Attorney Grievance v. Daskalopoulos

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IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 33 September Term, 2003 ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. DIMITRI G. DASKALOPOULOS Bell, C.J. Raker Wilner Cathell Harrell Battaglia Greene JJ. Opinion by Bell, C.J. File: October 13, 2004 The Attorney Grievance Commission of Maryland, the petitioner, acting pursuant to Maryland Rule 16-751,1 approved the filing by Bar Counsel of a Petition For Disciplinary or Remedial Action against Dimitri G. Daskalopoulos, the respondent. In that petition, pursuant to two com plaints filed against him, Bar C ounsel ch arged the re sponden t with miscond uct, as defined by Maryland Rules 16-701 (i),2 and 16-812, and consisting of violations of various of the Maryland Rules of Professional Conduct, as adopted by the latter Maryland Rule, to w it:. Rules 1.4, Communication,3 1.15 , Saf ekee ping Prop erty, 4 8.1, Bar 1 Maryland Rule 16-751 provides: (a) Com mencem ent of discip linary or remed ial action.(1)U pon app roval of the Commission. Bar Counsel shall file a Petition for Disciplinary or Remedial Action in the Court of Appeals. 2 Pursuant to Maryland R ule 16-70 1 (i) Profe ssional misc onduct o r miscon duct has the meaning set forth in Rule 8.4 of the Maryland Rules of Professional Conduct, as adopted by Rule 16-812. The term includes the knowing failure to respond to a request for information authorized by this Chapter without asserting, in writing, a privilege or other basis for such failure. 3 Rule 1.4 provides: (a) A lawyer shall keep a client reasonably informed about the status of a matter a nd pro mptly com ply with re asonab le reque sts for in forma tion. (b) A law yer shall explain a matter to the extent reaso nably necessa ry to permit th e client to make inform ed dec isions re gardin g the rep resenta tion. 4 Rule 1.15 provides, as relevant: (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 Admission and Disciplinary Matters,5 and 8.4, Miscon duct, 6 other M aryland R ules, i.e. 16603, Duty to main tain accoun t,7 16-604, Trust Account-Required Deposits, 8 16-606, Name 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 party, shall promp tly render a full acc ountin g regar ding su ch prop erty. 5 Rule 8.1 p rovides, as re levant: An ap plicant for ad mission or re instatemen t to the bar or a lawyer in connection with a bar admission application or in connection with a disciplinary ma tter, shall not: * * * * (b) fail to disc lose a fact n ecessary to corr ect a misapprehension known by the person to have arisen in the matter, or knowingly fail to respond to a lawful demand for info rmation from an ad miss ions or disciplinar y auth ority, except that this Rule does not require disclosure of information otherwise protected by Rule 1.6. 6 Rule 8.4, as relevant, provides: It is professional misconduct for a lawyer to: (a) violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or do so through the acts of an other; (b) commit a criminal act that reflects adversely on the lawyer's hone sty, trustworthine ss or fitness a s a lawyer in other respe cts; (c) engage in conduct involving dishonesty, fraud, deceit or misreprese ntation; (d) engage in conduct that is prejudicial to the administration of justice; * * * * 7 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 benefit of clients or third persons. The account or accounts shall be maintained in this State, in the 2 and Designa tion of A ccount, 9 16-607, Commingling of Funds, 10 16-609, Prohibited District of Columbia, or in a state contiguous 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 maintains such an account, an attorney may not receive and accept funds as an attorney from any source intended in whole or in part for the benefit of a client o r third pe rson. 8 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 . 9 Rule 16-606 provides: An attorney or law firm shall maintain each attorney trust account with a title that includes the name of the attorn ey or law firm and that clea rly designates the account as "Attorney Trust Account", "Attorney Escrow Account", or "Clients' Funds Account" on all checks and deposit slips. The title shall distinguish the account from any other fiduciary account that the attorney or law firm may maintain and from any personal or business accou nt of the attorney o r law fir m. 10 Rule 16-607 provides: a. General Prohibition. An attorney or law firm may deposit in an attorney trust account only those funds required to be deposited in that account by Rule 16-604 or permitted to be so deposited by section b. of this Rule. b. Exceptions. 