Office of Lawyer Regulation v. John C. Widule
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2003 WI 34 SUPREME COURT CASE NO.: OF WISCONSIN 01-2157-D COMPLETE TITLE: In the Matter of Disciplinary Proceedings Against John C. Widule, Attorney at Law: Office of Lawyer Regulation, Complainant-Respondent, v. John C. Widule, Respondent-Appellant. DISCIPLINARY PROCEEDINGS AGAINST WIDULE OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: May 8, 2003 March 6, 2003 SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: ATTORNEYS: For the respondent-appellant there were briefs by John C. Widule, Elm Grove, and oral argument by John C. Widule. For the complainant-respondent there was a brief by Robert G. Krohn and Roethe, Krohn, Pope, McCarthy & Haas, LLP, Edgerton, and oral argument by Robert G. Krohn. 2003 WI 34 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 01-2157-D STATE OF WISCONSIN IN SUPREME COURT : In the Matter of Disciplinary Proceedings Against John C. Widule, Attorney at Law: FILED Office of Lawyer Regulation, Complainant-Respondent, MAY 8, 2003 v. Cornelia G. Clark Clerk of Supreme Court John C. Widule, Respondent-Appellant. ATTORNEY disciplinary proceeding. Attorney's license suspended. ¶1 from PER the entered Office referee's after of CURIAM. a Lawyer Attorney findings public John of hearing Regulation's C. fact and following (OLR) Widule has appealed conclusions of law the of the August 10, complaint filing on No. 2001, alleging that Widule had committed four 01-2157-D acts of professional misconduct:1 Count 1: Widule had knowingly advanced a factual position without a basis for doing so that was not frivolous in violation of SCR 20:3.1(a)(2).2 Count 2: Widule took action on behalf of a client when it was obvious that such action would serve merely to harass or maliciously injure another, in violation of SCR 20:3.1(a)(3).3 Count 3: Widule had a conflict of interest in simultaneously representing two clients and 4 himself in violation of SCR 20:1.7(b). 1 Effective October 1, 2000, Wisconsin's attorney disciplinary process was substantially restructured. The name of the body responsible for investigating and prosecuting cases involving attorney misconduct was changed from the Board of Attorneys Professional Responsibility to the Office of Lawyer Regulation (OLR) and the supreme court rules applicable to the lawyer regulation system were also revised in part. Although the conduct underlying this case arose prior to October 1, 2000, the complainant in this case will be referred to as the OLR but all references to supreme court rules will be to those in effect prior to October 1, 2000, unless otherwise noted in the opinion. 2 SCR 20:3.1(a)(2)provides: "(a) In representing a client, a lawyer shall not: (2) knowingly advance a factual position unless there is a basis for doing so that is not frivolous." 3 SCR 20:3.1(a)(3) provides: (a) In representing a client, a lawyer shall not: (3) file a suit, assert a position, conduct a defense, delay a trial or take other action on behalf of the client when the lawyer knows or when it is obvious that such an action would serve merely to harass or maliciously injure another. 4 SCR 20:1.7(b) provides: (b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another 2 No. 01-2157-D Count 4: Widule failed to provide competent representation in violation of SCR 20:1.1,5 by failing to research issues and to thoroughly investigate the documentary and factual premises of the lawsuit he had commenced. ¶2 The referee appointed to hear this matter, Attorney Charles J. Herro, found that Widule had committed the misconduct alleged in Counts 1, 3 and 4 i.e., that Widule had pursued a frivolous action, had a conflict of interest, and had failed to provide competent representation. absolved Widule having of acted The referee, maliciously. however, Referee Herro recommended that Widule, who was admitted to practice law in this state in 1982 and who has never before been the subject of a disciplinary proceeding, be suspended from the practice of law for a period of three months. ¶3 On this appeal Widule challenges each of the referee's findings and conclusions of misconduct; he also appeals from the referee's recommendation that his license to practice law be suspended for a period of three months. In essence, Widule maintains that there is no clear and satisfactory evidence to client or to a third person, or by the lawyer's own interests, unless: (1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents consultation. . . . " 5 in writing after SCR 20:1.1 provides: "Competence. A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." 