Office of Lawyer Regulation v. Daniel F. DeMaio
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2009 WI 95 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2008AP1119-D In the Matter of Disciplinary Proceedings Against Daniel F. DeMaio, Attorney at Law: Office of Lawyer Regulation, Complainant-Respondent, v. Daniel F. DeMaio, Respondent-Appellant. DISCIPLINARY PROCEEDINGS AGAINST DeMAIO OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: ATTORNEYS: October 1, 2009 2009 WI 95 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2008AP1119-D STATE OF WISCONSIN : IN SUPREME COURT In the Matter of Disciplinary Proceedings Against Daniel F. DeMaio, Attorney at Law: FILED Office of Lawyer Regulation, Complainant-Respondent, OCT 1, 2009 v. David R. Schanker Clerk of Supreme Court Daniel F. DeMaio, Respondent-Appellant. ATTORNEY disciplinary proceeding. Attorney publicly reprimanded. ¶1 Referee PER CURIAM. James G. We review a report and recommendation by Curtis that Attorney Daniel F. DeMaio be publicly reprimanded for his professional misconduct and that he be ordered to pay the full costs of this disciplinary proceeding. ¶2 Following recommendation, "Respondent's the filing Attorney Dispositional of DeMaio Memo," the filed which referee's a report document purported to and entitled address No. the question of the appropriate sanction. 2008AP1119-D After the Office of Lawyer Regulation (OLR) filed a motion to strike this filing because it was not a notice of appeal, Attorney DeMaio withdrew the document. Thus, since no appeal has been filed, our review proceeds under SCR 22.17(2).1 ¶3 When reviewing a referee's report and recommendation in a disciplinary matter, we will affirm the referee's findings of fact unless they are found to be clearly erroneous, but we review conclusions of law de novo. See In re Disciplinary Proceedings Against Inglimo, 2007 WI 126, ¶5, 305 Wis. 2d 71, 740 N.W.2d 125; In re Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶29, 248 Wis. 2d 662, 636 N.W.2d 718. to the question of discipline, we determine the With respect appropriate level of discipline given the particular facts of each case, independent of the referee's recommendation, but benefiting from it. See In re Disciplinary Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686. ¶4 Attorney DeMaio was admitted to the practice of law in Wisconsin in 1990 and currently practices in Hudson. 1 In 1998 he SCR 22.17(2) states: If no appeal is filed timely, the supreme court shall review the referee's report; adopt, reject or modify the referee's findings and conclusions or remand the matter to the referee for additional findings; and determine and impose appropriate discipline. The court, on its own motion, may order the parties to file briefs in the matter. 2 No. received a private reprimand. 2008AP1119-D That is the only prior discipline imposed on Attorney DeMaio. ¶5 All three counts in this disciplinary proceeding relate to Attorney DeMaio's representation of and interactions with client M.B. The relevant facts set forth below are taken from the referee's findings of fact. ¶6 G.P. As of 2004 M.B. was married to, but separated from, M.B. and G.P. together owned a piece of residential real estate that will be referenced in this decision simply as the "Property." In February 2004 M.B. and G.P. signed a listing contract for the sale of the Property. The Property was subject to a number of mortgages. On May 13, 2004, First National Bank of a Hudson (FNB) Property. obtained judgment of foreclosure on the A sheriff's sale was held later in 2004, at which time FNB became the entity entitled to purchase the Property, subject to the circuit court confirming the sale. ¶7 Attorney DeMaio's attorney-client relationship with M.B. began in October 2004, when the St. Croix County circuit court appointed Attorney DeMaio at county expense to represent M.B. in a criminal proceeding. The circuit court ordered M.B. to make monthly $100 payments to the county as reimbursement for payment of Attorney DeMaio's fees. M.B. made two such payments. In April 2005 the state filed a motion to dismiss the criminal charges against M.B., and the circuit court granted the motion to dismiss. The court approved Attorney DeMaio's fee request and ordered that M.B.'s cash bail of $750 and her two $100 3 No. monthly payments be applied toward the 2008AP1119-D payment of Attorney DeMaio's fees and expenses. ¶8 While Attorney DeMaio was representing M.B. on the criminal matter, he also began to represent her on a private pay basis with respect to debt