Attorney Grievance v. Prichard

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IN THE COURT OF APPEALS OF MARYLAND Misc. Docket AG NO. 50 SEPTEMBE R TERM 2003 ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. JAMES L. PRICHARD Bell, C. J. Raker Wilner Harrell Battaglia Greene Eldridg e, John C. (Retired, specially assigned) JJ. OPINION BY BEL L, C. J. ______________________________________ FILED: April 11, 2005 The Attorney Grievance Commission of Maryland (the Commission ), through Bar Counsel and pursuant to Maryland Rule 16-751,1 filed ag ainst Jam es L. Prichard , the responde nt, a Petition for Disciplinary or Remedial Action, in which it was alleged that he violated Rules 1.15 (Safek eeping Property); 2 8.1 (Bar Admission and Disciplinary Matters)3 1 Maryland Rule 16-751 (a), as relevant, provides: (a) Commencement of disciplinary or remedial action. (1) Upon approval of the Commission. Upon approval or direction of the Commission, Bar Counsel shall file a Petition for Disciplinary or Remedial Action in the Court of Appeals. 2 Maryland R ule 1.15 (a) p rovides, as re levant: (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, Ch apter 600 o f the Ma ryland Rules. O ther proper ty shall be identified as such and appropriately 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 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. 3 Rule 8 .1. Bar Adm ission and Disciplinary Ma tters, provides, in p ertinent part: An applicant for admission or reinstatement to the bar, or a lawyer in connection with a bar a dmission a pplication o r in connec tion with a d isciplinary matter, sh all not: * * * (b) fail to disclose a fact necessary to correct a misapprehension known by the person to h ave arisen in the matter, or k nowing ly fail to respond to a lawfu l demand for inform ation from an admiss ions or discip linary authority, exce pt that this Rule does not require disclosure of information otherwise protected by Rule and 8.4 (Miscondu ct),4 of the Rules of Professional Conduct, Appendix: Rules of Professional Condu ct of the M aryland Rule s, Maryland Rule 16-812, Maryland Rules 16-603 (Duty to Maintain Accou nt) 5 ; 16-604 (T rust Acco unt - Requ ired Dep osit) 6 and Maryland 1.6. 4 Rule 8.4 states, in pertinen t part: It is professional misconduct for a lawyer to: * * * (d) en gage in condu ct that is p rejudici al to the a dminis tration o f justice . 5 Maryland 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 benefit of clients or third persons. The account or accounts shall be maintained in this State, in the 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 benef it of a clie nt or third person . 6 Maryland 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 . 2 Code (1989, 2000 Replacement Volume) §§ 10-302 (a)7 and 10-3068 of the Business Occupations and Professions A rticle. We referred the matter, pursuant to Rule 16-752 (a), 9 to the Hon orable Pamela L. North of the Circuit Court for Anne Arundel County, for hearing pursuant to Rule 16 -757 (c). 10 The resp ondent, having failed to respond to the Petition, an 7 Section 10-30 2. Attorney trust ac count. (a) Unless a lawyer or the f irm of the la wyer mainta ins an attorne y trust account in accordance with this subtitle and the Maryland Rules, the lawyer may not accept trust mon ey. 8 Section 10-30 6. Mis use o f trust mo ney. A lawyer may not use trust m oney for any purpose other than the purpose for which the trust mon ey is entrusted to the lawyer. 9 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. 10 Maryland Rule 16-757 (a) provides: (a) Generally. The hearing of a disciplinary or remedial action is governed by the rules of e vidence a nd proce dure app licable to a co urt trial in a civil action tried in a circuit court. Unless extended by the Court of Appeals, the hearing shall be completed within 120 days after service on the respondent of the order designating a judge. Before the conclusion of the hearing, the judge may permit any complainant to testify, subject to cross-examination, regarding the effect of the alleged misconduct. A respondent attorney may offer, or the judge may inquire regarding, evidence otherwise admissible of any remedial action undertaken relevant to the allegations. Bar Counsel may respon d to any e videnc e of rem edial ac tion. 3 order of defau lt, pursuant to Maryland Rule 2-6 13 (b), 11 setting a trial date more than thirty days subsequently, was entered ag ainst him. A lthough n otified, as req uired by Rule 2-613 (c),12 that the order of default had been entered, the respondent did not move to vacate the order, as required by Rule 2-6 13 (d). 