IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD v. Richard Dillon CROTTY
No. 16-1988
Supreme Court of Iowa
Filed March 10, 2017
HECHT, Justice
Richard D. Crotty, Omaha, Nebraska, pro se.
HECHT, Justice.
The Iowa Supreme Court Attorney Disciplinary Board filed a complaint alleging that an Iowa lawyer violated several disciplinary rules while representing a personal representative in an estate and in handling an appeal of a worker’s compensation case. After a hearing, the Grievance Commission of the Iowa Supreme Court found the lawyer violated several rules and recommended his license to practice be suspended for ninety days. Upon our de novo review, we find the lawyer violated various rules, and we conclude his license should be suspended with no possibility of reinstatement for sixty days from the date of this oрinion.
Richard Crotty was first licensed to practice law in Iowa in 1975. Upon investi- gation of a complaint lodged against Crotty in 2013, the Iowa Supreme Court Attor- ney Disciplinary Board (Board) filed a proceeding before the Grievance Commission of the Supreme Court of Iowa (commission) alleging Crotty violated several ethical rules in representing the administrator of an estate and in representing a claimant in a worker’s compensation case.
Following a hearing, the commission filed its findings of facts, conclusions of law, and recommendations with this court on November 17, 2016. The commission found Crotty violated several ethical rules while representing the administrator of the estate when he failed to disclose to the court that certain documents filed with the court in the probate proceeding bore forged signatures and by charging and receiving excessive and unauthorized at- torney fees. The commission found Crotty violated ethical rules in the worker’s com- pensation matter by practicing law after his license had been suspended for failing to comply with continuing legal education requirements. The commission recom- mended Crotty’s license to practice law in Iowa be suspended for at least three months and that as a condition of any reinstatement he be required to show com- pletion of at least eight hours of continuing legal education on probate law.
A. The Cleaver Estate.
While practicing law in Council Bluffs in 2012, Crotty was contacted by Leonard Cleaver who requested legal representation. Leonard sought Crotty‘s counsel in enforcing a judgment lien against Nancy Cleaver.1
When the marriage of Nancy and Richard was dissolved in 2006, the family resi- dence was awarded to Nancy. Richard was granted personal property and a judgment against Nancy in the amount of $34,600, payable upon sale of the residence. Richard died intestate in 2007, leaving four sons as his only heirs. Nancy sold the residence in 2012, but the judgment lien was not satisfied at the time of the sale.
Leonard and Crotty signed an attorney fee agreement on August 21, 2012. The agreement did not include a description of the scope or purpose of Crotty’s represén- tation, but it provided for a one-third contingent fee.2
Crotty sent letters dated August 22 to Leonard’s siblings, Richard Jr., Ronald, and Michael, informing them of his representation of Leonard in the effort to enforce the judgment lien against Nan- cy.3
Crotty also sent a letter to Nancy demanding prompt payment of the judg- ment.
Having concluded that any action against Nancy to enforce the judgment should be brought by Richard Cleaver’s estate, Crotty prepared and Leonard signed a petition for administration and appointment of an administrator. A new attornеy fee agreement was also signed on September 12 providing Crotty would rep- resent Leonard “in connection with the estate of [Richard Cleaver Sr.].”4
The court appointed Leonard administrator of the estate and Leonard formally designat- ed Crotty as his attorney for the adminis- tration of the estate on September 13.
The district court signed an order prepared and presented by Crotty, finding the settlement was “reasonable and in the best interests of the estate,” and further finding “[Crotty’s] fees hereunder are fair and reasonable and were necessary.”5
Crotty prepared and Leonard signed a release which was рrovided to Nancy in consideration for her payment of $34,600 to the estate. Crotty retained the sum of $11,533.33 from the settlement proceeds as his fee. He distributed the remainder of the proceeds to Leonard for distribution to the heirs, the distributions of the settlement proceeds to the heirs were uneven. Leonard made uneven initial distribu- tions of the net settlement proceeds to his brothers: $9033.33 to Michael, $1500 to Richard Jr., and $1500 to Ronald.
