In re Nawrath

In re Nawrath   (99-439); 170 Vt. 577; 749 A.2d 11

[Filed 10-Jan-2000]

                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 99-439

                             JANUARY TERM, 2000


In re W. Michael Nawrath, Esq.	}	Original Jurisdiction
                                }
                                }
                                }	Professional Conduct Board
                                }	
                                }
                                }	DOCKET NOS.	99.177, 99.184, 
                                }			99.185 & 99.186




       Pursuant to the recommendation of the Professional Conduct Board filed
  October 5, 1999, and  approval thereof, it is hereby ordered that W.
  Michael Nawrath, Esq. be publicly reprimanded for  the reasons set forth in
  the Board's report attached hereto for publication as part of the order of 
  this Court.  A.O. 9, Rule 8E.

       Attorney Nawrath shall also be placed on probation for one year with
  the conditions set forth in  the attached report.  The period of probation
  shall be deemed to have commenced on July 30,  1999.




BY THE COURT:

_______________________________________
Jeffrey L. Amestoy, Chief Justice

_______________________________________
John A. Dooley, Associate Justice

_______________________________________
James L. Morse, Associate Justice

_______________________________________
Denise R. Johnson, Associate Justice

_______________________________________
Marilyn S. Skoglund, Associate Justice


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136.PCB

[10-Oct-1999]


                              STATE OF VERMONT
                         PROFESSIONAL CONDUCT BOARD

In re:	W. Michael Nawrath, Esq. - Respondent
        PCB File Nos. 99.177, 99.184, 99.185 and 99.186


                      FINAL REPORT TO THE SUPREME COURT

                             DECISION NO.   136

       This matter was presented to us by stipulated facts that we adopt as
  our own and  incorporate herein by reference.  

       The parties also submitted a joint recommendation to the Board as to
  what conclusions of  law should be drawn from these facts and what sanction
  should be imposed.  Respondent  submitted a waiver of certain procedural
  rights, including the right to withdraw the stipulated  facts in the event
  that the recommended sanction was not imposed.

       Respondent, Respondent's counsel and Jessica Porter, Bar Counsel,
  appeared before us on  July 9, 1999, and the parties presented oral
  argument in support of the joint recommendation of  public reprimand and
  that Respondent be placed on probation for a period of one year. Upon
  consideration of the documents filed and the oral argument presented, we
  adopted  the stipulated facts and the conclusions of law.  For the reasons
  set forth below, the Board   recommends to the Supreme Court that a public
  reprimand be imposed and that Respondent be  placed on probation for a
  period of one year.

       A brief summary of the events leading to discipline are set forth
  below.

Facts

       1.	Respondent is an attorney licensed to practice law in the
  state of Vermont.  He  was admitted to practice in 1981.

PCB File No. 99.177

       2.	In early 1997, Respondent was retained to search the title
  and provide title  insurance for business property in Bennington for a
  client, T.N.  The initial title policy was for a  long term lease, but in
  early 1998 T.N. decided to purchase the property in fee simple.  The loan 
  closing for the purchase took place out of state and the documents were
  received by the  Respondent for recording on May 11, 1998.

       3.	On May 5, 1998 Respondent attended a closing on the purchase
  of the fee and a  mortgage back to the seller at the office of seller's
  attorney in Bennington.  

       4.	Respondent recorded the documents from the Vermont closing on
  May 5, 1998.

       5.	The funds were received from the client from two sources,
  directly from client's in-house counsel in Alabama and from Chicago Title
  Insurance Company.  Due to the double  payment, there was an overpayment of
  the recording fees and the Vermont Property Transfer  Tax.  The error was
  not discovered by the Respondent until May 24, 1999.

       6.	T.N. received a title insurance commitment. Issuance of the
  leasehold policy from  the 1997 closing was delayed because a mortgage
  discharge was not received from the out of  state closing until September
  10, 1997 and the property lacked a state permit for a previous  subdivision
  which at the request of T.N. was resolved by Respondent on February 17,
  1998.

