State ex rel. Oklahoma Bar Ass'n v. Johnston

State ex rel. Oklahoma Bar Ass'n v. Johnston
1993 OK 91
863 P.2d 1136
64 OBJ 2082
Case Number: SCBD, 3800, OBAD, 1041
Decided: 06/29/1993
Supreme Court of Oklahoma

STATE EX REL. OKLAHOMA BAR ASSOCIATION, COMPLAINANT,
v.
ROBERT L. JOHNSTON, RESPONDENT.

BAR DISCIPLINARY PROCEEDING

¶0 The parties' stipulation of facts, conclusions of law, mitigating factors and recommendation for discipline were adopted by the Professional Responsibility Tribunal. Upon this court's de novo consideration of the record,

RESPONDENT IS ORDERED DISCIPLINED BY A FOUR-MONTH SUSPENSION AND PAYMENT OF COSTS.

John E. Douglas, Asst. Gen. Counsel, Oklahoma Bar Ass'n, Oklahoma City, for complainant.

John W. Coyle, III, Oklahoma City, for respondent.

OPALA, Justice.

[863 P.2d 1139]

¶1 In this disciplinary proceeding against a lawyer, the issues to be decided are: (1) Is the record, consisting of the stipulated facts and a transcript of proceedings, sufficient for a meaningful de novo consideration of the complaint's disposition? and (2) Is a four-month suspension an appropriate disciplinary sanction to be imposed for respondent's professional misconduct? We answer both questions in the affirmative.

¶2 The Oklahoma Bar Association [Bar] charged Robert L. Johnston [Johnston or respondent], a licensed lawyer, with one count of professional misconduct. The Bar and Johnston then entered into a stipulation of facts and agreed conclusions of law with a joint recommendation for a for month suspension to be imposed as professional discipline for that misconduct. A panel of the Professional Responsibility Tribunal [PRT] adopted the parties' offer for an agreed disposition.

STIPULATION OF FACTS

¶3 In November 1990, respondent entered into a contract with Mr. and Mrs. T . . . [adoptive parents], Texas residents, to represent them in an adoption proceeding. Their agreement is contained in a letter from respondent to the couple.

¶4 The biological parents, residents of Oklahoma County, had agreed to place their then-unborn child for adoption with the Ts, who were to pay the medical bills. The baby was born on January 22, 1991 in Oklahoma City. The following day, respondent's secretary carried the child from the hospital and delivered it to the Ts at the Will Rogers World Airport in Oklahoma City.

¶5 On November 23, 1990, respondent deposited the adoptive parents' $10,000 check in his trust account. Of that amount, he paid $2,120.00 to the attending physician [physician] for the mother's medical care. Respondent stipulated that he "paid himself the balance [of the funds on hand] as attorney's fees."

¶6 On October 24, 1991, the Ts' Texas counsel filed a grievance with the Bar against respondent because he had failed to take the necessary steps to finalize the adoption proceedings. In fact, he had never filed a petition for adoption on behalf of the Ts. The Bar brought its complaint on February 25, 1992. On March 18, 1992, the same day that respondent filed an answer to the Bar complaint, he paid the medical care providers. Two other bills were paid on June 11, 1992. On the date of the hearing, July 9, 1992, the Bar's counsel reported that respondent had given him a check ($3,944.42) for the balance of the funds not used for the medical care or related incidental expenses. He did not retain any of the funds for his attorney's fee.

¶7 Respondent failed diligently or competently to work on this matter or to communicate appropriately with his clients. On June 12, 1991, he wrote the biological parents that he was attempting to work out an appropriate settlement with each care giver and that he had notified each one he was assuming responsibility for the debt.

¶8 The State of Oklahoma, where the biological parents reside and the baby was born, and the State of Texas, where the adoptive parents reside, are both parties to the Interstate Compact on the Placement of Children.

