed the Motion to Dismiss. 6. On 16 April 1996, NATG filed a second Motion to Dismiss in the Charles County action. Respondent did not answer this motion either. 7. On 28 May 1996, the Circuit Court wrote a letter to Respondent informing him that it had not received an •answer to NATG’s motions and that, “[g]iven the previous history concerning your representation of Mr. Weaver, [the Court is] forwarding a copy of the Memorandum and Motion to Dismiss directly to him, along with his copy of this letter .... to give [Weaver] every opportunity to respond to the Motion to Dismiss.” ¹¹ 8.

On 11 June 1996, Weaver informed the Circuit Court that he had not spoken with Respondent since October 1995 and that Respondent refused to communicate with Weaver since that date. Weaver then filed, pro se, a Motion for Voluntary Dismissal. This motion was granted on 18 June 1996. C. District of Maryland, Harris County, Texas, and Chicago, Illinois Actions 1.

On 19 June 1995, Respondent, on behalf of Impero and his company, filed suit against NATG, Biotrace International, three law firms, two attorneys, and the American Arbitration Association in the United States District Court for the District of Maryland. The complaint alleged a breach of fiduciary duty, breach of contract, fraud, wrongful interference with a contract, replevin, and mandamus. 2. On 20 June 1995, Respondent received a letter from the United States District Court for the District of Maryland that warned him that the complaint he had filed was deficient in many respects. The letter indicated that it was not clear whether the Court had subject matter or personal jurisdiction over the action or any of the defendants, respectively, and that the Court questioned whether venue was proper.

The Court advised that Respondent would have to correct the deficiencies before the Court would address the merits of the claims. 3. The record reflects that Respondent neither corrected these deficiencies nor complied with the Court’s order. 4. On 26 June 1996, Respondent wrote to Impero and Weaver to discuss the fee for his legal services and expenses, as well as the fees for those attorneys whom he had hired to assist him with Weaver’s and Impero’s representation. See infra Fee Discussion.

He also wrote to update them on the status of their respective cases. ¹² With respect to the federal District Court case, Respondent stated he would stagger the filing of three separate complaints on Mr. Weaver’s, Mrs. Weaver’s, and Mr. Impero’s behalf. After filing each complaint, he would move to amend it before he filed the next. His intention in filing the suit in this manner was that the “[fjiling schedules will probably throw off all party defendants with a degree of risk that the Court may not be too fond of our tactics.” With respect to the Chicago arbitration, Respondent indicated that he hoped the arbitration would be “greatly affected” by the federal action in Maryland. As to the Texas action, Respondent assured them that he would be doing most of the drafting of the initial pleadings, including a motion to move in out-of-state counsel, an entry of appearance, a motion to dismiss for lack of jurisdiction, an affidavit of residency of Impero, and a motion to strike one of the law firms from representing NATG.

Respondent also indicated in his letter that he and the Texas counsel would meet with Impero in Texas on 28 June 1996. Lastly, Respondent stated that he had received an inquiry regarding a possible settlement between NATG, Weaver, and Impero. He indicated, however, that “realistically speaking a settlement with [NATG] is not in the cards.” 5. On 31 July 1995, Respondent filed a Petition for Removal and Consolidation of the Texas action into the United States District Court for the District of Maryland.

Informing Weaver of the petition, Respondent indicated that he felt the Texas action should be removed to Maryland because Impero and Weaver were residents of Maryland, and because he thought NATG was not licensed to do business in Texas. 6. On 1 August 1995, Respondent filed on Impero’s behalf a Joinder of Party Co-Defendant in the District Court for Harris County, Texas. The joinder was filed pend ¹³ ing the removal of the Weaver case from Texas to the federal District Court in Maryland. 7. On 8 August 1995, Judge Deborah Chasanow of the U.S. District Court in Maryland issued a written opinion in which she concluded that Respondent “appear[ed] to be confused as to the applicability of the removal statute [ 28 U.S.C. § 1446 ] 10 to the various proceedings involved.” Judge Chasanow informed Respondent that, under the Federal Rules of Civil Procedure, only a defendant can file a removal petition, and that even if Respondent were in a position to make such a filing, the Texas state action could not be removed to a federal district court in Maryland, but rather only to one in ¹⁴ Texas, if at all.

