Attorney Grievance v. Watson

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IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 17 September Term, 2003 ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. BARRY K. WATSON Bell, C.J. Raker Wilner Cathell Harrell Battaglia Greene JJ. Opinion by Bell, C.J. File: August 4, 2004 The Attorney Grievance Commission of Maryland, the petitioner, by Bar Counsel filed, pursuant to Maryland Rule 16-7511 of the Maryland Rules of Procedure, a Petition For Disciplinary Or Remedial Action, in which it alleged that the respo ndent, Barry K. Watson, 1 Rule 16-7 51 of the M aryland Rule s of Proce dure prov ides, as releva nt: (a) Commencement of Disciplinary or Remedial Action. Upon approval of the Commission, Bar Counsel shall file a Petition for Disciplinary or Reme dial Ac tion in th e Cou rt of A ppeals . Upon the completion of an investigation by Bar Counsel, unless there is a recommendation pursuant to Rule 16-735 (dismissal of the complaint or termination of the proceeding w ithout discipline), Rule 16-736 (C onditional Diversion A greement), 16-737(reprimand) or Rules 16-771, 16-773, or 16-774 (immediate filing of a Petition for Disciplinary or R emedial A ction), Rule 1 6-734 (d) re quires that B ar Coun sel file with the Commission a Statement of Charges with an election for peer review in accordance with Rule 16-741." Maryland Rule 16-741 governs the filing of statements of charges. It provides: (a) Filing of Statement of Charges. (1) Upo n comple tion of an in vestigation, B ar Coun sel shall file with the Commission a Statement of Charges if Bar Counse l determines that: (A) the attorney either engaged in conduct constituting p rofessiona l miscondu ct or is incapacitated; (B) the professional misconduct or the incapacity doe s not warra nt an imm ediate Petition for Disciplinary or Remedial Action; (C) a Co nditional D iversion A greemen t is either not appropriate under the circumstances or the parties were unable to agree on one; and (D) a reprimand is either not appropriate under the circumstances or (i) one was offered and rejected by the attorney, or (ii) a proposed reprimand was disapproved by the Commission and Bar Counsel was directed to file a Statem ent of C harges . the respondent, violated Rules 1.4, Communication,2 1.15 , Saf ekee ping Prop erty, 3 and 8.4, Miscon duct, 4 of the Maryland Rules of Professional Conduct, as adopted by Maryland R ule 16-812. Bar Counsel also alleged that, in ad dition, the respondent violated Maryland Rules 2 Rule 1.4 requires a lawyer to keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information and explain a matter to the extent reasonably necessary to permit the client to make informed decisions regard ing the r eprese ntation. 3 Rule 1.15, as relevant, provides: (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 pursuant to Title 16, Chapter 600 of the Maryland Rules. Other proper ty shall be id entified as such and ap propria tely safeg uarded . Complete records of such account funds and of other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation. (b) Upon receiv ing funds or other pro perty in which a client or third person has an interest, a law yer 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 o r other prop erty that the client or th ird person is entitled to rece ive and, up on reque st by the client or third person, sha ll promp tly render a full acc ountin g regar ding su ch prop erty. 4 Rule 8.4, as relevant, provides: It is professio nal miscon duct for a la wyer to: (a) violate o r attempt to v iolate the rules o f professio nal condu ct, knowingly assist or induce an other to do so through the acts of another; (b) com mit a crim inal a ct tha t refl ects adverse ly on the la wyer s ho nesty, trustworthin ess or fitness as a lawyer in o ther respects ; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) en gage in condu ct that is p rejudici al to the a dminis tration o f justice . 2 16-603, Duty to Maintain Accou nt, 5 and 16-604, Trust Account - Required Deposits, 6 as well as Maryland Code (1989, 2000 Replacement Volume) § 10-3067 of the Business and Occupation Article. The alleged violations were committed during the course of the respondent s representatio n of Da rrill Winder a nd his minor children in their personal injury claims arising out of a m otor vehicle accident. 