49 V.I. 409 | Supreme Court of The Virgin Islands | 2008
MEMORANDUM OPINION
(March 3, 2008)
The Virgin Islands Bar, by and through the Ethics and Grievance Committee (the “Bar”), filed two petitions with this Court for disciplinary action against respondent, Attorney Stephen A. Brusch (“Brusch”). The two petitions allege that Brusch violated several rules of the Model Rules of Professional Conduct relating to his failure to communicate with clients and remit funds due to clients. In both petitions, the Bar recommends that we disbar Brusch. For the reasons which follow, we find that Brusch has violated some of the most important ethical duties an attorney owes to his clients and that the only appropriate sanction is disbarment.
I. JURISDICTION AND STANDARD OF REVIEW
The Virgin Islands Code vests the Supreme Court with “exclusive jurisdiction to regulate the admission of persons to the practice of law and the discipline of persons admitted to the practice of law.” V.I. Code Ann. tit. 4, § 32(e) (2007 Supp.). The disciplinary procedures adopted by the Court require the Bar’s Ethics and Grievance Committee to obtain an
The petition in this case arose out of a grievance filed against Brusch by a former client, Julio Colon, Jr. (“Colon”). Colon was incarcerated when he retained Brusch to handle certain probate and property matters. In late June of 2002, Colon paid Brusch a total of $10,000.00 as a retainer for the representation. In a letter dated July 17, 2002, Colon urged Brusch to take immediate action to prevent the sale of certain real estate that was the subject of his representation. It is unclear whether Brusch took any action on the matter, but on November 3, 2003, Colon sent Brusch a letter advising him that he had retained another attorney. In the letter, Colon complained about the complete lack of communication from Brusch, and Colon demanded an immediate refund of the unearned portion of the retainer. Brusch never responded to Colon’s letter. On February 3, 2004, Colon’s new attorney, who had repeatedly demanded, but was unsuccessful in obtaining a refund, sent a letter to Brusch protesting Brusch’s broken promises to repay the unearned retainer. In the letter, Colon’s new attorney warned that if he did not hear from Brusch by the close of business that day, he would recommend that Colon file a grievance with the Bar.
Colon filed his grievance against Brusch with the Bar on February 19, 2004. In the grievance, Colon alleged that Brusch came to see him only once, and as far as Colon knew, Brusch never did anything else on his case. Colon asserted that Brusch had still not repaid the unearned retainer. On July 8, 2004, the Bar notified Brusch of the grievance. The notice generally informed Brusch about the grievance, the appointment of the adjudicatory panel members, and the opportunity to seek recusal of the appointed members. Brusch did not respond to the letter. In a letter dated November 22, 2004, the case investigator assigned to the grievance forwarded Brusch a copy of the grievance and the supporting materials supplied by Colon. The letter requested Brusch to respond to the grievance by December 20, 2004. Brusch did not reply to the grievance, and on the morning of December 28, 2004, the case investigator faxed him a letter requesting a response by noon that day. Again, Brusch failed to respond.
The adjudicatory panel chairperson scheduled a hearing on the grievance to take place on September 7, 2006. The panel notified Brusch of the hearing in a notice that was both hand-delivered to Brusch’s office
Following the hearing, the adjudicatory panel issued a Memorandum of Decision concluding that Brusch violated the following Model Rules of Professional Conduct: Rule 1.4(a)(4) (duty to communicate with clients), Rules 1.5(a)-(b) (rules governing fee agreements with clients), and Rule 1.16(d) (attorney’s duties upon terminating representation).
The Bar subsequently filed the instant petition requesting that the Court disbar Brusch. The Bar also petitioned the Court for the immediate interim suspension of Brusch based on the misconduct alleged in the two Petitions presently before the Court. At a June 8, 2007 hearing on the Bar’s interim suspension petition, Brusch, represented by counsel, conceded that he had completely failed to respond to both grievances before the Court and that he was guilty of the ethical violations charged in the grievances. Following the hearing, the Court granted the Bar’s petition and immediately suspended Brusch, pending final determination of the grievance.
In the Order of Immediate Interim Suspension, the Court required Brusch to send a Notice of Court-Ordered Sanctions, within ten days, to all of his clients, co-counsel, opposing counsel, courts and agencies
The Bar’s disbarment petition came before the Court for oral argument on October 26, 2007. The Bar argued that Brusch should be disbarred for his unethical conduct. Brusch responded that the Court should impose a sanction of probation with limited supervision. In support of his position, Brusch argued that newspaper articles concerning the matter served as a public reprimand and that his unethical conduct was mitigated by the fact that he had recently paid full restitution to the grievants.
