*1 same, not There is a discipline need however. unique some additional imposing discipline rationale not Maryland. Although Respondent practicing has been Maryland, delinquent reporting Maryland au- she was imposed by District of suspension thorities Southern discipline New York. But that additional should not be disbar- ment. BARBERA have Judge Judge
Chief ADKINS advised join they opinion. this
Bruce KENT. 13, Sept. Term, Misc. Docket No. 2015. AG Maryland. of Appeals Court April 21, 2016. Reconsideration Denied June *3 (Glenn Raymond Hein, Deputy Bar M. Gross- A. Counsel man, Counsel, Mary- Bar Grievance Attorney Commission land), petitioner. for (Arbutus, August MD), Kent for respondent.
Bruce *, BARBERA, C.J., Argued before BATTAGLIA HOTTEN, GREENE, ADKINS, MCDONALD, WATTS, JJ. * J., retired, Battaglia, participated and conference of now in the Court; being this case while member of this after recalled active
HOTTEN, J. lawyer involves a who attorney discipline proceeding This living a revocable creating and wife in assisted a husband while pattern of misconduct trust, engaged thereafter and fiduciary of trustee. acting role to the (“Respondent”) Kent was admitted August Bruce this Bar on 1974. At all times Maryland June relevant County. office in Baltimore case, Respondent maintained law (“Peti- Attorney Maryland Commission Grievance tioner”) Action Disciplinary Remedial Petition filed April alleged 2015.1 Petitioner against Respondent Living that, Family of The McClelland as trustee Revocable (“the Trust”), misappropriated McClelland Trust capacity, and violated fiduciary to him his funds entrusted of Professional Maryland Lawyers’ Rules Conduct (Conflict (“MLRPC”) MLRPC Inter- (Competence), 1.1 1.7 (Conflict Rule), Current MLRPC 1.8 of Interest: est: General Rules), (Safekeeping Proper- 1.15 Specific MLRPC Clients: Matters), (Bar Disciplinary MLRPC 8.1 Admission and ty), Trust (Misconduct), (Attorney Rule 16-606.1 MLRPC 8.4 Md. (Prohibited 16-609 Record-Keeping), Md. Rule Account (1989 § Transactions), 10-306 of Md.Code Repl.Vol.2010), (“Bus. Professions Article Occ. Occupations the Business Prof.”) (Trust Restrictions).2 Money & Circuit Court transmitted the action
This Court Colleen A. County designated Baltimore Honorable findings of fact conclusions law. Cavanaugh enter (“the hearing 4, 2015, Judge Cavanaugh September On *4 for to to Bar respond failure judge”) Respondent sanctioned included, sanctions discovery requests. The Counsel’s written IV, 3A, Constitution, participat- pursuant Article Section she also to the majority opinion. adoption ed in the decision and Disciplinary for or Remedial filed an Amended Petition 1. Petitioner 14, September 2015. Action on 2, Lawyers’ Professional Conduct found Maryland Rules of are Md. Rule 16-812. alia, inter precluding producing any evi- disciplinary hearing, and deeming dence/witnesses all for allegations Disciplinary the Petition or Remedial 21, 2015, Action September were admitted. On held, 22, 2015, and the hearing judge October issued Findings Fact and Conclusions of hearing judge Law. The concluded “that there clear and to convincing [was] evidence support each of charged the Petition for violations[ ]” Disciplinary or Action. Remedial 8, 2016,
On February we heard oral For argument. follow, reasons that not we hold did sanctions, abuse her discretion in imposing discovery we and order that Respondent be disbarred.
I. BACKGROUND hearing judge’s discovery
a. The sanction (“Mr. 20, May 2015, Balint”), On J. Balint Charles counsel for Respondent, accepted process, service including copy of the Petition for or Disciplinary Respon- Remedial Action. dent thereafter an extension of obtained time to file a re- sponse the Petition for Action Disciplinary Remedial until June not response but file a until did June (“Bar July 10, On Balint Deputy Mr. Bar Counsel Counsel”) appeared conference, for a Bar scheduling Counsel interrogatories request hand delivered and a for production of documents Mr. Balint. Mr. Balint and Bar agreed Counsel to several deadlines that were incorporated into a scheduling order. The order established a deadline for the completion discovery by of written August completion discovery by September all 2015. Respon- dent present scheduling was not at the conference. September 2, 2015,
On Petitioner for filed Motion Sanc- for Discovery, tions Failure of and an accompanying Motion to Shorten for Respond. According Time (30) Sanctions, thirty Petitioner’s Motion had days respond interrogatories to the request produc- *5 2015, July 10, on that were hand delivered tion documents (30) for request to to an additional days respond thirty and July on mailed to Mr. Balint that was production documents 2-422(c). (b) Despite 24, 2015. See Md. Rules 2-421 that writ- Bar and Mr. Balint understanding Counsel between 28, by August responses received discovery ten would be 1, 2015. September 2015,3 no were received as responses to to Time the Motion Shorten alleged Petitioner pro- failure to “Respondent’s Respond necessary was because of Peti- discovery ability greatly prejudiced] written vide Respondent’s deposition[,]” to prepare counsel to take tioner’s counsel, scheduled, September for by agreement which was short that, “[g]iven also contended 2015. Petitioner to discovery trial prior of time to conduct allowed period discovery requirements matters, compliance with disciplinary is imperative.” deadlines Time to the Motion to Shorten hearing judge granted 2, 2015, response by and ordered Respond September on no was received September response a.m. on 2015. When deadline, hearing judge imposed by the September for Disci- the Petition following sanctions: averments admitted; Respon- or Action deemed Remedial were plinary or Disciplinary Remedial Response dent’s the Petition from calling stricken; Respondent precluded Action was was trial; and presenting any or documents at any witnesses any affirmative prohibited asserting from Respondent was defenses, mitigation, extenuation. 8, 2015, Response September
On filed a Motion to Reconsider. Petitioner’s Motion Sanctions that Mr. Reconsider, alleged In Motion September from 12:50 on p.m. Balint not his office was Thus, Mr. Balint September 9:30 a.m. until shortened dead- respond by not have able would been beyond thirty days the dates on August 3. While discovery requests, a letter sent which was served with the agreed parties had to Mr. Balint indicates that from Bar Counsel during phone conversation. this deadline Sanctions, In the Response line. Petitioner’s Motion for Respondent noted that he had of Maryland been outside *6 Balint, electronically discovery had forwarded to Mr. material was to the open hearing who unable email attachment. The Motion judge denied the to hearing. Reconsider without a 21, 2015, September On a parties appeared hearing for on the merits At Respondent’s violations. of the outset hearing, Mr. Balint informed that judge Respondent want- to discovery ed be heard Respondent sanctions. ex- plained that he advised Mr. Balint in June that he had a scheduled on August Respondent vacation hearing judge informed the that he received the for request production of documents and interrogatories from Mr. Balint August 14, 2015, on Friday, and had following three trials the However, week. Respondent believed that he until Sep- had 14, 2015, to complete tember the discovery responses because thought requests he that the had been received on August 2015, the Mr. day Balint sent them to him. According he Respondent, intended to finish discovery responses his 6, 2015, when he returned from vacation on September and entirely 4, 2015, was unaware for September deadline discovery.