Judge Chasanow not only found that removal of the Weaver case was improper, but that adding Maryland defendants to the Impero case “would destroy whatever diversity jurisdiction currently exists in that case, if any, and would require the dismissal or the transfer of that case to a Maryland circuit court.” Judge Chasanow concluded the opinion by entering an Order of Remand. 8. At the time the Motion for Removal was filed by Respondent, a previously scheduled hearing on a temporary injunction pending in the Texas action was scheduled for 11 August 1995. NATG claimed that Respondent did not send notice of the filing of the Petition for Removal to counsel of record in the Texas action until 9 August 1995. Moreover, NATG claimed that Respondent sent the notice by express mail, which arrived on 10 August 1995, requiring a postponement of the 11 August 1995 hearing and resulting in an incurment of expenses by NATG for costs of witness appearance and travel that could not be canceled in time.

As a result, NATG filed a Motion for Rule 11 Sanctions in the U.S. District Court in Maryland against Respondent, Weaver, and Impero. Although Weaver testified that Respondent failed to advise him or Impero that these sanctions had been filed against them, a letter dated 21 August 1995 from Respondent to NATG’s counsel in Maryland discussing the sanctions indicates that the letter was copied to both Weaver and Impero. 9. On 5 October 1995, Respondent wrote a letter to Impero informing him of the status of his cases, but omitted any mention of the Motion for Sanctions which had been filed against them. 10. On 11 October 1995, Impero called Weaver to inquire whether he was aware of the Motion for Sanctions filed against them.

Shortly afterward, Weaver received a facsimile from. Respondent informing him of the motion. Weaver testified that he repeatedly tried to ¹⁵ reach Respondent to discuss the motion, but that Respondent failed to return his calls. 11. On 13 October 1995, Weaver reviewed his court file at the U.S. District Court in Maryland and learned that a response to the Motion for Sanctions was due by 16 October 1995.

After discussing his situation with the Clerk of Court, Weaver filed a letter with the Court on 17 October 1995, informing Judge Chasanow of his lack of knowledge regarding the motion and his inability to contact Respondent. Weaver testified that he tried contacting Respondent during the week of 13 October, but to no avail. He also testified that he asked Respondent’s secretary if he could review his files. The secretary initially answered affirmatively, but later informed Weaver that Respondent denied Weaver’s request to see the files.

Also on 13 October 1995, a request was made by Weaver to NATG on Impero’s and Weaver’s behalf to dismiss the Motion for Sanctions. This request was granted, but only as to the two men and not as to Respondent. 12. On 26 October 1995, Impero told Respondent he wanted to end the litigation, and instructed him to file a Motion to Dismiss the lawsuit filed in the U.S. District Court in Maryland without prejudice and to return all of his papers to the Weavers. 11 Weaver testified that while Respondent failed to return his papers, he did demand $150,000 as payment for his representation of Impero and/or Weaver. 13. On 21 November 1995, the U.S. District Court granted NATG’s Motion for Sanctions against Respondent, reiterating Respondent’s lack of legal foundation for the removal of the Texas and Charles County actions to U.S. District Court in Maryland, as well as his failure to explain his actions upon the Court’s request.

Judge ¹⁶ Chasanow concluded that Respondent’s “actions indicate that he did not even conduct the bare minimum legal research required by Rule 11 ____[and that his] oversight is unconscionable.” Furthermore, Judge Chasanow determined that Respondent’s “carelessness has resulted in inexcusable delay in state court proceedings, has consumed unnecessary time and resources in federal court, and has forced Defendants to spend unwarranted amounts on litigation.... ” Respondent was ordered to pay $2500 within 30 days of the date of the Order. 14. On 29 November 1995, the federal District Court action was dismissed pursuant to the Notice of Voluntary Dismissal filed by Respondent. 15. Respondent appealed Judge Chásanow’s decision to the U.S. Court of Appeals for the Fourth Circuit. The Fourth Circuit affirmed the Order for Sanctions on 27 April 1997.

D. Accounting, Fees, and Expenses 1. Weaver’s wife, Marilyn, testified that she assisted Respondent on one occasion when one of his secretaries left. She testified that “when she first arrived at Respondent’s office, the office looked like someone had thrown a party for a four year old.” She stated that “there were files on the floor and documents were missing.” After two days, she was able to sort the NATG files and put them into binders in chronological order. She indicated that there was no evidence that Respondent kept time sheets for the work he did on the NATG case. 2.