relief matters. foreclosure action Property, Attorney and the DeMaio sheriff's told M.B. In light of the sale that he regarding could delay the the foreclosure process by filing a bankruptcy petition on behalf of M.B. and G.P. M.B. bankruptcy action. retained Attorney DeMaio to pursue a At least initially, the primary purpose of these efforts was to preserve any equity in the Property for M.B. and G.P. ¶9 into a The referee found that Attorney DeMaio never entered written fee representation of agreement her on debt with relief M.B. regarding matters. In his addition, there is no writing which itemizes Attorney DeMaio's time, the work he performed, or the expenses he incurred when representing M.B., with the exception of his work on the criminal matter. ¶10 debt Attorney DeMaio had M.B. complete a relatively short relief filed a client Chapter behalf. individuals 13 Although with information personal a sheet. bankruptcy Chapter employment Attorney DeMaio petition 13 petition income, M.B. income at the time the petition was filed. is had on M.B.'s designed no then for employment In addition, the petition was filed only on behalf of M.B. and did not include G.P. 4 No. ¶11 2008AP1119-D The bankruptcy court ordered M.B. to submit a Chapter 13 plan and other documents by December 20, 2004. It also scheduled an initial meeting of M.B.'s creditors for January 18, 2005. ¶12 On December 16, 2004, Attorney DeMaio sent a letter to M.B. asking her to come to his office immediately in order to prepare a Chapter 13 plan. On December 17, 2004, Attorney DeMaio sent another letter to M.B., this time advising her that the Property had been sold at a sheriff's sale and was awaiting court confirmation of the sale. ¶13 On December 20, 2004, the United States bankruptcy trustee assigned to M.B.'s case filed a motion seeking dismissal of her Chapter 13 petition because she had failed to file a plan as required by the bankruptcy court's order. money order trustee as to Attorney evidence DeMaio of her that good he M.B. gave a $700 was faith. to send Attorney to the DeMaio forwarded the money order to the trustee on January 18, 2005. Also on that date Attorney DeMaio and M.B. attended the initial meeting of creditors. ¶14 Despite the pendency of the trustee's motion to dismiss, Attorney DeMaio and M.B. did not file a Chapter 13 plan. Consequently, on January 21, 2005, the bankruptcy court dismissed finding the by bankruptcy bankruptcy the petition. referee, proceeding the did According dismissal not end of the to the a specific Chapter 13 attorney-client relationship between Attorney DeMaio and M.B. with respect to obtaining debt relief for M.B. 5 No. ¶15 On or about January 31, 2005, the 2008AP1119-D trustee Attorney DeMaio a $700 check made payable to M.B. sent to The check was intended to be a refund of the $700 money order that Attorney DeMaio had submitted on M.B.'s behalf. Although M.B. may have been informed orally that Attorney DeMaio's office had received the $700 refund check, Attorney DeMaio did not inform M.B. of that fact in writing. The referee further found that Attorney DeMaio never sought written authority or permission from M.B. to deposit the $700 check. Attorney DeMaio deposited check into an account that his law office maintained. Attorney DeMaio initially stated that the check the $700 Although had been deposited into a "Cost Account," he later told the OLR District Committee that he had deposited the check into his "Earned Fee Account." ¶16 Attorney DeMaio knew from his representation of M.B. that M.B. and G.P. were attempting to sell the Property even while the sheriff's sale was awaiting confirmation. M.B. had attempted to convince Attorney DeMaio that he should consider personally Attorney purchasing DeMaio the a Attorney DeMaio and his and his agent wife, showed who expressed wife 2005 As estate he February interested in the Property and that they wished to view it. real that late be M.B.'s M.B. In might result, told Property. the Property to an interest in purchasing it. ¶17 At some point around this time, M.B. learned that the confirmation of the sheriff's sale of the Property was imminent. She subsequently met with Attorney 6 DeMaio. Attorney DeMaio No. admits that he had a conversation with M.B. 2008AP1119-D concerning his interest in purchasing the Property and the matter of the real estate agent's commission. Attorney DeMaio asserts that M.B. raised whether the question the as real to estate she agent could by avoid filing a paying a commission to bankruptcy petition. The referee did not make a