The judge again Respondent’s denied Motion discovery sanctions, Reconsider the noting Respondent that to provide had failed compelling delay “[a] reason further proceedings these that very tight are ... a timeline pursuant the rules.” The hearing judge granted Mr. Balint’s motion to withdraw light Respondent’s represen- tations his concerning counsel. The hearing proceeded with pro se, day. later that concluded
b. Motion for Reconsideration 14, 2015, On October after the conclusion of the hearing, Respondent filed Motion for and for Appro- Reconsideration priate Relief with the assistance of new counsel. requested hearing judge strike “precluding the order Respondent from submitting evidence in defense of Petition- allegations deeming er’s admitted the averments or Remedial Disciplinary Action[.]” Petition him Bar with provide that “Mr. Balint failed again alleged manner requests timely discovery written Counsel’s Respon- in a manner.” competent him represent to otherwise where he appropriate alleged dent reconsideration “provided September deposition, in the participated of the re- produced many Interrogatories Answers to hearing judge’s imposition sanc- after the quested records” having “in reconcilia- currently process tions, and was accounts IOLTA and Trust bank performed tions fully that he so could accounting/bookkeeping professional ]” for documents. comply request with Petitioner’s hearing judge filed Memorandum On October Motion for Reconsideration.4 denying Respondent’s Opinion reasoned: *7 severe, violations are substantial Respondent’s discovery date, fully respond Respondent yet To has ongoing. July him on 10 and upon July served discovery 2015.[5] process “in the proffers he is Respondent Trust for his IOLTA and having performed reconciliations professional. by accounting/bookkeeping accounts bank completed, will reports that these Respondent anticipates twenty to Bar Counsel within the next and made available However, (20) pp. Motion at days.” Respondent’s See 3-4. proceedings has had formal notice these Respondent actual notice May 2015—and nearly five months —since Any many months more. inquiry of Bar Counsel’s accounts professional banking Respondent’s reconciliation of initiated, proceedings for these should been preparation in this minimum, the scheduled date at a before matter. opinion 2015 to hearing judge amended on November
4. The filed an original opinion. caption in the correct the discovery referencing hearing judge may misspoke when have 5. According July Notices of Service of request on 2015. to the served court, discovery served Discovery circuit Bar Counsel hied July requests Respondent on 10 and initially discovery claimed that his failures discovery were due to his counsel’s failure to send him the fashion; however, in a months requests timely three after served, requests discovery those were is still not complete. This court Respondent’s explanation discovery found for his at trial proof by violations incredible scant offered his claim conclu- supports bolster the court’s sions. See Exhibit 1. court Peti- [ ] This Defendant’s tioner severely prejudiced by Respondent’s have both been discovery opinion failures which continue of this date continue, by and are own esti- anticipated mate, through date for this of fact filing findings court’s Therefore, prejudice and conclusions law. suffered Petitioner, by Maryland’s this court and of Appeals Court due to Respondent’s delay by continued will not be cured simple postponement continuance of this matter. hearing judge’s findings
c. The of fact 22, 2015, On Findings October filed Fact and findings Conclusions Law. The fact were as follows: (husband 27, 2005,
On January Sally John and McClelland wife) signed Agreement a Trust drafted attorney. agreement their This “The established (hereinafter McClelland Family Living Revocable Trust” Trust”) Sally “the McClelland with John and McClelland designated as John passed away Trustees. McClelland September 20, 2008. On Sally McClelland October *8 signed by a Trustee Renunciation relinquished which she her the positon surviving as Trustee of the McClelland Trust to in Respondent, original who was named Trust Agreement to as in appointed Successor Trustee Sally longer event John and McClelland no serve as could trustee(s) physical incapacity, “due or mental death.” 1, 2011, Respondent checking
On a account opened March (account in the name of Trust the McClelland number 8938) ending in at First Mariner Bank. The McClelland assets, including Trust also held additional funds invested took over as the time he account. brokerage From respon- was Respondent Trustee October Successor manag- financial Trust accounts and for McClelland sible of fiduciary to him in role entrusted ing any funds trustee. trustee, Respondent took over as
From time he of the he received deposited funds behalf regularly account, attorney his escrow which Trust into McClelland (account number at First Bank also maintained Mariner was into 1962), depositing such funds instead ending checking Respondent’s Trust account. escrow McClelland pursu- at First account maintained account Mariner was From Maryland 600 of the Chapter Rules. ant Title incre- through September October $281,651.95 Trust of McClelland funds mentally deposited account. attorney into his escrow a loan in the 2010, Respondent made On December Bene, LLC, entity $40,000 Mangia a business amount of clients, by Orendorff, one of by Greg owned Respondent’s attorney escrow issuing a check drawn a loan this transaction as Respondent designated account. from his account. Re- Trust funds escrow McClelland independent legal repre- not counsel spondent engage did $40,000.00 loan he regarding Trust sent the McClelland nor he legal entity, to a clients’ did made as trustee business writing desirability recipient the loan advise entering into seeking legal advice before independent capacity in his financial transaction with trustee the McClelland Trust. longer no maintained
By November attorney in his Trust funds accrued balance McClelland Fiedler, Mr. investigator, account. Bar Counsel’s escrow analysis account bank concerning escrow testified First Mariner Bank and subpoena records obtained in the Respondent provided Quicken Register report records, From investigation. those course of Bar Counsel’s “Negative Balance Chart” compile Mr. Fiedler able 1) that on (Tab demonstrating 24 of Petitioner’s Exhibit *9 in Respondent’s November overall balance $88,572.21 only Respon- escrow account was at a time when $95,443.73 holding dent should have been account solely Trust client the McClelland matter. negative subsequently Trust balance in- McClelland By Respondent’s
creased. March overall escrow ac- count balance was drawn down an amount under $17,000.00. significant No disbursements McClelland Trust during period. just funds this As one occurred snapshot funds, of the in McClelland Trust on deficiency March the overall balance in escrow $16,300.90. time, account At that should have still he $91,693.73 had solely the account for the McClelland Trust matter. Respondent therefore has an escrow account $75,392.83 deficiency regard to the individual client with matter of the Trust. McClelland
Mr. in his pointed testimony Fiedler that out personally from the of McClel- misappropriation benefited land 17-25, Trust From Respon- funds. November $13,734.00 four totaling payable dent issued checks to him- self, (numbered 3113) including two with no checks 3108 and memo notation identifying any client matter. This issuance of such to the initial on negative checks contributed balance Thereafter, McClelland Trust funds November throughout 2013, Respondent continued draw himself, checks payable including many included no memo notation.
