Attorney Grievance v. Davis

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Circuit Co urt for Princ e Georg e s Coun ty Case No. CAE02-26578 IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 80 September Term, 2002 ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. GARY E. DAV IS Bell, C.J. *Eldridge Raker Wilner Cathell Harrell Battaglia, JJ. Opinion by Raker, J. Bell, C.J., Wilner and Harrell, JJ., dissent Filed: February 11, 2004 *Eldridge, J., now retired, participated in hearing and conference of this case while an active member of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion. On November 12, 2002, the Attorney Grievance Commission, acting through Bar Counse l, filed a petition with this Court for disciplinary action against respondent Gary E. Davis, charging him with violating Maryland Rules of Professional Conduct 1.15 (Safekeeping prop erty) 1 and 8.4(b), (c), and (d) (Misconduct). 2 Pursuant to Maryland R ule 1 Rule 1.15 provides as follows: 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 property shall be identified as such and appropriately safeguarded. C omplete records of such account funds an d of other p roperty shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation. (b) Upon receiving funds or other property in which a client or third person ha s an interest, a la wyer 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 p erson is entitled to receive and, upon request by the client or third person, shall promptly render a ful l accounting rega rding suc h pro perty. (c) When in the course of representation a law yer is in possession of prope rty in whic h both the lawyer and another person claim interests, the property shall be kept separate by the lawyer until there is an accounting and severan ce of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separate by the lawyer until the disp ute is res olved. 2 Rule 8.4 provides, in pertinent part, as follows: It is professional misconduct for a lawyer to: *** 16-752(a), we referred the matter to Judge Julia Weatherly of the Circuit Court for Prince George s County to make findings of fact and proposed conclusions of law. Judge Weathe rly held an eviden tiary hearing on May 7, 200 3, and con cluded that the Rules of Professional Conduct had not been violated as alleged by Bar Counsel, but that Davis had violated Maryland Code (2002 Repl. Vol., 2003 Cum. Supp.) § 22-103(f) of the Insurance Article. I. Judge Weatherly made the following findings of fact and conclusions of law: FINDINGS OF FACT 1. Responden t was admitted to the B ar of the Court of Appeals on May 25, 1982. In October 1999, Respondent was in private practice specializing in criminal defense representation and personal injury work on behalf of plaintiffs. He testified that he has recently ended his active practice of law. (b) comm it a criminal ac t that reflects ad versely on the lawyer s honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving disho nesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice -2- 2. In October 1997, the Respondent and his then girlfriend, Linda Pelton, establish ed and forme d Alleg iance T itle & E scrow , Ltd. (hereinafter Allegiance Title ). The Respondent was the sole owner and President of the com pany. Ms. Pelton was Vice President. He did not receive a salary but would share any profits earned by the company equally with Ms. Pelton, who operate d the bu siness. 3. Respondent did not attend or conduct any settlements on behalf of the company. He did contribute to the operation of Allegiance Title by reviewing and signing deeds. He was paid a fee for each deed. He was also a signatory on the bank accounts. 4. When A llegiance starte d in 1997, Respondent opened an escrow account and a commercial checking account in the compan y s name w ith the Com munity B ank of Marylan d (here inafter Bank ). 5. At the time the escrow account was opened, the Respondent was unaware of the provisions of Chapter 22 of the Insurance Article of the Annotated Code of Maryland. Section 22-103(b) requires all title insurance companies to pool and commingle monies received as the result of a settlement, clo sing, or other title work if th e title insurer be lieves the de posit will generate in terest less than $ 50 or the co st of admin istering a sepa rate account. Section 22 -103(c) req uires the intere st in the escrow accounts th at -3- contained commingled funds as indicated in (b) above to be paid by the Bank to the Maryland Affordable Housing Trust (MAHT), to help provide affordab le housing throughout Maryland. Section 22-103(f) provides that except for the trust money deposited in to a MAHT account, trust money may be deposited in any other deposit or investment vehicle specified by the client or beneficial owner, or as agreed to by the beneficial owner and title insurer, or its age nt. Tho se acco unts ca n be an interest b earing a ccoun t. 6. In the fall of 1999 Chicago Title conducted an audit of Allegiance Title, and notified the Respondent of the existence of the requirem ent for all title insurance companies to maintain a MAHT (Maryland Affordable Housing Trust) account. The Respondent then met with an employee of the Bank, who suggested that Allegiance Title should set up a MAHT account and a sweep accou nt. 7. After a review of Allegiance Title s records, the Bank suggested to the Respondent that the company should deposit fun ds less than $ 150,000 into a MAHT account, as these funds were likely to generate less than $50.00 in interest or the cost o f administe ring a separ ate account p ursuant to Md. Code Ann., Title Ins. § 22-103(b)(c). Deposits of $150,000 or greater were to be depos ited into the com pany s ex isting es crow a ccoun t. 8. Respon dent instructe d Ms. Pelton to structure Allegiance T itle s -4- deposits as described above. However, between November or December 1999 and December 2000, the Bank closed the MAHT account on several occasions because there was no activity in the account. After each such occasion, Allegianc e Title instructe d the Ban k to reopen the account. The Respondent attributed the lack of use of the a ccount [] to difficulties with Allegiance Title s software. Respondent s Exhibit No. 1, Document 2 (Letter from Responden t s attorney, Jan. 22, 2001). It was not until December 2000 th at Allegia nce Tit le bega n to utiliz e the M AHT accou nt. 9. Allegianc e Title main tained its original escro w accou nt. Depos its in excess of $150,000 were made into this account. Monies held in that account were transferred or swept by the Bank at the end of each banking day into a separate interest bearing account established in the name of the com pany. The follo win g bankin g day, the interest earned on the funds held in that separate interest bearing account was transferred to Allegiance Title s commercial checking account. The principal balance was transf erred back to the escrow account on the next banking day following the sweep as needed to meet the obligations of the original escrow account. Through the use of the sweep account, A llegiance T itle earned interest on funds in its escrow account in the amount of $6,625.10 in 1999 and $19,984.79 in 2000. 