3 No. 01-2157-D support the referee's conclusion that Widule had violated the three supreme court rules as alleged. ¶4 We determine that the referee's findings of fact and conclusions convincing of law evidence disciplinary are supported presented proceeding. We at by the further the satisfactory and hearing held in this determine that Widule's misconduct warrants a suspension of his license to practice law in this state for six months; in addition, we direct, as the referee recommended, that Widule pay to the OLR all the costs connected with this disciplinary proceeding and appeal. ¶5 The events giving rise to these misconduct counts against Widule stem from his representation of Tim Ormson, d/b/a Ormson Financial Services (OFS). In December 1992 Northern Plastics Inc. was in default on obligations it owed to the Royal Bank of Elroy which held a general business security agreement on the assets property. and a first mortgage on the company's real The president of Northern Plastics, Larry Ormson, Tim Ormson's brother, negotiated a sale of the assets of the company to Royal Plastics, Inc., whose director and major shareholder was David Grams. The sale proposal contemplated that Northern Plastics would voluntarily surrender its assets to Royal Bank in lieu of foreclosure, distributed at the and that closing to those assets individuals would and then entities be who claimed security interests in those assets. ¶6 the Tim Ormson, who claimed to hold a security interest in assets of Northern Plastics, was given notice of brother's company's planned voluntary surrender of assets. 4 his Dona No. 01-2157-D Merg, the attorney representing the bank, sent notice of the closing to Tim Ormson including a termination statement on which Tim Ormson was to indicate the amount of money he would accept in settlement of OFS's interest in Northern Plastics' assets which were to be distributed December 18, 1992. which the the scheduled closing on Tim Ormson did not attend that closing at assets allocated; at of instead, the plastics company Tim's brother, Larry were settled Ormson, and appeared on Tim's behalf asserting that he had Tim's authority to do so. Larry Ormson brought with him the termination statement Tim had signed in blank; that termination statement identified no dollar amount that OFS would accept in settlement. At that closing Larry Ormson agreed to accept on behalf of his brother Tim and OFS, the amount of $44,000; that amount was then inserted in the space that had been left blank on the settlement form. A check in that amount was subsequently mailed to Tim Ormson and he later cashed that check on behalf of OFS. ¶7 On December 15, 1994, Widule filed a complaint in the Dane County Circuit Court on behalf of his client, Tim Ormson, against Attorney Dona Merg and the Royal Bank of Elroy. complaint interest asserted in defendants the had that assets Tim of unlawfully Ormson Northern defeated held a Plastics that valid and security that interest settlement closing held on December 18, 1992. That the at the The complaint prepared by Widule asserted four causes of action on behalf of his client, Tim Ormson, including: unjust enrichment, conversion, breach of fiduciary duty by trustee, and uniform 5 No. commercial code violations. 01-2157-D Specifically, the complaint alleged that Tim Ormson, d/b/a OFS, had a valid security interest in the assets of Northern Plastics and that Tim Ormson had executed a satisfaction of his interest in blank in order to allow the closing to proceed. The complaint further alleged that Dona Merg, as the attorney for Royal Bank, and the bank, had caused Tim Ormson to mortgage held Plastics for claimed terminate value complaint on an the the that actual security assets amount of his and interest real substantially security value of property less than interest. Tim and satisfy a of Northern Tim Ormson's According to the interest in the Ormson's assets of Northern Plastics ranged from $185,000 to $245,000; the complaint further alleged that Dona Merg had agreed to hold in trust, for Tim Ormson, the settlement satisfaction. The complaint also alleged that Dona Merg had improperly allocated from the plastics company assets only $44,000 to OFS and had assigned to Tim Ormson a second mortgage on Larry Ormson's home. Although this complaint was premised on the existence of a promissory note and security agreement, no promissory note or any other documentation were attached to the complaint to support Tim Ormson's claim that he had a valid security interest in the assets of Northern Plastics in excess of the $44,000 he had already been paid. ¶8 On January Interrogatories asking 23, 1995, Widule Merg and and Tim the Ormson bank served to produce documents or to identify any verbal communications to support the claim that Tim Ormson, d/b/a OFS, 6 was entitled to at least No. a $185,000 settlement payout from Northern 01-2157-D Plastics' assets. The defendants also sought documents that would establish any indebtedness by Northern Plastics, Inc., to Tim Ormson or OFS including such things as security agreements, original notes, etc. Widule, on behalf of Tim Ormson, declined to produce any documents, asserting that many of the requested documents were already in the