1. An attorney or law firm shall either (A) deposit into an attorney trust account funds to pay any fees, service charges, or minimu m balanc e required b y the financial in stitution to open or maintain the account, including those fees that cannot be charged against interest due to the Maryland Legal Services Corpora tion Fund pursuan t to Rule 16-610 b 1 (D), 3 Transactions,11 and section s of Ma ryland Code (1989,20 0 0 Rep lacement V olume), of the Business Occupations and Professions Article,12 namely, § 10-304, requiring expeditious deposit of trust money into an attorney s trust account, 10-306, prohibiting the use of trust money for any purpose other than the purpose for whic h the trust mo ney is entrusted, and or (B) enter into an agre ement w ith the financ ial institution to have any fees or charges deducted from an operating account maintained by the attorney or law firm. The attorney or law firm may deposit into an attorney trust account any funds expected to be adva nced on b ehalf of a client and ex pected to be reimbu rsed to the atto rney by the client. 2. An attorney or law firm may deposit into an attorney trust account funds b elonging in part to a client and in p art presently or potentially to the attorney or law firm. The portion belonging to the attorney or law firm shall be withdrawn promptly when the attorney or law firm becomes entitled to the funds, but any portion disputed by the client shall remain in the account until the dispute is resolved. 3. Funds of a client or beneficial owner may be pooled and commin gled in an a ttorney trust acco unt with the funds he ld for oth er clients or bene ficial ow ners. 11 Rule 16-609 provides: An attorney or law firm may not borrow or pledge any funds required by these Rules to be deposited in an attorney trust account, obtain any remuneration from the financial institution for depositing any funds in the account, or use any funds for any unauthorized purpose. An instrument drawn o n an attorne y trust account m ay not be draw n payable to ca sh or to bearer 12 Bar counsel included Maryland Code (1989, 2000 Replacement Volume) § 10606 (b) of the Business Occupations and Professions Article, a penalty section, among the statutes v iolated. 4 10-30 7, subje cting an attorney w ho mis uses tru st mon ey to discip linary actio n. We referred the case to the Honorable Michael E. Loney, of the Circuit Court for Anne Arundel County, for hearing pursuant to Rules 16-752 (a)13 and 16-757 (c). 14 Although he acc epted s ervice, the respondent neither filed an answer to the petition or appeared at the hearing.15 Conseq uently, an Ord er of De fault was enter ed. Sub sequ ently, following a hearing, th e hearing court found facts, by clear and convincing evidence, and drew conclusions of law with respect to the complaints of David Rushfield and Charles 13 Rule 16-752 (a) provides: (a) Order. Upon the filing of a Petition for Disciplinary or Remedial Action, the Court of Appeals may enter an order designating a judge of any circuit court to hear the action and the clerk responsible for maintaining the record. The order of designation shall require the judge, after consultation with Bar Counsel and the attorney, to enter a scheduling order defining the extent of discovery and setting dates for the completion of discovery, filing of motions, and hearing. 14 Maryland Rule 16-757 (c) provides: (c) Findin gs and co nclusions. T he judge s hall prepare and file or d ictate 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 days after the conclusion of the hearing. The clerk shall mail a copy of the statement to each party. 15 The respondent did call the court immediately prior to the first hearing scheduled by the court following its entry of an Order of Default and, claiming to be hospitalized for neurological and psychological treatment at the Stanford Medical Center, Palo Alto, California, requested a continuance of that hearing so that he could file responses to the petition and discovery requests and present a defense. The continuance was granted; however, the respondent did not appear at the continued hearing. 