III. FACTS AND BACKGROUND: S. CT. BA NO. 2007-65
The petition in this case arose out of a grievance filed against Brusch by a former client, Fitzgerald Morris (“Morris”). Brusch represented Morris, who is blind, as the plaintiff in a lawsuit. On May 18, 2005, prior to trial, Morris agreed to settle the action for $250,000.00, and Brusch agreed that he would accept $50,000.00 of the settlement proceeds for his fee. Although Brusch received the entire settlement amount of $250,000.00, in the latter part of May he remitted only $162,345.02 to Morris. Brusch acknowledged that he owed Morris an additional $37,654.98 from the settlement proceeds and promised Morris that the payment was forthcoming. Morris visited Brusch’s office on several occasions to obtain the balance of his settlement, but Brusch kept delaying the payment. Morris also repeatedly telephoned Brusch about the payment, but Brusch would not respond to his calls. On September 8, 2005, Morris filed his grievance against Brusch, complaining that Brusch
On November 1, 2005, the Bar notified Brusch of the grievance. The notice provided Brusch with a copy of the grievance and informed him, among other things, of his obligation to respond within thirty days. Brusch did not respond as directed, and on July 11, 2006, the case investigator assigned to the grievance sent Brusch a second notice requiring him to respond no later than July 17, 2006. Brusch signed a receipt acknowledging delivery of the July 11, 2006 notice, but again neglected to file a response to the grievance.
On July 26, 2006, the Bar notified Brusch that a hearing on the grievance would take place on September 7, 2006. The hearing notice restated the allegations in Morris’ grievance and noted that Brusch did not contest the allegations. Brusch was informed by the notice, among other things, that if he failed to appear at the hearing, the panel could “proceed to an adjudication of the Greivance [sic] and the imposition of sanctions on a default basis.” (Morris v. Brusch, No. 27-2005-STT, Hr’g Notice 4.) Brusch did not request a continuance and failed to appear at the hearing.
Following the hearing, the adjudicatory panel issued a Memorandum of Decision concluding that Brusch violated the following Model Rules of Professional Conduct: Rule 1.4(a)(4) (duty to communicate with clients), Rule 1.15(d) (duty to safeguard client property), and 8.1(b) (duty to comply with demand from disciplinary authority). Upon considering numerous factors contained in the American Bar Association’s Standards for Imposing Lawyer Sanctions, the panel determined that Brusch should be disbarred from practicing law in the Virgin Islands.
The Bar subsequently filed the instant petition requesting that the Court disbar Brusch. As is discussed above, the Bar also petitioned the Court for the immediate interim suspension of Brusch. The history concerning Brusch’s response to the petition for immediate interim suspension, the Court’s subsequent Order for Immediate Interim Suspension, and the oral argument on the Bar’s petitions for interim suspension and disbarment are stated above in the facts and background statement of S. Ct. BA No. 2007-64 and need not be repeated here.
IV. DISCUSSION OF ETHICAL VIOLATIONS
Our assessment of the record in these two cases was facilitated, in part, by the fact that the evidence was virtually uncontested. Indeed, not
In light of the uncontested evidence, Brusch’s actual admissions that he engaged in the charged misconduct and the factual concessions that flowed from his failure to participate in the proceedings before the Bar, we are convinced of the truth of the factual allegations charged in each of the two grievances before the Court. Moreover, we reach the same conclusion even without the benefit of Brusch’s admissions to these factual allegations. Our careful and independent review of the evidence of record, the parties’ arguments and the adjudicatory panels’ decisions in each grievance, compel but one conclusion: there is clear and convincing evidence that Brusch engaged in egregious misconduct to the detriment of his clients, the legal system, the Bar, and the public at large. Under these circumstances, we adopt the findings of fact presented by the Bar’s
In light of these findings, we conclude that Brusch violated the following ethical rules of the Model Rules of Professional Conduct. In S. Ct. BA No. 2007-64, Brusch violated Rules 1.4(a)(3)-(4) and 1.16(d) of the Model Rules of Professional Conduct.
In S. Ct. BA No. 2007-65, Brusch violated Rules 1.4(a)(4) and 1.15(d) of the Model Rules of Professional Conduct. Rule 1.4, which is stated above, required Brusch to promptly comply with Morris’ repeated requests for information about the status of the settlement proceeds. See Model Rules of Prof’l Conduct R. 1.4(a)(4). Instead of responding, Brusch ignored Morris’ requests for information. Moreover, Brusch’s failure to promptly deliver the balance of the settlement proceeds due to Morris was a violation of Rule 1.15(d) which provides, in pertinent part:
Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or*419 by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.