possession of Merg or the bank. ¶9 The defendants filed precluding Widule motion (1995-96)6 Wis. Stat. § 804.01(3)(a)(2) order a and Tim pursuant seeking a Ormson from to protective initiating any discovery until Tim produced written evidence confirming that he held any secured interest in the assets of Northern Plastics, Inc., which had not been paid or satisfied as a result of the closing on the voluntary transfer of assets held on December 18, 1992. At the March 9, 1995, hearing on that motion for a protective order, Widule, on behalf of Tim Ormson, submitted an affidavit averred that retrieve entity from Dona OFS's that one had Paul Merg file Martin; had from that telephoned his purchased in him employer, Northern affidavit, and Royal Plastics, asked Martin him Plastics, Inc.'s to the assets. According to Martin's affidavit, Merg asked him to forward that file to her, and he did so. Based on that Widule argued that Tim Ormson could not produce evidence of any promissory notes or securities agreements because they were in that OFS file that Merg had already obtained from Martin. 6 All subsequent references to the Wisconsin Statutes are to the 1995-96 version unless otherwise indicated. 7 No. ¶10 Dona 01-2157-D Martin's affidavit was countered by an affidavit from Merg in which she averred that she had never seen or possessed any promissory notes to OFS or security agreements involving OFS. ¶11 At the conclusion of the March 9, 1995, hearing the Dane County Circuit Court granted the defendants' motion for a protective order precluding Tim Ormson from initiating or conducting any discovery until he produced proof satisfactory to the court of the existence of a valid and properly perfected security interest in favor of OFS in Northern Plastics assets that would support his claim that OFS was entitled to more than the $44,000 OFS had already received following the December 18, 1992, closing. ¶12 By affidavit dated March 17, 1995, submitted in support of a motion asking the circuit court to reconsider its March 9, 1995, protective order, Tim Ormson averred that shortly after the business circuit note and court hearing security he agreement had found with the original Northern Plastics which established the value of his security interest greatly in excess of the $44,000 payout he had received. According to Tim Ormson those documents had been located behind a file cabinet in his home immediately after the March 9, 1995, circuit court hearing and Tim Ormson attached those documents to his March 17, 1995, affidavit and asserted that they established that OFS had a $240,000 security interest in Northern Plastics' assets. ¶13 Tim Ormson also attached to that same affidavit a letter dated December 7, 1992, that his brother Larry Ormson had 8 No. purportedly received from David Grams. Grams wrote that he had reviewed 01-2157-D In that letter David the business notes and financing statements of Northern Plastics, and had discussed the matter with Attorney Merg; Grams wrote that Merg had offered to pay OFS at the upcoming closing a total of $185,000 which represented 75 percent of the plastics company's indebtedness to OFS. Grams' letter, which was signed "Dave," asserted that the $185,000 settlement offer was "very favorable for Tim." According to Widule he viewed Grams' letter as an outsider's confirmation that Dona Merg, in fact, had verbally acknowledged that Tim Ormson was entitled to a settlement amount greatly in excess of the $44,000 actually allocated at the closing. ¶14 to Tim As noted, Grams' December 7, 1992, letter was appended Ormson's March 17, 1995, affidavit. However, by affidavit dated April 12, 1995, David Grams denied that he had written or caused the December 7, 1992, letter to be authored; Grams asserted that he had not executed or signed the original of that document, and that the signature on that letter was not a true copy of his signature. ¶15 Despite Grams' affidavit disavowing that December 7, 1992, letter, 23 days later, on May 5, 1995, Widule, on behalf of Tim Ormson, filed an amended complaint against Dona Merg and the bank asserting claims of negligent and/or intentional breach of trust; negligent and/or intentional breach of fiduciary duty; misappropriation and conversion of properties; unjust enrichment; negligence and breach of fiduciary duty by bank; fraud; violation of 12 U.S.C. 9 1972; failure to comply with No. 01-2157-D Wis. Stat. §§ 409.504 and 409.507; breach of good faith under Wis. Stat. §§ 401.201(19) and 401.203; and, breach of contract. Attached to that amended complaint was a copy of that December 7, 1992, letter purportedly written by Grams. ¶16 Subsequently, at a circuit court hearing on June 26, 1995, Widule withdrew the Grams' letter. He later explained that until that time he thought that perhaps the Grams' letter had been signed by Grams' attorney on Grams' behalf. ¶17 Subsequently, at a November 1, 1997, deposition, Paul Martin