8 5 Rule 16-603 provides: An attorney or the attorney's law firm shall maintain one or more attorney trust accounts for the deposit of funds received from any source for the intended b enefit of clie nts or third pe rsons. The account o r accounts s hall be mainta ined in this S tate, in the Distric t of Colum bia, or in a state contigu ous to th is State, a nd sha ll be with an app roved f inancia l institutio n. Unless an attorney maintains such an account, or is a member of or employed by a law firm that maintains such an account, an attorney may not receive an d accept fu nds as an a ttorney from a ny source inten ded in w hole or in pa rt for the benef it of a clie nt or third person . 6 Rule 16-604 provides: Except as otherwise permitted by rule or other law, all funds, including cash, received and accepted by an attorney or law firm in this State from a client or third person to be delivered in whole or in part to a client or third person, unless received as payment of fees owed the attorney by the client or in reimbu rsement fo r expense s properly adv anced on behalf of the client, shall be deposited in an attorney trust account in an approved financial institution. This Rule does not apply to an instrument received by an attorney or law firm that is made payable solely to a client or third person and is tra nsmitte d directl y to the clie nt or third person . 7 Maryland Code (1989, 2000 Replacement Volume) § 10-306 of the Business and Occupation Article provides: A lawyer may not use trust money for any purpose other than the purpose for which the trust money is entrusted to the lawyer. 8 The Petition for Discip linary or Rem edial Actio n also charg ed the respo ndent w ith certain R ule viola tions in c onnec tion wi th his rep resenta tion of D orethia L . Glove r. Those allegations of p rofessional miscondu ct were withdraw n by the petitioner. 3 We referred the case to the H onorable M. Brooke Murdock, of the Circuit Court for Baltimore City, for h earing. See Rule 16-757. Although served with process, the respondent did not file an answer, prompting the entry of an order of default. Following a hearing on the merits,9 at which the respo ndent neith er appeare d, nor particip ated and in which testimony was elicited and exh ibits considered from the p etitioner, the hearing court made finding s of fac t, see Rule 16-757 (c), 10 and drew conclusions of law, as follows: Findings of Fact Barry K. Watson (hereinafter the Respondent ) was admitted to the Maryland Bar on December 23, 1987. Throughout the period of the representa tion and events which are the subject of these findings, the Respondent maintained an office for the practice of law as a sole practitioner in Baltim ore C ity. [11] In July 2001, the Respondent assumed representation of Darrill Winder 9 Notice of the order of default and the date it set for the hearing was mailed to the respondent at his last known address. Although that hearing date was rescheduled, the court, by letter, notified respondent of the new date. 10 Maryland Rule 16-757 (c) provides: (c) Findin gs and C onclusion s. The judg e shall prepa re and file o r dictate into the record a statement of the judge's findings of fact, including findings as to any evidence regarding remedial action, and con clusions of law. If dictated into the record, the statement shall be promptly transcribed. Unless the time is extended by the Court of Appeals, the written or transcribed statement shall be filed with the clerk responsible for the record no later than 45 da ys after the con clusion of th e hearing. T he clerk sha ll mail a copy of t he statem ent to ea ch party. 11 In a footnote, the hearing court noted that it had been advised that, effective April 8, 2003, the Respondent was decertified as an attorney in this State for non payment of the annual attorney s assessment [to] the Client protection Fund of the Bar of Marylan d. 4 and Mr. Winder's three minor children, Quashawn, Shacora and Tyneshia, (hereinafter referred to collectively as the Winders ), in connec tion with the ir personal injury claims arising from a motor vehicle accident which occurred on August 9, 2000. The W inders originally had been represented by the law firm of Hassan, Hassan & Tuchman, P.A. ( the Hassan firm ). Prior to July 2001, the Hassan firm had received Personal