*1 842 A.2d 26 OF MARYLAND ATTORNEY GRIEVANCE COMMISSION v.

Gary E. DAVIS. Term, 80, Sept. Misc. Docket AG No. 2002. Maryland. Appeals Court of Feb. 2004. *2 Hirsman, Broderick, Bar and C. Assis- Melvin Counsel John of Attorney tant Bar for the Grievance Commission Counsel Maryland. Davis, Bowie, respondent. E. for

Gary ELDRIDGE,* RAKER, BELL, C.J., before Argued HARRELL, BATTAGLIA, WILNER, CATHELL, JJ. RAKER, Judge. 12, 2002, the Grievance Commis- Attorney

On November Counsel, sion, a with this acting through petition Bar filed E. against Gary action disciplinary respondent Court for Davis, him Rules of Profes- charging violating Maryland (e), 8.4(b), and (Safekeeping property)1 sional Conduct 1.15 * J., retired, hearing Eldridge, participated in and conference of this now Court; being pursu- of this after recalled case while an active member Constitution, IV, 3A, participated he also ant to the Article Section adoption opinion. decision and of this provides as 1. Rule 1.15 follows: "a) lawyer property persons that is in A shall hold of clients or third representation separate lawyer’s possession with a a in connection lawyer’s property. kept a own Funds shall be from 16, Mary- pursuant Chapter to Title 600 of the account maintained appropri- property shall be identified as such and land Rules. Other ately safeguarded. Complete account funds and of records such kept by lawyer preserved property shall be and shall period years representation. a of five after termination (b) receiving property a or third Upon funds or other in which client interest, lawyer notify person promptly a shall the client or has an Except permitted person. third as stated in this Rule or otherwise client, by agreement lawyer promptly with the a shall deliver law or person any property that the to the client or third funds or other and, upon request by person to receive client or third is entitled accounting regard- person, promptly client or third shall render full ing property. such (c) lawyer representation possession When in course of lawyer person

property both the and another claim inter- in which ests, lawyer property kept separate by until there is shall be accounting dispute severance of their interests. If a arises an and 16-752(a), Rule (d) (Misconduct).2 to Maryland Pursuant Weatherly of the Judge matter Julia referred the we findings to make County George’s for Prince Court Circuit Weatherly held Judge of law. conclusions proposed fact and 7, 2003, concluded that the on evidentiary hearing May as alleged had not been violated Conduct Rules of Professional Counsel, violated Code that Davis had Bar but (2002 of the Insurance Cum.Supp.) Repl.Vol., 2003 22-103® Article.

I. findings fact Weatherly following made the Judge of law: conclusions

FINDINGS OF FACT Bar of the Court of was admitted “1. 1999, In May on 1982. October Appeals *3 representa- in criminal defense in private practice specializing on of He injury plaintiffs. work behalf personal tion of law. practice ended his active recently that he has testified 1997, girl- In the and his then Respondent “2. October friend, Pelton, Allegiance formed Title Linda established and Title’). (hereinafter Escrow, Respon- The ‘Allegiance Ltd. & company. Ms. was the sole owner and President dent salary a but President. He did not receive Pelton was Vice any by company equally would share earned profits Pelton, business. operated Ms. who interests, dispute concerning respective portion shall be their in

kept separate by lawyer dispute is resolved.” until provides, pertinent part, as follows: 2. Rule 8.4 in lawyer professional for a to: “It is misconduct (b) adversely lawyer’s on the commit a criminal act that reflects lawyer respects; honesty, as a in other trustworthiness or fitness fraud, (c) involving dishonesty, misrepre- engage deceit or in conduct sentation; (d) engage prejudicial of in conduct that is to the administration justice” or conduct settlements any “3. did attend He did contribute to the company. operation on behalf Title deeds. He was Allegiance by reviewing signing on paid signatory a fee for each deed. He was also the bank accounts. in Allegiance Respondent opened

“4. When started an account and a commercial checking escrow Community Maryland name with the Bank company’s (hereinafter ‘Bank’). opened,

“5. At the time the escrow account was the Re- 22 of spondent provisions Chapter was unaware of the Maryland. Insurance Article of the Annotated Code of Sec- 22-103(b) companies pool tion all title insurance requires settlement, commingle monies received as the result of a if or other title work the title insurer believes the closing, will less than or the cost of deposit generate $50 22-103(c) administering requires account. Section commingled the interest the escrow accounts contained (b) paid by funds as indicated above be the Bank (MAHT), Housing help provide Affordable Trust 103(f) Maryland. housing throughout affordable Section 22— trust into a provides except money deposited for the money may MAHT or investment vehicle the client or benefi- deposit specified owner, cial or as the beneficial owner and title agreed insurer, or its Those accounts can be an interest agent. account. bearing In Chicago

“6. the fall of 1999 Title conducted audit Title, and notified the of the existence Allegiance *4 of the for all title insurance to main- requirement companies Trust) (Maryland Housing tain a MAHT Affordable account. Bank, employee The then met with an of the who Respondent Allegiance that Title should set a MAHT account suggested up and a account.’ ‘sweep records,

