Thursday, June 13, 2024

Do It!

The Arkansas Supreme Court affirmed a contempt imposed on an attorney

On July 8, 2022, Benton County District Judge Chris Griffin, who sat in the capacity of a circuit judge pursuant to Administrative Order No. 18, presided over Arkansas Rule of Criminal Procedure 8.1 hearings involving felony first appearances in a Benton County jail courtroom. Comstock, a lawyer, arrived to observe the Rule 8.1 hearings. A glass window separated the courtroom area from the public-viewing area. According to Comstock’s pleading, he was sitting “behind [the] glass window where he could see—but could not hear—the proceedings.” Comstock stated that the sound system for the public-viewing area was either malfunctioning or was not turned on, so he could not hear the proceedings. Comstock admitted that he “attempted to make Judge Griffin aware of the violation of the constitutional guarantees of open court proceedings at a level of voice calibrated to get the judge’s attention.” Judge Griffin advised Comstock that he “had no control over the sound system” and that he “should take it up with the Sheriff’s office.”

During a break in the Rule 8.1 proceedings, Judge Griffin asked Comstock to come inside the courtroom. They engaged in a conversation about whether Comstock had a right to hear the proceedings. Specifically, Judge Griffin submitted a statement recounting the following:

When Mr. Comstock was brought into the courtroom[,] I said to him[,] “Jon, this isn’t the Jon Comstock show, it’s bond hearings and if you can’t act appropriately, you can leave. [Comstock] then said angrily, “What does that mean?” I explained that I don’t control the jail[’]s IT department and, as I began to explain his behavior and the issues I listed above, he became louder and louder as he explained how “rights were being violated,” and how he had a “right to participate.” He continued to loudly speak “over” me while this occurred. I tried to explain again that he was not there to “participate” as he didn’t have any clients but he, quite loudly, cut me off and said “you invited me here!” I told him sternly that I did not invite him there, that it was open to the public but only for observation. I then began to start my explanation of the above items again but he again interrupted me speaking loudly. I raised my voice and told him it was “time to go.” I believe I motioned to the door. He refused to leave. He continued to speak over me and I said “leave now.” He refused to leave. I then explained that this was a court proceeding and I would hold him in contempt and it would be in a Circuit Capacity (due to Supreme Court Orders. A.O. 4 and A.O. 18(6)(c)) and he’d be stuck there. He then motioned towards me, shook his hands, and even more loudly exclaimed “Do it!”

I then held him in Direct Contempt and sentenced him to 5 days in Benton County Jail. The Deputies took custody of him and, although he initially resisted the deputies, he ultimately cooperated and was taken into custody. [That day,] I later filed the Contempt Order and suspended 4 ½ days of the 5 days he was sentenced to initially. He ultimately served 12 hours in the Benton County Jail.

The attorney appelaed the contempt

Here, Comstock’s recitation of the facts in his motion, the statements from Judge Griffin, and the narratives of the two court deputies provide substantial evidence to support the circuit court’s direct criminal-contempt finding. Comstock committed in the presence of the circuit court the egregious conduct of disrupting the Rule 8.1 proceedings, interrupting Judge Griffin, repeatedly refusing to leave when asked, and yelling “DO IT!” when told that he could be held in contempt. Under its inherent power to punish Comstock for his contemptuous behavior, the circuit court clearly found Comstock guilty of direct criminal contempt and immediately sentenced him.

...viewing this record in the light most favorable to the circuit court’s decision, we hold that substantial evidence supports the circuit court’s order finding Comstock in direct criminal contempt. Because we affirm the circuit court’s finding, we decline to reach Comstock’s recusal argument.

CODY HILAND, Justice, concurring in part and dissenting in part.

Based on Judge Griffin’s written order, this court cannot determine what “direct orders were given” or how Comstock “willfully refused to comply.” We, likewise, cannot assess whether Comstock’s actions interfered with the court’s business or determine the ways in which Comstock disobeyed the court’s orders. While it is true that a much more detailed statement from Judge Griffin is attached to a pleading submitted by the State, it is not an affidavit, and the statement is not sworn or verified. The same can be said regarding the hearsay statements submitted by both Deputy Deppner and Deputy Wilke––statements given by witnesses whom Comstock had no opportunity to confront or cross-examine. In his brief, Comstock states that he “disputes a substantial portion of Judge Griffin’s rendition” of the facts. This court is not a fact-finder. Because Comstock’s recitation of the relevant events is not presently before us, ending the analysis here without affording Comstock the opportunity to create a record effectively deprives him of due process and his right to appeal.