admitted that his earlier statement that he had retrieved the OFS file from Royal Plastics and sent it to Dona Merg as she had requested, was false; according to Martin, Larry Ormson had paid him $500 to make that false claim implicating Merg and asserting that she already had the documents supporting Tim Ormson's claim for a share of Northern Plastics in excess of $44,000. ¶18 On March 4, 1998, the Dane County Circuit Court dismissed Tim Ormson's amended complaint against Merg and the bank with prejudice. The defendants' request for sanctions pursuant to Wis. Stat. § 814.025 against Widule and Tim Ormson for bringing a frivolous action was transferred to Dane County Circuit Court Judge Richard Callaway for resolution. After several days of hearings Judge Callaway on October 28, 1998, granted the defendants' motion for sanctions and entered judgment in favor of Dona Merg and Royal Bank of Elroy against John Widule personally in the amount of $102,373.75. 10 No. ¶19 findings 01-2157-D That sanction was imposed on Judge Callaway's specific that Widule knew that his client, Tim Ormson, had previously accepted the $44,000 payment in satisfaction of OFS's claimed interest in Northern Plastics' business assets, that Tim Ormson had not objected to that amount, and in fact had cashed the check. In addition, the circuit court determined that Widule should have known that Tim Ormson had no promissory note or other documentation to support the existence of any larger security interest in Northern Plastics, and that Tim Ormson and Larry Ormson had colluded to produce fraudulent documents which Widule had then introduced in support of Tim Ormson's lawsuit against Merg and the bank. ¶20 Judge Callaway further determined that Widule had acted with malicious intent based on the fact that nearly two years had passed without Tim Ormson objecting to the settlement payout he had received from the Northern Plastics' voluntary surrender of assets. Then Widule filed Tim Ormson's lawsuit against Dona Merg and the bank the day after the bank and Merg had rebuffed Larry Ormson's attempt to repurchase the assets of Royal Plastics (Northern Plastics' successor) which was then in bankruptcy. David Stauffacher, who was also Widule's client, and Larry Ormson had submitted various offers to purchase Royal Plastics' assets out of bankruptcy but their efforts were unsuccessful because the bank declined to provide any financing to Larry Ormson. ¶21 had been Judge Callaway also determined that Merg's testimony credible, including her 11 assertion that during the No. pendency of the Royal Plastics' bankruptcy, 01-2157-D Widule had threatened to claim that Merg had known at the time of the Northern Plastics' settlement closing that Larry Ormson had not been authorized to act on Tim Ormson's behalf at that closing. ¶22 Widule appeals, in appealed. Case No. On April 98-3313, 12, 2000, affirmed the Judge court of Callaway's imposition of sanctions against Widule finding that the record supported harass the Merg finding after that Widule Stauffacher's Plastics' assets failed. had acted attempts to maliciously purchase to Royal In that appeal, the court of appeals wrote: The trial court's finding that Widule had threatened Merg during the Royal Plastics' proceeding is not clearly erroneous, and supports the trial court's inference of malicious intent. Given Widule's improper motive for initiating the suit, it was not clearly erroneous for the trial court to also have found that Widule failed to adequately investigate the existence of [Tim] Ormson's claimed security interest in the Northern Plastics liquidation before filing suit the day after the Royal Plastics' assets were sold, and that the fraudulent nature of the documents which Ormson and his brother [Larry] conveniently produced when faced with a motion to dismiss ought to have been obvious. We agree with the trial court's resulting conclusion that initiating and maintaining suit based on a security interest which reasonable investigation would have revealed never existed, in order to harass an attorney who did not cooperate in another proceeding, violated Wis. Stat. § 814.025 and merited an award of sanctions against counsel. Ormson v. Merg, No. 98-3313, unpublished order (Wis. Ct. App. April 12, 2000). Widule's petition for review in that case was subsequently denied by this court. 