Leonard told Crotty that two of his sib- lings—Richard Jr. and Ronald—were not supportive of the estate’s claim against Nancy and wanted nothing to do with it. Relying on Leonard’s representation, Crotty prepared renunciation documents for signature by Richard Jr. аnd Ronald and gave the documents to Leonard on September 19. Leonard left Crotty’s office with the documents and brought them back bearing signatures later the same day. Crotty’s secretary thought it unusual that Leonard could have secured his broth- ers’ signatures in less than an hour. Yet when Crotty asked Leonard directly about the authenticity of the signatures, Leonard attested that his brothers had signed the renunciations. Relying on Leonard’s affir- mation of the authenticity of his brothers’ signatures, Crotty filed the renunciations with the court.
Although the record does not disclose the substance of Leonard’s response to Crotty’s letter of October 23, Crotty con- cedes that, when confronted, Leonard ad- mitted he forged his brothers’ signatures on the renunciations. Upon learning this, Crotty sent a letter to Leonard on October 23 revealing Crotty’s discovery of the fact that the signatures on the renunciations were forged and demanding that he return the settlement proceeds.
Leonard left Crotty’s office with the documents and brought them back bearing signatures later the same day. Crotty’s secretary thought it peculiar that the distributions to them were in cаsh and decided to investigate the terms of the settlement. In the course of their investi- gation, Richard Jr. and Ronald revealed to Crotty that they had not signed the renun- ciations. Upon learning this, Crotty sent a letter to Leonard on October 23 revealing Crotty’s discovery of the fact that the signatures on the renunciations were forged and demanding that he return the settlement proceeds. Crotty concedes that, when confronted, Leonard ad- mitted he forged his brothers’ signatures on the renunciations. Armed with Leon- ard’s admission of the forgeries, Crotty prepared and Leonard signed an applica- tion for the appointment of a successor administrator. The appliсation filed on November 14 alleged that Leonard’s actions as administrator had “resulted in less than amicable relationships with the remaining heirs” and that the best interests of the estate would be served by the appointment of his brother, Ronald, as administrator, in consideration for her payment of $34,600 to the estate. Crotty retained the sum of $11,533.33from the settlement proceeds as his fee. He distributed the remainder of the proceeds to Leonard for distribution to the heirs.
After several months of inactivity in the estate, Crotty filed a final report and an accounting which included his request for an ordinary attorney fee of $812.6
Ronald subsequently objected to the final report and did not view the order as an approval of either an ordinary or extraordinary fee for the services rendered by Crotty in the administra- tion of the estate.
On January 9, 2014, Martin filed a re- port and inventory together with affidavits signed by Richard Jr. and Ronald attest- ing that their signatures were forged on the renunciations filed earlier in the estate proceedings. Martin also filed an applica- tion requesting instructions from the court as to the amount of attornеy fees Crotty was entitled to for his services to the estate and for a determination of how the estate’s only asset—the settlement pro- ceeds—should be distributed.7
Following a hearing on March 6, the district court ordered Crotty to refund $670 to the estate because that fee had neither been earned nor approved by the court. In its April 16 order, the court further found that the fair and reasonable extraordinary fee for Crotty’s services to the estate in securing pay- ment of the judgment against Nancy was $50008
and ordered Crotty to refund $7203.33 to the estate within thirty days.9
Crotty filed a motion to set aside the district court’s order and sought a new hearing. The court rejected Crotty’s post- hearing requests for relief, and Crotty filed a notice of appeal on June 18. The appeal was dismissed, however, because Crotty failed to comply with our rules of appellate procedure. After the administra- tor sought further court intervention in securing the repayment, Crotty eventually refunded the sum of $7203.33 to the estate.
Crotty’s license to practice law in Iowa was suspended by an order of this court on December 5, 2014, for failing to comply with Iowa Court Rule 41.4. See Iowa Ct. R. 41.4 (requiring Iowa attorneys to file annual report with commission on continuing education). On December 9, while suspended from the practice of law, Crotty signed a proof brief as counsеl for Robert Freeman who was the claimant in a worker’s compensation case. On Decem- ber 12, Crotty signed the final brief as Freeman’s counsel in the same case.
Our review of the record made before the commission is de novo. Iowa Ct. R. 36.21(1); Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. Bernard, 653 N.W.2d 373, 375 (Iowa 2002). The burden to prove ethical violations by a convincing prepon- derance of the evidence is allocated to the Board. Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Adams, 809 N.W.2d 543, 545 (Iowa 2012). This standard of proof is less demanding than proof beyond a reasonable doubt, but more demanding than proof by a preponderance of the evidence. Id. “We give respectful consideration to the commission’s finding of fact and recommended sanction, but we are not bound by them.” Iowa Supreme Ct. Att‘y Disciplinary Bd. v. McGinness, 844 N.W.2d 456, 461 (Iowa 2014).