Marilyn testified that, once Respondent hired a new secretary, she and the new secretary initiated an accounting system for Respondent, but that she was uncertain whether Respondent ever maintained the system. Marilyn also indicated that Respondent fired the new secretary when she refused to send Impero a bill ¹⁷ for $7000. Additionally, Marilyn testified that Respondent told her to “tell [Impero] he owes us $7000 and $500 in expenses.” Marilyn relayed the message to Impero, who requested an accounting of the amount. 3. Despite repeated requests for accounting, Respondent did not provide Weaver or Impero with any formal accounting. 4.

A bill dated 25 April 1995 to Impero from Respondent totaled $11,550, less $10,000 already received, for services rendered between 8 March 1995 and 25 April 1995. 5. In a letter dated 1 May 1995, Respondent addressed the scope of his legal representation of Impero and Weaver and his fees for services rendered. He noted his hourly fee of $150, explaining that, “[i]n essence, each client is charged $75.00 per hour for all representations, even though in some instances the matters may refer only to. one client, and at other instances the matters will refer to the other client.” 6. Weaver testified that Impero paid Respondent $50,000 on their behalf over the course of the representation.

Impero indicated in a note to Respondent that he had paid Respondent $5000, and that he was sending Respondent a $20,000 check, dated 2 May 1995. He also stated that he would send Respondent $10,000 more by July 1995. 7. In a letter dated 26 June 1995, Respondent informed Impero and Weaver that, as to the Chicago arbitration, Respondent had hired an attorney to assist him for $1000 as a retainer and at the rate of $100 per hour. Respondent also said he had hired an attorney to assist with the Texas action at the rate of $175 per hour.

Additionally, Respondent indicated that he had spent approximately 168 hours on legal representation, excluding social hours, to date. He said he also had incurred $3000 in various business expenses, but acknowledged that Impero had already advanced him $32,000 to cover services rendered in the Texas action for him and the ¹⁸ Weavers. Respondent did not provide any accounting of his hours or receipts to validate his expenses. 8. In response to Impero’s concern over Respondent’s fee, Respondent, in a letter dated 5 July 1995, acknowledged “that there may have been a colossal misunderstanding on the issue of expenses.” He went on to describe client expense accounts in general, noting that such a “fund has not been established by this office as the extent of the expenses has not been known at the time of our agreement.” He explained that “[t]he reason for [his] restraint on that issue is that expenses in general do not depend on the client’s attorney only, but is also contingent on the activities of other attorneys as well.” He hoped that the year’s end expenses would not exceed $15,000, but reminded Impero that “the retainers for the indispensable local counsel in Chicago and Houston are set at $6000, 12 the sum considered indeed a tremendous bargain in the legal profession.” Telling him that an accounting would follow, Respondent asked Impero to pay the retainer fee to the attorney in Texas in the interim. 9.

On 10 July 1995, Impero answered Respondent’s letter by explaining his financial situation and by setting forth the fees which he had paid to Respondent and the other attorneys to date. He noted that he had financed “this endeavor 100%” and that he could only “commit to a maximum of an additional $40,000 on top of the $11,000 paid to [his] first attorneys, $10,000 paid to [Respondent] when [he] agreed to [Respondent’s] representing [the Imperos], followed by an additional $20,000, with an additional $10,000 to be paid at a later date.” Additionally, Impero stated that Biotrace, the other company in the Chicago arbitration, had paid Respondent $2500 for ¹⁹ services rendered and another $2500 would be forthcoming. Impero also questioned Respondent’s deposition fee ($1080) and travel expense reimbursement requests ($776), as Impero had already paid Respondent $2000 for deposition fees and filing fees in the Maryland action, and $2700 in travel expenses between Chicago and Houston. 10. In an unsigned letter dated 15 August 1995 to the local counsel in Texas, Respondent stated that their arrangement called “for a set fee in the amount of $80.00 per hour and a contingent fee of an additional $45.00 per hour, the aggregate hourly fee being $125.00 .... [with] any expenses incurred in connection therewith shall be reimbursed to your office, ie., telephone, secretarial and paralegal services and the like.” 11.