Arkansas Times reported on the incident

Comstock, a former circuit judge and twice an unsuccessful Democratic candidate for the legislature, has been active in the Arkansas Justice Reform Coalition. He’s joined in its criticism of a proposed Benton County jail expansion and the absence of public defenders for people appearing in district court for bond hearings.

According to accounts of others, Griffin found Comstock in contempt of court for repeatedly objecting to being seated behind glass where he couldn’t hear the bond proceedings, though he’d given advance notice he planned to attend. Griffin sentenced him to five days in jail, with all about 12 hours suspended. He was to be released about 7:30 p.m. today.

(Mike Frisch)

June 13, 2024 in Bar Discipline & Process | Permalink | Comments (0)

A Choice

The Oregon Supreme Court reversed a criminal conviction and remanded for a new trial over the defendant's right to be represented by retained counsel

The record in this case reveals that: (1) defendant retained attorneys Mackeson and Hall to represent him after he was indicted on criminal charges; (2) on the first scheduled trial date, the court granted defense counsel’s request to postpone the trial so that they could investigate photographs that had been anonymously delivered to Hall’s office; (3) on the next scheduled trial date, the trial court granted defense counsel’s request to withdraw due to an ethical conflict that would likely arise from the prosecutor’s plan to cross-examine defendant about those photographs; (4) nine days later, at the next court appearance, the same attorneys appeared and asked to be allowed to represent defendant; and (5) the trial court noted that the ethical conflict “may or may not have resolved itself,” but it denied defendant’s request due to its “concerns” about the ethical obligations that had been previously raised.
 
Although that record shows that the trial court gen-erally understood that defendant’s right to be represented by retained counsel of his choice could be qualified by ethical or efficiency concerns, it does not demonstrate that the trial court weighed the relevant considerations and acted within the permissible range of its discretion in denying defendant’s request to be represented by Mackeson and Hall. This record does not reveal whether there was a sufficient risk that allowing that representation would unduly delay or disrupt the trial, or whether Mackeson and Hall’s representation of defendant at trial would have violated any ethical or professional standards of conduct.
 
Record insufficient
 
Contrary to the state’s assertion, characterizing the ethical conflict that led Mackeson and Hall to withdraw in the first place as “significant” is not enough to support the trial court’s exercise of discretion, especially considering the court’s acknowledgment that the original conflict “may or may not” have been resolved. Instead, to show that its decision was a permissible exercise of discretion, the court itself needed to explain the nature of its concerns, why it determined that those concerns were justifiable under the circumstances, and why it determined that they might unduly delay or disrupt the trial. Making an adequate record does not mean that trial courts must invade the attorney-client privilege or pressure a defendant to waive that privilege, and it may require the court to address the defendant or defense counsel on the record but outside the presence of the prosecutor, and to seal the record to preserve confidentiality.The record in this case does not demonstrate that the trial court’s denial of defendant’s constitutional right to be represented by the attorneys he retained to represent him at trial was a permissible exercise of its discretion. Accordingly, as in Stanton and Hightower, the appropriate result is to reverse and remand for a new trial.
 
(Mike Frisch)

June 13, 2024 | Permalink | Comments (0)

Not A Federal Case

The United States Court of Appeals for the Second Circuit returned a legal malpractice  case that had been removed to federal court to the state court

Link Motion Inc. (“LKM”), a Chinese company incorporated in the Cayman Islands, brought this legal malpractice action against the law firm of DLA Piper LLP (US) and one of its attorneys (hereafter referred to collectively as “DLA Piper”) in the New York State Supreme Court for New York County. After DLA Piper removed the case to the United States District Court for the Southern District of New York (Victor Marrero, Judge), that court entered a judgment of dismissal on May 26, 2023, finding LKM’s action to have been untimely filed. On this appeal, LKM challenges both that timeliness determination and the district court’s earlier denial of LKM’s motion to remand the case to state court. For reasons explained in this opinion, we conclude that the case must be returned to state court for lack of federal jurisdiction over LKM’s state law claim. The federal law standing question that the district court identified as embedded in LKM’s malpractice claim does not fall within the narrow category of “disputed and substantial” questions of federal law permitting the exercise of federal jurisdiction over a state law claim. Gunn v. Minton, 568 U.S. 251, 258 (2013); see Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 316 (2005). Accordingly, we vacate the judgment of dismissal without considering the question of timeliness, and we remand the case to the district court with instructions that it return LKM’s malpractice action to the New York Supreme Court.