       7.	By this time, T.N. had made the decision to purchase the fee
  and the Respondent  had been told by the title insurance company to give a
  credit for the premium paid on the  leasehold policy if the leasehold
  policy was surrendered.  Respondent therefore held the leasehold  policy in
  his file.

       8.	Upon return of the recorded documents from the closing on the
  fee, Respondent  erroneously awaited the return of the leasehold policy
  from his client T.N., before issuing the title  insurance.

       9.	In May, 1999 Respondent was alerted by the firm's bookkeeper
  that there were  still unissued title policies from the May 1998 closing. 
  He found $4,033.00 still remaining in the  trust account from the
  transaction of the previous May.

       10.	Respondent checked to see that all expenses of the closing
  had been paid and  assumed the $4,033.00 was for additional legal services.
  He transferred the trust funds to the  Whalen and Nawrath operating account
  from which he also wrote a check to himself for  $2,500.00.

       11.	On May 24, 1999 Respondent's partner asked Respondent about
  this removal of  the trust funds and when the partner was told it was for
  unpaid legal services the partner found  out that the firm had received a
  payment on May 13, 1998, of $486.00 for legal services related to  the
  title search and zoning opinion letter, and a separate check for the
  commission on the title  insurance for $1,340.50.

       12.	On May 28, 1999, Respondent refunded the trust account
  $4,033.00 and wrote his  client saying the money had been removed in error. 
  He also enclosed a trust check reimbursing  the client for $4,033.00.

       13.	On May 28, 1999, the same date that Respondent wrote to his
  client T.N.,  Respondent self-reported a trust account irregularity to the
  Professional Conduct Board.

       14.	On June 27, 1999, Respondent billed his client $2,452.50 for
  his remaining  unbilled legal services for resolving the permit issue and
  the preparations for and attendance to the  1998 closing.  While unbilled,
  this obligation predated the obligation to refund the $4,033.00.

PCB File No.  99.184

       15.	On November 23, 1998, Respondent did a refinancing closing
  for a Mrs. B. of  Manchester, Vermont.  None of the original documents had
  been filed but remained in  Respondent's file along with a stale GMAC check
  for closing expenses until brought to the  Respondent's attention in June,
  1999.  No priority was lost because Respondent had prepared and  obtained a
  mortgage Subordination of Mrs. B's second mortgage.  There were no
  intervening  liens.

       16.	Because the original HUD-1 settlement statement erroneously
  listed the loan  origination fee as being paid from the borrower's funds at
  closing, Mrs. B. was asked to sign a  settlement statement that erroneously
  stated that she owed $144.78.

       17.	On June 14, 1999 after checking with the lender, Respondent
  sent to Mrs. B. a  revised HUD-1 settlement statement for her signature
  which indicated that Mrs. B. should have  received $814.72 at the November
  1998 closing.  Mrs. B. received the $814.72 on or about June  22, 1999. 
  Respondent has paid Mrs. B. interest on the $814.72 at the mortgage rate.

PCB File No. 99.185

       18.	Respondent attended a closing on April 16, 1999 for an out of
  state client for the  sale of a piece of property in Winhall, VT.  

       19.	One week prior to the closing, Respondent sent the proposed
  closing documents  to the client and asked for certain information needed
  to apply for a Certificate of No Withholding  from the Vermont Tax
  Department.

       20. 	Respondent spoke to his client after the closing and asked
  how she wanted the net  proceeds delivered to her.  She said she would fax
  wiring instructions to her mother's account.

       21. 	Respondent again reminded his client that he needed
  additional information  regarding the costs of acquisition of the property
  for the Certificate of No Withholding.

       22. 	The client did not send the wiring instructions at that time. 
  She never did send the  additional information requested.

       23.	On May 14, 1999, client's mother called and reported she had
  still not received the  net proceeds from the sale of the home.

       24. 	At Respondent's request, she faxed wiring instruction to the
  Respondent's office.   Respondent did not see the fax.

       25.	On May 22, 1999, client's mother telephoned Respondent again. 
  He reported he  still had not received the fax.  She again faxed the wiring
  instructions.  Respondent then wired the  net proceeds to her, less
  $3,350.00 held to satisfy the non-resident withholding tax obligation 
  pending the receipt of the Certificate.