# [*] [*] This clear and convincing court finds evidence Respondent knowingly intentionally misappropriated funds entrusted to him as the McClelland trustee Trust and that he from use of personal derived benefit misappropriated funds.
As paragraph original averred and amended numerous petitions, Respondent also drew checks cash attorney ... Petitioner not con- account!.] escrow does test that cash deposited obtained these checks was checking account at Wacho- personal Sally into McClelland’s *10 lifetime, (later Fargo) during her but the Bank via Wells to constituted payable of checks cash nevertheless drawing Rule Maryland 16-609b. a transaction under prohibited on March 2013. At Sally passed away McClelland death, checking account at of the McClelland Trust time her only April Bank of On had a balance $303.40. First Mariner $41,664.87to the McClelland 24, 2013, deposited Respondent sum account, constituting aggregate checking Trust by Sally maintained accounts separate from three bank time of her death. McClelland check Respondent issued number April On account checking Trust drawn on the McClelland $11,602.00 to Home payable amount Duda-Ruck Funeral of funeral Sally of ex- payment of McClelland’s Dundalk date, he number 1203 On the same issued check penses. account in the checking drawn on the McClelland trust LLC,” Street $3,000.00 to payable amount “Herkimer Respondent and his wife entity of which forfeited business knowingly Marjorie Respondent the sole members. were unauthorized this check as an disbursement issued personal Trust funds his benefit. McClelland number 1205 Respondent a check May On issued account in the checking McClelland drawn on the Trust II, LLC.” The $10,000 payable “Kenwalls amount II, it “Loan.” Kenwalls on check identified as memo line by Brian E. entity organized LLC a owned is business son-in-law, Walls, purchase, remodel legal independent not engage did sell homes. behalf to review the terms transaction counsel loan to son-in- making Trust when this the McClelland law’s business. $15,000.00 31, 2013, Respondent authorized May
On checking Trust funds the McClelland wire transfer designated This transaction was to Brian Walls. account property on a of real mortgage parcel aby a loan secured County, Missouri. owned Camden Mr. Walls legal counsel review engage independent not did terms the transaction on behalf of the McClelland Trust making personal when this loan to his son-in-law.
In August 2013, legal counsel for First Mariner Bank wrote to Bar report activity Counsel to concerns about the account, in the McClelland Trust checking including issu- ance of the II checks Herkimer Street LLC and Kenwalls LLC and the wire transfer to Brian In response Walls. Bar initial inquiry letter, through Counsel’s Respondent, counsel, falsely $3,000.00 claimed that the check to Herki- mer Street LLC “was wrong drawn account” error. after Only receiving notice of the did complaint $3,000.00 return to the McClelland Trust check- (drawn ing account by depositing a check on the Kenwalls *11 II, account) LLC checking September 26, 2013.
Following of investigation. commencement Bar Counsel’s repayments obtained outstanding the three LLC, loans from Mangia McClelland trust funds Bene Kenwalls, II LLC Brian and Walls.
In the of Bar course Counsel’s investigation, Respondent provided an accounting McClelland Trust funds that did not accurately account for all funds him in entrusted to fiduciary capacity. Respondent did not create and maintain a client matter complied record that with the requirements 16-606.1(a)(3) of Maryland Rule for the McClelland Trust in attorney funds his account. escrow April On Respondent deposited check issued Pershing/Founders LLC, payable Financial Securities Family “The Rev. in McClelland Trust” the amount of $15,000.00, attorney into his account. Respondent escrow not deposit accounting did include that of McClelland provided Trust funds Bar Counsel’s investigator Janu- ary during investigation of the complaint prior to (Tab filing public charges Petitioner’s Exhibit 1). Respondent $15,000.00 deposit added a revised (Tab 25) Report” ‘McClelland-IOLTA produced he Peti- tioner when he appeared deposition this matter on September 8, 2015. hearing judge’s of law conclusions
d. fact, judge findings the above Based that convincing and evidence concluded that there was clear 1.15(a) 1.8(a), 1.1, 1.7, and violated MLRPC Respondent had 16-609, 8.1(a), 8.4(a)-(d), Maryland Rules 16-606.1 and (d), § Prof. 10-306. Bus. Occ. and
Rule 1.1 lawyer provide compe- shall provides “[a] MLRPC 1.1 representation Competent tent to a client. representation skill, knowledge, thoroughness prepara- requires legal for the The hear- reasonably necessary representation.” tion to act a manner “[b]y failing ing judge concluded objectives of the McClel- disposition the stated consistent with (John McClelland), Sally Respon- ... Trust Settlors land to the McClel- provide competent representation not dent did Sachse, v. (citing Attorney land Trust.” Grievance Comm’n (1997) 585-86, (lawyer’s failure 693 A.2d 345 Md. reason- skill, thoroughness preparation knowledge, to use of trust or its beneficiaries ably necessary protection 1.1)). Rule violated
Rule 1.76 conflict of involving a prohibits representation MLRPC 1.7 significant is a risk that interest, exists where “there which *12 provides: MLRPC 1.7 6. (b), (a) represent paragraph lawyer not Except provided in a shall A representation involves a conflict of interest. a client if the conflict of interest exists if: (1) directly adverse representation of one client will be the client; or another (2) significant representation or more risk the of one there is a that materially by lawyer's responsibilities limited the clients will be client, person by personal or a third or a another a former client lawyer. interest the