13 On the day set for the hearing, the hearing judge conducted a hearing, after which she issued a Memorandum Of Findings Of Fact And Conclusions Of Law, making findings of fact and drawing conclusions of law in accordance with Maryland R ule 16-757 (c), 14 as follows: 11 Maryland Rule 2-613 (b) provides: (b) Order of Default . If the time for pleading has expired and a defendant has failed to plead as provided by these rules, the court, on written request of the plaintiff, shall enter an order of default. The request shall state the last kno wn ad dress o f the de fenda nt. 12 Maryland Rule 2-613 (c) provides: (c) Notice. Promptly upon entry of an order of default, the clerk shall issue a notice informing the defendant that the order of default has been entered and that the defenda nt may mov e to vacate th e order w ithin 30 days af ter its entry. The notice shall be mailed to the defendant at the address stated in the request and to the defendant's attorney of record, if any. The court may provid e for ad ditional notice to the def endan t. 13 Maryland Rule 2-613 (d) provides: (d) Motion by Defendant. The defendant may move to vacate the order of default within 30 days after its entry. The motion shall state the reasons for the failure to plead and the legal and factual basis for the defense to the claim. 14 Maryland Rule 16-757 (c) provides: (c) Findings and conclusions. The judg e shall prepa re and file o r dictate 4 Findings of Fact The Respon dent was admitted to the Maryland Bar on June 17,1976. Pursuant to an Order of the Court of Appeals filed May 27, 2003, he was indefinitely suspended by consent from practicing law in this State, retroactive to May 1, 2003. Attorney Grievance Commission v. Prichard. 375 Md. 1, 824 A.2d 966 (2003). The Respondent has not petitioned for reinstatement from the previously entered indefinite suspension. The legal representation that is the subject of the current disciplinary action began in September 2001, when Kenneth and Melissa Garrison (husband and wife) retained the Respondent to represent them in connection with personal injury claims related to a motor vehicle accident in which the Garrisons had been involved on September 6, 2001. On September 11, 2001, Mr. and Mrs. Garrison signed retainer agreements employing the Respondent on a contingent fee basis. The retainer agreements signed by the Garrisons provided for the Respondent to receive an attorney s fee equal to thirty-three and one-third (33 1/3) percent of any gross recovery or settlement in each client s case. Allstate Insurance Company (Allstate) was the insurance carrier for the party against 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. 5 whom the Garrisons asserted personal injury claims. In the spring of 2002, settlements of the Garrisons' claims were reached in the following amounts: Kenneth Garrison Melissa Garrison $9,300.00 $9,000.00 On May 14, 20 02, Allstate issu ed separate settlement checks to M r. and Mrs. Garrison in the above amounts. Each settlement check was mad e paya ble jointly to the claimant and the Respon dent. Allstate mailed the checks to the Respondent, along with releases to be executed by the Garrisons. At the time of settlement, Mr. and Mrs. Garrison each had unpaid bills for medical treatment associated with injuries they sustained in the September 6, 2001 accident. K enneth Garrison had outstanding balances due to the following entities: 1. North Arundel Hospital $ 479.19 2. Cohen and Pushkin, M.D., P.A. $ 750.00 3. Atlantic Rehab, Inc. $3,475.00 Melissa Garrison similarly had outstanding balances due in the following amounts: 1. North Arundel Hospital $ 315.89 2. Coh en and Pushk in, M.D ., P.A. $1,775.00 3. Atlantic Rehab, Inc. $1,665.00 Upon receipt of the Garrisons' settlement checks, the Respondent arranged for Melissa Garrison to meet him and to accompany him to a liquor store which also offered a check cashing service. Mrs. Garrison and the Respondent endorsed the back of her settlement check and cashed it on or about May 16, 2002. The Respondent prepared a handwritten distribution 6 sheet for Melissa Garrison, listing how the cash proc eeds from her settleme nt check w ere to be allocated. The distribution sheet prepared by the