“7. of Title’s Bank Allegiance After review the to that should suggested Respondent deposit the the $150,000 account, into a MAHT funds less than these in or the cost than interest likely generate less $50.00 were to Md.Code pursuant account administering separate of 22-103(b)(c). $150,000 or Ann., great- of Deposits Title Ins. escrow existing into the company’s er were to be account. Alle- Ms. Pelton to structure Respondent

“8. instructed However, above. between deposits Title’s as described giance 2000, the Bank or December 1999 and December November on several occasions because there the MAHT account closed occasion, in such activity account. After each was no account. the Bank to reopen Title instructed Allegiance lack of use of the account [] attributed the The Ex- software. Allegiance Respondent’s Title’s difficulties (Letter 1, attorney, from Respondent’s No. Document hibit 2001). Alle- It not until 2000 that was December Jan. the MAHT account. giance began Title utilize original its escrow account. Allegiance “9. Title maintained $150,000 into this account. in excess were made Deposits in swept held that account were transferred Monies day into a interest banking separate at the end each Bank The company. account the name bearing established banking day, interest earned on the funds held following bearing account was transferred that checking principal Title’s The Allegiance commercial account. on was back to the escrow account balance transferred banking day following sweep as needed to meet next account. the use obligations original Through escrow Title earned interest on funds sweep Allegiance $6,625.10 1999 and its escrow account in the amount $19,984.79in 2000. MAHT Allegiance

“10. There is no Title’s [] evidence Allegiance was or that Title retained the swept ever “11. The admits that interest on account. given owners not and their consent the beneficial were notice prior Allegiance acquired depositing Title and the account. sweep into its escrow account *5 “12. During the relevant period, the main- Respondent tained separate general and escrow accounts for legal his practice. He his properly maintained escrow funds in an Ann., IOLTA account as required by Md.Code Bus. & Occ. § Prof. 10-301 et seq.

CONCLUSIONS OF LAW “The Commission does not that allege has improperly handled the trust account in legal used his prac- tice. The Commission has filed this disciplinary proceeding against Respondent, that alleging because he is an attor- ney, his title insurance cannot retain the benefit of the interest in ‘sweep earned accounts.’ The Petitioner maintains that if trust funds were not in MAHT these funds should have been dealt with as fiduciary funds as defined by the statute. The statute that required those beneficial owners must consent to deposit into an account which benefitted the Respondent and the consent in needed to be writing with conformity COMAR 31.16.03.05. The Complaint alleges that failure to with comply these statutes constitutes a viola- tion of his ethical obligations. They allege also retaining the interest the sweep account he is guilty theft, and fraudulent misappropriation by a fiduciary.

I. Rule 8.4—Misconduct

“Rule 8.4 of the Maryland Rules of Professional Conduct provides the following:

‘It is professional misconduct for a lawyer to: (b) commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer other respects;

(d) engage conduct that is prejudicial to the administra- justice.’ tion of the Petitioner alleged violation conjunction

“In statutes. two criminal violated that the asserts Article 27 Respondent violated alleges Petitioner misap- Fraudulent Maryland, of the Annotated Code *6 § Annotat- fiduciaries, 27 of the and Article propriation 132, Fraudulent § Article Theft. Maryland, ed Code fiduciaries, states: misappropriation committee, administrator, trus- executor, guardian, any ‘If willfully tee, any fraudulently shall fiduciary receiver or due and any purpose use appropriate thing trust, any or other any money of his lawful execution executor, may into his hands as such of value which come receiver, administrator, committee, trustee, or in guardian, a fraudulent fiduciary or secrete it with capacity, use or he shall appropriate purpose, intent to it to such embezzlement, upon and shall be guilty punished deemed not less in the by imprisonment penitentiary conviction years.’ nor year one more than five than “Article 27 342 states:

‘(a) Obtaining per- or unauthorized control.—A exerting or willfully theft he son commits offense of when or exerts obtains control which unauthorized knowingly owner, control which is unauthorized over property and:

(1) of the purpose depriving proper- Has the owner ty; or

(2) uses, conceals, or or Willfully knowingly abandons of the deprive such manner as to the owner property or property;

(3) Uses, conceals, knowing or abandons the property use, concealment, deprive or abandonment will probably the owner of property.

(b) commits Obtaining by deception. person control —A willfully knowingly the offense of theft when he or uses property to obtain and does obtain control over deception owner, and: (1) purpose Has the of depriving the owner of the proper- ty; or

(2) uses, conceals, or Willfully knowingly or abandons the in such property manner as to deprive the owner of the property;

(3) Uses, conceals, or abandons the property knowing use, concealment, such or abandonment will probably deprive the owner of the property.’ “In Maryland fraudulent misappropriation by fiduciary, commonly embezzlement, referred to as and theft are specific intent crimes. The Petitioner has the burden to demonstrate that the Respondent specifically intended to deprive owners of their property by retaining the interest on the principal generated in the escrow account and into Alle- swept giance Title’s operating account.

“The opened up the sweep and main- *7 tained the interest at the invitation of his bank. There is ample evidence and the Petitioner admits title insurance com- panies regularly maintain these accounts. The establishment of the account is insufficient evidence to prove the mens sweep rea of the Respondent. The Court does not find that it is illegal for a title company to maintain a sweep account. The Respondent had no information that would him lead to con- clude that it was wrong for his title insurance to retain the interest on the escrow account.