(b) Notwithstanding interest under of a conflict of the existence (a), lawyer may represent paragraph a a client if: (1) reasonably lawyer lawyer that the will be able to the believes provide competent diligent representation to each affected and client; materially of one or more will representation the clients client, a by lawyer’s responsibilities limited the to another person by personal former client or a third a interest of the Sachse, 1.7(a)(2); see 345 Md. at lawyer.” MLRPC (“Conflicts impair ability at 811 of interest the A.2d trustee’s independent to act on of the with behalf beneficiaries and judgment trust, in the administration of the the disinterested it being generally possible rationale is not for the same in person fairly capacities act two and behalf two transaction.”) (citation omitted). interests in the same The hearing judge concluded that loans of McClel- business, land Trust funds to another his son-in-law’s client’s business, individually, MLRPC son-in-law violated 1.7. also Respondent, observed the “[a]s trustee”, incapable conflicted the conflict of waving by interest on of the consent. giving behalf trust informed 1.7(b)(4). See MLRPC
Rule 1.87 1.8(a)(3) attorney MLRPC prohibits “enter[ing] into a business transaction with a client ... the client is unless law; (2) representation prohibited by not the is (3) representation the not claim does involve the assertion against represented by lawyer one client another client the in the tribunal; litigation proceeding same or other before a (4) consent, gives client each affected informed confirmed writ-
ing. provides, part: MLRPC 1.8 relevant (a) lawyer A shall not enter a business transaction with a client into unless: (1) lawyer acquires and terms on the transaction which fully interest are fair and reasonable to the client and are disclosed writing reasonably and transmitted in in manner that can be client; by understood (2) writing desirability seeking client is advised given opportunity independent is a reasonable to seek the advice of transaction; legal counsel consent, (3) gives signed by writing client informed client, lawyer's to the essential the transaction and the role terms transaction, including lawyer representing in the whether the is client in the transaction. *13 570 given is desirability seeking of of writing in
advised legal of independent to seek the advice opportunity reasonable this rule was judge concluded that hearing The counsel[.]” $40,000.00 loan McClel- Respondent made violated where entity (Mangia to another client’s land Trust funds business desirability of his client “of the LLC), advising Bene without financial concerning the legal advice seeking independent omitted). (citation transaction[.]” Rule 16-606.1 Rule 1.15 and Md. 1.15(a) property “a lawyer that hold provides
MLRPC shall in lawyer’s possession that is in a persons of clients or third lawyer’s from the representation separate connection awith in a kept such shall property,” “[f]unds own and that 16, Chapter to Title pursuant maintained separate account judge concluded that Maryland hearing The Rules[.]” multiple provisions with Md. Respondent comply failed Rule 16-606.1: Trust mat- record-keeping for the McClelland provided in to Mr.
ter, “Register Report” contained as (Tab inaccuracy in 17), reflects January Fiedler not com- and does recording deposits disbursements 16-606.1(a)(3). requirements Rule ply specific with the that not Moreover, Respondent Mr. testified did Fiedler required by chronological ledger, transaction produce 16-606.1(a)(2), all account activity the escrow Rule through Finally, period October during Trust negative McClelland funds recurring balances that points various time establish the account at monthly reconciliations performing was not 16-606.1(b). required Rule violated judge also concluded The 1.15(d), lawyer that “a shall deliver provides MLRPC which or other person any or third funds promptly the client is entitled to re- person client third property should noted that ceive[.]” *14 deposited McClelland Trust funds into the McClelland have or checking type positive Trust account some “obtain[ed] having in money stagnant return rather than remain his escrow account.”
Rule 8.1 8.1(a) “an provides applicant MLRPC that for admission or bar, or lawyer to the a in connection a bar reinstatement with in application disciplinary admission or connection with a matter, knowingly shall not ... make a false statement 8.1(a). hearing judge material MLRPC The concluded fact[.]” 8.1(a) falsely stating, that “in by violated MLRPC $3,000.00 response Counsel, initial Bar that the his written (check 1203) check number written Herkimer Street LLC on on April checking drawn the McClelland Trust account, on wrong was drawn account error.” The that hearing judge knowingly found had drawn $3,000.00 check the McClelland Trust account. checking
Rule 8.4 alia, inter is professional MLRPC that provides, “[i]t 8.4 to:” lawyer misconduct for a
(a) Lawyers’ or attempt Maryland violate violate the Conduct, assist or in- knowingly
Rules Professional so, through another to do or so the acts of duce do another;
(b) adversely commit criminal act that on the reflects
lawyer’s honesty, lawyer or fitness as trustworthiness respects; in other
(c) fraud, dishonesty, deceit engage involving conduct
misrepresentation; (d) to the administra- engage conduct that is prejudicial justice
tion of ... The violated each of hearing judge concluded that the aforementioned subsections. 8.4(a), hearing judge to MLRPC relied
Relative 1.8, 1.7, 1.15, 8.1 1.1, discussed violations MLRPC previously. 8.4(b) 8.4(c),
Regarding MLRPC a violation of Md.Code Respondent had committed ruled that (“Grim. (2002 § Law 7-113 the Criminal Repl.Vol.2012), Law”) (Embezzlement-Fraudulent misappropriation Article Fiduciaries) “fraudulently willfully appropriating] by holding attorney from his escrow account he was funds contrary Trust a manner fiduciary for the McClelland ... trust requirements responsibility.”8 to the misappro further fraudulent judge opined *15 practice his to adversely general on fitness priation reflected Hodes, 441 Md. Attorney Comm’n v. (citing law Grievance (2014) (“An attorney’s conduct A.3d 8.4(c) attorney improp a when an violation Rule constitutes for his or her money utilizes the erly removes funds and (citation omitted)). personal gain.”) also 8.4(d), hearing judge MLRPC the ruled Concerning ‘undermines “Respondent’s fiduciary position that abuse attorney confidence that an will maintain entrusted public ” Id. at fiduciary required by (quoting as law.’ funds as a and 574). 205, 105 A.3d
Rule 16-609 16-609, relat- enumerating prohibited Rule transactions Md. accounts, provides: to trust ing attorney any An or law not use Generally. attorney may a. Arm ... any purpose. for unauthorized funds provides, part: § Law 7-113 in relevant 8. Crim.