¶9 On January 23, 1991, when respondent appeared with the biological parents to take their consent to the adoption of the child, he told the court that the adoptive parents were in the process of moving to Oklahoma and would be domiciled in Oklahoma County. Though this statement was admittedly false, the signed consent form approved by the judge indicates that both the biological parents and the judge were [863 P.2d 1141] aware of the child's impending removal from Oklahoma.

AGREED CONCLUSIONS OF LAW

¶10 The parties' stipulation concedes that Johnston's misconduct violates the mandatory provisions of Rules 1.1,6 1.3,7 1.4,8 1.15,9 and 8.4,10 Oklahoma Rules of Professional Conduct, and Rule 1.4,11 Rules Governing Disciplinary Proceedings, and constitutes grounds for professional discipline.

CONCESSION AS TO AVAILABLE MITIGATION

¶11 The parties submit that (a) respondent paid all bills in the total amount of $6,055.58, (b) respondent has returned all of the residual funds in the amount of $3,944.12 (at the beginning of the hearing he gave the Bar counsel a check in that amount), (c) they expect the adoption will be completed by new counsel, and (d) respondent has not previously been disciplined.

THE PARTIES' RECOMMENDATION FOR DISCIPLINE

¶12 The parties recommend that respondent (a) be suspended from the practice of law for a four-month period and (b) pay the costs incurred in this proceeding.

[863 P.2d 1142]

I

THE RECORD BEFORE THE COURT IS COMPLETE FOR A DE NOVO CONSIDERATION OF ALL FACTS RELEVANT TO THIS PROCEEDING

¶13 The Oklahoma Supreme Court has exclusive original jurisdiction over Bar disciplinary proceedings.12 The court's review is conducted by de novo consideration of the prosecution that is brought before us.13 Neither the trial authority's findings nor its assessments with respect to the weight or credibility of the evidence can bind this court.14 In a de novo consideration, in which the court exercises its constitutionally invested, nondelegable power to regulate both the practice of law and the legal practitioners,15 a full-scale exploration of all relevant facts is mandatory.16

¶14 The court's task cannot be discharged unless the PRT panel submits a complete record of proceedings for a de novo examination of all material issues.

¶15 Johnston has admitted, and the record sufficiently supports, the allegations of professional misconduct in Count 1. We hold the record is adequate for our de novo consideration of respondent's offending past conduct.

[863 P.2d 1143]

II

RESPONDENT'S FALSE STATEMENT TO THE TRIAL JUDGE

A.

Rule 8.4(c) - Misrepresentation

¶16 The OBA charged Johnston with making a misrepresentation to the trial judge in violation of Rule 8.4(c). That rule, which generally targets fraudulent conduct,

¶17 Johnson admits that (a) he told the trial judge the adoptive parents were planning to move to Oklahoma from their residence in Texas and (b) the statement is not true. The PRT found the statement would have served no purpose in the judge's evaluation of the case. Nothing in the record indicates to us that it would have been advantageous for Johnston to misinform the court.

B.

Rule 3.3 - False Statement To A Tribunal

¶18 While no "bad or evil intent" is shown by the record, Johnston is not relieved of professional responsibility for his false statement to the court. Any charge of "misrepresentation" to a judge or tribunal also carries with it an included or implied count of making a "false statement" in violation of Rule 3.3(a)(1).

¶19 A "false statement" to a tribunal, as distinguished from a "misrepresentation," requires no proof of "bad or evil intent,"

[863 P.2d 1144]

¶20 On de novo consideration of the record, we conclude that the alleged facts sufficiently put Johnston on notice and that he had a fair opportunity to respond to them. He does not deny making the false statement to the court and having actual knowledge

III

MISHANDLING FUNDS

¶21 The Bar has charged Johnston with improperly managing the funds entrusted to him in violation of Rules 1.15

¶

¶23 Johnston admits that he withdrew from his trust account funds that were earmarked for payment of medical bills and placed them in his personal account. By failing to keep his money separate from that due the care givers, Johnston has commingled funds.