Facts

In July 2018, LKM engaged DLA Piper for “corporate advice,” both generally and specifically in connection with a stock offering. LKM Compl. ¶ 12, J. App’x 22. Later that year, Wayne Baliga, a holder of LKM’s American Depositary Receipts (“ADRs”), sued LKM; its chairman, Vincent Shi; and other executives and directors by filing what was styled as a “Verified Shareholder Derivative Complaint” in the United States District Court for the Southern District of New York. See Compl., Baliga v. Link Motion Inc., No. 1:18-cv-11642 (S.D.N.Y. Dec. 13, 2018), Dkt. 1 [hereafter “Baliga Compl.” and “Baliga Dkt.”].  In that action—also assigned to Judge Marrero—Baliga asserted common law claims for breach of fiduciary duty and unjust enrichment, and federal securities law claims. Id. ¶¶ 36–54. LKM’s present malpractice action arises out of DLA Piper’s purported negligent representation of LKM in the Baliga action. 

The underlying representation

On March 1, 2019, DLA Piper sought leave to withdraw from the Baliga action, citing LKM’s failure both to pay the firm’s overdue legal fees and “to cooperate in the [firm’s] representation by failing to respond to [counsel’s] inquiries.” Letter at 3, Baliga Dkt. 28. The district court granted the request the same day.

Federal jurisdiction

The question of federal jurisdiction here depends on whether the asserted claim “aris[es] under the Constitution, laws, or treaties of the United States.” Id. § 1331.7 A claim most directly “arises under federal law when federal law creates the cause of action asserted.” Gunn v. Minton, 568 U.S. at 257. Nevertheless, the Supreme Court has identified a “‘special and small’ category of actual state claims that present significant, disputed issues of federal law.” NASDAQ OMX Grp., Inc. v. UBS Sec., LLC, 770 F.3d 1010, 1019 (2d Cir. 2014) (quoting Gunn v. Minton, 568 U.S. at 258). For a state law claim to fall within this “slim category,” the embedded federal issue must be “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn v. Minton, 568 U.S. at 258; see Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. at 314. While the first two factors here support the exercise of federal jurisdiction, the third and fourth do not.

Left to the state

In sum, DLA Piper has not adduced the “something more” required by Gunn v. Minton to view the federal law standing issue in LKM’s state malpractice claim as anything other than backward-looking and hypothetical. 568 U.S. at 264. The claim looks backward to ask whether the district court would have denied Baliga’s motions for a TRO, preliminary injunction, and appointment of a receiver if, hypothetically, DLA Piper had timely challenged Baliga’s standing under federal securities law. Thus, because the federal issue raised by LKM’s state malpractice claim “is not substantial in the relevant sense,” id. at 260, the district court was without jurisdiction to hear the claim.

(Mike Frisch)

June 13, 2024 | Permalink | Comments (0)

Burned In Memory

A British Columbia Law Society Hearing Panel found that an attorney had engaged unwelcome sexual conduct with a client

The Complainant testified that in late 2022 she read a news article reporting on the Respondent and his inappropriate conduct toward another woman, and it was this article that prompted her to come forward, initially to the reporter who had written the article, about her experience with the Respondent. The Complainant said that the reporter referred her to the Law Society.

The Complainant also testified that since events occurred six years earlier, there were some things she could not remember and other things that were “burned” in her memory. 

June 2016 office visit

The Complainant recalled attending the Respondent’s office for the first time by herself, and that when she arrived at his office there was no one sitting at the reception desk. The Complainant testified that a man she later identified as the Respondent came up behind her and put his arms around her upper chest and pressed her body against the front of his body. The Complainant said at that point the Complainant “froze” with fear. After a period described by the Complainant as approximately one minute, she said the Respondent chuckled, released her and asked her to come into his office.

The Complainant said that the Respondent was wearing a suit but looked “disheveled”, and despite the fact she was nervous about being alone with him she followed him to his office where he collected information related to the Family Law Services.

The Complainant said that as she sat in a chair opposite the Respondent in his office, the Respondent started rubbing his socked foot against her feet and leg under the Respondent’s desk. The Complainant said that she could not remember what the interview was about or what information she provided to the Respondent, but she did remember being “petrified”.  

As an exception to her statement that she could not recall what she discussed with the Respondent during the June 2016 Office Visit, the Complainant said that the Respondent asked her if she planned on having any more children, and after she responded in the negative, the Respondent said how lucky he would be if she was the mother of his children. This struck the Complainant as unusual, as framed photographs of what the Complainant assumed were the Respondent’s wife and children were sitting on the Respondent’s desk.

At the end of the visit

The Complainant testified that after the interview was over, and as she was leaving the Respondent’s office the Respondent leaned into her as if he was going to give her a kiss or hug. The Complainant said she panicked and turned her head away and ran down the staircase out of the building. According to the Complainant, after she got into her car she sat and cried for a few minutes before going home, and that she also cried sitting in her car in the driveway of her home.