IV. Violations.
The Board alleged Crotty violated several ethical rules in representing the admin- istrator of the Cleaver estate and claimant Robert Freeman in a worker’s compensa- tion case. Like the commission, we find Crotty violated ethical rules in both mat- ters.
A. The Cleaver Estate.
The Board alleged that Crotty violated several ethical rules in connection with the Cleaver estate. First, the Board alleged Crotty obtained fees in violation of Iowa Rule of Professional Conduct 32:1.5(a) (violating restric- tions imposed by law) by violating Iowa Cоurt Rules 7.2(2) (ordinary fees), 7.2(3) (extraordinary fees), and 7.2(4) (schedule for ordinary fee collection) and further al- leged that by taking the unauthorized fees Crotty violated Iowa Rule of Professional Conduct 32:8.4(d) (prejudice to the admin- istration of justice). Second, the Board al- leged Crotty violated several rules of eth- ics in connection with his client’s forging of signatures on estate documents filed with the court. Specifically, the Board alleged he violated Iowa Rules of Professional Conduct 32:1.2(d) (counselling or assisting a client to engage in crime or fraud), 32:1.4(a)(5) (communicating legal limits of lawyer’s powers to client), 32:3.3(a)(3)(candor to court), 32:8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresen- tation). The commission found Crotty vio- lated all of these rules except rule 32:1.4(a)(5).
The Board alleged and the commission found Crotty violated Iowa Rules of Professional Conduct 32:1.5(a) and 32:8.4(d) in connection with the fee he obtained for his work in the estate. We agree.
Rule 32:1.5(a) of the Iowa Rules of Pro- fessional Conduct provides that “[a] lawyer shall not ... charge, or collect an unrea- sonable fee or an unreasonable amount for expenses, or violate any restrictions im- posed by law.” Iowa R. Prof‘l Conduct 32:1.5(a). Our rules of probate procedure impose several restrictions on the process for obtaining attorney fees in probate mat- ters. A violation of any of those probate rules can thereby also constitute a viola- tion of rule 32:1.5(a).
In our rules of probate proce- dure, fees for ordinary services are gov- erned by rules 7.2(2) and 7.2(4), and fees for extraordinary services are governed by rule 7.2(3). Rule 7.2(2) provides, “When fees for ordinary services are sought pur- suant to Iowa Code sections 633.197 and 633.198, proof of the nature and extent of responsibilities assumed and services ren- dered shall be required.” Iowa Ct. R. 7.2(2).Rule 7.2(4) prescribes a timeline for the payment of such fees. Id. r. 7.2(4). When, as was the case in the Cleaver estate, neither a federal estate tax return nor an Iowa inhеritance tax return is re- quired, one-half of the fees for ordinary services may be paid when the probate inventory is filed. Id. The commission found Crotty’s taking of the $670 fee be- fore a probate inventory was filed violated a temporal restriction on taking fees for ordinary services and therefore also consti- tuted a violation of rule 32:1.5(a). We agree. Crotty violated rule 7.2(4) and rule 32:1.5(a) in taking a fee for ordinary ser- vices before the inventory was filed. Fur- ther, Crotty violated rule 7.2(2) by collect- ing an ordinary fee without justifying the reasonableness of his claim through an itemized statement of services rendered. See Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Arzberger, 887 N.W.2d 353, 365 (Iowa 2016).
Rule 7.2(3) providеs, When an allowance for extraordinary ex- penses or services is sought pursuant to Iowa Code section 633.199, the request shall include a written statement show- ing the necessity for such expenses or services, the responsibilities assumed, and the amount of extra time or expense involved. In appropriate cases, the state- ment shall also explain the importance of the matter to the estate and describe the results obtained. The request may be made in the final report or by sepa- rate application. It shall be set for hear- ing upon reasonable notice, specifying the amounts claimed, unless waivers of notice identifying the amounts claimed are filed by all interested persons. The applicant shall have the burden of prov- ing such allowance should be made. Iowa Ct. R. 7.2(3). The commission found Crotty violated this rule—and thereby rule 32:1.5—by taking a contingent fee in the amount of $11,533.33,substantially in ex- cess of the statutory limit on fees for ordinary services. See Iowa Code § 633.197 (2017) (prescribing limit of fees payable to personal representatives for or- dinary services); id. § 633.198 (authorizing compensation of attorney for personal rep- resentative to be “such reasonable fee as may be determined by the court, for ser- vices rendered, but not in excess of the schedule of fees herein provided for per- sonal representatives”). We conclude the Board proved Crotty violated rule 7.2(3) by taking the contingent fee without re- questing a hearing on the application or filing waivers signed by the heirs.10