¶24 The second level of culpability is simple conversion. Rule 1.4(b) establishes that simple conversion occurs when an attorney applies a client's money to a purpose other than that for which it was entrusted to him.

¶25 The third level of culpability is misappropriation, i.e. "theft by conversion or otherwise." This occurs when an attorney has purposely deprived a client of money by way of deceit and fraud.

¶26 The parties agree that Johnston did not intend to misappropriate his clients' money. The PRT also agreed and concluded that Johnston's misconduct grew out of his ignorance of proper procedures for holding and distributing the money entrusted to him. On de novo consideration, we agree with the PRT's conclusion and hold that discipline is warranted for respondent's mishandling of his client's funds.

IV

OTHER MISCONDUCT

¶27 Johnston has been charged with other offenses, namely: (1) failing to give competent representation in violation of Rule 1.1;

¶28 Professional competence - acting promptly on a matter and communication with a client - is a mandatory obligation imposed upon attorneys. Albeit high, this obligation is the minimum we expect from a lawyer. It epitomizes professionalism. Anything less is a breach of a lawyer's duty to serve his client.

V

A FOUR-MONTH SUSPENSION IS AN APPROPRIATE SANCTION FOR RESPONDENT'S PAST PROFESSIONAL MISCONDUCT

¶29 The court's responsibility in a disciplinary proceeding is not to punish but to inquire into and gauge a lawyer's continued fitness, with a view to safeguarding the interests of the public, of the courts [863 P.2d 1146] and of the legal professionals.

¶30 The PRT adopted the parties' stipulation, recommending that Johnston be suspended from the practice of law for four months and pay all costs incurred in this proceeding.

¶31 We recently imposed a three-month suspension sanction for a single act of commingling and conversion of client's funds.

¶32 Respondent stands suspended from the practice of law for four months from the day this opinion becomes final; costs shall be paid in full before his reinstatement.

¶33 HODGES, C.J., LAVENDER, V.C.J., and SIMMS, HARGRAVE, ALMA WILSON and SUMMERS, JJ., concur.

¶34 KAUGER and WATT, JJ., concur in part and dissent in part.

Footnotes:

1 The text of the letter agreement is:

"December 21, 1990

. . . . and. . . . T . . .

* * * * * *

Re: Adoption

Dear Mr. and Mrs. T . . .:

I apologize for not getting back with you sooner, but several trials have kept me very busy. I acknowledge receipt of $10,000.00 as and for fees deposited with me by your personal check for purposes of assuring the Adoption of a healthy baby. You have agreed to provide these funds so that I may be able to pay all expenses for the pregnancy and birth, as well as all fees and expenses for my services with regard to the Adoption. I will pay all bills on an `as invoiced' basis for the pregnancy. If the child is not a `healthy baby,' to your satisfaction, you will be refunded the remaining funds. I have been advised by the Dr. caring for the mother of the child that the mother has tested negative for HIV and communicable diseases. Also, all blood work, history and ultra sound is complete and the mother is fine and the Dr. foresees no health or delivery problems.

I am enclosing a copy of the Petition for Adoption and Appearance and Consent to Adoption previously executed. I am anticipating the child will be born in late January, 1991 and because we are completing this `without investigation' I will have to file the Petition after the birth, this will not alter your scheduled pick up of the child after birth. It simply means that the time for running of the publication will be extended 45 days. I would greatly appreciate a copy of the home study which you have from a previous birth as soon as possible.

If you have any further questions, please feel free to contact me.

Merry Christmas
Virtually yours,
/s/ Robert L. Johnston"

2 Agreed Stipulations of Fact, Conclusions of Law, and Agreed Recommendation of Discipline, No. 11, p. 4.

3 Respondent's letter states in part:

"I have been in contact with each and every care giver in this matter and am attempting to work out a just and appropriate settlement in this regard. I have advised each and every care giver that all statements should be addressed directly to me in that I have assumed responsibility, as per our agreement, for each and every debt."