October 2016 court appearence

According to the Complainant, during the October 2016 Court Appearance the Respondent looked “very disheveled”, “smelled bad”, and appeared to be drunk. She recounted that at one point when they were all sitting on a bench outside the courtroom, the Respondent put his hand on her thigh, her arm, and back. The Complainant said that at that time, she was sitting in between the Respondent and TW.

TW's evidence

TW said that at some point she, the Complainant and the Respondent were sitting together on a bench, when TW observed the Respondent putting his hand on the Complainant’s upper thigh. TW also said she observed the Complainant become noticeably uncomfortable when this happened.

TW said that after observing the Respondent touching the Complainant, she felt bad because she felt she had not been a good friend to the Complainant because TW had assumed that the Complainant had been exaggerating when the Complainant had previously informed her the Respondent had touched her inappropriately. TW said she apologized to the Complainant for not taking her seriously before.

Respondent

The Respondent gave limited evidence and did not provide any evidence about the June 2016 Office Visit or the October 2016 Court Appearance, nor did he address the Complainant’s evidence or TW’s evidence about those events.

Finding

 Having found that all three parts of the Janzen test for sexual harassment are satisfied on the evidence, the Panel finds that the Respondent sexually harassed the Complainant, contrary to rule 6.3-3 of the BC Code.

The Respondent’s actions were sexual in nature, unwelcome and resulted in adverse consequences to the Complainant. The Panel finds that the Respondent’s actions constitute sexual harassment contrary to the BC Code.

June 13, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Failure To Supervise

The District of Columbia Court of Appeals approved a petition for negotiated discipline

In this disciplinary matter, the Hearing Committee recommends approval of a petition for negotiated attorney discipline. See D.C. Bar R. XI, § 12.1(c). Respondent John P. Mahoney voluntarily acknowledged that in six client matters he failed to both take reasonable steps to ensure that two subordinate attorneys complied with their ethical duties to clients and take reasonable remedial action to avoid or mitigate the consequences of the subordinates’ conduct of which he knew or reasonably should have known; in four of the six matters, respondent personally failed to respond to reasonable requests for information from the clients (and one of those matters involved a proceeding pending before a Maryland tribunal); and in three of the six matters, respondent personally failed to protect the clients’ interests as the representation was ending. As a result, respondent admits that he violated D.C. R. Pro. Conduct 1.4(a), 1.16(d), 5.1(b), and 5.1(c)(2), and Md. R. 19-301.4(a)(3). The proposed discipline consists of a sixty-day suspension, stayed as to all but thirty days, followed by one year of probation with conditions.

(Mike Frisch)

June 13, 2024 in Bar Discipline & Process | Permalink | Comments (0)

No Protection

The Oklahoma Supreme Court reversed an order of protection brought against a "pastor" who engaged in anti-gay posts and activities

Penkoski is a public figure who holds himself out as a pastor, activist, and street preacher. Petitioners are also public figures; Morgan Lawrence-Hayes is President of Oklahomans for Equality and Sheena Hayes is Vice President of Oklahomans for Equality. Hayes is also the outreach committee chair for Petitioners' church, Disciples Christian.

On September 9, 2022, Penkoski created a post on Facebook. See Pet'rs' Ex. 2. The post said: "This is NOT a church!! This is a satanic recruitment center to groom and indoctrinate children while they pervert the Word of God[.]" Id. The post also contained two photographs, the first was a collaboration of photos of individuals with the overlying text "DISCIPLES CHRISTIAN CHURCH" in bold and below that in italics the text "Happy Pride Month[.]" Id. The photograph cuts off halfway through the second line of text. The second photograph depicts a group of adults and children holding what appears to be photos or pieces of art. No text indicated the identity of the individuals in either photo. Petitioners testified that they and their minor child were pictured in both of the photos. Tr. of Procs. 35:6--22, Feb. 15, 2023. The photographs were available on the church's public page. Tr. of Procs. 57:14--16, 72:25--73:3.

The next day, on September 10, 2022, Penkoski attended the Bartlesville Pride Event in Bartlesville, Oklahoma. Penkoski allegedly stood on the street corner and yelled into a bullhorn for several hours, shouting slurs across the street toward the children's bouncy house. Penkoski testified that he stayed where the police asked the protesters to assemble during the Pride Event. Penkoski had no direct interaction with Petitioners and Penkoski did not mention Petitioners' names or Petitioners' church by name.

On November 7, 2022, both Petitioners and Penkoski chose to attend and speak at the Bartlesville City Council meeting. At the meeting, Penkoski did not speak directly to the Petitioners, mention them by name, or have any direct interaction with them. No videos or photos of the city council meeting were submitted into evidence.