10. There is no evidence that [] Allegiance Title s MAHT account -5- was ever swept or that A llegiance Title retained the inte rest on that ac count. 11. The Respondent admits that the beneficial owners were not given notice and their consent w as not acqu ired prior to Allegiance Title depositing trust mone y into its escrow account a nd the sw eep acco unt. 12. During the relevant p eriod, the R esponde nt maintaine d separate general and escro w accou nts for his leg al practice. H e properly ma intained his escrow funds in an IOLTA account as required by Md. Code Ann., Bus. Occ. & Prof. § 10-301 et seq. CONCLUSIONS OF LAW The Commission does not allege that the Respondent has impro perly handled the trust account used in his legal practice. The Commission has filed this disciplinary proceeding against the Respondent, alleging that because he is an attorney, his title insurance company cannot retain the benefit of the interest earned in the sweep accounts. The Petitioner maintains that if the trust funds were not deposited in a MAHT account, these funds should have been dealt with as any other fiduciary funds as defin ed by the statute. The statute required that those beneficial owners must consent to the deposit of trust money into an account which benefitted the Respondent and the consent needed to be in writing in conformity with COMAR 31.16.03.05. The Complaint alleges that failure to comply with these statutes constitutes a -6- violation of his ethica l obligations. T hey also allege th at by retaining the interest in the sweep account he is guilty of theft, and fraudulent misa ppro priation by a fi duciary. I. Rule 8.4 Misconduct Rule 8.4 of the Maryland Rules of Professional Conduct provides the following: It is professional misconduct for a lawyer to: (b) commit a criminal ac t that reflects ad versely 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 admin istration o f justice . In conjunctio n with this alleged violation the Petitioner asserts that the Respondent violated two criminal statutes. Petitioner alleges that the Respondent violated Article 27 § 132 of the Annotated Code of Maryland, Fraudulent misappropriation by fiduciaries, and Article 27 § 342 of the Annota ted Code of Maryland, Theft. Article 27 § 132, Fraudulent misappropriation by fiduciaries, states: If any executor, administrator, guardian, committee, trustee, receiver or any fiducia ry shall fraudule ntly and willfu lly appropriate to any use and purpose not in the due and lawful execution of his trust, any money or any other thing of value which may come into his hands as such executor, administrator, guardian, committee, trustee, receiver, or in any other fiduciary -7- capa city, or secrete it w ith a fraudule nt intent to app ropriate it to such use or purpose, he shall be d eemed g uilty of embez zlement, and shall be punished upon conviction by imprisonment in the penitentiary for not less than one year nor more than five year s. Article 27 § 342 states: (a) Obtaining or exerting unauthorized control. A person commits the offense of theft when he willfully or knowingly obtains con trol which is unauthorized or exerts contro l which is unauthorized over property of the owner, and: (1) Has the purpose of depriving the owner of the property; or (2) Willfully or knowingly uses, conceals, or abandons the property in su ch mann er as to deprive the owner of the property; or (3) Uses, concea ls, or abando ns the prop erty knowing the use , concealment, or abandonment prob ably w ill de prive the own er of the p rope rty. (b) Obtaining control by deception. A person commits the offense of theft when he willfully or knowin gly uses deception to obtain and does obtain con trol over pro perty of the ow ner, and: (1) Has the purpose of depriving the owner of the property; or (2) Willfully or knowingly uses, conceals, or abandons the property in such manner as to deprive the owner of the property; or (3) Uses, conceals, or abandons the property knowing such use, concealment, or abandonment probably will deprive the owne r of the p roperty. In Maryland fra udulent m isapprop riatio n by fiduciary, commo nly referred to as embezzlement, and theft are specific intent crimes. The Petitioner has the burden to demonstrate that the Respondent specifically intended to de prive ow ners of th eir prope rty by retaining the interest on the -8- principal that was generated in the escrow account and swept into Allegiance Title s o perating accou nt. The Respon dent opened up the sweep account and maintained the interest at the invitation of his bank. There is ample evidence and the Petitioner admits title insurance companies regularly maintain these accounts. The establishment of the sweep account is insufficient evidence to prove the mens rea of the Respondent. The Court does not find that it is illegal for a title company to maintain a sweep account. The Respondent had no information that would lead him to conclude that it was wrong for his title insurance compan y to retain the intere st on the esc row acco unt. Furthermore, there is no eviden ce to determ ine what p roperty interest existed for any bene ficial own er. There is no evidence upon which the Court could find that an y individual be neficial ow ner was d eprived of interest to which they would be entitled. So long as the depos ited trust fund s were likely to generate less than $50.00 in interest or the cost of administering a separate account, the trust funds sh ould have been dep osited into the MA HT acc ount, and the interest provided to a charitable organization. In this situation, the beneficial owners had no right to the interest on the escrowed funds. The Court finds that no fraudulent misappropriation or theft has been proven by clear and convincing evidence. -9- Without a finding of theft or fraudulent misappropriation, this Cou rt finds that the Respondent has not violated Rule 8.4 of the Maryland Rules of Professional Condu ct. No evid ence has b een subm itted that wo uld substantiate the Petitioner s claims that the Respondent committed a criminal act, engaged in dishonest, fraudulent, deceitful conduct or misrepresentation. In addition, the Petitioner ha s failed to prove that the Respondent has engaged in cond uct that is prejud icial to the admin istration o f justice . II. Rule 1.15 Sa fekeeping pro perty Rule 1.15 of the Maryland Rules of Professional Conduct provides the following: (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 kep t in a separate accoun t maintained pursuant to Title 16, Chapter 600 of the Maryland Rules. Other property shall be identified as such and appropriate ly safeguarded. 