Attorney Grievance Commission v. Zodrow

BARBERA, J. This reciprocal discipline action arises out of a disciplinary proceeding initiated in Colorado against Respondent, attorney John Joseph Zodrow. 1 On June 10, 2009, Respondent was suspended from the practice of law in Colorado for one year and one day, following the Colorado Supreme Court’s acceptance of Respondent’s “Conditional Admission of Misconduct,” 2 whereby Respondent admitted under oath that he had ²⁸⁹ engaged in conduct that violated Colorado Rules of Professional Conduct 3.3(a)(1), 3 3.4(c), 4 and 8.4(c). 5 ²⁹⁰ On October 1, 2009, the Attorney Grievance Commission (“Petitioner”), acting through Bar Counsel, filed a Petition for Disciplinary Action or Remedial Action against Respondent. See Maryland Rules 16-773 6 ; 16-751 (stating that, “[u]pon ²⁹¹ approval of the Commission, Bar Counsel shall file a Petition for Disciplinary or Remedial Action in the Court of Appeals”). Attached to the Petition were a certified copy of the Colorado Supreme Court’s disciplinary order and the “Stipulation, Agreement, and Affidavit Containing the Respondent’s Conditional Admission of Misconduct.” Pursuant to the disciplinary order, the Colorado Supreme Court approved Respondent’s “Stipulation, Agreement and Affidavit Containing the Respondent’s Conditional Admission of Misconduct,” by which Respondent affirmed under oath, and the Colorado Supreme Court accepted, that the “following facts and conclusions are true and correct:” Real Estate Transaction a. In Spring 2005, respondent decided to purchase a condominium from the father of a friend.

The condominium was located at 10680 W. 63rd Ave., Arvada, CO 80004 (hereinafter referred to as the “Arvada property”). The sellers were Clifford and Daisy Whitehill. The parties agreed on a purchase price of approximately $156,000. b. Respondent executed a promissory note in the face amount of $136,062.08, dated April 30, 2005.

The note ²⁹² obligated respondent to pay Clifford Whitehill monthly payments of $1,079.51 commencing May 1, 2005. The note stated that it was secured by a deed of trust dated June 30, 2005 for the Arvada property. c. Respondent also executed a Quitclaim Deed transferring his rights in the Arvada property to his long-time friend and legal assistant, Susan K. Boyer (“Boyer”). The Quitclaim Deed was dated April 30, 2005. d.

Boyer executed a Bill of Sale, also dated April 30, 2005. In the Bill of Sale, Boyer agreed to assume respondent’s obligations related to the Arvada property. Boyer did not provide respondent any security for her agreement to assume respondent’s obligations. e. Respondent did not inform Mr. Whitehill that he had quitclaimed his interested in the Arvada property to Boyer or that Boyer had agreed to assume respondent’s obligations under the promissory note. f.

Respondent executed a Deed of Trust, dated June 30, 2005. By the Deed of Trust, respondent conveyed the Arvada property to the Jefferson County Public Trustee along with a power of sale, to be exercised for the benefit of Mr. Whitehill to secure respondent’s indebtedness under the promissory note. In the Deed of Trust, respondent warranted that he owned the Arvada property. g. Mr. Whitehill—who lives in Florida—understood that respondent would be recording the Deed of Trust.

Respondent did not do so. Respondent claims that he mailed the Deed of Trust to Mr. Whitehill and that Mr. Whitehill did not return it to respondent. However, respondent did not follow up to ensure the Deed of Trust was recorded. h. In consideration of respondent’s promissory note, secured by the Deed of Trust, and an additional payment of $20,000 (discussed below), Clifford L. Whitehill and Daisy M. Whitehill executed a Warranty Deed dated June 30, 2005, conveying the Arvada property to respondent for $156,062.08.

The Whitehills executed the Warranty Deed on July 25, 2005. ²⁹³ i. The Whitehills sent the Warranty Deed to respondent with the understanding that he would record it. Respondent did not do so. Respondent claims that he did not receive the Warranty Deed from Mr. Whitehill.

Respondent did not follow up with the Whitehills to learn what had happened to the Warranty Deed. j. In late June and early July 2005, Boyer issued several checks to Mr. Whitehill. The memos of the checks indicate that they are intended to be monthly payments on the promissory note. k. As the down payment for respondent’s purchase of the Arvada property (the difference between the sale price and the face amount of the promissory note), Boyer issued a check for $20,366.68 to Mr. Whitehill.

