Supreme Court of Florida
THE FLORIDA BAR,
SHARI NICOLE HINES,
[June 10, 2010]
We have for review a referee’s report recommending that respondent, Shari
Nicole Hines, be found not guilty of professional misconduct. The Bar seeks
review and asserts that Hines should be subject to a rehabilitative suspension. We
have jurisdiction. See art. V, § 15, Fla. Const.
As more fully explained below, we disapprove the referee’s
recommendation that Hines be found not guilty of violating Rule Regulating the
Florida Bar 4-5.3(b), governing a lawyer’s responsibilities with respect to
nonlawyers associated with a lawyer. That rule provides that the lawyer must
make reasonable efforts to ensure that the conduct of a nonlawyer associated with a
lawyer is compatible with the professional obligations of the lawyer. We conclude
that Hines violated this rule by allowing a nonlawyer, whom she neither employed,
supervised, nor controlled, to have signatory authority over an escrow account she
opened to handle real estate closings, resulting in misappropriation by that
nonlawyer of funds held in trust in the escrow account. We accordingly remand
this matter to the referee for a recommendation as to the appropriate discipline.1
STATEMENT OF CASE AND FACTS
On December 10, 2008, The Florida Bar filed a complaint against Hines,
alleging that in the course of acting as attorney and closing agent in a real estate
transaction involving Paramount Lending Group (Paramount), Hines failed to
appropriately supervise a nonlawyer title processor, Ida Ocasio, and the nonlawyer
principal of Paramount, John Mohan, and improperly permitted Mohan to have
signatory authority over the escrow account she opened to handle all closings she
transacted through Paramount. The complaint further alleged that as a result of
1. We approve the referee’s findings of fact and her recommendation that
Hines be found not guilty of violating rules 4-1.1 (lawyer shall provide competent
representation); 4-1.15 (lawyer shall comply with trust account rules); 4-5.3(a)
(paralegals and legal assistants must work under direction or supervision of
lawyer); 4-5.3(c) (lawyer shall review and be responsible for work product of
paralegals and legal assistants); 4-8.4(a) (lawyer shall not violate rules, assist or
induce another to do so, or do so through actions of another); and 4-8.4(d) (lawyer
shall not engage in conduct in connection with practice of law that is prejudicial to
administration of justice).
Hines’ actions, Ocasio, Mohan, or both were able to steal the proceeds of a
residential real estate transaction, resulting in harm to the parties involved.
Before the referee, the parties stipulated to the following facts. Prior to
November 2007, part of Hines’ law practice included real estate transactions, and
she was introduced to Paramount Lending Group and its principal, Mohan. In late
November 2007, Hines began accepting potential real estate closings from
Paramount. During the course of this business relationship, Hines assumed
responsibility for two closings that were generated by Paramount, the second of
which was a residential real estate transaction between Alyce and Frederick
Droege, the sellers, and George Melendez, the buyer. Prior to the closings, Hines
relocated her law office to the same building as Paramount and became a tenant of
Paramount, and she opened a new escrow account for all transactions with
Paramount. Hines allowed Mohan shared signatory authority over this escrow
account. However, because she recognized the inherent danger of allowing a
nonlawyer access to an escrow account maintained in her name as an escrow agent
and Florida lawyer, she placed caps on the amounts of money that Mohan could
access or control in the escrow account.
On or about December 17, 2007, Hines was contacted by Ocasio and was
advised that the Droege transaction needed to close that day in Orlando, Florida,
pursuant to the closing instructions provided by the lender. As a result of this
conversation, Hines forwarded, via Federal Express, ten blank, signed escrow
account checks to Ocasio to be used for the closing. The closing was conducted by
Ocasio on December 18, 2007, with all parties executing the required closing
documents. Hines did not attend the closing and did not see, review, or approve
the closing documents before the closing. The HUD-1 closing statement executed
by all parties to the closing indicated that the Droeges’ mortgage on the property in
the amount of $34,714.10 was to be satisfied and that the Droeges were to be paid
the sum of $128,802.68 as their proceeds from the sale. After executing their
closing documents, the Droeges were given, by Ocasio, an escrow account check
drawn in their favor in the amount of $128,802.68. The Droeges deposited this
check into their account at SunTrust. They were advised that there would be a tenday hold on the check but that $10,000 would be credited immediately and
available for their use. The Droeges wrote checks against this $10,000. On
December 24, 2007, the bank advised the Droeges that the check was being
dishonored because a stop payment order had been issued. It was subsequently
determined that Mohan had placed the stop payment order and that he had
misappropriated the Droeges’ sale proceeds, as well as the required mortgage
payoff to his own use by electronically transferring these funds to his own bank
account. Hines was made aware of the stop payment order on or about December
27, 2007, and was able to recover the sum of $45,000 from Mohan and wire this
sum to the Droeges on or about January 2, 2008. After discovering that Mohan
had misappropriated the funds, Hines reported the matter to the criminal
authorities, who initiated a successful criminal action against Mohan. Hines also
reported the problem with the Droege transaction to her underwriter, Attorney’s
Title Insurance Fund. On February 28, 2008, the Fund satisfied the Droeges’
mortgage and sent them a check in the amount of $83,802.68. This check, when
coupled with the $45,000 previously wired to them by Hines, completed the
restitution owed to the Droeges as a result of the theft of the proceeds from their
original escrow check.
