Hugh Erwin Sabel v. State of Texas--Appeal from 226th Judicial District Court of Bexar County

No. 04-00-00469-CR

Hugh Erwin SABEL,
Appellant
v.
The STATE of Texas,
Appellee
From the 226th Judicial District Court, Bexar County, Texas
Trial Court No. 1998-CR-1555
Honorable Sid L. Harle, Judge Presiding

Opinion by: Tom Rickhoff, Justice

Sitting: Phil Hardberger, Chief Justice

Tom Rickhoff, Justice

Catherine Stone, Justice

Delivered and Filed: September 26, 2001

AFFIRMED

Appellant Hugh Erwin Sabel was convicted of the felony offense of misapplication of fiduciary property ($10,000-$100,000). After a bench trial, Sabel was found guilty and sentenced to two years' confinement and ordered to pay $44,000 in restitution. The prison term was probated. In two appellate issues, Sabel contends the evidence is factually insufficient to support the verdict and he was held to a higher standard of duty than provided by the Penal Code. We disagree and affirm.

Factual and Procedural History

Sabel is an attorney who represented Phillip L. Stotter in a dental malpractice claim, which settled for $110,000 in March 1991. The settlement funds were deposited into Sabel's client trust account. Under a contingent fee agreement, Sabel was entitled to twenty-five percent of the net proceeds ($27,500) and Stotter was entitled to seventy-five percent of the net proceeds ($82,500) ("the settlement proceeds"). Stotter did not want to receive all the settlement proceeds at once because he thought a deposit of more than $80,000 might look suspicious as he had just been appointed executor to his mother's estate and he had an ongoing dispute with the IRS. Sabel and Stotter agreed that Sabel would hold the settlement proceeds for Stotter, to be disbursed at Stotter's request. Stotter allowed Sabel to keep any interest on the money, although Stotter testified he did not realize at the time that attorneys were precluded from earning interest on client accounts. By April 1992, Stotter had received $35,000 of the settlement proceeds. (1) Stotter never received the balance of the proceeds.

In April 1992, Stotter helped Sabel obtain financing for a home located at 11918 Mission Trace, because Sabel and his wife, Sandi, were unable to obtain their own financing. Sabel transferred $27,457.54 to a USAA account to support the purchase, and Stotter signed a mortgage for $82,147. The lender also required that Stotter lease the property to Sabel to create sufficient income to pay the mortgage. Under an agreement between Stotter and Sabel, Sabel did not pay rent to Stotter; instead, Sabel made the mortgage payments directly to the mortgage company.

In 1992, the 11918 Mission Trace house was conveyed by Stotter to Sabel, and Sabel executed a "wrapping note" indicating a debt to Stotter of $129,000. The note makes no mention of the settlement proceeds owed to Stotter, and Stotter testified that Sabel assured him the settlement proceeds were not part of the note. The wrapping note was secured by a deed of trust in the 11918 Mission Trace house.

In the summer of 1992, Stotter purchased a home for himself in Sabel's neighborhood at 12131 Mission Trace. Stotter purchased the house for $75,000, and hired Sandi to remodel. Stotter spent $70,000 on remodeling, and he testified Sandi was out of control on spending and making unauthorized charges.

Stotter said that he demanded the balance of the settlement proceeds in July or September of 1993. In September 1993, Sabel sent Stotter a letter terminating their professional relationship; attached to the letter was a settlement proceeds disbursement schedule that included the notation "Wrap note ($46,852.75)."

After Stotter and Sabel's wife had a falling out over renovations at 12131 Mission Trace, and Sabel continued to refuse to remit the settlement proceeds to Stotter, Stotter filed a civil lawsuit and criminal complaint against Sabel. A jury found that the settlement proceeds were not connected to the 11918 Mission Trace house, and Sabel was ordered to pay Stotter $47,500.

In 1996, after Sabel failed to pay homeowner's fees and the mortgage on the 11918 Mission Trace house, Stotter foreclosed on the property.