“Furthermore, is no there evidence to determine what prop- erty interest existed for beneficial owner. There is no evidence upon which the Court could find that any individual beneficial owner was deprived of interest to they which would be entitled. long So as the deposited trust funds were likely to generate less than in interest or the cost of adminis- $50.00 account, tering a separate the trust funds should have been into the MAHT and the interest provided to a charitable organization. situation, In this the beneficial owners had no right the interest on the escrowed funds. The Court finds that no fraudulent or misappropriation theft proven has been by clear and convincing evidence. misappropriation, or fraudulent finding a theft “Without Rule not violated 8.4 has Respondent finds that the this Court No evidence Rules of Professional Conduct. Maryland Petitioner’s substantiate the has submitted would been act, engaged a criminal committed claims that fraudulent, or dishonest, misrepresenta- conduct deceitful prove that the addition, the has failed tion. In Petitioner prejudicial in conduct that engaged has administration justice. property Safekeeping

II. Rule 1.15 — of Professional Conduct Maryland 1.15 of the Rules “Rule following: provides or

‘(a) persons third lawyer hold clients property A shall repre- a a connection with lawyer’s possession is in lawyer’s property. from own Funds separate sentation pursuant in a account maintained kept shall be proper- Rules. Other Chapter Title safeguarded. appropriately identified as such and ty shall be and of other prop- records of such account funds Complete preserved for a kept by lawyer shall be and shall erty the representation. of five after termination of period years (b) receiving or other which client Upon property funds interest, lawyer or shall person promptly third has an Except or as stated notify person. the client third by agreement or law or permitted Rule otherwise client, a client or lawyer shall deliver promptly that the client or person any property third or and, upon request third is entitled to receive person render a full account- person, promptly client third shall *8 property. such ing regarding

(c) in a is in representation lawyer the course of When lawyer both the and another possession property which interests, be person property kept separate claim the shall accounting an and severance of by lawyer the until there is concerning respec- If a arises their their interests. dispute interests, portion dispute kept tive shall lawyer is resolved.’ by dispute until “The Petitioner asserts Respondent that the has a fiduciary obligation safeguard as an agent and maintain the clients’ or third funds. party Commission asserts that retaining the interest earned from clients funds in Allegiance Title’s sweep has client misused the entrusted to him as a for his fiduciary gain. own personal The issue is whether it is a violation of the Professional Rules of an attorney Conduct for to benefit from the interest on escrowed his title if it insurance business is for legal the title an bearing insurance maintain escrow account. attorney/owner The second issue is whether the has a fiduciary obligation to the parties the real estate settle- ment. side was provide Neither able to to the Court clear authority dispositive the issue. The Petitioner primarily cited that dealt attorneys cases who real conduct estate part legal settlements as of their practice. The Respondent maintains is a case impression brought of first by the case, Commission and there is no statute or ethics opinion which would hold that his actions were improper.

“The on Respondent primarily relied an opinion issued a Bar Counsel Blue Inquiry Ribbon Panel on December 1991. The complaint questioned whether it was misconduct attorney, who owned title insurance company, deposit funds into escrow an interest bearing account instead of an IOLTA account. The title retained the interest on the funds. escrowed The Panel that no concluded attor- ney-client relationship attorney/owner existed between the parties real estate transaction. BC Docket No. 91- (1991). 52-14-5 Respondent’s They Exhibit No. 4. also found there ample legislative history to conclude that legislature many was aware that attorneys owned title compa- nies. By refusing bill, to enact IOTA which would have required that interest on companies’ title escrowed accounts be paid cause, to a charitable legislature did intend to impose requirements attorneys on IOLTA who owned title companies. insurance

“In the instant matter the a real is not estate attorney, nor does he conduct or closings settlements on

371 suggest is evidence Title. There no Allegiance behalf of to a real related funds deposited any ever that the associated with his into bank accounts transaction estate transactions with real estate Funds associated law practice. accounts. The Allegiance into Title’s only deposited were that of an was company with the title Respondent’s connection attorney, an required not to be As an he was owner. owner required which as an owner not duties perform and he did with the legal His involvement legal performance. skills for which he deeds solely reviewing title consisted business remunera- deed, any from per fee and was paid company profits received from may tion he have Grimble, 157 Ariz. In the Matter the owner. See (1988). P.2d 594 at though attorney that would even

“The Court finds funds his on the escrowed be entitled retain 1.15 by Rule law does not violate practice, under the laws of company, title insurance which owning a on an interest money to retain the earned is entitled escrow account. bearing Occupa- Maryland, Code of Business

III. Annotated § 10-306 Misuse of tions and Professions Article money trust Ann., § Prof. 10-306: ‘A to Md.Code Bus. Occ. &