(a) fiduciary may A not: (1) thing fraudulently appropriate money of value willfully or a contrary capacity to the fiduciary fiduciary that holds responsibility; requirements fiduciary’s or trust (2) money tiling fiduciary holds in a or a of value that the secrete money or fiduciary capacity intent to use the with a fraudulent fiduciary’s trust thing contrary requirements of to the value responsibility. No An instrument drawn an b. Cash Disbursements. attorney payable not drawn to cash may trust account be bearer____ from attor- Prohibited. No funds an Negative e. Balance if ney trust account shall disbursed the disbursement with an individual negative regard would create balance aggregate. client matter or matters in the all client hearing judge concluded that violated subsec- (a) attorney tion for his by using funds trust account (b) benefit; violated personal subsection cash; drawing payable trust account instruments (c) by “disbursing that Respondent violated subsection negative with funds the account that created balance regard client matter of the individual McClelland Trust.” §
Bus. Occ. and Prof. 10-306 lawyer § provides may Bus. Occ. Prof. 10-306 that “[a] purpose use trust for other than the money any purpose not Again, lawyer.” which is entrusted money the trust knowingly “Respondent found to him trus- intentionally funds entrusted misappropriated According hearing judge, tee of the to the McClelland Trust.” other than attorney money “[w]hen uses trust a purpose *16 money purpose the which the trust is entrusted the statutory provision such of the of lawyer, misuse funds violates § 10-306.”
Mitigating Aggravating Circumstances evidence prohibited presenting was While mitigation, hearing several character judge in the considered general who favorably Respondent’s witnesses about “testified However, hearing judge the integrity[.]” character of opinions these persuaded “not favorable in of misconduct this lessened] character seriousness case.” factors judge aggravating
The also considered the hearing 9.22 of the Bar Association reflected in Standard American Lawyer for Imposing Standards Sanctions: (a) offenses; prior disciplinary (b) motive; or dishonest selfish (c) misconduct; of pattern
(d) offenses; multiple
(e) disciplinary faith proceeding bad obstruction of intentionally failing comply with rules or orders agency; disciplinary
(f) evidence, statements, or of false other submission false deceptive during disciplinary process; practices conduct; (g) acknowledge nature wrongful refusal (h) victim; vulnerability of
(i) law; experience in the practice substantial restitution; (j) making indifference (k) conduct, illegal including involving the use of con- trolled substances.
Standard the American Bar Standards 9.22 Association (1992); Lawyer Imposing Attorney Sanctions Grievance Bleecker, Comm’n v. Md. 994 A.2d (2010) (“In sanction, we often determining appropriate aggravating look to the factors found Standard 9.22 of American Bar Association for Imposing Lawyer Standards Sanctions.”). judge (b), The that factors concluded (f), (i), (k) (d), were as acted implicated, with motive, offenses, multiple dishonest selfish committed process, during disciplinary submitted false statement law, experience had practice engaged substantial illegal conduct.
II. DISCUSSION
a. Standard Review applicable attorney standard review disci plinary cases is follows:
575 jurisdiction This court has over attor original complete ney proceedings. Attorney Comm’n disciplinary Grievance (2009). Thomas, 185, 121, 147, v. 409 A.2d 200 At Md. 973 Bar of evidentiary hearing, Counsel had the burden his in the clear proving allegations disciplinary petition by 16-757(b). convincing evidence. See Md. Rule “We accept hearing judge’s findings fact unless we deter that they clearly Attorney mine are erroneous.” Grievance Guida, 33, 50, Comm’n 391 Md. 1095 v. 891 A.2d (2006). hearing judge’s “This deference accorded findings appropriate, part, is the fact finder is in because position credibility best assess the demeanor-based 16-759(b)(2)(B). a witness.” Id. See also Md. Rule Find ings of fact to party exception may which neither takes by conclusively treated us as See Rule 16- established. Md. 759(b)(2)(A)(“If exceptions filed, may no are the Court treat established____”). findings proposed of fact as “All however, by hearing judge, conclusions law are Thomas, subject to this 409 de novo review Court.” Md. at 201 (citing Attorney 973 A.2d Grievance Comm’n (2008)); Ugwuonye, v. 405 Md. A.2d 16-759(b)(1). Md. Rule Edib, 696, 706-07, 4
Attorney Grievance Comm’n v. 415 Md. (2010). A.3d hearing judge’s discovery
b. The sanction Respondent only excepts discovery to the imposition Respondent repeated sanctions. his assertion that Mr. Balint to inform him completion failed for the deadlines discovery, and also to inform him Petitioner’s failed discovery requests July July were received 10 and According Respondent, hearing judge, Findings her Law, of Fact to consider ... and Conclusions “failed problems rendition of the with uncontroverted answering interrogatories request production of documents.” discovery that the hearing judge’s also contends sane- improper
sanctions
“the more draconian
were
because
*18
the
neces
tions,
precluding
a claim or
evidence
dismissing
of
claim,
normally
persistent
reserved
the
are
sary
support
actually
prejudice,
that
some
violations
cause
and deliberate
Zachair,
Ltd. v.
(citing
a
or to the
party
court.”
either
(2000)
438,
991, 1010
(citing
Driggs,
403,
A.2d
Md.App.
135
762
545,
533,
A.2d
Mortgage
Cooper,
Admiral
Inc. v.
357 Md.
745
(2000))).
1026,
that
the
Respondent proffers
hearing
of Law failed
of Fact and Conclusions
judge’s Findings
discovery
persis
violations were
that
establish
deliberate,
tent,
or prejudicial.9
below,
hearing
that
the
For the reasons outlined
we hold
in imposing
of
judge
not commit an
discretion
did
abuse
Clarke,
Rodriguez
sanctions.10 See
v.
39,
Md.
discovery
(2007)
736,
that
this Court
56-57,
(noting
926 A.2d
746-47
circuit
sanctions under an abuse
discovery
the
court’s
reviews
Mayor
v.
standard)
N. River Ins. Co.
(citing
of
discretion
of
(1996)).