Model Rules of Prof’l Conduct R. 1.15(d).
We also find, that by failing to respond to the grievances in both cases, Brusch violated Rule 8.1 of the Model Rules of Professional Conduct. Rule 8.1 prohibits a lawyer, in connection with a disciplinary matter, from knowingly failing to respond to a lawful demand for information from a disciplinary authority. MODEL Rules OF PROF’L CONDUCT R. 8.1(b). Here, the Rules of the Ethics and Grievance Committee required Brusch to respond to the grievances
V. SANCTIONS
Having found that Brusch violated several significant ethical duties, we must determine the appropriate sanction. In considering the various alternatives,
In exercising our independent judgment concerning the proper sanction, we too are guided by the Standards for Imposing Lawyer
1. The Duty Violated. Initially, we recognize that “the most important ethical duties are those which a lawyer owes to clients.” Id. These obligations include not only the lawyer’s duty to communicate with his clients, but more importantly, the duty to preserve client property. The unearned portion of the retainer that Colon paid to Brush was Colon’s property. Likewise, the settlement proceeds paid to Brusch in his representation of Morris were Morris’ property. In both cases, the ethical rules required Brusch to use the utmost care in safeguarding his clients’ property and to remit those funds to his clients when the circumstances required. Thus, the ABA Standards provide that “[djisbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client.” Std’s for Imposing Lawyer Sanctions § III.C., Std. 4.11.
“Knowing conversion or misappropriation of client money ‘consists simply of a lawyer taking a client’s money entrusted to him, knowing that it is the client’s money and knowing that the client has not authorized the taking.’” People v. Brown, 161 P.3d 1286, 1293 (Colo. 2007) (quoting People v. Varallo, 913 P.2d 1, 11 (Colo. 1996)); see also In re Noonan, 506 A.2d 722, 723 (N.J. 1986) (In a misappropriation case, “[i]t makes no difference whether the money is used for a good purpose or a bad purpose, for the benefit of the lawyer or for the benefit of others, or whether the lawyer intended to return the money when he took it, or whether in fact he ultimately did reimburse the client; nor does it matter that the pressures on the lawyer to take the money were great or minimal.”).
We cannot overstate the importance of a lawyer’s duty to safeguard and accurately account for a client’s property. Whether that property is a retainer paid in advance of services, settlement proceeds remitted to an
2. The Lawyer’s Mental State. In violating a duty, a lawyer may act intentionally, knowingly, or negligently. Std’s for Imposing Lawyer SANCTIONS § II. Conduct is intentional when the lawyer acts with the “conscious objective or purpose to accomplish a particular result.” Std’s for Imposing Lawyer Sanctions § III. When the lawyer acts with “conscious awareness of the nature or attendant circumstances of the conduct but without the conscious objective or purpose to accomplish a particular result,” the conduct is done knowingly. Id. The least culpable mental state is negligence. A lawyer acts negligently when the lawyer fails “to heed a substantial risk that circumstances exist or that a result will follow, which failure is a deviation from the standard of care that a reasonable lawyer would exercise in the situation.” Id.
In this case, Brusch’s clients repeatedly demanded that Brusch remit the funds due to them. Brusch ignored those demands and refused to communicate with his clients regarding the matters. Considering these circumstances, and that Brusch later acknowledged that he failed to refund the money, it is patently obvious that he was consciously aware that he had not remitted the funds when he was required to do so. Thus, we conclude that Brusch’s conversion of the funds was, at a minimum, knowing.
3. The Potential or Actual Injury Caused by the Lawyer’s Misconduct. The extent of the injury in a misappropriation case is determined by examining the extent of the actual or potential loss to the client. Std’s for Imposing Lawyer Sanctions § II. In this case, Brusch has conceded that he failed to remit significant settlement proceeds due to a client and also failed to refund a substantial deposit owed to another client. Although Brusch has now apparently refunded the money, Colon
Our initial determination of the appropriate sanction, based on Brusch’s knowing conversion of his clients’ property and the injury caused to those clients, is that Brusch should be disbarred. We now turn our attention to whether any relevant aggravating or mitigating circumstances merit a departure from the initial determination.