       26.	When he still did not receive all the information he needed
  to file for the Certificate  from the client, Respondent obtained the
  information from another attorney involved in the earlier  closing and
  filed for the Certificate.

       27. 	Respondent received the Tax Certificate on May 27, 1999.  He
  immediately faxed  to the Purchaser's attorney requesting authority to
  release the $3,350.00 to his client.

       28. 	On May 28, 1999 (a Friday), Purchaser's attorney left a phone
  message for  Respondent, who was in Bennington until after closing time,
  that Respondent was authorized to  release the $3,350.00 to his client.

       29. 	On May 30, 1999 (a Sunday) Respondent found the phone message
  and mailed the  $3,350.00 to his client.

PCB File No.  99.186

       30.	Respondent has a client for whom Respondent has a General
  Power of Attorney.   Respondent timely sought and was granted tax
  extensions until August 18, 1998 to file client's  1997 state and federal
  income tax returns.

       31. 	Upon filing requests for the extensions, Respondent paid the
  estimated taxes due in  the amount of $2,250.00 on the federal taxes and
  $625.00 on the state taxes.

       32.	In November 1999, the Vermont Department of Taxes sent the
  Respondent a  letter stating that the 1997 state income tax return had
  still not been filed.  Furthermore, On April  19, 1999, the Department of
  the Treasury sent a notice that the federal 1997 tax return had not  been
  filed.

       33.	On June 10, 1999, Respondent filed the state and federal
  Returns for 1997.  They  show $126.00 due on the state return and $190.00
  due on the federal return.  

       34.	Respondent has stated he will personally pay any penalties
  and interest charges that  are levied by either the state or federal tax
  authorities.

	GENERAL CONSIDERATIONS

       35.	Over the course of years, the Respondent financial and
  managerial arrangements  with his partner have caused him significant
  stress and depression.  Respondent was receiving  psychiatric treatment and
  medication for this until a few years ago.  Respondent discontinued this 
  psychiatric shortly after his treating psychiatrist committed suicide.  In
  the last year the stress and  depression has affected his attention span
  and his work.  Respondent is now resuming counseling  and has procured the
  assistance of a mentoring attorney, James Cormier, Esq. of Bennington to 
  address this situation.

Conclusions of Law

PCB File No.  99.177

       1.	The Respondent violated DR 6-101(A)(3) by neglecting a legal
  matter entrusted to  him by T.N..  Specifically, the Respondent neglected
  to issue the final title insurance policy on a  title he had searched for
  T.N., and upon which he was entrusted the task of issuing the title 
  insurance policy.

       2.	The Respondent violated DR 9-102(B)(3) and DR 9-102(C) by
  failing to maintain  a complete and accurate account of client funds. 
  Specifically, due to an error by his client, the  Respondent received
  double payment for recording fees and property transfer tax, but Respondent 
  did not notice the double payment which amounted to $4,033.00, between the
  time of the original  closing in May, 1998 and May, 1999 when it was
  reviewed.

PCB File No.  99.184

       1.	The Respondent violated DR 6-101(A)(3) by neglecting a legal
  matter entrusted to  him by Mrs. B.  Specifically, the Respondent failed to
  timely file a mortgage reflecting that Mrs.  B. had refinanced her original
  mortgage.

       2.	The Respondent violated DR 6-101(A)(2) by failing to prepare
  for Mrs. B's  refinancing in a manner that was adequate in the
  circumstances.  Specifically, the Respondent  improperly prepared one of
  the settlement statements.  As a result, the client was erroneously 
  charged on the settlement statement for $811.72 she was due and it took 7
  months to discover the  error and obtain the refund she was due from the
  Mortgagee.

PCB File No. 99.185

       1.	The Respondent violated DR 6-101(A)(3) by neglecting a legal
  matter entrusted to  him by his client.  Specifically, the Respondent was
  unable to file an application for a Certificate  of No Withholding within
  30 days of the closing.  As a result, his client was not able to promptly 
  access the $3,350.00 until Respondent got the information from other
  sources, which was a  period of six weeks. In addition, Respondent did not
  pursue the client's failure to send the wiring  instructions for the rest
  of the proceeds of the closing.