“Pursuant money purpose trust for other than lawyer may not use the trust is entrusted purpose which Respon- held in the lawyer.’ alleges Petitioner pursu- trust money title escrow account are company’s dent’s Respon- that the alleges ant this The Complaint statute. his title insurance dent violates this statute because sweep from in its account. retains interest escrowed funds of the interest into sweeping concludes Petitioner constitutes misuse checking commercial Allegiance’s he to this money pursuant subsection because attorney. “This Court finds that Md.Code Ann. Bus. Occ. & Prof. inapplicable 10-306 is to the Respondent’s corporate title accounts, company’s escrow because such an account is not an account,’as Ann., ‘Attorney trust defined in Md.Code Bus. Occ. *10 10-301(b). matter, § & Prof. In the instant money no is being to the Respondent entrusted to hold for of the benefit a client or a given beneficial owner. Funds Allegiance were to Title as a result of or closing, settlement to title pay work. The is not a acting settlement on attorney behalf of of the any participants. He is the of owner the title insurance that is involved in the real estate transac- tions. There is no suggest evidence to that an attorney-client relationship exists between the Respondent parties and the the real estate transactions. Maryland, Annotated. Article,

IV. Code of Insurance Deposits money: of trust 22-103— “ ‘(a) (1) In section following words Definitions. — meanings have the indicated.

(2) “Beneficial owner” means person, other than the buy- transaction, er in a real estate for whose benefit a title agent insurer or its is entrusted to trust money. hold (3) money” “Trust a deposit, means or payment, money person to a entrusts title or agent insurer its buyer hold for the benefit of a in a real estate transaction owner, or for a in escrow, beneficial connection with an settlement, or closing, title indemnification.

(b) Pooling and trust commingling money authorized. —A title insurer or its agent pool shall commingle from money received clients or in beneficial owners connec- escrows, settlements, tion with or closings, title indemnifica- if, judgment tions in the of the title insurer or its agent, a of separate deposit the trust generate would interest in greater an amount not than the cost administer- $50 ing a separate account.

(c) Payment interest Housing Affordable Trust. —At least quarterly, financial institution in which a commingled account is maintained under this section shall less service on the earned pay institution, Maryland Afforda- financial to the of the charges availability affordable Trust enhance Housing ble 83B, in Article provided housing throughout State the Code. § 11-102 of mon- (d) institutions. —Trust specified Deposit financial (b) of this under commingled subsection to be

ey required transaction shall with a real estate connection section in accordance until disbursed and maintained the transaction: State; or

(1) in the in a institution located financial (2) Depart- Board subject approval Banking Labor, a financial Licensing, Regulation, ment with the require- that complies institution outside State ments this subtitle.

(e) title insurer legal No ethical or duties. —A violation of violate, charged by not be agent may or its does *11 of, or legal ethical duties any with violation Commissioner (b) of money under subsection trust in an account by placing to paid this section with the interest Afforda- (c) of this section. Trust under subsection Housing ble (f) for trust money Except deposits Other trust allowed. — agent a commin- money places that a title insurer or its (b) (c) section, of this under gled account subsections Commissioner, money trust subject regulations to agent may or its be possession in the the title insurer or any other investment vehicle: deposited deposit (1) owner; or specified by the client or beneficial (2) by on or owner and agreed as the client beneficial agent.’ title insurer or its. it is for a Title

“The Commission asserts that permissible to are not to be Company deposit required deposit- funds that separate provided a MAHT account into a ed in knowledge agree writing the beneficial owners have (f) allocation, CO- pursuant to subsection above and such (2003). Petitioner, Alle- According to the MAR 31.16.03.05 their retention of the earned from giance Title’s interest sweep account violates rules since these the beneficial owners allocation, did not knowledge have of the funds nor had they to Allegiance consented Title’s retention of the interest. The Court agrees with assertion.

“The provides statute two methods to handle funds. can money Trust be into deposited a MAHT account. All other of trust deposits may be other or deposit specified investment vehicle as client or beneficial or agreed owner on the client or the beneficial owner and the title insurer its agent. or COMAE 31.16.03.05 makes the requirement obtaining the consent of the parties to the absolutely settlement clear. The Respondent testified that he on the relied advice the Bank in setting up the MAHT and sweep produced accounts. He the materials given to him Bank by the as an attachment to proposed his findings of fact. on The Bank’s brochure MAHT account includes the following provision:

‘Q. MUST ALL INTEREST ON TRUST ACCOUNTS BE GIVEN TO MAHT?

A No. Individual trust accounts may put into some vehicle, (a) or deposit investment if they expected are (2) to earn than more in interest and earn interest $50 which will exceed the of opening cost bearing insurer, oumer and title if beneficial agent added) both approved attorney agree.’ (emphasis “The and Allegiance Title both had notice that the title required obtain the consent of the beneficial to deposit owner into a non MAHT fund. The Respondent did not dispute Allegiance Title did not give *12 any notice the the parties real estate transactions that the trust money placed would be in an interest bearing account, and that the interest earned would retained by be Allegiance Title.

“The Respondent argues that even if provisions the of this violated, statute have been enforcement for non-compli- ance Attorney should not come from Grievance Commis- sion. (2003), Pursuant to COMAR Maryland 31.16.03.08

375 a insurer or title on title may impose Insurance Commissioner sanction, form legal or other of agent penalty, insurance of the to with comply provisions for failure enforcement not as acting that he chapter. He asserts was account MAHT only and should establishing sweep attorney in an other owners discipline same standard held to the be title companies. (a) Ann., § 2-201 and COMAR to Ins.