2. The forgeries.
As we noted above, the Board alleged Crotty’s actions concerning his client’s forgeries violated Iowa Rules of Professional Conduct 32:1.2(d), 32:1.4(a)(5), 32:3.3(a)(3), and 32:8.4(c). The commission found Crotty violated each of these rules except rule 32:1.4(a)(5). We conclude Crotty’s actions concerning his client’s forgery do not amount to a disci- plinary violation.
The Board first alleged Crotty vio- lated rule 32:1.2(d) in failing to disclose to the court that the renunciations filed with the court were forged. This rule provides, A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudu- lent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, mean- ing, or application of the law. Iowa R. Prof‘l Conduct 32:1.2(d). Although the commission did not find that Crotty knew the signatures of Richard Jr. and Ronald were forged when he filed the renunciations with the court, it nonetheless found Crotty violated the rule when he failed to reveal to the court Leonard’s forgeries in the application for appoint- ment of a successor administrator, in the final report, or in a separate application requesting Leonard be held in contempt. In particular, the commission found Crotty’s vague written characterization of the reason for appointing a successor adminis- trator misled the court and aided Leon- ard’s perpetration of a fraud. We respect- fully disagree. We conclude the Board failed to prove Crotty either counseled Leonard to forge the signatures of his brothers or knowingly assisted him in perpetrating a fraud on the court. We credit Crotty’s testimony that he was un- aware of the forgeries when he filed the renunciations with the court. We also are convinced that Crotty verbally revealed the forgeries to the court when he present- ed the application and order for appoint- ment of a successor administrator. Al- though we believe it would have been a better practice to further disclose the for- geries in a motion to withdraw the renun- ciations filed in the probate proceeding, we find the Board failed to meet its burden to prove a violation of rule 32:1.2(d).
Second, the Board alleged Crotty violat- ed rule 32:1.4(a)(5) by failing to consult with his client, Leonard, about any rele- vant limitation on his conduct when he knew Leonard expected assistance not permitted by the Iowa Rules of Professional Con- duct or other law. Rule 32:1.4(a)(5) requires every lawyer in Iowa to communi- cate “any relevant limitation on the law- yer’s conduct when the lawyer knows that the client expects assistance not permitted by the Iowa Rules of Professional Conduct or other law.” Id. r. 32:1.4(a)(5). The com- mission found no violation of this rule in the record and neither do we.
Comment 10 to rule 32:3.3 informs our understanding of Crotty’s obligation under the rule: If withdrawal from the representation is not permitted or will not undo the effect of the false evidence, the advocate must make suсh disclosure to the tribunal as is reasonably necessary to remedy the situation, even if doing so requires the lawyer to reveal information that other- wise would be protected by rule 32:1.6. It is for the tribunal then to determine what should be done—making a state- ment about the matter to the trier of fact, ordering a mistrial, or perhaps nothing. Id. r. 32.3.3(a)(3), cmt. 10. Although, as we have already noted, it would have been better if Crotty had disclosed the forgeries in a writing filed with the court or speci- fically sought direction from the court as to any additional measures he should take under the circumstances, we cannot say on this record that his verbal disclosure of the forgeries to the court was an unreasonable measure under the circumstances present- ed here. Accordingly, we find no violation of rule 32:3.3(a)(3).