5 D Am ico, resp ectively. The respondent was retained by David Rushfield, a New Jersey petroleu m dealer, in connection with a contract dispute with Sunoco. In June 2002, he negotiated a settlement of that dispute, under the terms of which Rushfield agreed to pay Sunoco fourteen thousand ($14,000.00) dollars. To a ccomm odate his clien t, who wanted to delay paying Su noco un til after he settled on the purcha se of prop erty for a new gas station, the respondent promised Rushfield, conditioned o n being repaid a t a later tim e, that he would pay Sun oco fo r him. He did not do so. Two months later, however, the respondent presented Rushfield with a settlement agreement, purportedly between Rushfield and Sunoco, in which a Joseph D. Zulli acknowledged receipt of thirteen thousand ($13,000.00) dollars. signed that name. The respondent Subsequently, the respondent gave Rushfield a letter addressed to a Richard Gaines, Esq. at Sun oco. Acc ording to tha t letter, due to a m isunderstan ding as to payment, for which Sunoco was at fault, the respondent enclosed a second check, this one in the amount o f fourteen thousand ($14,000 .00) dollars, to cover Ru shfield s ob ligation to Sunoco. A complaint against the re sponden t having be en filed w ith the petitione r on beha lf of Mr. Rushfield, Bar Counsel sent respondent a letter advising him of that complaint. The responde nt received and read th at letter, but did n ot respond to it. Based on the foregoing findings, the hearing court found, by clear and convincing evidence, that the respondent violated Rules 1.4, 8.1 and 8.4 of the Rules of Professional Responsibility. More particularly, the hearing court concluded, the respondent s lack of 6 candor with respect to his payment of his client s obligation, after having represented that he would d o so, resulting in failure to inform the client as to the status of settlement payment to Sunoco, or explain to him what actually transpired with respect to it, constituted the communications violatio n. The violation of R ule 8.1 consisted of the resp ondent s failure to respon d in wr iting to B ar Cou nsel s re quest f or info rmation . As to Ru le 8.4, the hearing court explained: Responden t s conduct of forging a signature of Sunoco s counsel acknowledging receipt of thirte en thousa nd ($13,0 00.00) do llars involved dishonesty, deceit, and misrep resenta tion in v iolation of Ru le 8.4 (c). Such conduct is prejudicial to the admin istration o f justice in violat ion of R ule 8.4 (d) and these als o violate Rule 8 .4 (a). The respondent negotiated the settlement of the contract dispute betw een his clien t, Charles D Amico, a New Jersey petroleum dealer, and Sunoco. The settlement agreement provided that Mr. D Amico would pay and Sunoco would accept $71,188.61 for the termination of Mr. D Amico s petroleum franchise. Mr. D Amico authorized the respondent to wire the ag reed sum directly to Sunoco. Consistent with that authoriza tion and to facilitate the payment to Sunoco, on June 12, 2002, Mr. D Amico, as instructed by the responde nt, wired the agreed sum to a Bank of America account, M ary Patricia M . Daskal, POD Dimitri G. D askal, wh ich the respo ndent repre sented w as his attorney trus t account. That account, which b efore the transfer had a balance of only $211.78, was not the respondent s trust account. The respondent paid Sunoco only $32,740.00 of the $71, 188.61, by wire from the account on August 12, 2002, leaving a balan ce of $ 38,488 .61. 7 Nevertheless, the account balance as of October 8, 2002 was $1,554.08, and the respondent has never accounted for those funds. Although B ar Counsel notified the re spondent of M r. D Amico s complaint, requesting a written response, none was ever given. In addition, the respondent failed to appear in response to a subpoena to personally appear for a statement under oath, despite having been served and having requested the rescheduling of the proceeding. On these facts, the hearing court concluded that the respondent violated all of the rules and statutes c harged . His failure to keep Mr. D Amico informed concerning the settlement proceeds and, in fact, misleading him by falsely advising him that the funds would be placed in his attorney trust a ccoun t and the n forw arded to Suno co, wa s a viola tion of R ule 1.4. Rule 1.15 was violated, the hearing court determined, when: the respondent placed Mr. D Amico s funds in a personal account, rather than in his attorney trust account; did not promptly forward those funds to the third party to whom they were due; and failed to account for $38, 448.61 of those funds. The Rule 8 .1 violation consisted of the respondent s failure to respond to the petitioner s request for information. His failure to appear, after service, in response to a subpoena to personally appear for a statement under oath, also constituted a violation of that rule. The hearing court found by clear and convincing evidence that the respondent misappropriated $38,448.61 of Mr. D Amico s money. 