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 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 ag reement w ith the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the -10- client or third person is entitled to receive and, upon request by the c lient or third person , shall promptly render a full accounting regarding such prop erty. (c) When in the course of representation a lawyer is in possession of property in which both the lawyer and anoth er person claim interests, the property shall be kept separate by the lawyer un til there is an accounting and severan ce of their interests. If a dispute arises concernin g their respective interests, the portion in dis pute shall be kept separate by the lawyer until the dispute is resolve d. The Petitioner asserts that the Respondent has a fiduciary obligation as an agent to safeguard and maintain the clients or third party funds. Commission asserts that by retaining the interest earned from clients funds in Allegiance Title s sweep account, the Respondent has misused the client funds entrusted to him as a fiducia ry for his o wn pe rsonal g ain. The issue is whether it is a violation of the Professional Rules of Conduct for an attorney to benefit from the interest on escrowed money in his title insurance business if it is legal for the title insurance to maintain an interest bearing escrow account. The second issue is whether the attorney/owner has a fiduciary obligation to the parties in the real estate settlement. Neither side was able to provide to the Court any clear autho rity dispositive of th e issue. The Petitioner prim arily cited cases that dealt with attorneys who condu ct real estate settlements as part of their legal practice. The Respondent maintains this is a case of first -11- impression brough t by the Commission an d there is no case, statute or ethics opinio n whic h wou ld hold that his a ctions w ere imp roper. The Respon dent primarily relied on an opinion issued by a Bar Counsel Blue Ribbon Inquiry Panel on December 13, 1991. The complaint questioned whether it was misc onduct fo r an attorney, w ho own ed a title insurance c ompany, to deposit escrow funds into an interest bearing account instead of an IO LTA accou nt. The title company retained the interest on the escrowed funds. The Panel concluded that no attorney-clien t relationship existed between the attorney/owner and the parties to a real estate transaction. BC Docket No . 91-52-14-5 (1991). Respondent s Exhibit No. 4. They also found that there is am ple legislative h istory to conclude that the legislature was aware that many attorneys owned title companies. By refusing to enact the IOTA bill, which would have required that interest on title companies escrowed accounts be paid to a charitable ca use, the legisla ture did not intend to impose the requirements of IOLTA on attorneys who owned title insurance companies. In the insta nt matte r the Re spond ent is no t a real es tate attorn ey, nor does he conduct settlements or closings on behalf of Allegian ce Title. There is no evidence to suggest that the Respondent ever deposited any funds related to a real estate transaction into the bank accounts associated with his law -12- practice. Funds associated w ith real estate transactions were only deposited into Allegiance Title s accounts. The Re sponden t s connectio n with the title company was that o f an ow ner. As an owner h e was no t required to be an attor ney, and he did not perform duties as an ow ner whic h required le gal skills and performance. His legal involvement with the title business consisted solely of reviewing deeds for which he was paid a fee per deed, and was separate from any remuneration he may have received from the profits of the company as the o wner. See In the Matter of Grimb le, 157 Ariz. 448, 759 P.2d 594 at 598 (198 8). The Court finds that even though the attorney wou ld not be en titled to retain the interest on the escrowed funds in his law practice, the Respondent does not violate Rule 1.15 by owning a title insurance company, which under the laws of Maryland is entitled to retain the money earned on an interest bearing esc row acco unt. III. Annotated Code of Maryland, Business Occupations and Professions Article § 10-306 Misuse of trust money Pursuant to Md. Code Ann., Bus. Occ. & Prof. § 10-306: A lawyer may not use trust money for any purpose other than the purpose for which the trust money is entrusted to the lawyer. Petitioner alleges that the fun ds held in the Respondent s title company s escrow account are trust money pursuant to this statute. The Complaint alleges that the Res ponden t violates this statu te -13- because his title insurance company retains interest from escrowed funds in its sweep account. Petitioner concludes that the sweeping of the interest into Allegiance s commercial checking account constitutes misuse of this trust mone y pursua nt to this s ubsect ion bec ause he is an atto rney. This Court finds that Md. C ode An n. Bus. O cc. & Pro f. § 10-30 6 is inapplicable to the Respondent s corporate title company s escrow accounts, because such an account is not an Attorney trust account, as defined in Md. Code Ann., B us. Oc c. & Prof. § 10-301(b ). In the instant m atter, no mo ney is being entrusted to the Responde nt to hold for the bene fit of a client or a beneficial owner. Funds were given to Allegiance Title as the result of a closing, settlement or to pay for title work. The Respondent is not a settlement attorney acting on behalf of any of the particip ants. He is the owner o f the title insurance company that is involved in the real estate tra nsactio ns. There is no evidence to suggest that an attorney-client relationship exists between the Respo ndent a nd the p arties to th e real es tate trans actions . IV. Annotated Code of Maryland, Insurance Article, § 22-103 D eposits of trust money: (a) Definitions. (1) In this section the