“Pursuant Md.Code Commissioner has the 31.16.03.08, the Insurance Maryland for Title Allegiance authority discipline to How- the MAHT account statutes. non-compliance their ever, for these violations Respondent’s accountability solely not rest with the Commissioner. the law does may other activities attorney engage “An however, not, may He aban legal from his apart profession. marketplace enters the his ethics when he don professional Lurie, In re professional standing. his jeopardy without (1976). 98, The 95, 1126, Oregon 1129 113 546 P.2d Ariz. Heider, 1107, 134, 159, Re 341 P.2d in In 217 Or. Court held of respon no (1959), cleavage separation ‘. . . there is 1118 a lawyer. a man and as acts as business sibility petitioner’s for accept the benefits such intermin may employ He not without activity involving both the law and business gling for Courts have both.’ The assuming responsibility in the directly practice of laws involved held that violations In Attorney for action. grounds disciplinary of law bemay (2001) Clark, 169, 767 A.2d 865 v. 363 Md. Grievance Comm’n income taxes held that failure state pay [the Court] stated, ‘The lawyer, action. The Court disciplinary basis all, associated with the administration intimately after rightfully expected example law and should be set returns, willfully failing law. to file his tax By observing himself above the lawyer public placing appears Baldwin, v. law,’ 183, citing Attorney Grievance Comm’n at (1987). 407-08, 1291, A.2d Md. finds is in violation of Md. “The Court Ann.Code, § Art. 22-103. The Court notes no third Ins.

376 party real estate by Allegiance transaction handled Title has filed a based on the complaint give failure to notice deposit obtain consent to the of their the funds into account, or that bearing Allegiance Title received interest from the account. is no There evidence that the However, parties. intended defraud third aas licensed attorney, the responsible for complying with the requirements of the law both his legal practice separate business entities.”

II. A. This Court original jurisdiction attorney has over disci plinary proceedings. See Attorney Grievance Comm’n v. Harris, 510, 539, 457, (2002). 371 Md. 810 A.2d In 474-75 exercise of our we obligation, conduct independent review record, accepting judge’s findings of hearing fact they clearly unless are See erroneous. Grievance Attorney 97, 757, v. Garfield, 85, Comm’n 369 Md. 797 A.2d 763-64 (2002). review hearing We judge’s proposed conclusions of law novo. de See Attorney Grievance Comm’n v. 467, 493, (2002). McLaughlin, 1145, 372 Md. 813 A.2d 1160 Bar Counsel’s petition against respondent upon rests (2002 allegation that respondent violated Repl. Code 22-103(f) Vol., § Cum.Supp.) of the Insurance Article when title his retained company possession of the interest generated by funds in the title bank company’s which from originated his clients and were to be held in trust by the title until the funds could be distributed 22-103(f) § proper violated, beneficiaries. If was not then might whatever merit there have been Bar Counsel’s re maining allegations dissipates, respondent cannot found have the ethical rules violated for lawyers. See Attorney Grievance Comm’n v. Lichtenberg, 379 Md. (2004). Thus, A.2d 11 inquiry Court, of aswell the. thrust of both Bar respondent’s Counsel’s and arguments Court, before this centers on proper application and 22-103(f) Article of Insurance interpretation Maryland Code.

B. *14 103(f) reads as follows: Insurance Article Section 22— “(f) for money Except deposits Other trust allowed. — in a agent places or its that a title insurer money trust (c) (b) and of this subsections account under commingled Commissioner, section, subject regulations and insurer or its of the title possession or investment deposit other agent may deposited be vehicle: owner;

(1) or or beneficial client specified (2) owner or beneficial on the client agreed its title insurer or agent.” 22-103(a) the terms “beneficial definitions for provides

Section money”: owner” and “trust

“(a) section the words following In this (1) Definitions. — meanings indicated. have the

(2) than buyer a other person, ‘Beneficial owner’ means transaction, a title for whose insurer in a real estate benefit trust money. its is to hold agent or entrusted (3) or mon- money’ payment, a deposit, ‘Trust means to a title or its agent that a entrusts insurer ey person in a for of a real estate transaction buyer hold the benefit escrow, owner, an settle- for a beneficial in connection with ment, or title closing, indemnification.” a does not definition the term provide Section 22-103 “client.” 103(f), § satisfy in order to

Bar Counsel maintains that 22— consent of benefi- required to receive the respondent deposited from funds into cial owners to retain the trust account: of a [respondent agent that as] role settlement

“[T]he where the fiduciary on behalf of numerous beneficiaries into of funds that are possession settlement officer comes be distributed in accordance with the instructions of the lender.... It is Petitioner’s contention ... the short term possession of these ... is not to accrue to the benefit of one party over another and has historically properly been into a non-interest-bearing because do otherwise would exercise in control over the funds to the detriment of the owner.” beneficial Exceptions Petitioner’s Sanction, Recommendation of at 5 added). (emphasis Significantly, Bar Counsel’s contentions rest upon the fact owners, as defined by beneficial 22-103, § not did consent to respondent’s retention of interest. Although Bar Counsel “clients,” sometimes mentions the term in the Petition for Disciplinary Action he only does so in the context alleging violation of 22-103 because respondent did not receive the consent of owners, the beneficial respondent because failed to receive the consent of his client. Thus, Bar Counsel contends: *15 commingled

“[T]he funds represented by settlement pro- ceeds under common law and § Insurance Article 22-103 preserves the identity of the funds as belonging to the various principals to which a lender’s closing instructions refer.”