Undisputed testimony at the final hearing also established the following. At
the time of the Droege closing, Hines had nearly ten years of experience as a
lawyer and, in fact, she ran her own title agency from 2002 until 2005. Hines and
Mohan had agreed that Mohan would provide Hines with all of Paramount’s title
work and that Hines would conduct closings for Paramount. Hines was to receive
$300 per closing and Mohan promised about thirty closings a month—an annual
income of approximately $108,000. As to her role as escrow agent, Hines testified
that she opened the escrow account at issue ―specifically for the Paramount
transactions‖ and that she kept the checks for this account in her office, which was
Based on the evidence presented and the stipulation of the parties, the
referee concluded that the Bar failed to present clear and convincing evidence that
Hines had violated the rules as alleged in the complaint. The referee stated:
At the core of the Bar’s presentation was the fact that the Respondent
had placed a non-lawyer on her escrow account as a signatory and that
this decision ultimately provided the vehicle by which Mr. Mohan
engaged in criminal conduct. The referee was presented with no
evidence or case law indicating that it was unethical for an attorney to
have a non-lawyer signatory on an escrow account. In fact, the
Respondent pointed to a Florida Bar Ethics Opinion that specifically
sanctioned such action. See Fla. Ethics Opinion 64-40. Furthermore,
the referee finds that at the time of Respondent’s decision to make Mr.
Mohan a signatory on the account, she had no reason not to trust him
and there were no warning signs that he might engage in criminal
activity until he had stolen the money.
Having recommended that Hines be found not guilty of any rule violations,
the referee recommended that no discipline be imposed and that each party bear its
own costs. The Bar seeks review of the referee’s findings and recommendations as
to guilt and her recommendation as to discipline and costs.
Although the Bar contends that the referee erred in making various factual
findings, we find no merit to these challenges. Additionally, as noted, the material
facts were stipulated, and the referee adopted the stipulated facts in her report.
Accordingly, we approve the referee’s findings of fact.
The Bar also challenges the referee’s recommendations that Hines be found
not guilty of violating rules 4-1.1, 4-5.3(b) and (c), and 4-8.4(a) and (d).2 Given
the stipulated material facts, our review of the referee’s recommendations in this
regard is de novo. See Fla. Bar v. Pape, 918 So. 2d 240, 243 (Fla. 2005) (stating
that where there are no genuine issues of material fact and the only disagreement is
whether the undisputed facts constitute unethical conduct, the referee’s findings
present a question of law that the Court reviews de novo); Fla. Bar v. Cosnow, 797
So. 2d 1255, 1258 (Fla. 2001) (stating that whether the attorney’s admitted actions
constitute unethical conduct is a question of law).
Despite the Bar’s arguments to the contrary, we conclude that although
Hines’ conduct in this case reflected poor judgment in several respects, it did not
constitute a violation of rules 4-1.1 (lawyer shall provide competent
representation); 4-5.3(c) (lawyer shall review and be responsible for work product
of paralegals and legal assistants); 4-8.4(a) (lawyer shall not violate rules, assist or
induce another to do so, or do so through actions of another); or 4-8.4(d) (lawyer
shall not engage in conduct in connection with practice of law that is prejudicial to
administration of justice). However, we disapprove the referee’s recommendation
2. The Bar does not specifically challenge the referee’s recommendation
that Hines be found not guilty of violating rules 4-1.15 (lawyer shall comply with
trust account rules) and 4-5.3(a) (paralegals and legal assistants must work under
direction or supervision of lawyer). Thus, the referee’s recommendation of not
guilty as to those rules is approved.
that Hines be found not guilty of violating rule 4-5.3(b) (with respect to
nonlawyers associated with lawyer, lawyer must make reasonable efforts to ensure
that nonlawyer’s conduct is compatible with professional obligations of lawyer).
In this case, Hines’ role in the transaction was as a title attorney, a closing
agent, and an escrow agent. She was providing legal services and, as closing and
escrow agent, owed a fiduciary duty to all of the principal parties involved. See
Fla. Bar v. Joy, 679 So. 2d 1165, 1167 (Fla. 1996). This Court has stated that
absent an express agreement, the law implies from the circumstances that an
escrow agent undertakes ―a legal obligation (1) to know the provisions and
conditions of the principal agreement concerning the escrowed property, and (2) to
exercise reasonable skill and ordinary diligence in holding and delivering
possession of the escrowed property (i.e., to disburse the escrowed funds) in strict
accordance with the principals’ agreement.‖ Id. Additionally, a closing agent has
a duty to supervise the closing in a ―reasonably prudent manner.‖ Askew v.