following words have the meanings indicated. (2) Beneficial ow ner means a p erson, other than the bu yer in a real estate transaction , for who se benefit a title insurer or its agen t is en trust ed to hold trust mon ey. (3) Trust money means a deposit, payment, or other money that a person e ntrusts to a title insurer or its agent to hold for the -14- benefit of a buyer in a real estate transaction or for a beneficial owner, in connection with an escrow, settlement, closing, or title indemnification. (b) Pooling and commingling trust money authorized. A title insurer or its agent shall pool and commingle trust money received from clients or beneficial owners in connection w ith escrows, settlements, clo sings, or title indemnifications if, in the judgment of the title insurer or its agent, a separate deposit of the trust money w ould gene rate interest in an amount not greater than $5 0 or the cost of admin istering a separa te acco unt. (c) Payment of interest to Maryland Affordab le Housing Trust. At least quarterly, the financial institution in which a commingled account is maintained under this section shall pay the interest earne d on the ac count, less an y service charges of the financial institution, to the Maryland Affordable Housing Trust to enhanc e the availa bility of affordable housing throughout the State as provided in Article 83B, § 11-102 of the Code . (d) Deposit in specified financial institutions. Trust money required to be commingled under subsection (b) of this section in connectio n with a rea l estate transactio n shall be deposited and maintained until disbursed in accordance with the transaction: (1) in a financial institution located in the State; or (2) subject to approval of the Banking Board in the Department of Labor, L icensing, an d Regu lation, in a fina ncial institution outside the State that complies with the requirements of this subtitle. (e) No violation of ethical or legal duties. A title insurer or its agent does not violate, and may not be charged by the Commissioner with a violation of, any ethical or legal duties by placing trust money in an account under subsection (b) of th is section with the interest pa id to the M aryland Aff ordable Housing Trust under subsection (c) of this section. (f) Other deposits of trust money allowed. Except for trust money that a title insurer o r its agent plac es in a com mingled account under subsections (b) and (c) of this section, and subject to regulations of the Commissioner, trust money in the possession of the title insur er or its agent m ay be deposited in any other deposit or investment vehicle: -15- (1) specified by the client or beneficial owner; or (2) as agreed o n by the client or benefic ial owner a nd the title insurer o r its agen t. The Commission asserts that it is permissible for a Title Company to deposit funds that are not required to be deposited in a MAHT account into a separate account provided that the beneficial owners have knowledge and agree in writing to such an allocation, pursuant to subsection (f) above and COMAR 31.16.03.05 (2003 ). According to the Pe titioner, Allegiance Title s retention of the interest earned fro m their sweep account violates these rules since the beneficial owners did not have knowledge of the funds allocation, nor had they con sented to A llegiance T itle s retention of the interest. The Court a grees w ith this as sertion. The statute provides two methods to handle trust funds. Trust money can be depos ited into a MAHT account. All other deposits of trust funds may be deposited in any other deposit or investment vehicle as specified by the client or beneficial owner or as agreed on by the client or the beneficial owner and the title insurer or its agent. COMAR 31.16.03.05 makes the requirement of obtaining the consent of the parties to the settlement absolutely clear. The Respondent testified that he relied on the advice of the Bank in setting up the MAHT and sweep accounts. He produced the materials given to him by the Bank as an attach ment to his propo sed fin dings o f fact. The Bank s brochure -16- on the M AHT account in cludes the f ollowing provision: Q. MUST INTEREST ON ALL TRUST ACCOUNTS BE GIVEN TO MAHT? A. No. Individual trust accounts may be put into some other deposit or investment vehicle, if they are expe cted (a) to earn more than $50 in interest and (2) to earn interest which will exceed the cost of opening a separate interest bearing account, if the beneficial owner and title insurer, agent or approved attorney both agree. (emphasis added ) The Respon dent and A llegiance Title b oth had no tice that the title company was required to obtain the consent of the beneficial owner to deposit money into a non MAHT fund. The Respondent did not dispute that Allegiance Title did not g ive any notice to the parties to the real estate transactions that the trust m oney wou ld be placed in an interest bearing accou nt, and th at the inte rest earn ed wo uld be r etained by Alleg iance T itle. The Respon dent argue s that even if the provisions of this statute have been violated, the enforcement for non-compliance should not come from the Attorney Grievance Commission. Pursuant to COM AR 31.16.03 .08 (2003), the Maryland Ins uran ce C omm issio ner m ay impose on a title insurer or title insurance agent any penalty, sanction, or other form of legal enforcement for failure to comply with the provisions of the MAHT account chapter. He asserts that he wa s not acting a s an attorney in establishing the sweep account and should only be held to the same standard of discipline as other owners of -17- title companies. Pursuant to Md. Code Ann., Ins. § 2-201(a) and COMAR 31.16.03.08, the Maryland Insurance Commissioner has the authority to discipline Respondent and Alleg iance Title fo r their non-co mpliance with the MAHT account statutes. However, the Respondent s accountability for these violatio ns of th e law d oes no t rest sole ly with the Com mission er. An attorney may engage in other activities separate and apart from his legal profession. He may not, however, abandon his professional ethics when he enters th e mark etplace withou t jeopard y to his pro fession al stand ing. In re Lurie, 113 Ariz. 95, 98, 546 P .2d 1126 , 1129 (19 76). The O regon C ourt held in In Re Heider, 217 Or. 134, 159, 341 P.2d 1107, 1118 (1959), ...there is no cleavage or separation of respon sibility for petitioner s acts as a business man and as a lawyer. He may not employ and accept the benefits of such intermingling of activity involving both the law and business without