Petitioner’s Exceptions and Sanction, Recommendation of at 10. Bar Counsel identifies the “various principals” as the “beneficial owners” of the trust money: principal funds,

“The owner of the commingled by their very nature as settlement subject funds to the instruction of the distribution, lender for is the anticipated recipient of the fiduciary funds as set forth in the lender’s closing instruc- tions.

“[Such ownership] conforms with the statutory definition of ‘beneficial owners’ as set forth in § Insurance 22- Article 103(a)(2).” sum,

Id. at 12-13. In Bar alleges Counsel that in order to retain the interest generated by the transferred him consent client, obtain respondent required his consent obtaining If such of that fund. intended beneficiaries no was entitled then one is, argues, impossible, respondent as into interest, deposited have been the funds should to the and account. non-interest-bearing that his arguments support position presents Professional Conduct violate the Rules of nothing to he did of the 22-103 he did not violate and, specifically, the term First, argues that respondent Insurance Article. 22-103(a)(3) and ambiguous §in is money” as defined “trust title into the deposited include funds which are those may already has the settlement escrow account company’s after process settlement Respondent describes the occurred. follows: matter, happens what is settlement practical really

“As a 1pm arrive at but parties and 1pm scheduled into new NOT YET wired money from the lender is payoff worse, there is no wire company’s title has to company’s a check which title bank merely been already fact checks have spite of the process money. yet non-negotiated payoff on the as issued fails to is that none comprehend [Bar Counsel] What appreciable period in the for an trust monies are ever bank ALWAYS, always, time and are almost if not and the have been distributed properly after monies have fulfilled obligations trustee of the title been thereby rendering ‘trust’ terminat- fully discharged, moot.” ed *16 Findings of Fact and

Respondent’s Proposed Conclusions Law, II. at Part

C. as was presents presented This case the same issue Lichtenberg, Md. Grievance Commission v. Attorney (2004). at bar and Lichten- 842 A.2d The facts in the case are, berg in all Here, relevant aspects, similar.3 inas Lichten- berg, Bar Counsel essentially complains that respondent did get the consent of the “beneficial owners” before he retained the gravamen accounts. The of Bar Counsel’s complaint is that respondent failed to secure the consent of the beneficial owners as by statute, defined and not that he failed to secure the consent of client.

We decline to construe the statute for the same rea sons stated in Lichtenberg. For therein, the reasons stated we do not decide respondent whether violated the Insurance Article and therefore will dismiss Bar Counsel’s petition.

In 103(f) Lichtenberg, we emphasized that previously 22— had not been interpreted either this Court or the Insurance Administration and that this case had come to through us our supervisory capacity regulating practice of law and the ethical behavior of attorneys, not through judicial the usual channels of appellate review. We elected not to construe the Insurance Article without from input the agency who was not party to the ease and had declined Bar Counsel’s invitation clarify the issue. We noted that we discipline attorneys for violation of Rule 8.4 when it is clear that a law has been violated, even if conviction, there is no criminal but not when such a violation is unclear. That reasoning applies equally here.

Indeed, in some ways, this case accentuates complexity 22-103(f) of interpreting § more so than Lichtenberg— —even and the reasons for which it would be better to have the Insurance Administration decide the propriety respondent’s or, minimum, actions at be involved in litigation 3. There is one factual difference between the instant case and Lichten- berg. Lichtenberg, hearing In court found that the title client, had obtained the company’s consent of the title though not of the beneficial owners. The record in the instant case does not reflect that Counsel, Davis secured the consent of his client. To Bar this is a distinction without a difference position because it is Bar Counsel’s requires holders, the statute the consent of the beneficial interest and it undisputed in the instant case that the beneficial owners did not consent. *17 it of the statute administers. proper interpretation the decides it was instance, argument, and we told at oral were For common- Counsel, that it is the general, Bar undisputed by compa- to title sweep to offer accounts place banks practice gener- nies; large portion that banks receive of the their performance for overnight compensation ated in the only aggregate of the portion sweep; swept the title are company from all of account the clients identify is impossible it therefore night; each and that generated portion. Significantly, at what interest was whose 103(f) when, for certain that applies it not even is 22— a check from the client a title receives example, necessary out of own funds the amount pays its simply check has client’s the real estate transaction settle before monies, it unclear disbursing After is been cashed. with fiduciary longer client duty to the exists whether monies into the company’s to the title respect Indeed, it is sometime after the settlement finished. in the also unclear whether the monies disbursed are ever is disbursement, at appreciable period prior account for an discharged. obligations arguably are point fiduciary which case, is not nor do we point argue respondent’s Our we are this We persuaded by argument. intimate that line § 22- merely complexity interpreting wish illustrate the 103(f). we pro- This case differs from those cases in which with actions in the of a criminal disciplinary ceeded absence where, lawyer failed to file example, conviction has prose- income taxes. There the violation is but the pay clear Here, only vague is uninitiated. is the cution violation unsubstantiated, regu- and the presence but the advice authority, agency charged protecting public, lating In absent from of these strikingly any part proceedings. is from Lichtenberg this case no different and will respect, is dismissed. overruled, being there no Bar Counsel’s are exceptions Conduct, petition violation of the Rules of Professional hereby dismissed.