specific factual finding as to when these discussions occurred. ¶18 Attorney DeMaio did begin to prepare bankruptcy documents for M.B. in mid-March 2005. the referee's report, "DeMaio stated he Chapter 7 According to does not recall precisely why he was preparing Chapter 7 bankruptcy documents for [M.B.] at that time, but he 'presumes' it was at [M.B.'s] request." As part of these efforts, Attorney DeMaio also sent forms to G.P. to be completed and returned. sent no further additional written information or communications indicating to that Attorney DeMaio M.B. requesting additional steps needed to be taken in order to commence a Chapter 7 bankruptcy action. Attorney DeMaio, however, never filed a Chapter 7 bankruptcy on behalf of M.B. or G.P. ¶19 On March 14, 2005, FNB obtained an order confirming the sheriff's sale of the Property to FNB. FNB took title to the Property and changed the locks on the house. M.B. had vacated the Property by this time. ¶20 Either M.B. or the real estate agent informed Attorney DeMaio that FNB had obtained title to the Property. After FNB took title to the Property, Attorney DeMaio contacted FNB and expressed an interest in purchasing the Property from the bank. 7 No. Attorney DeMaio initially offered to pay 2008AP1119-D $250,000 for the Property, but the bank responded that the purchase price was $270,000. Attorney DeMaio and his wife subsequently purchased the Property from FNB for $270,000. ¶21 Attorney DeMaio did not inform M.B. that he intended to make an offer to purchase the Property before he submitted an offer to the bank. The appraisal report and property inspection report connected with Attorney DeMaio's offer to purchase are dated March 28, 2005, after FNB took title to the Property. The transaction closed on April 1, 2005, with Attorney DeMaio and his wife receiving a warranty deed from FNB. ¶22 place The referee expressly found that no discussion took at any time between Attorney DeMaio and M.B. where Attorney DeMaio advised M.B. of an actual or potential conflict of interest between them because of Attorney DeMaio's interest in the Property. Attorney DeMaio never prepared any writing advising M.B. of the potential conflict of interest, and he did not obtain a written waiver of the potential conflict of interest. ¶23 The referee also explicitly found that Attorney DeMaio's purchase of the property from FNB did not cause any economic loss or detriment to M.B. When M.B. and G.P. had initially placed the Property on the market, the asking price was $334,000. times. The listing price, however, was reduced several By March 2005 the listing price had dropped to $275,000, with $6,200 in allowances, for a net asking price of $268,800. Thus, Attorney DeMaio did not 8 benefit from purchasing the No. property from the bank instead addition, the referee found that of at from this M.B. and sales 2008AP1119-D G.P. In price, there would not have been any equity in the home for M.B. and G.P. after satisfying the loan obligations to the bank. ¶24 Based on these findings of fact, the referee concluded that Attorney DeMaio had violated former SCR 20:1.15(d)(1),2 by failing to notify M.B. in writing that he had received the $700 refund check from the bankruptcy trustee. Although no written notice was provided, in violation of the rule's requirements, the referee did note that Attorney DeMaio believed that M.B. had been informed that the check was in Attorney DeMaio's office.3 ¶25 In addition, the referee concluded that Attorney DeMaio had demonstrated a lack of diligence and promptness, in 2 Former SCR 20:1.15(d)(1) (effective July 1, 2004, through June 30, 2007) provided: Upon receiving funds or other property in which a client has an interest, or in which the lawyer has received notice that a 3rd party has an interest identified by a lien, court order, judgment, or contract, the lawyer shall promptly notify the client or 3rd party in writing. Except as stated in this rule or otherwise permitted by law or by agreement with the client, the lawyer shall promptly deliver to the client or 3rd party any funds or other property that the client or 3rd party is entitled to receive. 3 We note that there was no claim in the OLR's complaint that Attorney DeMaio violated any rule by depositing the check into a regular business account instead of immediately delivering it to M.B. or depositing it into a client trust account. The referee therefore reached no legal conclusions on this subject. We also do not reach the issue. 