assuming responsibil ity for both. The Maryland Courts have held that violations of laws not directly involved in the practice of law may be grounds for disciplinary action. In Attorney Grievance Comm n v. Clark, 363 Md. 169, 767 A.2d 865 (2001) [the Court] held that failure to pay state income taxes was a basis for disciplinary action. The Court stated, The lawyer, after all, is intimately associated with the administration of the law and s hould righ tfully -18- be expected to set an exa mple in ob serving the law. By willf ully failing to file his tax returns, a lawyer appears to the public to be placing himself above the law, at 183, citing Attorney Grievance Comm n v. Baldwin, 308 Md. 397, 407-0 8, 519 A .2d 129 1, 1297 (1987 ). The Court finds that the Respondent is in violation of Md. Ann. Code, Ins. Art. § 22-1 03. The C ourt notes that no third p arty in any real estate transaction handled b y Allegiance Title has filed a complaint based on the failure to give notice or obtain consent to the deposit of their funds into the interest bearing ac count, or th at Allegiance Title received interest from the account. There is no evidence that the Respondent intended to defraud third parties. Howe ver, as a licens ed attorney, the R esponde nt is responsible for complying with the requirements of the law in both his legal practice and separate business entities. II. A. This Cou rt has orig inal j urisd ictio n ov er att orne y disciplina ry procee dings. See Attorney Grievan ce Com m n v. H arris, 371 Md. 5 10, 539 , 810 A .2d 457 , 474-7 5 (200 2). In the exercise of our obligation, we conduct an independent review of the record, accepting the hearing judge s findings of fact unless they are clearly erroneous. See Attorney Grievance -19- Comm n v. Garfield , 369 Md. 85, 97, 797 A.2d 757, 763-64 (2002). We review the hearing judge s proposed conclusions of law de novo. See Attorney Grievance Comm n v. McLa ughlin, 372 Md. 467 , 493, 813 A.2d 1 145, 1160 (200 2). Bar Counsel s petition against respondent rests upon the allegation that respondent violated Maryland Code (2002 Repl. Vol., 2003 Cum. Supp.) § 22-103(f) of the Insurance Article when his title company retained possession of the interest generated by funds in the title compan y s bank acco unt, which o riginated fro m his clients and were to be held in trust by the title company until the funds could be distributed to the proper beneficiaries. If § 22103(f) was not violated, then whatever merit there might have b een in Bar Cou nsel s remaining allegations dissipates, and respondent cannot be found to have violated the ethical rules for lawyers. See Attorney Grievance Comm n v. Lichtenberg, ___ Md. ___, ___ A.2d ___ (2004). Thus, the inquiry of this Court, as well as the thrust of both Bar Counsel s and respondent s arguments before this Court, centers on the proper application and interpretation of § 22 -103(f ) of the I nsuran ce Artic le of the Marylan d Cod e. B. Section 22-103(f) of the Insurance Article reads as follows: (f) Other deposits of trust money allowed. Except for trust money that a title insurer o r its agent plac es in a com mingled account under subsections (b) and (c) of this section, and subject to regulations of the Commissioner, trust money in the possession of the title insur er or its agent m ay be deposited in any other deposit or investment vehicle: -20- (1) specified by the client or beneficial owner; or (2) as agreed on by the client or beneficial owner and the title insur er or its ag ent. Section 22-103(a) provides definitions for the terms beneficial owner and trust money : (a) Definitions. (1) In this section the following words have the meanings indicated. (2) Beneficial owner means a person, other tha n the buyer in a real estate transaction, for whose benefit a title insurer o r its agen t is en trust ed to hold trust mon ey. (3) Trust money means a deposit, payment, or other money that a person entrusts to a title insurer or its agent to hold for the benefit of a buyer in a real estate transaction or for a beneficial owner, in connection with an escrow, se ttlement, closing, or title indem nificatio n. Section 22-103 does not provide a definition for the term client. Bar Counsel maintains that in order to satisfy § 22-103(f), respondent was required to receive the consent of the beneficial owners to retain the interest from the funds deposited into the trust ac count: [T]he role of [resp ondent as ] a settlement ag ent is that of a fiduciary on behalf of numerous beneficiaries where the settlement officer comes into possession of funds that are to be distributed in accordance with the ins truction s of the lender . . . . It is Petitioner s contention . . . that the short term possession of these fu nds . . . is not to accrue to the b enefit of o ne party over another and has historically and properly been deposited into a non-interest-bearing account because to do otherwise would be an exercise in control over the funds to the detriment of the beneficial owner. Petitioner s Exceptio ns and R ecomm endation o f Sanction , at 5 (emphasis added). Sign ifica ntly, Bar Co unsel s con tentions rest upon th e fact that the beneficial owners, as -21- defined by § 22-103, did not consent to respondent s retention of interest. Although Bar Counsel sometimes mentions the term clients, in the Petition for Disciplinary Action he does so on ly in the context of alleging a violation of § 22-103 because respondent did not receive the consent of the beneficial owners, not because respondent failed to receive the consent of his client. Thus, Bar Counsel contends: [T]he commingled funds represented by settlement proceeds under commo n law and Insurance Article § 22-103 preserves the identity of the funds as belonging to the various principals to which a lende r s closin g instruc tions ref er. Petitioner s Exceptions and Recommendation of Sanction, at 10. Bar Counsel identifies the various p rincipals as th e benef icial owne rs of the trus t money: The principal owner of the funds, com mingled by their very nature as settlement funds subject to the instruction of the lender for distribution, is the anticipated recipient of the fiduciary funds as set forth in the lender s closing instructions. *** [Such ownership] conforms with the statutory definition of beneficial owners as set forth in Insurance Article § 22103(a) (2). Id. at 12-13. In sum, Bar Counsel alleges that in order to retain the interest generated by the funds transferred to him by his client, respondent was required to obtain the consent of intended beneficiaries