Finally, the Board alleged that Crotty violated rule 32:8.4(c) when he filed a final report but failed to mention the renunciations in the court file bore signa- tures forged by the former administrator. Rule 32:8.4(c) provides that lawyers may not “engage in conduct involving dishones- ty, fraud, deceit, or misrepresentation.” Id. r. 32:8.4(c). The commission found a viola- tion; however, we are not convinced. A lawyer violating this rule must act with some level of scienter. Thus, proof of a misrepresentation arising from mere negli- gence will not support a finding of a viola- tion of this rule. Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Netti, 797 N.W.2d 591, 605 (Iowa 2011). In this case, Crotty dis- closed the forgeries to a district court judge more than four months before he filed a final report. Although he could have taken more aggressive remedial measures, we find Crotty’s failure to do so was not motivated by a purpose to deceive or de- fraud the court or the decedent’s heirs, nor was it the result of an intentional misrep- resentation. Crotty explained that he chose to disclose the forgeries in a conversation with the court rather than in a motion or application because he was fearful of Leon- ard’s reaction. While this explanation might support a finding that Crotty was lacking in courage tо face a client’s wrath or in an administrative appeal before the Commissioner of Patents and Trademarks by continuing to propound affidavits after the affiants notified the attorney that the affidavits were inaccurate and should not be used for any purpose); In re Scahill, 767 N.E.2d 976, 980-81 (Ind. 2002) (per curiam) (finding attorney who failed to update client’s financial declaration and reveal an IRA no longer existed at the time of trial violated his duty of candor to court). We therefore do not find a violation of rule 32:8.4(c).
We next consider what sanc- tion is appropriate for an attorney who violated our rules restricting the charging and collecting of attorney feеs in probate matters and who violated rules governing the conduct of an attorney whose license is suspended. When choosing the appropriate sanction for an attorney’s violation of ethi- cal rules, we consider the nature of the violations, the attorney’s fitness to continue in the practice of law, the protection of society from those unfit to practice law, the need to uphold public confidence in the justice system, deterrence, maintenance of the reputation of the bar as a whole, and any aggravating or mitigating cir- cumstances. Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Casey, 761 N.W.2d 53, 61 (Iowa 2009) (quoting Iowa Supreme Ct. Att‘y Disci- plinary Bd. v. Irеland, 748 N.W.2d 498, 502 (Iowa 2008) (per curiam)). We seek to “achieve consistency with prior cases when determining the proper sanction.” Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 769 (Iowa 2010).
Crotty is not the first Iowa lawyer to violate our rules controlling the charging and collecting of attorney fees in probate matters. “In prior cases, the resulting dis- cipline has ranged from a reprimand to a suspension of various degrees.” Iowa Supreme Ct. Att‘y Disciplinary Bd. v. Carty, 738 N.W.2d 622, 624 (Iowa 2007). In a recent survey of our cases involving sanc- tions for violations of the rules and stat- utes governing attorney fees in probate matters, we observed that “if an attorney violates probate rules by taking an еarly12 fee to which she is otherwise entitled, later obtains a court order authorizing the fee, and causes no other harm to the client, we may issue a public reprimand.” Arzberger, 887 N.W.2d at 368. If, however, the attor- ney “charges an excessive fee or engages in misrepresentation, we may suspend the attorney.” Id.
We find some aggravating factors in this rec- ord affecting our choice of the appropriate sanction. First, this is Crotty’s second dis- ciplinary action. A history of “prior disci- plinary action is properly considered as an aggravating circumstance.” Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. Gallner, 621 N.W.2d 183, 188 (Iowa 2001). In 1980, Crotty was found in contempt and fined $500 for practicing law in Iowa while holding a certificate exempting him from continuing education requirements. Sec- ond, Crotty was an experienced lawyer on the verge of retirement at the time he committed the violations discussed above. We view his substantial experience in the practice of law as an aggravating factor. Id.
We find one mitigating factor in this case as well. Crotty forthrightly admitted that he performed legal services for Free- man after his license was suspended. We consider his recognition of some wrongdo- ing as a mitigating circumstance affecting our determination of the appropriate sanc- tion. Iowa Supreme Ct. Bd. of Prof‘l Ethics & Conduct v. Lane, 642 N.W.2d 296, 302 (Iowa 2002).
We suspend Crotty’s license to practice law in Iowa for a period of sixty days. The suspension imposed in this case applies to all facets of the practice of law as provided by Iowa Court Rule 34.23(3) and requires notification to clients, as provided by rule 34.24. As Crotty is already under suspen- sion for failing to comply with the continu- ing legal education requirements for Iowa lawyers, prior to any reinstatement to practice law, he must establish that he has satisfied and brought current all continu- ing legal education obligations. The costs of this proceeding are assessed against Crotty pursuant to Iowa Court Rule 36.24.
LICENSE SUSPENDED.