Baltimore,
47,
480,
680 A.2d
486-87
343 Md.
hearing judge’s
shortening
order
the
Respondent contends that the
parte
"to an
respond
[ex
]
to the
for Sanctions amounted
time
Motion
However, Respondent
ruling by
proper notice.”
the court without
that this order was faxed to his counsel’s office.
concedes
faxing
improper
Respondent also
the order was
under
contends that
324(a). However,
prohibits
nothing in the rule
the clerk
Md. Rule 1—
sending
an order via facsimile:
(1) any
ruling
entry
of the court not
Upon
on the docket of
order or
(2)
hearing
scheduling
or
or
the
of a
the course of a
trial
made
hearing,
trial,
proceeding
or other court
not announced
the record
trial,
hearing
copy
of
or
clerk
send
in the course
order,
shall
parties
ruling,
proceeding to all
or
of the scheduled
notice
1-321,
Rule
the record discloses that
entitled to service under
unless
already
such service has
been made.
1-324(a).
Md. Rule
hearing
ignored
judge
10. While
contends that
Findings of Fact
explanation
discovery
for the
violations in the
Law,
hearing judge
required
was not
to address
Conclusions
hearing judge
already
Respondent's explanations
had
at that time.
during
Respondent's explanations
on the morn-
addressed
21, 2015,
ultimately
ing
September
dismissed Mr.
when
Respondent’s explanations in
hearing judge
Balint. The
also addressed
Opinion denying Respondent’s Motion for Reconsid-
the Memorandum
discovery
sanctions.
eration
more draco
Respondent correctly observes
“the
While
sanctions,
the evi
dismissing
precluding
nian
a claim
claim,
necessary
support
normally
are
reserved
dence
some
actually
and deliberate violations
cause
persistent
Mortgage,
Principal among the factors which recur are the opinions whether disclosure violation was technical substantial, disclosure, of the timing the the ultimate reason, violation, if of to any, degree prejudice for the evidence, parties respectively offering opposing any resulting prejudice might by post- whether cured so, and, if the overall ponement desirability a continuance. They factors not Frequently overlap. these do them- lend analysis. selves to a compartmental State, 376, 390-91, 295 A.2d (quoting Id. v. Md. 456 Taliaferro (1983)). 29, hearing judge 37 The should also consider wheth- persistent er the violations were and deliberate. Admiral in Mortgage, Lastly, Md. at 745 at A.2d 1032. factors, reviewing imposed the sanction the above we under those only grounds actually upon by consider relied the hear- Co., 47-48, N. River at ing judge. Ins. 343 Md. at A.2d that, discovery (noting reviewing hearing judge’s discretion, engage not in “a sanction for abuse we do grounds, upon by for not the trial record relied search court, support court could appellate which the believes action.”). trial court’s bar,
In hearing judge’s the case sanctions were proportionate Respondent’s violations when considered factors. light the Taliaferro
Timeliness the ultimate disclosure not provide any responses did until discovery September two months requests almost after the were July served counsel 2015. Additional- ly, hearing judge Opin- as noted her Memorandum ion, Respondent fully responded not had Petitioner’s discov- Instead, ery requests as October process having performed reconciliations IOLTA and Trust bank accounts that would allow him to Therefore, respond request Petitioner’s documents. after more than three months since the discovery requests served, not responded discovery were had all requests.
Reasons for the violation The hearing judge Respondent’s explanation “found for his discovery violations at trial[.]” incredible that “the scant proof’ support Respon- also noted offered dent’s claim confirms the of his explana- “incredible” nature tions. *20 proof hearing judge
The of a referred consisted chain printout an email between and Mr. Respondent Balint. This email chain following: consisted 3,
Email to Mr. on from, Respondent September Balint CJ, you for discovery what it’s worth didn’t send the until thought you just the 15th. There is no date on it I so it I days you differently received had 30 until told me I for yesterday. interrogatories have most done except review docs. 4, Respondent September
Email Mr. Balint to on I not I you differently yesterday. you No did tell told well left. you before You knew that the answers were due on 28, I gone August that would be 27 & August 2015 and August 28. your flooding problem
Your court schedule and weekend time. August occupied your may If I the Court today, these aren’t don’t know what do. 8, 2015 at deposition September p.m.
Your is 2:00 Attorney Annapolis. Commission’s office Grievance [] added). Mr. Balint
(emphasis Notably, by the email authored due on stating “[y]ou August knew that the answers were 28, 2015”, honestly claim that he contradicted Respondent’s complete until 2015 to his September believed he had discovery responses. explanation nature of was
The “incredible” con- provided fact that further confirmed In for his Re- flicting explanations discovery his violations. Sanctions, filed sponse Septem- to Petitioner’s Motion that he out “[had been] noted ber discovery material to electronically state and forwarded [had] Mr, Balint,]” open Balint the email [Mr. but was unable discovery. complete attachments and therefore unable to However, post- his during hearing the disciplinary Reconsideration, hearing Motion blamed him keep ap- discovery violations Mr. Balint’s failure judge acknowledged prised the deadlines. The re- conflicting disciplinary hearing, narratives at the these really jive.” marking “I don’t know how these two tales Prejudice remarked, in Opinion, her Memorandum severely been court and the Petitioner have both “[t]his That find- discovery prejudiced by Respondent’s failures[.]” of incomplete ing supported by Respondent’s provision morning September on the of his discovery responses any meaningful Petitioner of deposition, essentially depriving *21 the advance. responses review opportunity by the discovery responses to provide complete also failed Thus, Petitioner’s the in the circuit hearing date of court. entirely was Respondent’s deposition discovery advance hearing non-existent, discovery disciplinary the prior while severely limited. was prejudice possibility
The that could by a remedied continuance matter, hearing judge hearing At the the reminded this “on a are attorney disciplinary proceedings that rules tight pursuant pro- timeline the rules.” Those very that, days within 120 hearing completed shall be vide “the designating on of the order [Respondent service the after 16-757(a), or transcribed Rule and “the judge[,]” Md. written with the [findings law] of fact and conclusions of shall be filed days than 45 the no later after the responsible clerk record 757(c). authority The hearing.” conclusion of the Md. Rule 16— Md. by only. is held this Court to extend these deadlines 16-757(a) (c). Rule discovery hearings judge imposed