of that fund. If obtaining such consent is, as respondent argues, impossible, then no one was entitled to the interest, and the funds should have been deposited into a non-in terest-bearing account. Respondent presents arg uments to support his position that he did nothing to violate -22- the Rules of Professional Conduct and, specifically, that he did not violate § 22-103 of the Insurance Article. First, resp ondent arg ues that the ter m trust mo ney as defin ed in § 22103(a)(3) is ambiguo us and m ay not include those fun ds which are depos ited into the title company s escrow account after the settlement has already occurred. Respondent describes the settlement process as follows: As a practical m atter, what rea lly happens is se ttlement is scheduled for 1pm and the parties arrive at 1pm but the payoff money from the new lender is NO T YET wired into th e title company s account or worse, there is no wire and merely a check which the title compan y s bank has to process in spite of the fact that checks have already been issued on the as yet nonnegotiat ed payoff mon ey. *** What [Bar Counsel] fails to comprehend is that none of the trust monies are ever in the bank for an appreciable period of time and are almost a lways, if not ALWAY S, deposited after the monies have been prop erly distributed and the trustee obligations of the title com pany have b een fulfilled and fully discharged, thereby re nderin g the tru st termin ated an d moo t. Responden t s Proposed Finding s of Fact and C onclusions of La w, at Part II. C. This case presents the same issue as was presented in Attorney Grievance Commission v. Lichtenberg, ___ Md. ___, ___ A.2d ___ (2004). The facts in the case at bar and Lichtenberg are, in all relevant aspects, similar. 3 Here, as in Lichtenberg, Bar Counsel 3 There is one factual difference between the instant case and Lichtenberg. In Lichtenberg, the hearing court found that the title company had obtained the consent of the -23- essentially complains that respondent did not get the consent of the beneficial owners before he retained the interest in the accounts. The gravamen of Bar Counsel s complaint is that respondent failed to secure the consent of the beneficial owners as defined by statute, and not tha t he failed to s ecure the c onsent of any client. We decline to construe the statute for the same reasons stated in Lichtenberg. For the reasons stated therein, we do not decide w hether resp ondent vio lated the Insu rance Ar ticle and therefore will dismiss Bar Counsel s petition. In Lichtenberg, we emphasized that § 22-103(f) previously had not been interpreted by either this Court or the Insurance Administration and that this case had come to us through our supervisor y capacity regulating the practice of law and the ethical behavior of attorneys, not through th e usual judic ial channels of appella te review. We elected not to construe the Insurance Article without input from the agency who was not a party to the case and had declined Bar Counsel s invitation to clarify the issue. We noted that we d iscip line a ttorn eys for violation of Rule 8.4 when it is clear that a law has been violated, even if there is no criminal conviction, but not when such a vio lation is uncle ar. That reas oning app lies equally here. Indeed, in some ways, this case accentuates the complexity of interpreting § 22- title company s client, though not of the beneficial owners. The record in the instant case does not reflect that Davis secured the consent of his client. To Bar Counsel, this is a distinction without a d ifference b ecause it is Bar Counsel s position that the statute requires the consent of the beneficial interest holders, and it is undisputed in the instant case that the beneficial o wners did not conse nt. -24- 103(f) even more so than Lichtenberg and the reasons fo r which it w ould be be tter to have the Insuran ce Adm inistration decide the propriety of respondent s actions or, at minimum, be involved in the litigation that decides the proper interp retation of th e statute it administers. For instance, we were told at oral argument, and it was undisputed by Bar Counse l, that it is the general, commonplace practice of banks to o ffer swe ep accou nts to title companies; that banks r eceive a larg e portion of the interest generated overnight as compensation for their performance of the sweep; that only a portion of the aggregate funds in the accou nt from all o f the clients of the title c ompany are swept ea ch night; an d that it therefore is impossible to identify whose interest was generated at what portion. Sign ifica ntly, it is not even c ertain that § 22 -103(f) ap plies whe n, for exam ple, a title company receives a check from the client and simply pays out of its own funds the amount necessary to settle the real estate transaction before the client s check has been cashed. After disbursing the monie s, it is unclear w hether the f iduciary duty to the client exists any longer with respect to the monies deposited into the title company s trust account sometime after the settlement is finished. Ind eed, it is also unclear whether the monies disbursed are ever in the account for an appreciable period prior to the disbursement, at which point the fiduciary obligations arguably are discharged. Our point is not to argue respondent s case, nor do we intima te that we are persuaded by this line of argument. We merely wish to illustrate the complexity of interpreting § 22103(f). This case differs from those cases in which we proceeded with disciplinary actions -25- in the absence of a criminal conviction where, for example, the lawyer has failed to file or pay income taxes. There the violation is clear but the prosecution is uninitiated. Here, not only is the violation vague and unsubstantiated, but the presence and the advice of the regulating authority, an agency charged with protecting the public, is strikingly absent from any part of these proceedings. In this respect, this case is no different from Lichtenberg and will be d ismisse d. Bar Counsel s excep tions are overruled, and there being no violation of the Rules of Professional Conduct, the petition is hereby dismissed. PETITION FOR DISCIPLINARY ACTION DISMISSED. COSTS TO BE PAID BY THE ATTORNEY GRIEVANCE COMMISSION OF MARYLAND. -26- IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 80 September Term, 2002 ______________________________________ ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. GARY E. DAV IS ______________________________________ Bell, C.J. *Eldridge Raker Wilner Cathell Harrell