12 No. ¶23 01-2157-D Judge Callaway later held a hearing on Widule's motion that a portion of the $102,000 in sanctions imposed against him should be allocated against Tim Ormson. An amended judgment was then entered reducing the amount of sanctions against Widule personally to $77,000. ¶24 Widule again appealed. On April 26, 2001, the court of appeals, in Case No. 99-2616, affirmed that amended judgment against Widule. In that second appeal the appellate court addressed Widule's argument that all the sanctions should be allocated against Tim Ormson, and wrote: [Widule's] argument boils down to a claim he made on the previous appeal: that he should not have been sanctioned at all because he relied in good faith upon his client's assertions and did not know that documents his client produced were fraudulent. We have already considered this claim and decided it against Widule. We concluded that sanctions were appropriate under Wis. Stat. § 812.025 because Widule initiated and maintained a suit based on a security interest that reasonable investigation would have revealed never existed, in order to harass an attorney who did not cooperate in another proceeding. We will not revisit that ruling. Ormson v. Merg, No. 99-2616, unpublished slip op., ¶4 (Wis. Ct. App. April 26, 2001). ¶25 On July 18, 2001, this court denied Widule's petition for review in Case No. 99-2616. Thereafter, the OLR filed its complaint against Attorney Widule in this court alleging the four counts of misconduct as described above. ¶26 On this appeal Widule asks this court to revisit the sanctions imposed against him by Judge Callaway; Widule urges this court to consider reopening 13 the judgments against him No. because he believes Judge Callaway "made serious [error] in the underlying litigation . . . ." invitation. imposed 01-2157-D reversible We decline the The determination that sanctions were appropriately against Widule for violating Wis. Stat. § 814.025 by initiating and maintaining a suit based on the security interest which a reasonable investigation would have revealed never existed, in order to harass an attorney who did not cooperate in another proceeding, has been twice affirmed by the court of appeals, and this court has twice denied Widule's petitions for review. That determination may not now be collaterally attacked in this disciplinary proceeding. In re Disciplinary Proceedings Against Lauer, 108 Wis. 2d 746, 754, 324 N.W.2d 432 (1982).7 ¶27 charged Lauer was a disciplinary proceeding against a lawyer with knowingly maintaining proscribed by then SCR 20.36. a frivolous action as Former SCR 20.36 is now found, in substantially the same form, in SCR 20:3.1, one of the rules the referee found that Widule had violated in this case. ¶28 pay In the Lauer case, Attorney Lauer had been ordered to costs and pursuant frivolous to reasonable attorney's Wis. Stat. § 814.025 claim. The Board 7 fees by (1979-80) of a circuit for Attorneys court bringing a Professional Collateral estoppel which is now known as issue preclusion, Northern States Power Co. v. Bugher, 189 Wis. 2d 541, 549, 525 N.W.2d 723 (1995), is applicable under appropriate circumstances in lawyer disciplinary matters to preclude relitigation of issues before a referee that were previously resolved in court. See In re Disciplinary Proceedings Against Lucareli, 2000 WI 55, 235 Wis.2d 557, 611 N.W.2d 754. 14 No. 01-2157-D Responsibility then filed a misconduct complaint against Lauer asserting that he had violated SCR 20.36 because he knew, or should have known, that the frivolous action he had commenced in circuit court was without any reasonable basis in law or equity and could not be supported by a good faith argument for the extension of modification or reversal of existing law. The referee appointed in Lauer recommended that a private reprimand be issued. Lauer appealed to this court arguing that the referee had improperly concluded that Lauer had violated SCR 20.36 solely on the basis of the previous determination by the circuit court that Lauer had violated the frivolous claim statute, § 814.025. ¶29 The Lauer court agreed that a finding of frivolousness under the statute could not, per se, constitute a violation of the disciplinary rule. It was pointed out that although the statute and the rule were similar, they were not identical, and the assessment of costs under the statute does not, in and of itself, constitute responsibility. a violation of the rule of professional The Lauer court explained: However, it does not follow that where there is a violation of the statute there must be a violation of the disciplinary rule. To the extent they treat the same activity, the statute and the rule differ significantly. A violation of the statute requires that a party or a party's attorney knew or should have known that the action, special proceeding, counterclaim, defense or cross-complaint was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law. A violation of SCR 20.36 requires that the claim or defense 15 No. unwarranted under advanced. . . . existing law must be 01-2157-D knowingly 108 Wis. 2d at 757 (emphasis in original). ¶30 Furthermore, the Lauer court noted that under the frivolous claim statute, the test applied is an objective one; in contrast, under the disciplinary rule, the appropriate test is a subjective one because the referee or reviewing court in a disciplinary action, must determine whether an attorney has violated a disciplinary rule that sets forth the minimum level of conduct below which no lawyer can fall without being subject to disciplinary proceedings. In Lauer, the court wrote: In making that determination in the context of SCR 20.36(1)(b), we find it appropriate to apply the subjective standard, that is, whether the attorney, in fact, knew the claim he was advancing was unwarranted under existing law and could not be supported by a good faith argument for an extension, modification or reversal of existing law. Such knowledge is an issue of fact which in the context of an attorney disciplinary proceeding, must be established by clear and satisfactory evidence, . . . while a finding of frivolousness under § 814.025, Stats., must be based on a preponderance of the evidence . . . . 