Attorney Grievance Commission v. Gracey
136 A.3d 798
| Md. | 2016Background
- Wayne G. Gracey, a Maryland attorney, was the subject of a disciplinary petition based on complaints from BB&T, Daletia Chung, and Peter & Catherine Adams; a circuit court judge conducted an evidentiary hearing and issued findings of fact and conclusions of law.
- BB&T's complaint: Gracey opened seven non‑trust bank accounts (he was sole signatory) and his firm accepted ACH deposits from fictitious payors (e.g., “Yasmine Toye,” “Richard Jones”); $191,117 in ACH credits were posted and $184,035 were returned, producing a BB&T loss of $24,683.
- Client complaints: Gracey’s firm debited funds from Chung’s and the Adamses’ accounts without written authorization or placement in a client trust account; disputes arose and refunds were incomplete or delayed.
- Supervision/solicitation: Nonlawyer employees solicited clients by phone and in person; Gracey knew of but failed to stop or adequately supervise these practices.
- Disciplinary responses: Gracey provided conflicting/altered retainer documents and a misattributed credit report to Bar Counsel and failed to timely produce client files and trust records on request.
- Trial court found violations of MLRPC 1.15(a),(e), 1.16(d), 5.3(c), 8.1(a),(b), and 8.4(a)–(d); the Court of Appeals imposed disbarment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gracey violated Rule 1.15 by failing to maintain client funds in trust and by failing to segregate disputed funds | Gracey collected fees/charges that were not held in a client trust account and failed to escrow disputed funds | Gracey contends fees were "earned upon receipt" or were charged by employees without his immediate knowledge | Court: Violations of 1.15(a) and 1.15(e); fees were not properly held in trust and disputed sums were not segregated |
| Whether Gracey violated Rule 1.16(d) by failing to protect clients’ interests on termination (refunds, file delivery) | Bar Counsel: Gracey failed to refund unearned fees timely and did not surrender client papers | Gracey: Employees acted without his direct knowledge; no intentional misconduct by him | Court: Violation of 1.16(d); delayed/incomplete refunds and failure to provide client documents |
| Whether Gracey violated Rules 5.3 and 7.3 by permitting/ratifying solicitation by nonlawyer staff | Bar Counsel: Nonlawyer employees solicited live by phone/in person; Gracey knew and failed to stop them, so 5.3(c) is violated | Gracey: Solicitation and ACH issues were acts of dishonest employees beyond his immediate control | Court: Violation of 5.3(c) (lawyer responsible where knowing and remedial action was not taken); petitioner abandoned direct Rule 7.3 allegation against Gracey but relied on 5.3 |
| Whether Gracey committed misconduct and made false statements to disciplinary authorities (Rules 8.1, 8.4) | Bar Counsel: Gracey submitted conflicting/altered retainer agreements, misrepresented pulling a credit report, failed to timely respond to requests, and engaged in fraudulent ACH activity and unauthorized withdrawals | Gracey: Denies personal benefit and blames dishonest employees; disputes characterization of his intent | Court: Violations of 8.1(a),(b) and 8.4(a)–(d) (false statements, failure to respond, dishonesty/fraud, conduct prejudicial to administration of justice); |
| Sanction: Appropriate discipline for the misconduct | Bar Counsel: Dishonesty and fraud ordinarily warrant disbarment | Gracey: Emphasizes lack of prior discipline and claims employees caused wrongdoing | Court: Disbarment imposed; supervisory failure and dishonest conduct warranted ultimate sanction |
Key Cases Cited
- Attorney Grievance Comm'n of Maryland v. Hodes, 441 Md. 136, 105 A.3d 533 (standard of review in attorney disciplinary proceedings)
- Attorney Grievance Comm'n of Maryland v. Vanderlinde, 364 Md. 376, 773 A.2d 463 (intentional dishonesty by an attorney ordinarily warrants disbarment)
- Attorney Grievance Comm'n of Maryland v. Nelson, 425 Md. 344, 40 A.3d 1039 (Rule 8.4(a) implicated when other Rules are breached)
- Attorney Grievance Comm'n of Maryland v. Chapman, 430 Md. 238, 60 A.3d 25 (risks and disclosure obligations for "earned upon receipt" fee arrangements under Rule 1.15)
- Attorney Grievance Comm'n of Maryland v. Smith, 443 Md. 351, 116 A.3d 977 (5.3(c) liability where lawyer knows of nonlawyer misconduct and fails to take remedial action)