Allstate Title & Abstract Co., 603 So. 2d 29, 31 (Fla. 2d DCA 1992) (quoting Fla.
S. Abstract & Title Co. v. Bjellos, 346 So. 2d 635, 636 (Fla. 2d DCA 1977))
(stating that a title insurance company acting as a closing agent has a duty to
supervise a closing in a reasonably prudent manner).
Rule 4-5.3(b)(1) provides:
(b) Supervisory Responsibility. With respect to a nonlawyer
employed or retained by or associated with a lawyer or an authorized
business entity as defined elsewhere in these Rules Regulating The
(1) a partner, and a lawyer who individually or together with
other lawyers possesses comparable managerial authority in a law
firm, shall make reasonable efforts to ensure that the firm has in effect
measures giving reasonable assurance that the person’s conduct is
compatible with the professional obligations of the lawyer . . . .
In this case, Hines’ professional obligations as a lawyer included holding and
delivering possession of the escrowed funds in strict accordance with the
principals’ agreement and supervising the closing in a reasonably prudent manner.
By allowing Mohan, a nonlawyer whom she neither employed, supervised, nor
controlled, essentially unfettered access to the funds held in the escrow account,
Hines failed in her responsibility to ensure that she had ―in effect measures giving
reasonable assurance‖ that Mohan’s conduct would be compatible with those
professional obligations. In fact, when it comes to the area of funds held in trust
by a lawyer, we conclude that a reading of rule 4-5.3 in its entirety leads to only
one reasonable conclusion. A lawyer may permit a nonlawyer to have authority or
control over such funds only if that nonlawyer is employed by or under the direct
supervision and control of the lawyer.
The Florida Bar ethics advisory opinion relied upon by the referee does not
support the broad conclusion that it is not unethical for an attorney to have a
nonlawyer signatory on an escrow account. Both the 1964 and the revised 1987
advisory opinions are predicated upon facts involving nonlawyer employees of the
lawyer. The 1964 opinion approved the practice of a law firm office manager
drawing checks on the firm’s trust account, and the revised 1987 version clarified
that ―properly authorized and supervised nonlawyer employees‖ may be
signatories on lawyers’ trust accounts. See Fla. Bar Comm. on Prof’l Ethics, Op.
64-40 (1964); Fla. Bar Comm. on Prof’l Ethics, Op. 64-40 (reconsideration)
(1987). We do not read these opinions as authorizing a lawyer to permit a
nonlawyer, nonemployee to have essentially unfettered access to funds held in trust
by the attorney, whether in an IOTA trust account or an escrow account in the
attorney’s name. There is a critical distinction between an attorney’s office
manager and a person who is neither employed by, responsible to, nor otherwise
under the supervision and control of the lawyer as here.
Although the ethics opinions of The Florida Bar are not binding on this
Court, nevertheless the intent of the ethics opinion for lawyers is clear:
The Committee continues to be of the view that is permissible
for a trusted nonlawyer employee to draw checks on the trust account
upon proper authorization and under appropriate supervision.
Attorneys are cautioned, however, that they remain ultimately
responsible for compliance with all rules relating to trust accounts and
client funds, and that they are subject to discipline for an employee’s
misconduct involving client funds.
Fla. Bar Comm. on Prof’l Ethics, Op. 64-40 (reconsideration) (1987) (emphasis
added). In this case, Hines stipulated that she recognized the ―inherent danger‖ of
allowing Mohan signatory authority on the account. Hines abdicated her
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responsibility as a lawyer and her fiduciary obligation to the parties involved in
this closing when she allowed Mohan access to the funds held in the account. This
failure provided Mohan, whom she neither employed, supervised, nor controlled,
with the opportunity to misappropriate client funds, which were held in trust in the
Accordingly, while we approve the referee’s recommendations regarding the
other rule violations charged, we disapprove the referee’s recommendation as to
rule 4-5.3(b). Because the referee did not reach the issue of sanctions, we remand
this case to the referee for a hearing and recommendation as to the appropriate
sanction, including consideration of a rehabilitative suspension.
It is so ordered.
QUINCE, C.J., and PARIENTE, CANADY, POLSTON, LABARGA, and
PERRY, JJ., concur.
LEWIS, J., concurs in result.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
Original Proceeding – The Florida Bar
John F. Harkness, Jr., Executive Director, and Kenneth Lawrence Marvin, Staff
Counsel, The Florida Bar, Tallahassee, Florida, and Lorraine Christine Hoffman,
Bar Counsel, The Florida Bar, Sunrise , Florida,
for the Complainant
Kevin P. Tynan of Richardson and Tynan, P.L.C., Tamarac, Florida,
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