108 Wis. 2d at 758 (emphasis added and internal citations omitted). ¶31 Thus, in the instant matter, the focus of the inquiry before the referee, and now before this court with respect to the first count of the OLR's complaint against Widule, is whether there was clear and satisfactory evidence that Widule knowingly advanced a factual position without a basis for doing so that was not frivolous. 16 No. ¶32 In this case Referee Herro in Finding 01-2157-D of Fact #24 wrote: 24.The words frivolous and malicious have been the subject of discussion, definition and interpretation by our courts but remain subjective and dependent upon factual circumstances. Was the respondent [Widule] frivolous in pursuing the matter of Tom [sic] Ormson versus Merg, or was he a zealot on a crusade? The Referee finds that a wellprepared attorney, not clouded by his contingent fee arrangement with a client who would pervert the facts, would recognize the frivolity of his pursuit. Pursuing the Tim Ormson matter after: A. Tim finding an original business document which had been lost for 18 months, B. The Grams recantation, and C. The Martin bribery statement, compels the Referee to find the actions of the Respondent to be frivolous. ¶33 We uphold this finding because there is satisfactory evidence in the record to support it. clear and The above quote reveals that the referee correctly recognized that the test to be applied is a subjective one. as did complaint the referee, purportedly that which to appended the December 7, David 23 after Grams had he written by Widule We find it significant, Grams, filed the days first 1992, amended letter executed an affidavit specifically denying that he had authored or signed that letter. Despite that disavowal Widule filed that first amended complaint using the Grams' letter as documentary support. We recognize that Widule subsequently withdrew that 17 No. 01-2157-D letter; however, he did not do so until June 26, 1995, more than two months after Grams' recantation affidavit was filed. troubled, and certainly unpersuaded, by Widule's We are specious argument that he did not act earlier to withdraw Grams' letter because until then, he thought that perhaps Grams' attorney had signed the December 7, 1992, letter on Grams' behalf. claim is particularly unpersuasive "Dave" on that letter. in view of the That signature We think a lawyer signing a letter on behalf of a client would be unlikely to use such a casual or familiar diminutive. ¶34 in We agree with the referee and find that the evidence this record is sufficient to support a subjective determination that Widule knowingly advanced a factual position without a basis referee's for finding in doing this so that respect was is not frivolous. supported by clear The and convincing evidence and we adopt it. ¶35 Moreover, provides factual sufficient position frivolous. Widule's own evidence without a testimony before that basis he for knowingly doing so the referee advanced that was a not The transcript of the hearing before the referee on April 10, 2002, reveals that at the time he filed the first amended complaint with the Grams' letter attached, Widule knew that Grams had not written or signed that December 7, 1992, letter.8 Widule admitted that despite that knowledge, he had 8 The transcript of the hearing before the referee reflects the following exchange between the OLR's attorney and Widule on cross-examination. 18 No. 01-2157-D attached the letter as an exhibit and foundation for the first amended complaint. This testimony, together with all the other evidence before the referee, constitutes clear and satisfactory evidence that without a Widule basis knowingly for doing advanced so a was that factual not position frivolous. Accordingly, we find the evidence to be more than sufficient to support the referee's first conclusion of law that Widule clear and satisfactory violated SCR 20.3.1(a)(2). ¶36 We also find that there is evidence to support the referee's second conclusion that Widule violated SCR 20:1.7(b) by representing Tim Ormson while at the same time being under a retainer to another client David Stauffacher to the potential detriment of Stauffacher. As with respect to the first count, we find that