Battaglia, JJ. ______________________________________ Dissenting Opinion by Wilner, J., in which Harrell, J., joins ______________________________________ Filed: February 11, 2004 *Eldridge, J., now retired, participated in the hearing and conf erence of this case wh ile an active member of this Court; after being recalled pursuant to the Cons titution, Article IV, Section 3A, he also participated in the decision a nd adop tion of this opinion. At the direction of the Attorney Grievance Commission, Bar Counsel filed a petition against respondent, Gary Davis, charging him of having violated Rules 1.15 and 8.4(b), (c), and (d) of the Maryland R ules of Pro fessional C onduct. The alleged violations arose from the manner in which Davis, in his capacity as owner and president of a title insurance com pany, handled c ertain fund s entrusted to the comp any in the course of real estate settlements. In particular, Bar Counsel alleged that Davis, through his company, had retained interest earned on trust funds in violation of Maryland Code, § 10-306 of the Business Occu pations and Pr ofessio ns (BO P) Artic le and § 22-10 3 of the Insuran ce Artic le. The Court h olds, an d I agre e, that, because the funds in question were not received by Davis in his capacity as a lawyer, there was no violation of BOP, § 10-306 or Rule 1.15. I part compan y with the Co urt, howev er, in its decision to avoid construing, and thus finding a violation of, § 22-103 of the Insurance Article a violation that is clear beyond cavil and, by reason of that violation, a violation of Rule 8.4(d ) as well. Title insurance c ompanie s are subjec t to both statutory and administrative regulation. See Insurance Article, §§ 11-401-11-409, providing for the regulation of rates and policies and requiring tha t certain inform ation be disc losed to the Insurance Commissioner, and § 22102, requiring the sending o f certain no tices in conn ection with real estate settlements. Section 22-103 contains requirements and prohibitions with respect to money received in trust money that a person entrusts to a title insurer or its agent to hold for the benefit of a buyer in a real estate transaction or for a beneficial owner, in connection with an escrow, settlement, closing , or title indemnif ication. § 22 -103(a)(3). S ection 22-1 03(b) requ ires title insurers and their agents to pool and commingle trust money received from clients or beneficial owners in connection with escrows, settlements, closings, or title indemnifications if, in the judgment of the insurer or agent, a separate deposit of the trust money would not generate interest in an amount greater than $50 or the cost of administering a separ ate account. Under § 22-103(c ), the interest earned from such commingled funds, less any service charges, must be paid quarterly to the Maryland Affordable Housing Trust. Those provisions are the equ ivalent for title ins urers of the IOLTA arran gement a pplicable to lawyers trust acc ounts. See BOP, §10-303 and Maryland Rule 16-608. Section 22-103(f) the provision most applicable here provides that, except for trust money required by subsections (b) and (c) to be commingled, trust money in the possession of a title insurer or agent may be deposited in any other deposit or investment vehicle: (1) specified by the client or be neficial ow ner; or (2) as a greed on by the client or beneficial owner and the title insurer or its agent. Unlike the situation in Attorney Grievance Commission v. Lichtenberg, Md. , A.2d (20 03), which we con solidated w ith this case, there is no doubt whatever that, by acquiescing in the sweeping scheme sugge sted by his bank, D avis vio lated § 2 2-103 (f). As owner and president (and thus as agent) of a title insurer, he deposited trust funds received for the benefit of clients in an account, other than a commingled account permitted by subsections (b) and (c), that had been neither specified nor agreed to by the client or by any possible beneficial owner of the funds, and the clear and intended effect of that -2- arrangement was that, without the consent of his clients or any beneficial owners of the trust funds, his company retained all of the net interest earned on those accounts. There is no conceivable basis upon wh ich he was entitled to divert the interest on trust funds received for the benef it of clients to his own use or that of his company. Indeed, as the sweeping scheme was described to us, it appears that more than the diversion of interest was involved: each night, the prin cipal balanc es in the accounts the actual trust fund s were autom atically div erted to h is own use and thus, at le ast for th e night, m isappro priated. The record in this case establishes that the misappropriation was with the actual intent of depriving the clients of the intere st earned on trust funds deposited for their direct or indirect benefit, and, even if that conduct was the product of negligence, of Davis being unaware that it was unlawful, it nonetheless is, indeed, unlawful. When a lawyer, even when acting in another capacity, takes money that does not belong to him and that, under the law, he has no righ t to take, he commits conduct prejudicial to the administration of justice, and thus violates Rule 8.4(d). The Court as far as I can tell for the first time in its history has chosen to ignore both a clear viola tion of the R ules of Pro fessional C onduct an d the Cou rt s ultimate responsibility for enforcing those rules by deliberately refusing to address the statutory basis for those violations. The Court admits that the inquiry of this Court, as well as the thrust of both Bar Counsel s and respondent s arguments before this Court, centers on the proper application -3- and interpretation of § 22-103(f) of the Insurance Article of the Maryland Code, but then declines to construe the statute on the ground that the necessary issue should not be addressed unless the Insuran ce Com missioner is a party to the litigation, which effectively means it can never be addres sed in an attorney disc iplinary procee ding. Such a deferral is unprecedented, extraordinary, and wholly inappropriate. In Attorney General v. Waldron, 289 Md. 683, 692, 426 A.2d 929, 934 (1981), we held, explicitly, that the regulation of the practice of law, the admittance of new members to the bar, and the discipline of attorneys who fail to conform to the established standards governing their professional conduct are essentially judicial in nature and, according ly, are encompassed in the constitutional grant of judicial authority to the courts o f this