4 Interstate Compact On The Placement of Children, 10 O.S. 1981 §§ 571 -576 .

5 A standard questionnaire is used to elicit certain information from the biological parents of the child. One of the questions on the form states:

"14. Is this child to be sent out of Oklahoma to another State, or brought into Oklahoma from another State, for purpose of adoption?

A. Yes (Explain, if answer is Yes) §§§§"

6 The terms of Rule 1.1, Oklahoma Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, are:

"A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation." (Emphasis added.)

7 The terms of Rule 1.3, Oklahoma Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, are:

"A lawyer shall act with reasonable diligence and promptness in representing a client."

8 The terms of Rule 1.4, Oklahoma Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, are:

"(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation."

9 The pertinent terms of Rule 1.15, Oklahoma Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, are:

"(a) 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 in the state where the lawyer's office is situated. . . .

(b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

(c) When in the course of representation a lawyer is in possession of property in which both the lawyer and another person claim interests, the property shall be kept separate by the lawyer until there is an accounting and severance of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separate by the lawyer until the dispute is resolved." (Emphasis added).

10 The pertinent terms of Rule 8.4, Oklahoma Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, are:

"It is professional misconduct for a lawyer to:

* * *

(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation;"

11 The pertinent terms of Rule 1.4, Rules Governing Disciplinary Proceedings, 5 O.S. 1981, Ch. 1, App. 1-A, are:

"* * * (b) Where money or other property has been entrusted to any attorney for a specific purpose, he must apply it to that purpose. He may not avail himself of a counterclaim or setoff for fees against any money or other property of his client coming into his hands for such specific purpose, and a refusal to account for and deliver over such money or property upon demand shall be deemed a conversion. . . .

(c) Theft by conversion or otherwise of the funds of a client shall, if proved, result in disbarment." (Emphasis added).

12 State ex rel. Okl. Bar Ass'n v. Donnelly, Okl., 848 P.2d 543, 545 (1992); State ex rel. Okl. Bar Ass'n v. Raskin, Okl., 642 P.2d 262, 265 (1982); In re Integration of State Bar of Oklahoma, 185 Okl. 505, 95 P.2d 113, 114 (1939).

13 State ex rel. Okl. Bar Ass'n v. Lloyd, Okl., 787 P.2d 855, 858 (1990); Okl. Bar Ass'n v. Stubblefield, Okl., 766 P.2d 979, 982 (1988); State ex rel. Okl. Bar Ass'n v. Cantrell, Okl., 734 P.2d 1292, 1293 (1987); Raskin, supra note 12 at 265-266. Because this court's cognizance of disciplinary proceedings cannot be shared with any other institution, every aspect of the Bar's adjudicative process must be supervised by our de novo consideration. This attribute of nondelegable jurisdiction serves to distinguish the conduct of bar disciplinary functions from trial de novo - a retrial in a different court - or even from de novo appellate review on the record, which stands for an independent, non-deferential examination of another tribunal's record.

14 Raskin, supra note 12 at 265. The pertinent terms of Rule 6.15, Rules Governing Disciplinary Proceedings, 5 O.S. 1981, Ch. 1, App. 1-A, are:

"(a) The Supreme Court may approve the Trial Panel's findings of fact or make its own independent findings, impose discipline, dismiss the proceedings or take such other action as it deems appropriate." (Emphasis added).

15 Raskin, supra, note 12 at 266; Tweedy v. Okl. Bar Ass'n, Okl., 624 P.2d 1049, 1052 (1981).

16 State ex rel. Okl. Bar Ass'n v. Dugger, Okl., 385 P.2d 486 (syllabus) (1963).

17 The pertinent terms of Rule 6.13, Rules Governing Disciplinary Proceedings, 5 O.S. 1981, Ch. 1, App. 1-A, are:

". . . [T]he trial panel shall file with the Clerk of the Supreme Court a written report which shall contain the Trial Panel's findings of fact on all pertinent issues and conclusions of law (including a recommendation as to discipline . . . ) * * *." (Emphasis added.)