PETITION FOR DISCIPLINARY ACTION DISMISSED. COSTS TO BE PAID BY THE ATTORNEY GRIEVANCE COMMISSION OF MARYLAND. WILNER,

Dissenting Opinion by Judge, in which *18 HARRELL, joins. Judge,

At the direction of Attorney Commission, Grievance Bar Davis, Counsel filed a petition against respondent, Gary charg- (d) him ing having 8.4(b), (c), of violated Rules 1.15 and and of Maryland Rules of Professional Conduct. alleged The violations arose from Davis, the manner in which in his capacity president as owner and of a title insurance company, handled certain funds to entrusted in the course of real estate settlements. In particular, Bar alleged Counsel Davis, his through company, had retained interest earned Code, on trust in Maryland § violation of 10-306 of the (BOP) Business Occupations and Professions Article and § of 22-103 the Insurance Article. holds, that,

The Court and I agree, because the funds in question were not received in by Davis his a capacity as lawyer, BOP, § there was no violation of 10-306 or Rule 1.15. Court, I part company however, with the in its decision to avoid construing, of, and thus a finding § violation 22-103 the Insurance Article—a violation that is clear beyond cavil— and, violation, 8.4(d) by reason of that a violation of Rule well.

Title insurance companies subject are statutory both and regulation. Article, administrative §§ See Insurance 11—401— 11-409, providing for the regulation of rates policies and and requiring that certain information be disclosed to the Insur- Commissioner, 22-102, § ance and requiring the sending certain in notices connection with real estate settlements. Section 22-103 requirements contains prohibitions with respect money in received money person that “a trust — entrusts to a title or agent insurer its to hold for the benefit of a in a buyer real estate owner, transaction or for a beneficial escrow, settlement, connection with an or closing, title 22-103(b) 22-103(a)(3). requires § Section indemnification.” trust commingle agents pool title and their insurers in connection from or beneficial owners received clients money if, escrows, settlements, or title closings, indemnifications deposit a agent, separate or judgment insurer in an amount money generate the trust would not administering or than the cost greater $50 from such 22-103(c), § interest earned account. Under funds, paid must be any charges, service commingled less Those Trust. Maryland Housing to the Affordable quarterly of the IOLTA equivalent are the for title insurers provisions BOP, See lawyers’ trust accounts. arrangement applicable 16-608. 10-303 and Rule 103(f)—the pro- most provision applicable Section 22— here — (b) that, money required by trust subsections except vides (c) commingled, possession be agent deposit title “may insurer *19 (1) by or vehicle: the client or beneficial specified investment (2) owner; agreed the client or owner by on beneficial and insurer or the situation agent.” the title its Unlike 335, v. 379 Md. Attorney Lichtenberg, Grievance Commission (2003), case, this there A.2d which we consolidated with that, whatever by acquiescing “sweeping” no doubt the 22-103(f). bank, by Davis violated suggested scheme his (and and of a title president agent) As owner thus as insurer, deposited he trust funds received for the benefit of commingled permit- clients other than (b) (c), ted that had neither by specified subsections and been nor the owner agreed by any possible client or beneficial funds, the arrange- of and intended effect of that the clear that, of ment was the consent his clients or without funds, of his retained all beneficial owners the trust of is no the net interest earned on those accounts. There upon basis which he was entitled divert conceivable to his on trust funds received for the benefit of clients Indeed, of “sweeping” own use or that his as the company. us, was described to it that more than the appears scheme diversion interest was involved: each night, principal balances in the accounts—the actual trust funds—were auto- thus, matically diverted his own use and at for least night, misappropriated. record, in

The this case establishes that misappropria- tion was with the actual intent of depriving clients interest earned on trust funds for their direct or benefit, and, indirect even if that conduct was product negligence, unlawful, of Davis unaware that it being it is, indeed, nonetheless unlawful. a lawyer, When even when acting capacity, another takes not belong does that, law, take, to him and under the he has no right he commits prejudicial justice, conduct the administration of 8.4(d). and thus violates Rule

The far as I can for Court—as tell the first time in its history to ignore chosen both a clear violation of the —has Rules of Professional Conduct and the Court’s ultimate re- rules, sponsibility enforcing those deliberately refusing to address statutory basis for those violations. Court,

The Court admits that “the inquiry as well as the thrust of both Bar respondent’s Counsel’s and arguments Court, before this centers on proper application 22-103(f) §of interpretation the Insurance Article of the Code,” but then declines to construe the on statute the ground necessary that the issue should not be addressed unless the Insurance party litigation, Commissioner is a to the which effectively means it can never be addressed in an attorney disciplinary proceeding. Such a deferral is unprece- dented, extraordinary, wholly inappropriate. Waldron, 683,

In Attorney General v. 289 Md. 426 A.2d *20 929, (1981), held, 934 explicitly,, we regulation “the of the law, of practice bar, the admittance of new members to the the discipline attorneys and who fail to conform to the established standards governing professional their conduct are essentially judicial and, in accordingly, nature are encom- passed judicial the constitutional grant authority to the Quoting courts of this State.” from Pub. Serv. Comm’n v.