there was clear and satisfactory evidence in the record to support this finding and conclusion. ¶37 The evidence before the referee established that David Stauffacher which paid included, Widule a according monthly to retainer Widule, services" and "ancillary legal services." for his "business services consulting In his deposition Q:[By the OLR attorney]: Well, you knew Grams didn't write the letter? A: [Widule]: I knew Grams did not sign or write the letter. Q: And yet you attached the letter as an exhibit as a foundation for your first amended complaint? A: Yes. 19 No. 01-2157-D Stauffacher testified that the monthly retainer he paid Widule was for "legal services." Northern Plastics successor to and Northern Stauffacher had invested money in then later Plastics. in When Royal Plastics, bankruptcy the proceedings were subsequently commenced for Royal Plastics, Stauffacher and the Ormsons assets out made of several offers bankruptcy. to purchase Those offers Royal were Plastics' unsuccessful because all involved financing from the Royal Bank of Elroy and the bank refused to participate or finance any endeavor involving Larry Ormson. ¶38 Previously, at the December 1992 closing of the voluntary surrender of assets by Northern Plastics, a check had been issued Northern to David Plastics, in Stauffacher, the as a of $255,205.47. amount secured creditor At of the subsequent sanction hearing before Judge Callaway, Widule argued that Stauffacher had been paid $5000 too much at that closing and that Stauffacher's interest was actually junior to that of Widule's other client, Tim Ormson. Widule maintained before Judge Callaway that the excess $5000 Stauffacher had received came directly from Tim Ormson's rightful share in the settlement payout of Northern Plastics' assets. ¶39 does not Callaway; In his brief in this disciplinary proceeding Widule dispute that instead, he he made asserts this that argument the OLR before had not Judge "very vigorously pursued . . . " that point before the referee. In any event, Widule maintains that there was no risk to David Stauffacher and David Stauffacher had, in fact, consented to 20 No. 01-2157-D Widule making that argument; finally Widule asserts that there was no conflict of interest by him simultaneously representing Tim Ormson and David Stauffacher. ¶40 his We are not persuaded by these arguments. brief Widule repeatedly asserts that Although in Stauffacher had consented "in writing" to Widule making this argument before Judge Callaway, there is no such written statement from David Stauffacher in the record before this court by which Stauffacher allegedly waived this apparent conflict.9 We think that it is self-evident that when Widule argued before Judge Callaway that his client Stauffacher had received too much of the plastic company's assets and that the excess came from rightful share of his other client, Tim Ormson, that Widule had a conflict. Arguing a position favorable to one client, at the expense of another client, constitutes a detrimental position with respect to the first client. Widule could not reasonably believe that his responsibilities to his client Stauffacher were not, under these circumstances, materially responsibility to his other 20:1.7(b)(1). We agree that client, there 9 limited Tim is by Ormson. clear and Widule's See SCR convincing At oral argument Widule acknowledged that he had no written consent from Stauffacher but claimed that he did not need it because he never took a position that was directly adverse to Stauffacher's interest. Widule maintained that there was no requirement of consent if there is no adverse representation; according to Widule, Stauffacher did not view this argument as being adverse to him. Widule noted that Stauffacher did not file a grievance against him. 21 No. evidence that Widule's actions in this respect 01-2157-D violated SCR 20:1.7(b). ¶41 SCR The referee also concluded that Widule had violated 20:1.1 because Widule failed to provide competent representation to his client, Tim Ormson, by failing to research issues such as "accord and satisfaction," "waiver," "estoppel," before filing suit on behalf of Tim Ormson. and We need not engage in a detailed analysis of these legal doctrines and who has the burden of proof with respect to establishing them because even though these may be affirmative defenses, in order for Widule to have provided competent representation to Tim Ormson before commencing the underlying litigation against Dona Merg and the bank, Widule should have investigated the possibility that such defenses could defeat the action he was commencing. There is nothing in this record to establish that Widule even considered, let alone researched or analyzed, these issues before commencing the lawsuit on behalf of his client Tim Ormson. ¶42 In any event, it is unnecessary to now determine whether the evidence with respect to this third count was clear and convincing because we are persuaded that the evidence on the other two counts, as found by the referee, is overwhelming. ¶43 We turn now to the appropriate discipline imposed against Widule for his professional misconduct. to be In its complaint the OLR asked the referee to recommend a six-month suspension of Widule's license to practice law. referee recommended only a three-month suspension. 