9 No. 2008AP1119-D violation of SCR 20:1.3,4 by failing to ascertain the status of the confirmation of the sheriff's sale of the Property. Attorney DeMaio initially contended that he had no obligation to determine the status of the confirmation because by March 2005, M.B. had no residence. Attorney equity in the home and had moved to another The referee stated in his report, however, that when DeMaio filed the Chapter 13 bankruptcy petition in December 2004, a primary purpose of that filing was to attempt to preserve any equity that M.B. might have had in the Property, which depended on the amount that could be realized in a sale of the Property. Consequently, the referee concluded that Attorney DeMaio retained an obligation to ascertain whether and when the confirmation would occur because that information was needed for Attorney DeMaio to continue to advise M.B. properly in early 2005 regarding what legal options, if any, she might have. was especially true because Attorney DeMaio's This expression of interest in the property may have given M.B. a glimmer of hope that some equity could be preserved. Because he failed to obtain the confirmation information, the referee concluded that Attorney DeMaio had violated SCR 20:1.3. ¶26 DeMaio Finally, had the violated referee former also SCR concluded 20:1.7(b)5 by that Attorney continuing his 4 SCR 20:1.3 states, "A lawyer shall act with reasonable diligence and promptness in representing a client." 5 Former SCR 20:1.7(b) (effective prior to July 1, 2007) provided, in pertinent part: A lawyer shall not representation of that represent a client may 10 client if the be materially No. 2008AP1119-D representation of M.B. despite the fact that the representation may have interest husband Attorney been in materially purchasing retained DeMaio an limited the Property, interest. may by have Attorney in The DeMaio's which referee reasonably M.B. and commented believed that own her that the representation would not be adversely affected by his personal interest in his client's property, but such a belief did not satisfy the requirements of the rule because the rule also required Attorney DeMaio to consult with his client regarding the conflict and representation. to obtain Attorney written DeMaio consent neither to continue consulted with the M.B. about the at least potential conflict of interest nor did he obtain a written waiver of the conflict. ¶27 Although the referee found that Attorney DeMaio's purchase of the Property after the bank took title to it did not cause economic loss to M.B., the referee noted create an appearance of impropriety in M.B.'s view. that it did M.B. placed her faith in Attorney DeMaio's efforts to avoid the foreclosure and to preserve any possible equity in the Property. Even though there may not have been anything that could have been limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless: (1) the lawyer reasonably believes representation will not be adversely affected; and (2) the consultation. client consents 11 in writing the after No. 2008AP1119-D done as of March 2005 to change the situation regarding FNB's purchase of the Property or the loss of M.B.'s equity, Attorney DeMaio had learned of the situation regarding the Property by virtue of his representation, and he purchased the Property within a few weeks after M.B. lost title to her home. referee stated understandable that for under M.B. these to feel circumstances betrayed by it her The was very attorney, especially when he had previously failed to consult with her or obtain a written waiver for a potential conflict of interest. ¶28 sought With a respect 60-day to the level suspension, of citing discipline, In re the OLR Disciplinary Proceedings Against Riegleman, 2003 WI 3, 259 Wis. 2d 1, 657 N.W.2d 339, and In re Disciplinary Proceedings Against Krueger, 2006 WI 17, 288 Wis. 2d 586, 709 N.W.2d 857. On the other hand, Attorney DeMaio requested that the referee recommend a private reprimand. He contended that his conduct was less harmful than that which occurred in Public Reprimand of William P. Skemp, 2008-7, where Attorney Skemp actually completed the purchase of a house from his clients without consulting with them about the conflict of interest and without obtaining a written waiver, and also separately violated SCR 20:8.4(c) when he later resold the property without disclosing to the buyer that the property had been contaminated by a fuel oil spill. ¶29 by the The referee did not find any of the precedents cited parties to be directly on point. All three cases involved attorneys who were found to have engaged in dishonesty, fraud, deceit or misrepresentation, 12 in violation of SCR No. 20:8.4(c). 