8 Because misappro priation is criminal conduct w hich adversely reflects on the respondent s honesty, trustworthiness or fitness to practice law, it constitutes, the court concluded, a violatio n of R ule 8.4 (b).16 Such conduct, the hearing court also co ncluded, is p rejudicial to the administratio n of justice in violation of Rule 8.4 (d ) and con stitutes a violation of the rules o f professio nal condu ct. Violations of Ma ryland Rules 16-603, 16-604, 16-606, 16-607 and 16-609 were found by the hearing court based upon the respondent s failure to: maintain an attorney trust account; deposit client funds in such an account; and name or designate s uch an ac count in a man ner that c learl y identifies it as such. The respondent also used funds for an unauthorized purpose, the hearing court concluded. With respect to the charged violations of § § 10-304 and 10-307 of the Business Occupations and Professions Article, the hearing court was of the view that they were shown by the respondent s deposit of Mr. D Amico s funds in an account that was not an attorney trust account and by the respondent s failure to account for that portion of the D Amico funds that were not paid as authorized and, therefore, did not belong to him. The petitioner has taken exc eption to the hearing court s failure to find in connection with the D A mico c ompla int, a viol ation of Rule 8 .4 (c), proscribing conduct involving 16 The hearing court s memorandum opinion stated that the violation was of subsection (c). That sub section pro scribes con duct invo lving disho nesty, fraud, de ceit or misapp ropriation, w hile Rule 8 .4 (b) addres ses a crimin al act that reflec ts adversely on the law yer s honesty, trustw orthiness or f itness as a law yer in other resp ects. It is thus clear that the hearing court intended to find a violation of the latter subsection of Rule 8.4. 9 dish onesty, fraud, deceit or misappropriation, and § 10-306 of the Business Occupations and Professions Article, prohibiting a lawyer s use of trust money for a purpose other than that for which it was entrusted. It submits: The facts found by Judge Loney and his specific finding that Respondent knowin gly misappro priated app roximately half of the funds entrusted to h im by [Mr.] D Amico and that the fun ds were c learly disbursed for unauthorized and unintended purposes provide clear and convincing evidence of a violation of BOP § 10-306 and MRPC 8.4 (c). (Footnote omitted) We agree. The petitioner s exceptions, accordingly, are sustained. Turning to the sanction, the petitioner recommends that the respondent be disbarred. It points out, in support of the recommendation, that, in addition to a myriad of violations of varying severity, the hearing court found that in the course of representing two clients, the respondent forged the signature o f another attorney in one case and misap propriated more than $38,000.00, or more than half of the funds entrusted to him for the purpose of discharging the client s contractual obligation, the amount of which the respondent negotiated, presumably for the client s benefit. Such conduct, the petitioner contends, o f itself, warrants the ultimate sanction. Indeed, the petitioner re minds us o f what w e have said quite often, that misappropriation is an act infe cted with deceit and dishonesty, and, in the absence of compelling extenuating circumstances justifying a lesser sanction, will result in disbarm ent. Attorney Grievance Comm n v. Post, 379 Md. 60, 68, 839 A. 2d 718, 723 (2003); Attorney Grievance C omm n v. Sp ery, 371 M d. 560, 5 68, 810 A. 2d 487, 491-92 (2002). Thus, the general rule is, disbarment will inevitably follow any unmitigated 10 misappropriation of client, or an y 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. The same rule applies, moreover, it continues, when intentional dishonest conduct other than misappropriation is involv ed. See Attorney Grievance C omm n v. Gallagher, 371 Md. 673, 715, 810 A. 2d 99 6, 1021(2002); Attorney Grievance Comm n v. Vanderlinde, 364 Md. 376, 410, 77 3 A. 2d 463, 48 3 (200 1). As we hav e seen, the re sponden t has not resp onded to th e petitioner s c harges. H e did not appear at the hearing and has not presented anything by way of mitigation for the Court to consider. There simply is noth ing in this record that could, or would, mitigate the respondent s conduct; there are no compelling extenuating circumstances that would justify a lesser sanction than disbarment. Consequently, we adopt the petitioner s recommendation and ord er the re spond ent disb arred. IT IS SO ORDERED; RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING C O S T S O F A L L T R A N S C R IP T S , PURSUANT TO MARYLAND RULE 16-761, FOR WHICH SUM JU DGMENT IS ENTERED IN FAVOR OF THE ATTORNEY GRIEVANCE COMM ISSION AGAINST DIM ITRI G. DA SKA LOP OUL OS. 11

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