4. Aggravating or Mitigating Circumstances. An aggravating circumstance is one that may justify a more severe sanction, while a mitigating circumstance is one that may justify a more lenient sanction. Std’s for Imposing Lawyer Sanctions § III.C., Std’s 9.21, 9.31. The aggravating circumstances in these cases are as follows: Brusch engaged in a pattern of misconduct involving multiple offenses; he exhibited bad faith by intentionally failing to comply with the rules and the notices of the Bar; the victims in both case were vulnerable, one incarcerated, the other vision-impaired; Brusch engaged in these ethical violations even though he had substantial experience in the practice of law; and Brusch was indifferent in making restitution and did not do so until after the Court suspended him from practicing law. See Std’s FOR IMPOSING Lawyer Sanctions § III.C., Std’s 9.22(c)-(e), (h)-(j). In mitigation of his conduct, we find that Brusch has no prior disciplinary record, a good reputation in the legal community, and he has recently exhibited remorse for his conduct. See Std’s FOR IMPOSING LAWYER SANCTIONS § III.C., Std’s 9.32(a), (g), and (1).
Considering the totality of these circumstances, we find nothing to alter our initial determination that Brusch should be disbarred for his misconduct. Indeed, the circumstances in these cases present a picture of a highly experienced, reputable attorney who inexplicably engaged in a pattern of misconduct that included a total failure to communicate with clients, knowingly converting client funds, and violating several rules and Court orders associated with the ensuing disciplinary proceedings.
VI. CONCLUSION
For the reasons stated above, we conclude that Brusch should be disbarred from the practice of law in the Virgin Islands. Brusch knowingly violated significant rules of professional conduct relating to client communications and the safeguarding of client property. When grievances arising from Brusch’s conduct were filed with the Bar, he
Chief Justice Rhys S. Hodge recused himself from consideration of the matter in an Order dated May 22, 2007.
Former Superior Court Rules 301, 303, 304, 305, 306, and 307 have been adopted and amended by the Supreme Court as Supreme Court Rules 201, 203, 204, 205, 206, and 207, respectively. See Promulgation Order No. 2007-0011. Inasmuch as the language of the former Superior Court Rules has been adopted, virtually verbatim, as part of the new Supreme Court Rules, our citations in this Opinion will be to the Supreme Court Rules. Rule 207 consists of the Rules of the Ethics and Grievance Committee.
Pursuant to title 1, section 4 of the Virgin Islands Code “[t]he rules of the common law, as expressed in the restatements of the law approved by the American Law Institute, and to the extent not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the courts of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary.”
The Model Rules for Lawyer Disciplinary Enforcement are applicable in the Virgin Islands pursuant to Rule 203(a) of the Virgin Islands Supreme Court Rules.
The American Bar Association’s Model Rules of Professional Conduct apply in the Virgin Islands pursuant to Rule 203(a) of the Virgin Islands Supreme Court Rules.
The American Bar Association’s Standards for Imposing Lawyer Sanctions are applicable in the Virgin Islands pursuant to Rule 203(a) of the Virgin Islands Supreme Court Rules. The Model Rules for Lawyer Disciplinary Enforcement, which are also applicable in the Virgin Islands, also adopt the ABA Standards. See Model Rules for Lawyer Disciplinary Enforcement R. 10(C) (2007).
See VISCR 207.6.20-207.6.21 (standards and order of immediate interim suspension).
The Notice of Court-Ordered Sanctions is required by Rule 207.5.5 of the Virgin Islands Supreme Court Rules.
See VISCR 207.5.5(g) (requiring affidavit of compliance).
Rule 33(a) of the Model Rules for Lawyer Disciplinary Enforcement similarly provides that “ [f] ailure to answer charges filed shall constitute an admission of the factual allegations.”
Rule 33(b) of the Model Rules for Lawyer Disciplinary Enforcement likewise provides that “[i]f respondent should fail to appear when specifically so ordered by the committee or the board, the respondent shall have been deemed to have admitted the factual allegations which were to be the subject of such appearance and/or a concession to any motion or recommendations to be considered at such appearance.”
Although the Bar asserts that Brusch also violated Rule 1.5(a)-(b) of the Model Rules of Professional Conduct, which prohibit unreasonable fees and require an attorney to communicate the fee rate to the client, we do not find clear and convincing evidence in the record that Brusch violated these rules.
See VISCR 207.1.11 (providing that “[a]ll grievances shall be answered by the Respondent within the time set by these Rules”).
The various disciplinary sanctions and remedies for attorney misconduct are stated under Standards 2.1 through 2.8 of the ABA Standards for Imposing Lawyer Sanctions.