Sta te. Quoting from Pub. S erv. Co mm n v. Hah n Tran sp., Inc., 253 Md. 571, 583, 253 A.2d 845, 852 (1969), we added that [u]nder our constitutional system of separation of powers, the determination of what constitutes the practice of law and the regulation of the practice and of its practitioners is, and ess entially an d appro priately sh ould be , a function of the judicial branch of government. Attorney General v. Waldron, 289 M d. at 692 , 426 A.2d at 935. Over and over and over again, in nearly every attorney grievance case, we have emphasized that, in these special proceedings, this Co urt has orig inal and com plete jurisdicti on. Attorney Grievan ce v. Smith , 376 Md. 202, 229, 829 A.2d 567, 583 (2003); Attorney Grievance v. Garfield , 369 Md. 85, 97, 797 A.2d 757, 763 (2002); Attorney Grievance v. Snyder, 368 Md. 242, 253, 793 A.2d 515, 521 (2002); Attorney Griev. Comm. v. Garland, -4- 345 Md. 38 3, 392, 692 A.2d 46 5, 469 (19 97); Attorney Griev. Comm n v. Kent, 337 Md. 361, 371, 653 A.2d 909, 914 (1995 ) (Emphasis adde d). That jurisdiction, in this case, cannot be implemented without construing § 22-103(f), and yet the Court declines to address the statute, preferring either to allow the Insurance Commissioner to deal with the issue or to wait until a case arises in which the Commissioner is a party. Such a deferral appears to me to be applying the doctrine of primary jurisdiction, disguised as something else, and it is flat-out inconsistent with the notion that this Court has a Constitutionally-based orig inal and co mplete juris diction over attorney discipline matters. If, as we have held, our jurisdiction is complete, it cannot be regarded as shared with any administrative agency. As Waldron makes clear, this is not an area in w hich the Legislature is even competent to allocate jurisdiction between the courts an d executiv e agencies . This is not a situation in which a court and an administrative agency have concurrent jurisdiction over the same m atter. This is not a situation in which Bar Counsel could have obtained any relief from the Insurance Commissioner. The Commissioner could, if he chose to do so, take some action against the title insurance company, or Davis as its agent, for violating the insurance la w, but he w ould be pow erless to determ ine wheth er Davis h ad violated a Rule of Professional Conduct, much less to do anything about such a violation.1 1 Deferral to the Insurance Commissioner is particularly pointless in this case where, as the Majority acknowledges, the Insurance Administration declined Bar Counsel s invitation to clarify the Administration s interpretation of Section 22-103 (f) under the facts presented. Why should the Court shirk its responsibility for the regulation of attorney conduct in order to defer to an executive branch agency that (continued...) -5- The effect of the Cou rt s deferral in this case is no thing less than an imperm issible delegation of wha t we have already held to be a judicial function to an executive agency that has no authority in the matter.2 The exercise of our original and complete jurisdiction may, from time to time, require us to construe a statute over which an administrative agency has juris dicti on, a nd w e are entir ely compete nt to do so . See Attorney Griev. Comm n v. Eisenstein , 333 Md. 464, 635 A.2d 1327 (1994) (disciplining attorney for tak ing fees in excess of thos e allow ed und er Lon gshore and H arbor W orkers Com pensat ion Ac t). I would find that, as a title insurance agent, Davis violated the statute and, by doing so, also, as a law yer, violated Ru le 8.4(d). Up on that finding, I would then address the question of what sanction to impose or, indeed, on this record, whether to impose any 1 (...continued) apparently has little or no interest in weighing in on a related subject? Having declined the opportunity to express its expert opinion here, one could infer logically that the agency has nothing to add and instead defers to the Court s traditional role in interpreting legislative enactments. 2 It is questionable whether the Insurance Commissioner even has primary jurisdiction over ordinary civil claims that arise from an alleged violation of § 22-103, but he certainly cannot have primary jurisdiction over an attorney grievance matter based on that statute. I am not at all sure that, if one of Davis s clients had filed a civil action in court to recover interest that accrued on funds held in trust for him by Davis, we would have insisted that the client turn first to the Insurance Commissioner for relief. See Zappone v. Liberty Life, supra, 349 Md. 45, 706 A.2d 1060. Although the Commissioner has general authority to hold hearings, discipline companies and agents subject to his jurisdiction, and provide certain forms of relief to persons who suffer loss because of violations of the Insurance Code by entities or persons subject to regulation, there is no administrative procedure attached specifically to § 22-103, and there is nothing in that statute that evidences an intent by the Legislature that claims under that statute be submitted first to the Insurance Commissioner. The statute is not an interconnected part of an overall regulatory scheme, for which some administrative expertise exists. It is a stand-alone statute regulating trust accounts, and it does not appear to me that any special administrative expertise is required in interpreting it. -6- sanction. Judge Harrell has authorized me to state that he joins in this dissenting opinion. -7- IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG No. 80 September Term, 2002 ______________________________________ ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. GARY E. DAV IS ______________________________________ Bell, C.J. *Eldridge Raker Wilner Cathell Harrell Battaglia, JJ. _____________________________________ Dissenting Opinion by Bell, C. J. ___________________________________ Filed: February 11, 2004 *Eldridge, J., now retired, participated in the hearing and conference of this case while an active member of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion. For the reasons enunciated in the dissenting opinio n of Ju dge W ilner, I respectfully dissent. Unlike Judge Wilner and Judge Harrell, however, I believe that the determination of the culpab ility of Gary Dav is, the respon dent, with respect to all of the charged violations must, and shou ld, await this C ourt s cons truction of Ma ryland Code (1996, 2002 Replacement Volume) § 22-103 of the Insurance Article.

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