At the time 2015, comple- for the on the deadline September sanctions was That hearing September tion of 2015. deadline Court, which an of this had by had Order been established to be held hearing the time which the was already extended 16-757(a). time Additionally, at the Rule under Md. post-hearing Motion for Reconsideration Respondent filed his judge’s findings and conclu- hearing October According to by to be filed November sions were due Reconsideration, Motion for he would need discovery 14 to days complete from October additional waiting bookkeeping he responses because was still a reconciliation. professional perform above, holding the deadlines Therefore, as illustrated filing findings/conclusions were fast of a remedy unable to his viola- was approaching, of these deadlines. by tions either from Respon- that resulted prejudice unable to ameliorate deadlines, which continuing these discovery dent’s failures
581 this subject and to by Maryland are set the Rules extension only. Court Respondent’s violations
Persistence factors, the In addition to the we hold that Taliaferro hearing judge properly imposing exercised her discretion discovery Respondent’s persisted sanctions violations where Respondent made throughout proceedings the below. Had good comply discovery receiving faith effort to with after the requests in would not have been mid-August, Respondent waiting specialist generate documents bookkeeping Respondent’s persisted October. fact that violations The late such an “illustrates through period Respondent’s extended Therefore, dilatory approach proceedings[.]” these while “draconian,” sanction hearing judge’s labels the violations, prejudice the persistent nature the by Petitioner, the constraints various experienced judge on the hearing appropri- made such sanction deadlines ate. Exceptions
c. discovery Aside from exception hearing judge’s the above, party exceptions sanctions discussed neither noted hearing judge’s findings fact of law. conclusions Accordingly, accept findings fact as established. we Edib, 964; 415 706-07, Attorney Md. at A.3d at see also 4 Good, 445 Md. 128 Grievance Comm’n v. A.3d (2015) (noting that shall accept hearing judge’s “we ‘find- of fact ings purpose determining established ” Respon- neither nor appropriate where Petitioner sanctions’ 16-759(b)(2)(A)). (citing Md. any exceptions) dent noted Rule addition, judge’s In having reviewed conclusions novo, demonstrated, by Petitioner clear agree law de we evidence, convicting MLRPC violated 1.15(a) 1.1, 1.7, 1.8(a), (d), 8.1(a), 8.4(a)-(d), Maryland 16-609, § Prof. 10-306. Rules 16-606.1 and and Bus. Occ. and This sanction d. Court’s Relying “Respondent’s knowing in principally of funds to him misappropriation tentional entrusted as a fiduciary,” that the is appropriate Petitioner contends sanction agree. disbarment. We of this in an purpose attorney Court’s sanction “protect is to
disciplinary proceedings public rather than See, punish attorney____” e.g., Attorney Grievance Weiss, (2005) Comm’n v. Md. 886 A.2d *23 (citations omitted). observed that: We have public
the
is
when this
imposes
interest
served
Court
sanction which
to
of the legal pro-
demonstrates
members
tolerated____
type
fession the
that will not
conduct
Moreover,
represents
such sanction
the fulfillment
this
its
‘to
responsibility
upon
Court of
insist
the
maintenance
of the
the
integrity
prevent
transgression
bar and
into
lawyer
bringing
image
an individual
its
disre-
’ Therefore,
....
pute
public
interest
is served when
designed
sanctions
general
specific
effect
deterrence
on an
imposed
disciplinary
are
attorney who violates
rules____Of course,
sanction for
appropriate
what
is,
interest,
misconduct
particular
public
generally
depends upon the facts
of the
and circumstances
case....
attorney’s prior grievance
as
history,
well
facts
mitigation,
part
constitute
of those facts and circumstances.
180, 191,
Attorney Grievance Comm’n v. Sperling, 380 Md.
397,
(2004)
844 A.2d
404
(quoting Attorney
Comm’n
Grievance
(1994)).
440, 447,
1315,
Myers,
v.
Md.
635
1318
333
A.2d
extenuating
the absence of
circum
compelling
“[I]n
stances[,]” this
consistently
Court has
that acts of deceit
held
dishonesty, including
or
client funds
misappropriation
to the attorney,
Attorney
entrusted
will result in disbarment.
560, 568,
487,
v. Spery,
Grievance Comm’n
371 Md.
810 A.2d
(2002)
Culver,
(citing
491-92
Attorney Grievance Comm’n v.
265,
(2002); Attorney
371 Md.
583 186, 555, (2002); Attorney 798 A.2d v. 557 Grievance Comm’n Powell, 462, 475, 782, (2002); Attorney 369 Md. 800 A.2d 789 Vanderlinde, 376, 410, Grievance Comm’n v. 364 Md. 773 A.2d (2001); 463, Attorney Sabghir, 483 Grievance Comm’n v. 350 (1998); 67, 84, 926, Attorney Md. 710 A.2d 934 Grievance Ezrin, 603, 608-09, 966, 541 969 Comm’n v. 312 Md. A.2d (1988); Nothstein, Attorney Comm’n v. 300 Md. Grievance 667, (1984); 687-88, A.2d Attorney 480 818 Grievance Silk, (1977)). Comm’n v. 279 Md. 369 A.2d 71 Hodes, In v. 105 Attorney Grievance Comm’n Md. (2014), imposed A.3d 533 we principle, adhered this in the remarkably disbarment for violations similar those case, case at In that bar. Hodes had been a member Maryland Bar for approximately years, significant had at experience practice estates and trusts. Id. at to represent elderly A.3d 538. Hodes came client health, with declining and drafted a last will and testament containing provisions “certain trust which [Hodes] named as Trustee.” at also Id. A.3d 539. Hodes prepared a power attorney, naming durable Hodes and attorney another his office as “attomeys-in-fact, jointly individually, with regard personal client’s] care and [the property various financial and transactions.” Id.
Shortly after Hodes’ client
complications,
died
health
checking
Hodes drew two checks on his client’s
account: one
Hodes,
to a
payable
planning
by
financial
business owned
and
payable
one
to his wife. Id. at
“loan” was checking to a personal thereafter transferred funds were wife, pay- used to name of his account Hodes and Id. at 154-55, 105 Hodes. personal various debts owed at 544-45. A.3d judge concluded findings,
Based the above (Conflict Interest), MLRPC 1.7 that Hodes had violated 8.1(a) 1.15(d) (Disciplinary Proceed (Safekeeping Property), (Misconduct) 8.4(a)-(d) § Prof. Bus Occ. and 10-306. ings), Id. violated 167-68, 105 agreed at at 552. that Hodes A.3d We (Conflict Interest) when he “removed MLRPC 1.7 $270,000.00 from the Trust Account benefit himself ... of the Trust whom wife, his to the detriment beneficiaries Id. 197-98, 105 at 569. at A.3d duty loyalty[.]” he owed 1.15(d) (Safe also violated MLRPC We held that Hodes had neglecting distribute trust keeping Property) by foundation, required to a under terms funds charitable Id. at 198, 105 Bus Regarding A.3d at 570. his clients will. (Trust Restrictions), Money § we ob Occ. and Prof. 10-306 intentionally removed “willfully that Hodes served $270,000.00 pay personal from the account to his debts [ ]Trust 10-306.” Id. at 200, 105 and, therefore, A.3d violated Section at 571. 8.1(a) (false discussing disciplinary
In
MLRPC
statement
matters),
that Hodes had
agreed
with the
we
“he
of fact under oath when
knowingly made a false statement
Guaranty for
personal
repay-
that he had
claimed
executed
$270,000.00
he
from the Trust
ment of the
removed
fact,
after Bar
Account,
Guaranty
he executed the
when
Id.