18 A complete record is well-nigh necessary for review of a bar disciplinary proceeding. The material to be considered is never to be deemed settled beyond our ability to expand it. The record always remains within this court's plenary power to order its supplementation. State ex rel. Okl. Bar Ass'n v. Moss, Okl., 794 P.2d 403, 404 (1990); State ex rel. Okl. Bar Ass'n v. Samara, Okl., 683 P.2d 979, 983 (1984); State ex rel. Okl. Bar Ass'n v. Warzyn, Okl., 624 P.2d 1068, 1071 (1981). See also State ex rel. Okl. Bar Ass'n v. Armstrong, Okl., 791 P.2d 815, 816 (1990), which teaches that an interim suspension of an attorney cannot be made on an incomplete record. The same problem confronted this court in State ex rel. Okl. Bar Ass'n v. Lloyd, SCBD No. 3145 received November 17, 1987 [Lloyd I]. There, we declined to accept the trial panel's recommendation and returned the case for a full evidentiary hearing before the panel whence it came. For an explanation, see Lloyd II, supra note 13 at 856.

19 State ex rel. Okl. Bar Ass'n v. Perceful, Okl., 796 P.2d 627, 630 (1990).

20 State ex rel. Okl. Bar Ass'n v. Todd, Okl., 833 P.2d 260, 263 (1992); Okl. Bar Ass'n v. McMillian, Okl., 770 P.2d 892, 899 (1989).

21 For the pertinent text of Rule 8.4, see supra note 10. Rule 8.4(c) is substantially the same as its predecessor, DR 1-102(A)(4), Code of Professional Responsibility, 5 O.S. 1981, Ch. 1, App. 3, which provided: "(A) A lawyer shall not: * * * (4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation." Todd, supra note 20 at 262. McMillian, supra note 20, teaches that because DR 1-102(A)(4) is geared toward fraudulent conduct, bad or evil intent or its equivalent must be shown by clear and convincing evidence in order to make out a violation of the rule.

22 Todd, supra, note 20, 833 P.2d at 263; McMillian, supra note 20 at 899.

23 There appears to have been no specific advantage Johnston might have hoped to gain by informing the court that the adoptive parents would be moving to Oklahoma and would be domiciled in Oklahoma County. No motive for the misstatement is divinable. It is possible that Johnston merely perceived that he or his client would be benefited as a result of the misrepresentation, when in fact, no advantage could have been gained.

24 The terms of Rule 3.3(a)(1), Oklahoma Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, are:

"(a) A lawyer shall not knowingly:

(1) make a false statement of fact or law to a tribunal;"

In Todd, supra note 20 at 262 n. 2, we declined to entertain a Rule 3.3 violation of making false statements to a tribunal because we already found a violation of the then-effective Code of Professional Responsibility, 5 O.S. 1981, Ch. 1, App. 3, DR 1-102(A)(4), which is virtually identical to Rule 8.4(c), supra note 10.

25 McMillian, supra note 20 at 899. McMillian construed the then effective DR-7-102(A)(5), Code of Professional Responsibility, 5 O.S. 1981, Ch. 1, App. 3, which is virtually identical to the now effective Rule 3.3(a)(1), supra note 24.

26 See Rule 3.3(a)(1), supra note 24, Oklahoma Modification, which indicates that the word "material" was intentionally excluded from Rule 3.3(a)(1).

27 State ex rel. Okl. Bar Ass'n v. Miskovsky, Okl., 804 P.2d 434, 440 (1990); Moss, supra note 18 at 407.

28 5 O.S. 1991 Ch. 1, App. 3-A (Terminology) which defines "knowingly" as denoting "actual knowledge of the fact in question." It also states that a "person's knowledge may be inferred from circumstances."