Injury Protection (PIP) payments on behalf of each of the Winders and deposited such funds for safekeeping in the firm 's attorney escrow account. After being advised in July 2001 that the Winders had retaine d the Resp ondent as their new attorney, the Hassan firm transferred the escrowed PIP funds to the Respondent by the issuance of four checks drawn on the Hassan firm's attorney escrow account. Each of the checks was made payable to Barry W atson E scrow Acco unt. The four chec ks were issued in the following amounts. Check No. 37852 37853 37854 37855 Amount $869.56 893.23 682.19 877.04 For (Clien t) Quashawn Winder Tyneshia Winder Darrill Winder Shacora Winder On or about July 17, 2001, the Respondent picked up the four checks from the Hassan firm along with the representation files for the Winders. In July 2001 and at all times thereafter, the Respondent maintained no attorney trust or escrow account in which client funds could be appropriate ly safeguarded. Shortly after obtaining the four escrow account checks issued by the Hassan firm, the Respondent cashed those checks or deposited the checks in a personal bank account. In either case, the Respondent did not deposit and safeguard the funds as trust money entrusted to him to hold for the benefit of the Winders or another beneficial owner. See Maryland Code, Business Occupations and Professions Article, § 10-301(d ). The Re sponden t knowin gly and willfu lly appropriated the Winders PIP mo nies totaling $ 3,322.02 f or his perso nal use and benefit. As of July 2001, the Respondent commenced representation of the Winders with respect to their claims against the allegedly negligent third party or parties responsible for their injuries. In October 2001, the Respondent agreed to negotiated settlements of the Winders' claims. The claims were settled jointly with Maryland Automobile Insurance Fund (MAIF) and Safeco Insurance Company, which insured the two vehicles involved in the accident. The Winders had been pas sengers in the vehicle 5 insured by MAIF. In October 2001, the Respondent received a total of eight settlement checks, four issued by each insuran ce carrier. Each of the fo ur MAIF checks was issued October 18, 2001 and was made payable jointly to the claimant and the Respondent, as follows: Check No. H10695 H10696 H10697 H10698 Amount $1,500.00 750.00 1,000.00 750.00 Claimant Darrill Winder Tyneshia Winder* Shacom W inder* Quashaw n Winder* (*The checks issued for th e three min ors were m ade payable jointly to Dana Taylor, as parent an d/or guardian of each child, and B arry K. W atson, A tty.) Each of the four Safeco checks was issued [on] October 23, 2001 and was made payable to the claimant c/o Barry (or Barry Keith) Watson, as follows: Check No. Amount Claimant 0668152 0668153 0668154 0668155 $1,500.00 750.00 1,000.00 750.00 Darrill Winder Tyneshia Winder Sharma Winder Quashawn Winder The combined total amount of the eight settlement checks was $8,000 .00. The Respondent forged the endorsements of his clients in order to negotiate all eight checks and retained all of the proceeds therefrom for himself. The Respondent did not deposit and safeguard the Winders' settlement funds as trust money. He knowingly and willfully appropriated such fun ds for his pe rsonal use a nd benef it. For a considerable period of time following the settlements, extending into mid-2002, the Respondent tried to conceal his actions by misrepresenting to Darrill Winder and Mr. Winder's wife, Dana W inder (a/k/a Dana Taylor), that he had n ot received any of the settlement ch ecks. In September 2002, the Respondent turned over the Winders' representation files 6 to Darrill and Dana Winder and admitted to cashing the insurance settlement checks issued by MAIF and Safeco. The Respondent has not repaid any of the m isappropriated PIP monies and settlement funds. Conclusions of Law This court concludes that the Respondent, upon being retained in July 2001 to represent Darrill Winder and Mr. Winder's three minor children, Quashawn, Shacora and T yneshia , and while representing them thereafter, engaged in professional misconduct as defined in Maryland R ule 16-70 1(i) and Rule 8.4 of the Maryland Rules of Professional Conduct (MRPC) , as adopted by Mar yland Ru le 16-8 12. The Respon dent failed to keep the c lients reasonably informed about the status of the