The check was dated July 30, 2005. The check was returned for insufficient funds. Respondent (and Boyer) failed to timely cure this default. l. On November 8, 2005, Mr. Whitehill filed suit against respondent. [] (the “civil litigation”).

Mr. Whitehill requested judgment against respondent in the amounts due under the note, and for rescission of the sale of the Arvada property. m. During September 2005, Boyer made additional payments to Mr. Whitehill to satisfy respondent’s monthly obligations on the promissory note. In late November and early December, Boyer made three additional payments. On December 22, 2005, Mr. Whitehill’s counsel returned these checks to respondent.

Mr. Whitehill was unwilling to accept Boyer’s payments as a partial cure of the deficiency that had resulted from Boyer’s tendering an insufficient-funds check for the down payment. n. On January 5, 2006, the Whitehills filed an amended complaint in the civil litigation, seeking relief based on breach of contract and under the forcible entry and detainer statute. The Whitehills continued to seek damages and rescission of the sale. ²⁹⁴ o. On or about January 6, 2006, respondent caused his law firm, Zodrow et al., P.C., to loan $99,000 to Boyer.

Boyer did not provide any security for the loan to Zodrow et al., P.C. Boyer transferred $99,000 from the Zodrow et al, P.C. payroll account to purchase an Official Check, payable in that amount to Mr. Whitehill. The memo line of the check referenced “Zodrow, P.C.” p. Respondent mailed to Mr. Whitehill a cashier’s check in the amount of $20,740.42. The purpose of this check was to cure the breach of contract occasioned by Boyer’s issuing an insufficient funds check for the down payment. Respondent also sent the $99,000 Official Check to Mr. Whitehill as a pre-payment on the balance of the promissory note. q.

On June 17, 2008, the court in the civil litigation gave respondent 75 days to cure his defaults in monthly payments and to pay other relevant expenses. Boyer recently paid Mr. Whitehill the redemption amount, approximately $66,000. Boyer obtained these funds from respondent. Mr. Whitehill transferred title to the Arvada property to respondent.

Bankruptcy Case r. In 2003, respondent was sued for malpractice by a number of former clients. [ ] (the “malpractice case”). The Honorable Herbert L. Stern III issued an Order entering default and imposing sanctions on July 13, 2004. The issue of damages was reserved for a later hearing. s.

Late in the afternoon of September 1, 2005, respondent attempted to file a personal bankruptcy. Respondent appeared at the bankruptcy clerk’s counter, tendered bankruptcy pleadings, and paid a filing fee. Respondent received a date-stamped copy of his bankruptcy petition. t. After respondent had left the counter, the clerk reviewed the pleadings respondent had filed.

Respondent had failed to include in his filing a form that stated his Social Security number. Without this form, the bankruptcy clerk was unable to open a case. ²⁹⁵ u. The clerk called respondent’s office and informed respondent’s staff that respondent needed to file the missing form. Respondent’s office promised that he would file the required form the next day.

The bankruptcy court never got the form. v. Instead, on September 2, 2005, respondent appeared at a hearing on attorney’s fees in the malpractice case, over which the Honorable Robert S. Hyatt was now presiding. Respondent displayed the bankruptcy petition date-stamped September 1, 2005. Based on respondent’s representation that he had filed a personal bankruptcy, Judge Hyatt stayed further proceedings in the malpractice case pending briefing. w. The bankruptcy court clerk held respondent’s bankruptcy proceeding pleadings for a week after September 1, 2005, to allow respondent to supply the missing form.

When the bankruptcy [court] did not receive the form, the clerk returned the pleadings to respondent. x. When they did not receive any notices from the bankruptcy court concerning respondent’s purported bankruptcy filing, plaintiffs’ counsel in the malpractice case requested the bankruptcy clerk to search for the court’s records. The clerk informed plaintiffs’ counsel that no bankruptcy case existed. y. On December 30, 2005, respondent filed a Chapter 7 bankruptcy. [ ] (the “bankruptcy case”).

On his Schedules, respondent listed assets of $167,500 and debts of $2,089,000. z. Many of the debts respondent listed had been incurred by Zodrow et al, P.C. Respondent listed these debts because he had personally guaranteed them or because he was otherwise personally obligated, e.g., for unpaid payroll taxes. The amount of these law firm-related debts was in the $100,000’s. aa. Although the Whitehills had signed the Warranty Deed and sent it to him during [the summer of] 2005, respondent did not disclose the Arvada property as an asset on his Schedules.