22 Instead, the Widule does No. 01-2157-D not specifically address the appropriateness of the recommended sanction because he maintains that no sanction at all should be imposed since he believes he committed no acts of professional misconduct. On the other hand, the OLR in its responsive brief asserts that given the serious nature of Widule's violations and the effects his actions had on other individuals, especially Dona Merg who has incurred substantial attorney fees defending against before Ormson's it was lawsuit finally that remained dismissed, an pending several appropriate years suspension penalty is warranted. ¶44 Although this court takes into account the referee's recommendation as to appropriate discipline, we do not accord the referee's recommendation any conclusive or great weight. is this court's responsibility to determine the It appropriate discipline to be imposed for an attorney's misconduct; in making that determination this court is free to impose discipline more or less severe than that recommended by the referee. In re Disciplinary Proceedings Against Elliott, 133 Wis. 2d 110, 394 N.W.2d 313 (1986). ¶45 In this case, in light of the seriousness of Widule's misconduct, we believe the three-month suspension recommended by the referee to be too lenient; instead, given the egregiousness of Widule's behavior in commencing and maintaining what was found to be a malicious and frivolous action pursued over a several year period, and in light of his admitted failure to pay the sanctions ordered by the circuit court in the underlying litigation, and in light of Widule's misconduct in violation of 23 No. 01-2157-D at least two specific rules of professional responsibility, we conclude a minimum six-month suspension of Widule's license to practice law in this state is called for. We hope that that period of suspension will help Widule understand and accept the responsibilities of the legal profession and the ethical Widule's actions constraints placed upon its practice.10 ¶46 The referee's conclusions that violated provisions of the Rules of Professional Conduct for Attorneys were based on findings of fact that are not clearly erroneous. The referee's findings of fact and conclusions of law regarding Widule's professional misconduct as established in this proceeding are proper, and we adopt them. ¶47 that a Under the totality of the circumstances, we determine six-month suspension of John C. Widule's license practice law is appropriate discipline for his misconduct. 10 to That We have not asked the parties to brief the issue of the appropriateness of increasing the sanction from that recommended by the referee. Although we have done so in several cases, there are also cases in which this court has increased the sanction recommended by the referee without first asking the parties to comment either by brief or order to show cause. See, e.g. In re Disciplinary Proceedings Against Frank, 206 Wis. 2d 233, 556 N.W.2d 717 (1996); In re Disciplinary Proceedings Against Wentzel, 204 Wis. 2d 285, 554 N.W.2d 669 (1996); In re Disciplinary Proceedings Against Rutgers, 176 Wis. 2d 811, 500 N.W.2d 673 (1993); In re Disciplinary Proceedings Against Cook, 164 Wis. 2d 484, 476 N.W.2d 18 (1991); In re Disciplinary Proceedings Against Oppitz, 157 Wis. 2d 266, 459 N.W.2d 569 (1990); and, In re Disciplinary Proceedings Against Eisenberg, 144 Wis. 2d 284, 423 N.W.2d 867 (1988). We have not asked for additional briefs in this case because the six-month suspension we now impose is consistent with what the OLR initially sought in its disciplinary complaint. 24 No. 01-2157-D six-month suspension will require him to petition this court for reinstatement under SCR 22.28(3). ¶48 IT IS ORDERED that the license of Attorney John C. Widule to practice law in Wisconsin is suspended for six months commencing June 12, 2003, as discipline for his professional misconduct. ¶49 of this IT IS FURTHER ORDERED that within 60 days of the date order, John C. Widule pay to the Regulation all the costs of this proceeding. Office of Lawyer If the costs are not paid within the time specified and absent a showing to this court of his inability to pay the costs within that time, the license of John C. Widule to practice in Wisconsin shall remain suspended until further order of the court. ¶50 IT IS FURTHER ORDERED that John C. Widule comply with the provisions of SCR 22.26 concerning the duties of a person whose license to practice law in Wisconsin has been suspended. 25 No. 1 01-2157-D
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