In a letter to Impero dated 5 October 1995, Respondent stated: In consideration of the Retainer Agreement Provisions, I would like to request the following (a) Commitment to immediately discharge your obligation committed to in June of 1995 and pay to this office $7500.00, $7000.00 being the balance due from the committed payment of $10,000.00 and an additional balance of $500.00 advanced to defray part of the expenses; and (b) Further stipulations that you will fund all assignments with not less than $5000.00 per month to be advanced for fees and expenses on a timely basis. 12. Marilyn Weaver testified that, on or about 1 November 1996, a private investigator who worked for Respondent told her that Respondent wanted the Weavers to pay $150,000 in attorney’s fees within 48-hours or Respondent would ruin Weaver and his security clearance, and would bring criminal charges against him. She also testified that Respondent had not only assured her that there would be “no charge for my ²⁰ family, the • Weavers,” 13 but that she had never discussed any fee agreement with Respondent regarding his representation of her husband; in fact, she indicated that the last time she recalled retaining Respondent’s services was over 20 years ago. Based upon these findings of fact, Judge North concluded that Respondent violated MRPC 1.1, 1.3, 1.4, 1.5(a), 3.1, 8.4(a), and 8.4(d) regarding his attorney-client relationship with complainant Val Weaver.

Respondent excepted generally to Judge North’s findings, contending that “all his actions in the [Weaver] matter were taken in good faith with an aim to provide strong representation in a highly contentious legal battle.” Specifically, he asserted that he had a legal basis for his actions in the Circuit Court for Charles County; that he would have addressed the deficiencies noted in the Maryland federal action in June 1995 by the U.S. District Court for the District of Maryland if the case had not settled in November; and that he was unaware of the hearing for a temporary injunction in the Texas state court when he filed the removal petition in the Maryland federal court. We address Respondent’s exceptions below.

II

A. Standard of Review This Court has original jurisdiction over all attorney disciplinary proceedings. See Attorney Grievance Comm’n v. Sheridan, 357 Md. 1, 17 , 741 A.2d 1143, 1152 (1999); Attorney Grievance Comm’n v. Glenn, 341 Md. 448, 470 , 671 A.2d 463, 473 (1996); see also Md. Rule 16-709(b) (stating “[c]harges against an attorney shall be filed on behalf of the [Attorney Grievance] Commission in the Court of Appeals.”). As to Respondent’s exceptions to Judge North’s findings, “we ²¹ [make] an independent, detailed review of the complete record with particular reference to the evidence relat[ed] to the disputed factual finding.” See Sheridan, 357 Md. at 17 , 741 A.2d at 1152 ; Glenn, 341 Md. at 470 , 671 A.2d at 473 (quoting Bar Ass’n v. Marshall, 269 Md. 510, 516 , 307 A.2d 677, 680-81 (1973)). In our review, “we must keep in mind that the findings of the [hearing] judge are prima facia correct and will not be disturbed unless clearly erroneous.” See Sheridan, 357 Md. at 17 , 741 A.2d at 1152 ; Glenn, 341 Md. at 470 , 671 A.2d at 473 ; Attorney Grievance Comm’n v. Kemp, 303 Md. 664, 674 , 496 A.2d 672, 677 (1985); Attorney Grievance Comm’n v. Collins, 295 Md. 532, 548 , 457 A.2d 1134, 1142 (1983) (quoting Attorney Grievance Comm’n v. Kahn, 290 Md. 654, 678 , 431 A.2d 1336, 1349 (1981)).

We note that the hearing judge “may elect to pick and choose which evidence to rely upon,” Kemp, 303 Md. at 675 , 496 A.2d at 677 , for she or he is in the best position to assess a witness’s credibility. See Sheridan, 357 Md. at 17 , 741 A.2d at 1152 . Therefore, we will not tamper with Judge North’s factual findings if they are grounded in clear and convincing evidence. See Kahn, 290 Md. at 678 , 431 A.2d at 1350 .

We recently reiterated the definition of clear and convincing evidence in Attorney Grievance Comm’n v. Mooney, 359 Md. 56, 79 , 753 A.2d 17, 35 (2000): The requirement of “clear and convincing” or “satisfactory” evidence does not call for “unanswerable” or “conclusive” evidence. The quality of proof, to be clear and convincing, has also been said to be somewhere between the rule in ordinary civil cases and the requirement of criminal procedure — that is, it must be more than a mere preponderance but not beyond a reasonable doubt. It has also been said that the term “clear and convincing” evidence means that the witnesses to a fact must be found to be credible, and that the facts to which they have testified are distinctly remembered and the details there of narrated exactly and in due order, so as to enable the trier of the facts to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue. Whether evidence is clear and con ²² vincing requires weighing, comparing, testing, and