Respondent claimed not to hold any equitable ²⁹⁶ interest in real property or contingent or unliquidated claims of any nature. bb. Although he had executed the Deed of Trust at the end of June 2005, respondent did not list Mr. Whitehill as a secured creditor on his Schedules. Nor did respondent list the Whitehills as unsecured creditors. Nor did he list his purchase of the Arvada property as an executory contract.

Respondent did not list his monthly payment due under the promissory note among his monthly expenses. Respondent did not disclose the civil litigation on his Statement of Financial Affairs. Respondent did not provide the White-hills with notice of his bankruptcy. cc. Respondent also did not disclose in the bankruptcy case his transfer of the Arvada property to Boyer or Boyer’s agreement to assume respondent’s obligations to Mr. White-hill under the promissory note. dd.

On January 4, 2006, after receiving notice of the Chapter 7 bankruptcy case, Judge Hyatt held a hearing in the malpractice case. Judge Hyatt told respondent that it appeared he had lied to the court. Respondent asserted that after he filed the bankruptcy petition in early September, he understood that the bankruptcy case was proceeding. He claimed he did not learn that the bankruptcy case had not been opened until he was so informed by plaintiffs’ counsel in the malpractice case. ee.

Apparently suspicious of respondent’s explanation, Judge Hyatt ordered respondent to produce to the court and plaintiffs’ counsel documents that would demonstrate that the first bankruptcy case had been pending since September 2005. Respondent produced only a date-stamped copy of the petition that he had filed on September 1, 2005. Respondent alleged that the bankruptcy court retained the original petition and allied pleadings. Respondent was unable to produce any of the pleadings, notices and communications with creditors typical of a bankruptcy case. ff.

On January 25, 2006, respondent appeared before the Chapter 7 trustee for the creditors’ meeting in the bank ²⁹⁷ ruptcy case. Malpractice plaintiffs’ counsel also attended. Respondent testified under oath that he had declared all of his assets and debts on his Schedules. This testimony was false.

As noted above, respondent did not disclose his interest in the Arvada property and his monthly obligation under the promissory note. gg. Respondent testified that his firm, Zodrow et al, P.C. had dissolved on or about October 1, 2005. Respondent told the trustee that he was now practicing as a sole practitioner. Respondent testified that he had no money in his law office, which was now closed.

Respondent stated that he had not collected any money from anyone since September 2005. Respondent testified that his COLTAF account contained approximately $25,000 in client funds, but that only a small portion, if any, was due to him. hh. Some of respondent’s testimony as discussed in ¶ gg was false or incomplete. Respondent’s law firm had received $100,000’s in the last quarter of 2005.

Respondent did not tell the trustee that, in late December 2005, Zodrow et al, P.C. had received a check from the U.S. Postal Service for $99,000. Respondent also did not reveal to the trustee that Zodrow et al, P.C. had made a $99,000 unsecured loan to Boyer on January 6, 2006, just a few weeks before the creditors’ meeting. ii. On February 7, 2006, Judge Hyatt entered sanctions in the malpractice case against respondent’s firm in the amount of $34,870.90. Judge Hyatt also awarded to plaintiffs’ counsel their fees expended in response to various motions and directed plaintiffs’ counsel to submit documentation of their fees incurred.

Judge Hyatt stated: “The defendants have not genuinely contested any of the sanction amounts previously entered and have, instead, engaged in a further course of delay, obfuscation and deceit designed to thwart the orders of this court.” The delay included that caused by respondent’s abortive bankruptcy filing in September 2005. jj. Because of a change in the law, respondent should have undergone debt counseling prior to filing bankruptcy. Re ²⁹⁸ spondent had not done this. As a result, the bankruptcy-case was dismissed in Spring 2006. kk.

On April 14, 2006, Judge Hyatt amended his Order of February 7, 2006 to apply the sanctions against respondent individually, as well as his firm. 11. Through the respondent’s conduct described above, the respondent has engaged in conduct constituting grounds for the imposition of discipline pursuant to C.R.C.P. 251.5. The respondent has also violated Colo. RPC 3.3(a)(1), 84(c), and 34(c).