29 See supra note 24.

30 For the pertinent text of Rule 1.15, see supra note 9.

31 For the pertinent text of Rule 1.4, see supra note 11.

32 For the rule against "commingling", see Rule 1.15(a), supra note 9, which states in part that "[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". State ex rel. Okl. Bar Ass'n v. Miskovsky, Okl., 824 P.2d 1090, 1098 (1991).

33 For the rule against "simple conversion", see Rule 1.4(b), supra note 11, which states that "[W]here money or other property has been entrusted to any attorney for a specific purpose, he must apply it to that purpose. . . . and a refusal to account for and deliver over such money or property upon demand shall be deemed a conversion". Miskovsky, supra note 27 at 438.

34 Rule 1.4(c), supra note 11, provides that "[t]heft by conversion or otherwise of the funds of a client shall, if proven, result in disbarment." (Emphasis added.) These rules connote that "theft", rather than a mere simple conversion, will always dictate disbarment. Miskovsky, supra note 32 at 1101 n. 19.

35 The terms of Rule 6.12(c), Rules Governing Disciplinary Proceedings, 5 O.S. 1981 Ch. 1, App. 1-A, are:

"To warrant a finding against the respondent in a contested case, the charge or charges must be established by clear and convincing evidence. . . ." (Emphasis added).

36 When no means exists to account for money, it becomes a fungible unidentifiable property. Once money is combined, the only way in which a determination can be made of the divisible parts is the accounting methods employed. The attorney has exclusive reign over the management of funds entrusted to him. Keeping a client's money separate and distinct ensures that the money at all times is properly accounted for and can be shown to be distinct. This serves to prevent a lawyer from deliberately or mistakenly using any of the funds entrusted to him. "In their daily work lawyers commonly come into clients' funds. The trust placed in the lawyer owes its origin to the special professional status he occupies as a licensed practitioner. Public confidence in the practitioner is essential to the proper functioning of the profession. Few breaches of ethics are as serious as the act of commingling a client's funds and the unwarranted use of his money." Raskin, supra note 12 at 267.

37 Rule 1.15(a), supra note 9; Miskovsky, supra note 32 at 1098-99.

38 See supra note 11 for the terms of Rule 1.4(b); Miskovsky, supra note 27 at 438.

39 It was not until after a grievance had been filed against Johnston that he made full payment to all of the care givers. Restitution of the clients' funds is not delivery of the money "upon demand". State ex rel. Okl. Bar Ass'n v. Perkins, Okl., 757 P.2d 825, 831 (1988). In the present case the demand was to deliver the funds to the health-care provides.

40 Miskovsky, supra, note 27 at 438.

41 Donnelly, supra note 12 at 548.

42 Raskin, supra note 12.

43 See Rule 1.4(c), supra note 11; Miskovsky, supra note 32 at 1101 n. 19.

44 For the terms of Rule 1.1, see supra note 6.

45 For the terms of Rule 1.3, see supra note 7.

46 For the terms of Rule 1.4, see supra note 8.

47 Raskin, supra note 12 at 267.

48 Donnelly, supra note 12 at 546; State ex rel. Okl. Bar Ass'n v. Colston Okl., 777 P.2d 920, 925 (1989); State ex rel. Oklahoma Bar Ass'n v. Moss, Okl., 682 P.2d 205, 207 (1983); State ex rel. Oklahoma Bar Ass'n v. Harlton, Okl. 669 P.2d 774, 777 (1983); Raskin, supra note 12 at 267.

49 Raskin, supra note 12 at 267.

50 One PRT panel member observed: "We've had the opportunity to see Robert L. Johnston and to hear him and to watch him during these proceedings. We're both impressed by his appearance and impressed by his attitude. Both in appearance and attitude he is appropriate and even more than appropriate, impressive. He has candidly admitted incompetence in an area and that takes courage."

51 Miskovsky, supra note 27, 804 P.2d at 440.

KAUGER, Justice, with whom WATT, J., joins, concurring in part, dissenting in part.

I agree that discipline should be imposed. However, I would impose a longer suspension because of the respondent's misrepresentation to the trial court.