2008AP1119-D In the present case, the referee noted that Attorney DeMaio had not been charged with a violation of SCR 20:8.4(c), and there engaged Attorney was in no clear dishonest or and convincing deceitful DeMaio's misconduct as evidence acts. involving He more diligence and communication than dishonesty. that he had characterized of a lack of Further, none of the cases cited by the parties involved the same three rules violations that Attorney DeMaio had committed. ¶30 The referee noted that Attorney DeMaio had received a prior reprimand in 1998, but gave that prior discipline little weight since it was fairly remote in time and did not involve similar misconduct. The referee also indicated that he believed the fact that Attorney DeMaio's long-time secretary had been terminally ill with cancer during the relevant time period was a major mitigating factor due to her frequent absences from work and Attorney DeMaio's emotional difficulties with the situation. The referee stated that Attorney DeMaio had acknowledged that he had experienced a loss of empathy for clients during this time period and that he had given "shoddy treatment" to M.B. The referee concluded that Attorney DeMaio had demonstrated genuine remorse for his misconduct in the representation of M.B. Ultimately, balancing the fact that Attorney DeMaio's misconduct resulted from a lack of diligence and communication with his client with the fact that his failure to consult with and obtain a written waiver from M.B. for the conflict of interest created an appearance of impropriety in 13 M.B.'s eyes, the referee No. 2008AP1119-D concluded that a public reprimand would be the appropriate level of discipline. ¶31 The referee also recommended that Attorney DeMaio be required to pay the full costs of this disciplinary proceeding. The OLR subsequently submitted a statement of costs total costs of $5,290.22 as of February 20, 2009. showing Attorney DeMaio did not file an objection to the requested costs. ¶32 We conclude that the referee's findings of fact are not erroneous, and we adopt them. We also determine that those findings support the referee's conclusions that Attorney DeMaio committed the three violations alleged in the OLR's complaint. Attorney DeMaio had a clear obligation to notify M.B. of his receipt of the refund check. Given the fact that he was advising M.B. regarding debt relief matters, he also clearly had an obligation to ascertain when the confirmation of the sheriff's sale would occur and whether M.B. had any options to prevent the confirmation. With respect to the conflict of interest charge, although it appears that Attorney DeMaio did not have any negotiations with M.B. regarding price or the preparation of an offer to purchase her property, his interest in the Property and his expression of that interest to M.B. while she still materially had limited his an interest in representation the of Property M.B., such may have that he should have consulted with M.B. and obtained her written consent to continuing the representation. ¶33 the With respect to the level of discipline, we agree with referee that a public reprimand 14 is the appropriate No. discipline to impose in this instance. 2008AP1119-D There was no finding by the referee that Attorney DeMaio maneuvered the situation to obtain a financial benefit for himself at his client's expense or that he engaged in dishonest or deceitful conduct. other hand, provide he proper did fail to representation take to certain M.B., necessary and his On the steps to failure to consult with and obtain a written waiver from M.B. gave her the impression that he had looked out for his own interests rather than her interests. We conclude that a public reprimand is commensurate with Attorney DeMaio's misconduct, and that it will properly serve to deter Attorney DeMaio and other attorneys from committing similar misconduct in the future. ¶34 Finally, we determine that Attorney DeMaio should be required to pay the full costs of this disciplinary proceeding. ¶35 IT IS ORDERED that Daniel F. DeMaio is publicly reprimanded for his professional misconduct. ¶36 IT IS FURTHER ORDERED that within 60 days of the date of this order, Daniel F. DeMaio shall pay to the Office of Lawyer Regulation the costs of this proceeding. 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 Daniel F. DeMaio to practice law in Wisconsin shall be suspended until further order of the court. 15 No. 1 2008AP1119-D
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