MLRPC
investigation
begun.”
Regarding
Counsel’s
act
8.4(b),
“a criminal
we noted
Hodes had committed
adversely
honesty,
trustworthiness
[his]
that reflected]
Id.
In
as a
585 8.4(c) attorney’s a violation of Rule “[a]n conduct constitutes attorney when an improperly removes funds utilizes the money personal 203, for his own at 105 gain.” Id. A.3d at 573 Whitehead, (citing Attorney Comm’n Grievance v. 405 Md. (2008)). 798, 950 Lastly, regarding A.2d 808 (conduct 8.4(d) MLRPC prejudicial to the administration of justice), we noted that Hodes’ removal of to pay trust funds personal public debts confidence that an “undermin[ed] will maintain attorney funds as a fiduciary entrusted and as required by 204-05, law.” at Id. 105 A.3d at (quoting 573 Whitehead, 810). 260, at at Md. A.2d that, violations, held
We addition the above several factors aggravating referenced 9.22 of Standard the Ameri Bar can Association Standards for Imposing Lawyer Sanctions implicated: were has embodied a “[Hodes] dishonest and motive, misconduct, selfish in a engaged pattern of committed offenses, multiple testified falsely during grievance investi gation acknowledge and has refused to wrongful nature of 206, 105 his conduct.” Id. at A.3d at We concluded was the appropriate disbarment sanction con where “Hodes’ intentionally dishonest, duct was fraudulent and demonstrative of a lack of the qualities lawyer: honesty, fundamental respect integrity legal system.” Id. at A.3d bar,
Turning the case at both and Hodes respective fiduciary positions abused their in a re- trust markably Therefore, similar manner. consistent our with Hodes, decision in is appropriate sanction. disbarment Whitehead, See Comm’n v. Attorney Grievance 390 Md. (2006) (“Even 890 A.2d though attorney disci- primary is for the pline purpose protecting public, public bar and policy are served best determinations con- with Maryland sistent other sanctions miscon- similar duct.”).
First, Hodes, like engaged knowing misappropriation of his client’s re- property. peatedly withdrew unearned McClelland Trust from his funds *26 586 benefit, and also personal for his account own
attorney escrow
checking
McClelland Trust’s
$3,000 check on the
drew a
LLC,
was owned
Street
which
to Herkimer
payable
account
criminal
reflected
This
behavior
by
and his wife.
8.4(b),
lawyer,
as a
MLRPC
fitness
adversely
Respondent’s
fraudulent,
8.4(c),
“preju-
was
MLRPC
and
dishonest and
8.4(d); Attor-
justice.”
MLRPC
to the administration
dicial
Prichard,
238, 247, 872
v.
386 Md.
ney
Comm’n
Grievance
(2005)
violated Crim.
(holding
attorney
that an
had
A.2d
86
in
7-113(a)
client funds held
by misappropriating
§
Law
violation
establishing the criminal
thereby
fiduciary capacity,
Hodes,
203, 105
8.4(b));
atMd.
required under MLRPC
(“[a]n
a violation of
attorney’s conduct constitutes
at 573
A.3d
8.4(c)
funds and
attorney improperly removes
when an
Rule
204-05,
personal gain.”); Id.
money
for his own
utilizes
funds
removal
trust
(noting
at 574
Hodes’
A.3d
8.4(d)
it
violated
because
his
debts
MLRPC
pay
personal
will maintain
attorney
confidence that
public
“undermin[ed]
law.”).
fiduciary
required
as a
entrusted funds
Hodes,
found several
Also similar
interest)
(conflict
Respon-
1.7
where
violations of MLRPC
brother-in-law, his
to his
McClelland Trust funds
dent loaned
business,
Al-
and another client’s business.
brother-in-law’s
of self-
type
not involve the same
though these loans did
Hodes,
duty
loyalty
in
loan
dealing as the
when he
obviously compromised
Trust was
the McClelland
trust,
family
financial transactions
negotiated
between
Sachse,
Md. at
ADKINS, J., dissents.
ADKINS, J., dissenting. I I
Respectfully, Majority. Athough dissent from the Mr. for the expect ultimately Kent should be disbarred in the I am troubled Majority opinion, conduct outlined hearing judge discovery sanctions. concerning orders First, I granting think the erred Motion to to to Motion for Respond Shorten Time Petitioner’s time, days when, to than two at Sanctions less full responses late in to only days providing was three nor his discovery. Neither counsel should be days’ notice. expected prepared be file answer two Second, unduly harsh the nature and extent court from pre- imposed prohibiting Respondent sanctions — defenses, mitigation. all senting virtually possible including underlying I in any way Respondent’s do not condone misconduct. concern is for the that we set My precedent began very of such harsh sanctions for what as a approving minimal it is discovery Athough violation. cumbersome when the misconduct here point, particularly remand this severe, so I do for the appears we must so sake believe maintaining fairness this future cases. that Re- judge
I would to the and direct remand on a given the spondent opportunity put defense charges misconduct. A.3d 413
ATTORNEY GRIEVANCE COMMISSION MARYLAND,
OF Petitioner v. Respondent. EIDE,
Peter Jerome 61, Sept. Term, Misc. Docket AG No. Appeals Maryland.
Court *28 May ORDER this Court jointly petitioned herein have parties Maryland reprimand Respondent pursuant Rule 16-772. Joint Petition Upon review said the reasons set therein, day May forth it is this 18th ORDERED, Eide, Respondent, Peter Jerome reprimanded is in violation of Rule hereby he misconduct 5.5(a) Maryland Lawyers’ Professional Con- Rules duct.