(Emphasis added.) Bar Counsel alleged that, based on Respondent’s admissions of misconduct, Respondent violated Maryland Rules of Professional Conduct (“MRPC”) 3.3(a)(1) (Candor Toward the Tribunal), 7 3.4(c) (Fairness to Opposing Party and Counsel), 8 and 8.4 sections (a), (b), (c), and (d) (Misconduct), 9 all of which are identical to their Colorado counterparts. (a) A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer; A lawyer shall not: (c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists; It is professional misconduct for a lawyer to: (a) violate or attempt to violate the Maryland Lawyers’ Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another; (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice; ²⁹⁹ Pursuant to Maryland Rules 16-773 and 16-752, we designated the Honorable Laura S. Kiessling of the Circuit Court for Anne Arundel County to hear the matter and make findings of fact and conclusions of law in accordance with Maryland Rule 16-757. Judge Kiessling held a hearing on November 8, 2010, and issued written findings of fact and conclusions of law on November 17, 2010. I. Following the November 8, 2010 hearing, at which Respondent failed to appear, Judge Kiessling found, based on the “Stipulation, Agreement and Affidavit Containing the Respondent’s Conditional Admission of Misconduct,” supra, that the following facts were established by clear and convincing evidence.

On or about June 10, 2009, the Respondent was suspended from the practice of law in Colorado, effective August 15, 2009, by order of the Colorado Supreme Court; Hon. William R. Lucero, Presiding Disciplinary Judge. Said suspension was for a year and a day with conditions for reinstatement which included the resolution of fee awards entered against him in a legal malpractice case. The Court’s Order Approving Conditional Admission of Misconduct and Imposing Sanctions Pursuant to C.R.C.P. 251.22 stated that the stipulation of the parties is “accepted and approved.” The Respondent affirmed, under oath, that the facts and conclusions set forth in the Stipulation, Agreement and Affidavit containing the Respondent’s Conditional Admission of Misconduct are true and correct.

The Respondent thereby admitted, inter alia, that he failed to make pertinent disclosures during his personal bankruptcy proceeding and that he had given false testimony in that case. Specifically, [Respondent] stated that he had declared all his assets and debts on his schedule. However, he has failed to declare his interest in property and his monthly obligations were not disclosed. Additionally, [Respondent] testified in a false and misleading manner concerning his law firm’s receipt of funds in the last quarter of 2005.

Furthermore, he ³⁰⁰ failed to alert the bankruptcy trustee that he had made an unsecured loan to his Mend, Susan K. Boyer. Based on those findings, Judge Kiessling came to the following legal conclusions: At a hearing on a petition filed by the AGC pursuant to Md. Rule 16-757, the AGC has the burden of proving, by clear and convincing evidence, the averments of the petition. A respondent attorney must only establish an affirmative defense or a matter of mitigation or extenuation by a preponderance of the evidence. Md. Rule 16-757(b).

The AGC has charged that [Respondent] engaged in professional misconduct by violating the following Maryland Rules of Professional Conduct: Rules 3.3/] 3.4/] and 8.4/ 1 The Court finds that the AGC has established by clear and convincing evidence that [Respondent] violated Rules 3.3, 3.4[,] and 8.4 when he failed to make pertinent disclosures during his personal bankruptcy proceeding and when he gave false testimony in that case. [Respondent’s] actions in that case violated his duty of honesty and full disclosure to the courts. Furthermore, he violated his duty to obey the rules of the tribunal.[ 10 ] Neither Respondent nor Bar Counsel has filed exceptions to the hearing judge’s factual findings and conclusions of law. Though not directly stated in her findings, it is obvious that Judge Kiessling proceeded pursuant to Maryland Rule 16-773(g). That rule states in pertinent part that “a final adjudication in a disciplinary or remedial proceeding by another court, agency, or tribunal that an attorney has been guilty of professional misconduct or is incapacitated is conclusive evidence of that misconduct or incapacity in any proceeding under this Chapter.” Md. Rule 16-773(g); see also Attorney Grievance Comm’n v. Whitehead, 390 Md. 663, 669 , 890 A.2d 751, 755 (2006) (adopting, pursuant to Maryland Rule 16-773, the District of Columbia Court of Appeals’ finding that an attorney had violated rules of professional misconduct).

In ³⁰¹ accordance with that Rule and consistent with the hearing