representation and in fact knowin gly misled Mr. and Mrs. Winder about the status in order to conceal his misappropriation/theft of client funds. The Responden t s actions violated the communication requirements of MRPC 1.4, as well as the prohibition against engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, MR PC 8.4(c). By receiving and accepting funds for the benefit of clients or third persons when he did not maintain an attorney trust account for the deposit of such funds, the Respondent violated the follow ing Ma ryland Rules s et forth in Title 16, Chapter 600: Rule 16-60 3 Duty to M aintain Accou nt. An attorney o r the attorney's law firm shall maintain one or more attorney trust accounts for the deposit of funds received from any source fo r the intende d benefit of clients or third persons. The acco unt or acco unts shall be maintained in this State, in the District of Colu mbia, or in a state contigu ous to this State. and shall be with an approved financial institution. Unless an attorney maintains such an account, or is a member of or employed by a law firm that maintain s such an a ccount, an attorney may not receive and accept funds as an attorney from any source intended in w hole or in part for the benefit of a client or third person. 7 Rule 16-604 Tru st Account - Required Depo sits. Except as otherwise permitted by rule or other law, all funds, including cash, received a nd accepted by an attorney or law firm in this State from a client or third person to be delive red in wh ole or in part to a client or third person, unless received as payment of fees owed the attorney by the client or in reimbursement for expenses prop erly advanced on behalf of the client, shall be deposited in an attorney trust account in an approved financial institution. This Ru le does no t apply to an instrument received by an attorney or law firm that is m ade payable s olely to a client or third person and is transmitted directly to the client or third person. The Respondent violated MRPC 1.15(a) by not holding the Winders' PIP monies and settlem ent funds separate fro m his own property and by not otherwise safeguarding the Winders' client funds. He violated MRPC 1.15(b) by failing to notify his clients upon receiving funds in which th ey had an inter est, by failing to deliver to the clients funds to which they were entitled and by not rendering a full accounting of all client funds he obtained as the Winders' attor ney. The Respondent knowingly and willfully misused trust money entrusted to him for the benefit of the Winders. Such conduct violated § 10-306 of the Business Occupations and Professions Article. The R esponde nt engage d in criminal acts reflecting adversely on his honesty, trustworthiness or fitness as a lawyer in other respects, in violation of M RPC 8.4(b). Th e Responden t s criminal acts include, but are not necessarily limited to, theft (Md. Code, Criminal Law Article, § 7-104), fraudulent misappropriation by a fiduciary (§ 7113) and coun terfeiting of p rivate instruments and documents (§ 8-601). The Responden t s criminal activities also establish violations of M RPC 8.4 (c) & (d). Neither the petitioner n or the respo ndent filed exception s to the findings and conclusions of the h earing c ourt. As we have seen, the respondent did not participate in these proceedings. The petition er has filed P etitioner s Re comme ndation fo r Sanction, in which it urges the respondent s disbarment. In support of that recommendation, it references the 8 hearing court s finding that the respondent misappropriated funds he obtained in his capac ity as an attorney en trusted with clients perso nal injury settleme nt checks, as well as personal injury protection funds transferred to him by prior coun sel, forging th e clients end orsemen ts to accomplish that result, and relies on Attorney Griev. Comm n v. Vlahos, 369 Md. 183, 186, 798 A. 2d 555, 556 (2002); Attorney Griev. Comm n v. Mininsohn, 380 Md. 536, 571-572, 846 A. 2d 353, 375 (2004); Attorney Griev. Comm n v. Herman, 380 Md. 378, 399-400, 844 A. 2d 1181, 11 94-1195 (200 4). Following oral argument, aware that the respondent was then not eligible to practice law, having been decertified by this Court for failure to pay his annual attorney assessment to the Client Protection Fund of the Bar of Maryland and having been informed that