Respondent indicates he received an attor ney's fee of $2,500.00 ( reduced $500.00"). The Respondent listed the amounts of Mrs. Garrison s outstanding medical bills. He retained a sufficient amount of cash to pay off each of those bills in full. The Respondent retained cash in the amount of $3,338.89 from the proceeds of Melissa Garrison's settlement check and represented to Mrs. Garrison that such funds would be used to pay the medical bills listed on the handwritten distribution sheet. The distribution sheet reflec ts a net balan ce of $3,1 61.11 to be distributed to the client. Mrs. Garrison a cknow ledges she received c ash in that am ount. Kenn eth Garrison endorsed the back of his settlement check and tu rned the check over to the Respondent. On or about June 15, 2002, Mr. Garrison's check was negotiated at a branch of The Bank of Glen Burnie. The Respondent prepared a typed distribution sheet which was provided to Mr. Garrison. The distribution sheet indicates the Respondent received an attorney s fee of $2,500.00 ( reduced $600.00"). As on Mrs . Garriso n's distribution sheet, the Respondent listed the amounts of Kenneth Garrison's outstanding medical bills as deductions from the gross proceeds of $9,300.00. The Respondent retained funds in the amount of $4,704.19 from the proceeds of Kenneth Garrison's settlement check 7 for the stated purpose of p aying off the medical bills listed on M r. Garrison's distribution sheet. The distribu tion sheet ref lects a net balance of $2,095.81 to be distribute d to the client. Mr. Ga rrison ackn owledg es he receiv ed cash in th at amoun t from the R esponde nt. The Respondent did not issue any payment to Cohen and Pushkin, M.D ., P.A., to satisfy two separate account balances in the amounts of $1,000.00 and $775.00 owed by Melissa Garrison, despite retaining $1,775.00 from Mrs. Garrison's settlement proceeds for that purpo se. Similarly, the Respondent did not pay off Kenneth Garrison's account balance of $75 0.00 to C ohen a nd Pu shkin, M .D., P.A., despite retaining funds in that amount from Mr. Garrison's settlement proceeds for that purpose. The Respondent did not issue any payment to Atlantic Rehab, Inc. to satisfy Melissa Garrison's outstanding account balance of $1,665.00, despite retaining funds (listed in the amount of $1,248.00) from Mrs. Garrison's settlement proceeds for that p urpo se. S imila rly, the Respondent did not issue any payment to Atlantic Rehab, Inc. to satisfy Kenne th Garrison's acco unt b alan ce of $3,4 75.0 0, de spite retai ning funds in that a mou nt from M r. Ga rriso n's settlement proceeds for that purpose. Mrs. Garrison testified she has been unable to determine whether the amounts she and her h usband o wed to N orth Arundel Hospital, for which the Respondent also withheld funds from their settlements, have been paid. As of the date of the hearing in this Court, 8 North Arundel Hospital had not initiated any collection efforts against the Garrisons. Throughout the time he represented the Garriso ns, the Res ponden t did not ma intain an attorney trust account, as defined in Maryland Rule 16-602c, for the deposit of funds he received as an attorney for the intended benefit of clients and/or third persons. Having no such account, the Respondent did not deposit all or any portion of the Garrisons' settlement proceeds in an attorney trust account at an approved financial institution when he received such p roceed s. On April 2, 2003, Bar Counsel received a written complaint from Melissa Garrison setting forth the un derlying facts supporting the professional misconduct charges in this case. By a letter to the Respondent dated April 16, 2003, mailed to the Re spon dent's only known address, the office of Bar Counsel forwarded a copy of Mrs. Garrison's complaint to the Respondent and requested that the Respondent respond in writing to tha t complain t within ten days. The Respondent did not respond at all to Bar Counsel's lawful demand for information. Conclusions of Law By receiving and accepting the Garrisons ' settlement fun ds, which were inten ded in whole or in part for the benefit of a client or third person, when he did not maintain any attorney trust account, the Respondent violated Maryland Rule 16-603. It follows therefrom that the funds, including cash, the Respo ndent rece ived and a ccepted to b e delivered in whole o r in 9 part to a client or third person were not deposited in an attorney