385 Inc., 583, 845, 571, 253 A.2d 852 253 Md. Transp., Hahn system constitutional (1969), added that our “[u]nder we of what constitutes the determination powers, separation and of its practice and the of the regulation of law practice be, is, essentially and and should practitioners appropriately Attorney judicial government.” branch of function Waldron, 692, at 289 Md. at 426 A.2d 935. Over v. General attorney grievance again, nearly every and over and over case, that, in emphasized special proceedings, we have these “original complete jurisdiction.” Attorney this has Court Smith, 202, 229, 567, Md. 829 A.2d 583 v. 376 Grievance 85, 97, (2003); v. 369 Md. 797 Attorney Garfield, Grievance 757, (2002); Attorney Snyder, A.2d 763 v. 368 Md. Grievance 242, 515, (2002); 253, 793 A.2d 521 Griev. Comm. v. Attorney Garland, 383, 392, 465, (1997); Attorney 692 A.2d Md. Kent, 361, 371, v. 337 Md. 653 A.2d Griev. Comm’n added). (1995) (Emphasis case, jurisdiction, implemented

That this cannot be with- 22-103(f), construing yet out the Court declines to statute, address the either to allow the Insurance preferring until Commissioner to deal with the issue or wait a case arises in which the is a Such a deferral party. Commissioner jurisdic- appears applying primary me be the doctrine tion, else, as and it is flat-out inconsistent disguised something Constitutionally-based with the notion that this Court has a “original jurisdiction attorney over complete” discipline If, held, jurisdiction “complete,” matters. as we have our is it cannot regarded any agency. shared with administrative clear, As in which Waldron makes an area is even Legislature competent jurisdiction to allocate between the courts and is not a situation in agencies. executive This which a court and an administrative have agency concurrent jurisdiction over the same matter. This is not a situation which Bar Counsel could have relief from obtained could, if Insurance Commissioner. The Commissioner he so, against chose to do take some action the title insurance law, agent, violating Davis as its the insurance company, but he would be powerless determine whether Davis had

386 Conduct, much to do violated a Rule of Professional less anything about such a violation.1 nothing

The effect of the Court’s deferral this case is less already of what we have held impermissible delegation than no agency to function to an executive that has judicial be “original in the matter.2 The exercise of our authority time, us to jurisdiction may, require from time complete” has agency construe a statute over which an administrative to do so. jurisdiction, entirely competent and we are See Eisenstein, 464, v. 333 Md. 635 A.2d Attorney Griev. Comm’n (1994) in excess of (disciplining attorney taking fees and Harbor Longshore those allowed under Workers’ Com Act). pensation particularly pointless

1. Deferral to the Insurance Commissioner is where, Majority acknowledges, this case as the the Insurance Adminis- clarify” Bar Counsel’s invitation to the Administra- tration "declined 103(f) interpretation presented. tion’s of Section under the facts 22— responsibility regulation Why its for the should the Court shirk attorney agency conduct in order to defer to an executive branch that weighing subject? apparently or no interest in in on a related has little here, Having opportunity express expert opinion one declined the its logically agency nothing that the has to add and instead could infer interpreting legislative to the Court’s traditional role in enact- defers ments. questionable has 2. It is whether Insurance Commissioner even jurisdiction ordinary primary over civil claims that arise from an 22-103, certainly alleged primary but he cannot have violation jurisdiction attorney grievance over an matter based on that statute. I that, not at all if one of Davis’s clients had filed a civil action in am sure by accrued on him court to recover interest that funds held in trust for Davis, we would have insisted that the client turn first to the Insurance Liberty Life, Zappone supra, v. Commissioner for relief. See Md. Although general authority 706 A.2d 1060. the Commissioner has hearings, discipline companies agents subject jurisdic- hold to his tion, provide persons certain forms of relief to who suffer loss persons Insurance Code entities or because violations subject regulation, procedure there is no administrative attached 22-103, specifically nothing §to and there is in that statute that Legislature evidences an intent that claims under statute submitted first to the Insurance Commissioner. The statute is not an scheme, part regulatory interconnected of an overall for which some regulating expertise exists. It is a administrative stand-alone statute accounts, appear any special and it does not to me that adminis- required interpreting expertise trative it. that, I Davis agent, would find as a title insurance violated and, so, also, as a violated Rule by doing lawyer, the statute 8.4(d). I finding, question would then address the Upon or, indeed, record, sanction to on this impose what whether impose any sanction. *22 joins HARRELL has to state that he

Judge authorized me dissenting opinion. BELL, Dissenting Opinion by Judge. Chief For the reasons dissenting opinion enunciated Wilner, I Judge respectfully Judge dissent. Unlike Wilner Harrell, however, I Judge believe that the determination Davis, culpability Gary respondent, respect must, should, charged to all of the violations await this (1996, Court’s construction of Maryland Replace- Code Volume) § ment 22-103 of the Insurance Article.

842 A.2d42 ATTORNEY GRIEVANCE OF MARYLAND COMMISSION

v. John B. STOLARZ. 96, Sept. Term, Misc. AG No. 2002. Appeals Maryland.

Court Feb. 2004.