a preliminary injunction e njoining th e respondent from practicing, attempting to practice, holding himself out as authorized to practice, law and soliciting, charging or accepting payments intended as fees for legal services had been obtained by the petitioner on May 26, 2004,12 the Court issued, on June 3, 2004, a Per Curiam Order immediately disbarring the 12 Although the respondent did not appear or participate in the injunction proceedin gs, he wa s served bo th with pro cess inform ing him of the action an d giving h im notice of the hearing an d, on May 28, 200 4, with the Order G ranting Preliminary Injunc tion. In deciding to grant the preliminary injunction, the trial court acknowledged that the respondent was decertified to practice law and expressed its satisfaction that the [respondent] poses an immediate and ongoing threat of causing substantial injury to the financial interest of members of the public who may pay the [respondent] to provide legal services, as well as substantial harm to the administration of justice by the continuation of his unauthorized practice of law. 9 respondent for reasons to be stated in an opinion later to be filed. We now provide those reasons. This Court has consistently and repeatedly admonished that [m]isappropriation of funds by an attorney is an act infested w ith deceit and disho nesty and ord inarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanctio n. Attorney Griev. Comm n v. Brown, 380 Md. 661, 668, 846 A. 2d 42 8, 432 (2004); Attorney Griev. Comm n v. Hayes, 367 Md. 504, 510 , 789 A.2d 119, 123 (2002); Attorney Griev. Comm n v. Vanderlinde, 364 Md. 376, 418, 773 A. 2d 463, 488 (2001); Attorney Griev. Comm 'n v. Bernstein , 363 Md. 208, 226 , 768 A.2d 607, 617 (2001); Attorney Griev. Com m'n v. Tomaino, 362 Md. 48 3, 498, 765 A.2d 65 3, 661 (20 01); Attorney Grie v. Co mm'n v. Sheridan, 357 Md. 1, 27, 741 A.2 d 1143, 1 156 (199 9); Attorney Griev. Comm'n v. Bakas, 323 Md. 395, 403, 593 A.2d 1087, 1091 (1991). Moreover, our application of the general rule has been consistent: d isbarmen t will inevitably fo llow any unmitigated misappropriation of client, or any third party s funds[.] Attorney Grievance Comm n v. Hayes, 367 Md. 504, 512-13, 789 A.2d 119, 124 (2002), and the cases therein cited. This is in line with th e American Bar Association Standards for Imposing Lawyer Sanctions (1986). Standard 5.11 provides th at: "Disbarment is generally appropriate when: (a) a lawyer engages in serious criminal condu ct a necessary element of which includes intentional interference with the administration of justice, false swearing, misrepresentation, fraud, extortion, misappropriation, or theft; or the sale, distribution or 10 importation of controlled substances; or the intentional killing of another; or an attempt or conspiracy or solicitation of another to commit any of these offenses; or (b) a lawyer engages in any other intentional conduct involving dish onesty, fraud, dec eit, or misrepre sentation tha t seriously adversely reflects on the lawyer's fitness to practice. Our cases also a re clear that th e burden is on the resp ondent to d emonstrate - in Maryland, the burden of establishin g factual m atters in a defense must b e car ried by a preponderance of the e videnc e, [Attorney Griev. Comm n v. ] Pow ell, 328 Md. [276,] 288, 614 A.2d [ 102,] 109 [(19 92)]; Attorney Griev. Comm'n v. Bakas, 322 Md. 603, 605, 589 A.2d 52, 53 (1991) - that less severe discipline than that [recommended by Bar Counsel], or no discipline, should be imposed. Brown, 380 Md. at 669-670, 846 A. 2d at 433, quoting McCoy, 369 Md. at 236, 798 A. 2d at 1137. As we have seen, the respondent has made no submission and, indee d, has not participated at all in these proceedings. Consequently, the respondent certainly has not shown by a prep onderance of the evidence that a less severe sanctio n than th at recom mend ed sho uld be im posed in these procee dings. Given the hearing court s findings, the only appropriate sanction in this case is disbarm ent. IT IS SO ORDERED; RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING COSTS OF ALL TRANSCRIPTS, PURSUANT 11 TO MARYLAND RULE 16-761, FOR WHICH SUM JUDGMENT IS ENTERED IN FAVOR OF THE A T T O R N EY C O M M I S S IO N AGAINST WATSON. 12 G R I E V A N CE BARRY K.

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