PCB File No. 99.186

       1.	The Respondent violated DR 6-101(A)(3) by neglecting a legal
  matter entrusted to  him by his client.  Specifically, the Respondent,
  after paying the estimated tax and securing an  extension of the time
  period in which to file client's state and federal tax returns for 1997, 
  neglected to file the returns until June 1999.

Sanctions

       The Board recommends that the Respondent be publicly reprimanded and
  placed on probation for one year.

       In determining an appropriate sanction, the Board considered four
  factors: (1) the duty  violated; (2) the mental state of the attorney; (3)
  the actual or potential injury caused by the  violation; and (4) any
  aggravating or mitigating factors.  See In Re Illuzi, 165 Vt. 598, 599
  (1996)  citing American Bar Association Standards for imposing Lawyer
  Discipline. Section 3.0).  An  analysis of these factors indicates that a
  public reprimand would be appropriate.

PCB File No. 99.177

       1.	The Duty

       The Respondent violated his duty to preserve his client's property. 
  See ABA Standards  For Imposing Lawyer Sanctions, Section 4.1.

       2.	State of Mind

       The Respondent's mental state was one of negligence.  Upon finding
  $4,033.00 in the  account, Respondent assumed the funds were for additional
  legal fees for which he had not been  paid after seeing that other expenses
  of the closing had been paid.  He transferred the funds to the  firm's
  operating account and removed $2,500.00 therefrom in payment to himself. 
  He did this  without making an effort to determine that the actual fee owed
  to the firm was $2,452.50.

       3.	Injury

       The Respondent's failure to maintain accurate records caused injury in
  that it deprived  T.N. of a net amount of $1,580.50 for over a year. PCB
  Files Nos. 99.184, 99.185, 99.186

       1.	The Duty

       In each of these cases, the Respondent violated a duty of diligence
  that he owed to a  client.	

       2.	State of Mind

       The Respondent's mental state was one of negligence

       3.	Injury

       a.	99.184

       Mrs. B. suffered little actual injury in that the Respondent repaid
  her the money owed to  her.  There was potential for injury, though, in
  that she might not have received the money she  was owed by the Mortgagee
  if Respondent's files had not been inspected as a result of review by 
  Review by Respondent's partner.  Also, there was potential for injury to
  the Mortgagee had an  intervening lien been filed.

       b.	99.185

       Respondent knew that he had client's funds from the proceeds of the
  closing, but did not  promptly follow up when he did not receive the wiring
  instructions client was supposed to send  him.

       c.	99.186

       Client faced little potential financial injury due to the Respondent's
  failure to timely file  state and federal tax returns. The estimated taxes
  were paid in a timely manner.  The client's  unpaid tax liability was
  $315.00 which was paid on June 10, 1999.  The final interest and penalties 
  have yet to be calculated, but it should be noted that Respondent has
  committed to personally  paying any interest or penalties.  

Mitigating Factors

       1.  The Respondent has no prior disciplinary record.

       2.  The Respondent has maintained an open and cooperative attitude
  with Bar Counsel.

       3.  Respondent has made a good faith effort to rectify the
  consequences of the misconduct  by promptly filing all necessary papers.

       4.  Respondent did not have dishonest or selfish motives.

       5.  Respondent's stress and depression is now being addressed by a
  psychologist.  Its  impact on his work will now be addressed by a mentoring
  attorney.

Aggravating Factors

       These cases show a pattern of misconduct for one year.

Sanction

       According to the ABA Standards, a reprimand is appropriate when a
  lawyer is negligent in  dealing with client property and as a result,
  causes injury or potential injury to the client.  See  ABA Standards For
  Imposing Lawyer Sanctions, Section 4.13.

1.	PCB File No. 99.177

       The Respondent was negligent when he discovered $4,033.00 in the trust
  account from  the T.N. matter.  In this case, Respondent had established
  proper accounting procedures but failed  to use them.  Such a large amount
  of money should have triggered questions in the Respondent's  mind as to
  whether the account was accurate and he should have found the double
  payment rather  than transferring the amount to his firm's operating
  account.