Factual Sufficiency

In his first issue, Sabel challenges the factual sufficiency of the evidence to support his conviction. In considering a factual sufficiency challenge, we do not view the evidence through the prism of "in the light most favorable to the prosecution." Cain v. State, 958 S.W.2d 404, 407 (Tex. Crim. App. 1997); Clewis v. State, 922 S.W.2d 126, 129 (Tex. Crim. App. 1996). Instead, we examine all of the evidence impartially, and set aside the verdict only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain, 958 S.W.2d at 410; Clewis, 922 S.W.2d at 129. We must defer to the factfinder, and may find the evidence factually insufficient only where necessary to prevent manifest injustice. See Cain, 958 S.W.2d at 407.

The Texas Penal Code provides: "A person commits an offense if he intentionally, knowingly, or recklessly misapplies property he holds as a fiduciary . . . in a manner that involves substantial risk of loss to the owner of the property . . . ." Tex. Pen. Code Ann. 32.45(b) (Vernon Supp. 2001). "Misapply" is defined as dealing "with property contrary to: (A) an agreement under which the fiduciary holds the property; or (B) a law prescribing the custody or disposition of the property." Id. 32.45(a)(2).

Sabel argues the evidence is insufficient to prove the settlement proceeds were held contrary to the agreement between him and Stotter. Sabel contends that Stotter agreed to have the settlement proceeds and Sabel's house debt replaced by the wrapping note for $129,000. Stotter testified he never agreed to have the settlement proceeds become a part of other transactions. Sabel also contends the funds were not subject to a risk of loss because Stotter was protected by the note and title to the house at 11918 Mission Trace, and he felt Stotter was compensated by the foreclosure. Stotter testified the foreclosure cost him between $130,000 and $145,000--the balance of the original mortgage, plus attorney's fees and other costs. The property appraised at under $120,000. While the evidence may be contradictory, it is the trier of fact who must determine credibility and resolve factual disputes. After examining all the evidence impartially, we conclude that the verdict was not so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust.

Fiduciary Duty

In his second issue, Sabel asserts the trial court held him to a higher duty than called for in the Penal Code. Sabel contends the trial court erroneously held him to the higher ethical standard required of an attorney by the common law and the State Bar Rules because the court concluded as follows:

Dr. Stotter clearly was attempting to hide that money from the I.R.S. There are lawyers and civilians doing time for that very thing. So nobody comes here with clean hands.

I clearly believe that there was an agreement to have [the settlement proceeds] initially placed in whatever account Mr. Sabel wanted them in. However, I don't ever believe there was an agreement to put them in the house. Unfortunately, in a situation where nobody comes with clean hands we revert back to the fact that the lawyer has a higher duty, a fiduciary duty, and that money never should have been co-mingled or placed into that house, assuming it was, without express permission from Dr. Stotter. That is the agreement I am going to find was violated and I am going to find him guilty of count I.

The standards of professional conduct for an attorney are not at issue in this case. The Penal Code defines a "fiduciary" as "any other person acting in a fiduciary capacity." Tex. Penal Code Ann. 32.45(a)(1)(B) (Vernon Supp. 2001). The statute is not a model of legislative draftsmanship because the essential term "fiduciary" is defined only self-referentially; however, "fiduciary" has such a common meaning one need not be familiar with case law or treatises to discern its meaning. Talamantez v. State, 790 S.W.2d 33, 35 (Tex. App.--San Antonio 1990, pet. ref'd). In common parlance, one acts in a fiduciary capacity when the money or property that he handles is not his own or for his own benefit, but is for the benefit of another person. See Gonzalez v. State, 954 S.W.2d 98, 103 (Tex. App.-San Antonio 1997, no pet.). Sabel clearly held the settlement proceeds as a fiduciary, i.e., he held the money in trust or confidence for Stotter's benefit. The trial court found that Sabel held the money in his fiduciary capacity as Stotter's attorney and Sabel dealt with the money in a manner contrary to the agreement. This constitutes an offense under Section 32.45 of the Penal Code.

We affirm the trial court's judgment.

Tom Rickhoff, Justice

DO NOT PUBLISH

1. The trial court found an additional $3500 paid at Stotter's instruction by Sabel to Sabel's wife, who remodeled Stotter's house at 12131 Mission Trace.