trust account at an approved financial institution. The Respondent therefore violated Maryland Rule 16-604. The funds withheld by the Respondent from the settlement proceeds of Kenneth and Melissa Garrison for payment to third party medical providers constituted "trust money" as that term is defined in the Maryland Code, Business Occupations and Professions Article, § 10-301(d). By accepting trust mone y when he did not ma intain an attorney trust account for the deposit of such money, the Respondent violated § 10-302(a) of the Business Occupations and Professions Article. Furthermore, the Respon dent know ingly and willf ully used such trust money for a purpose other than the purpose for which the trust money was entrusted to him. By doing so, he violated § 10-306 of the Business Occupations and Professions Article. The Respondent failed to hold property of clients or third persons tha t was in his possession in connection with a representation separate from his own property, including monetary funds w hich wer e not kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules. The Respondent thus violated Rule 1.15(a) of the Maryland Rules of Professional Conduct (MRPC). By failing to deliver funds that the Garrisons' third party medical p roviders w ere entitled to receive, the Respondent also violated MRPC 1.15(b). The R esponde nt fraudule ntly and willfu lly appropriate d or secreted money held in 10 a fiduciary capa city contrary to the requirements of his trust responsibility. In so doing, the Respondent engaged in criminal conduct including, but not necessarily limited to, the offense of Embezzlement - Fraudulent misappropriation by fiduciary, as se t forth in the Maryland Code, Crimin al Law Article, § 7-113. The Respondent's dishonest and fraudulent actions with respect to the Garrisons' settlement funds represent professional misconduct that violated MRP C 8.4(b) & (c). Fin ally, the Respondent violated MRPC 8.1(b) by failing to respond to a lawful demand for information from a disciplinary authority (Bar Counsel's April 16, 2003 letter seeking a response to Melissa Garrison 's complaint). Although not a basis for the MRPC 8.1(b) violation, this Court also notes that the Respondent has not responded in any fashion to the disciplinary charge s conta ined in th e petition filed by th e Attor ney Grie vance Com mission . The petitioner has not taken any exceptions to the hearing court s findings and conclusions. In its Petitioner s Recom mendatio n for San ction, it urges d isbarment a s the appropriate sanctio n. In support of that recommendation, the petitioner reminds the Co urt of the respondent s rather recent, May 27, 2003, and continuing, indefinite suspension; the finding by the hearing court that the respondent engaged in serious professional misconduct involving misappropriation of trust mo ney that should have bee n paid to third party medical providers out of the proceeds of the Garrisons personal injury settlements; that the respondent did not maintain an attorney trust account for the deposit of the funds retained; 11 and that the respondent w as found to have used, knowing ly and willfully, trust funds for a purpose other than that for which the funds were entrusted to him. In addition, the respondent did not respond to the petitioner s lawful demand for information. As indicated, the respondent neither responded to the Petition for Disciplinary or Remedial Action nor appeared at any time in these proceedings. We accept the petitioner s recommendation. The respondent has misappropriated trust funds, an act infected with deceit and dishonesty, and he has not presented, nor even attempted to present, compelling extenuating circumstances, that would, or could, justify a sanction m ore lenient tha n disbarm ent. Disbarment, therefore, inexorably must follow. Attorney Grievance Comm n v. Daskalopoulos, 383 Md. 375, 384-85, 859 A. 2d 653, 658 (2004); Attorney Grievance Comm n v. Watson, 382 Md. 465, 475-76, 855 A. 2d 1213, 1219 (2004); Attorney Grievance Comm n v. Post, 379 Md. 60, 68, 839 A. 2d 71 8, 723 (2003); Attorney Grievance C omm n v. Sp ery, 371 M d. 560, 5 68, 810 A. 2d 4 87, 491 -92 (20 02). IT IS SO ORDERED; RESPONDENT SHALL PAY ALL COSTS AS TAXED BY THE CLERK OF THIS COURT, INCLUDING COSTS OF ALL TRANSCRIPTS, PURSUANT TO MARYLAND RULE 16715.C ., FOR WHICH SUM JUDGMENT IS ENTERED IN FAVOR OF THE ATTORNEY GRIEVANCE COMMISSION AG AINST JAMES L. PRICHARD. 12