2.	PCB File No. 99.184, 99.185 & 99.186

       In cases involving neglect, "a reprimand is generally appropriate . .
  . when a lawyer is  negligent and does not act with reasonable diligence in
  representing a client and causes injury or  potential injury to a client." 
  A reprimand is appropriate here due to the fact that Respondent,  over the
  past year, has failed to follow up on his files including  timely filing of
  documents with  local and state authorities.

Conclusion

       For these reasons, the Board believes that a public reprimand is
  appropriate.   In addition,  we recommend that Respondent be placed on
  probation for one year and be required to observe  the following conditions
  of probation:

       1.	No later than July 30, 1999, the Respondent shall find a
  mentoring  attorney, approved by the Office of Bar Counsel, who will have
  reviewed a  summary, within applicable confidentiality requirements, of
  each of the  Respondent's open files.

       2.	No later than August 30, 1999, the Respondent shall submit to
  his  mentoring attorney a plan of action for each such file.

       3.	The Respondent shall follow any reasonable suggestions made
  by the  mentoring attorney.

       4.	In addition to the mentoring attorney's review of
  Respondent's files,  Respondent shall also review his files, and if either
  review reveals any likely  or probable violations of the Code of
  Professional Responsibility,  Respondent shall forthwith report the same to
  the Office of Bar Counsel.

       5.	The respondent shall not take any new cases or clients
  without the  approval of his mentoring attorney who must agree that the
  Respondent  can take on a new case without jeopardizing  the interest of
  that client or  existing clients.

       6.	The Respondent shall keep all appointments with his treating
  psychologist.

       7.	No later than July 30, 1999, the Respondent shall authorize
  his treating  psychologist to inform the Office of Bar Counsel if he misses
  any  appointments.

       8.	No later than July 30, 1999 the Respondent shall direct and
  authorize his  mentor and psychologist to inform the Office of Bar Counsel
  if at any time  during the probationary year if either believes that the
  Respondent's  condition adversely affects his ability to practice law.

       9.	The Respondent shall not violate the Code of Professional
  Responsibility.

       10.	The Respondent shall promptly respond to requests from the
  Office of Bar  Counsel that relate to his compliance, or lack thereof, with
  this agreement.

       11.	The Court may immediately suspend the Respondent's license to
  practice  law, without a hearing, upon presentation to the Court or the
  Professional  Conduct Board of clear and convincing evidence that the
  Respondent has  materially violated the terms of this order.  This
  agreement is subject to the  condition that Bar Counsel shall immediately
  provide Respondent with full  disclosure of all evidence submitted to the
  Court and the Professional  Conduct Board in support of any request to
  suspend Respondent's license  to practice law.  It is subject to the
  understanding that Respondent shall be  permitted to appear and move for a
  dissolution of or modification of the  order of suspension on two days
  notice to Bar Counsel and such motion  will be heard and determined as
  expeditiously as the ends of justice require.

       12.	In the event that the Board or the Court desires to impose
  more stringent  discipline than that stated above, this stipulation shall
  not be binding upon  Respondent nor shall any of its contents be used as
  evidence against him. Dated at Montpelier, Vermont this   1st        day of
  October, 1999.

PROFESSIONAL CONDUCT BOARD

	     /s/
____________________________ 
Robert P. Keiner, Esq. Chair






     /s/	                            /s/
___________________________	____________________________
Steven A. Adler, Esq.	        John Barbour 


      /s/	                           /s/
___________________________	____________________________
Charles Cummings, Esq.	         Paul S. Ferber, Esq.	

     /s/	
___________________________	____________________________
Michael Filipiak	        Barry E. Griffith, Esq.


     /s/	                        /s/
___________________________	____________________________
Robert F. O'Neill, Esq.	        Alan S. Rome, Esq.


      /s/
___________________________	____________________________
Mark L. Sperry, Esq.	        Ruth Stokes 


      /s/	                 /s/
___________________________	____________________________
Joan Wing, Esq. 	        Jane Woodruff, Esq.



___________________________	
Toby Young