On November 11, 2022, Penkoski again posted on Facebook. See Pet'rs' Ex. 4. This post consisted of the text "Liar, liar, pants on fire!!" and a video. Id. The thumbnail of the video in the post showed a woman standing at a lectern with a microphone. The woman had dark colored, long hair which covered most of her face making her virtually unrecognizable in the photo. No text in the post identified the woman in the video. Petitioners testified that the video showed Lawrence-Hayes speaking at the City Council meeting but did not submit a copy of the posted video into evidence. See Tr. of Procs. 16:14--16.

On November 12, 2022, Penkoski again posted on Facebook. See Pet'rs' Ex. 5. This post had the text "Oklahomans for Eqaulity [sic] in Bartlesville OK caught lying about sexualizing children... See more" and a video. Id. The thumbnail of the video in the post was almost identical to the previous one, showing a woman standing at a lectern with a microphone, with her long, dark hair covering most of her face making her virtually unrecognizable from the photo. No text in the post identified the woman in the video other than that they were associated with Oklahomans for Equality. Petitioners testified that it was also an image of Lawrence-Hayes. 

Court majority

The definition of stalking requires "willful, malicious, and repeated following or harassment of a person." Section 60.1(10), both prior to November 1, 2022, and as amended effective November 1, 2022, gives a list of examples of uninvited contact or course of conduct which would be considered stalking. Every example concerns contact or conduct toward an "individual." Penkoski's actions were not directed toward an individual person, but rather were public Facebook posts that named two organizations, not individuals. Penkoski spoke neither of Petitioners' names at the parade or the city council meeting. Penkoski did not send electronic communications to Petitioners, or contact them directly by any means, including directing a message, comment, or other content toward them. Penkoski did not photograph, videotape, or otherwise record Petitioners' activities. Penkoski created Facebook posts that included photos or videos he obtained from other sources which, while they depicted one or both of Petitioners, did not name either Petitioner or direct his message toward either Petitioner. The district court's decision was clearly against the evidence, and based on the court's mistaken finding that Penkoski "made specific references to [Petitioners] personally and their family personally" and that he targeted his posts to specific people and "called them out by name." The district court abused its discretion when it found that Penkoski directed his posts or comments toward the Petitioners.

We need not address all of Penkoski's or Petitioners' arguments, including Penkoski's First Amendment arguments, because regardless of protected speech status, the district court abused its discretion in issuing the order of protection.

Gurich, J., concurring in part and dissenting in part:

The majority correctly points out that Penkoski's conduct, as a matter of law, did not constitute harassment. However, the record in this case contained sufficient evidence to support the decision of the trial court finding Richard Penkoski engaged in behavior which met the statutory definition of "stalking," as codified in the Protection from Domestic Abuse Act, 22 O.S. 2022, § 60.1(9).

Although some of Penkoski's commentary appeared to be directed toward Oklahomans for Equality, in truth, his oppressive and intimidating conduct was directed toward Morgan Lawrence-Hayes and Sheena Hayes (Appellees) as individuals. It is important to note that the trial court only considered issuing a protective order to the Appellees as individuals; the judge did not consider an order on behalf of the organization or community at-large. Judge Thomas specifically explained, "I only have the jurisdiction at this point to deal with whatever individual harm you might be referring to." As such, I respectfully dissent from that portion of the majority opinion which concludes the evidence did not establish stalking of the Appellees in their individual capacities.

Evidence of stalking

Penkoski's social media posts and intimidation tactics were not isolated incidents; rather they were an ongoing "course of conduct" designed to intimidate/harass Appellees and potentially incite violence toward the couple. He even testified that the Appellees, as parties to a same-sex relationship, were "worthy of death," according to his interpretation of the Bible. Considering the testimony and exhibits, it is clear Penkoski's actions were directed toward Appellees as individuals. In addition, the record supports the trial court's legal determination that Penkoski's repeated bullying (both in person and via social media) and incendiary rhetoric toward Appellees satisfied the definition of stalking. Because the trial judge did not abuse her discretion, I would affirm the finding that Penkoski engaged in stalking of Appellees.

(Mike Frisch)

June 13, 2024 in Current Affairs | Permalink | Comments (0)

Oklahoma Denies Legal Recourse To Tulsa Race Massacre Survivors

The Oklahoma Supreme Court affirmed the denial of relief to survivors of the Tulsa Race Massacre

Plaintiffs, survivors of the Tulsa Race Massacre, brought suit against Defendants seeking abatement of the public nuisance caused by Defendants' unreasonable, unwarranted, and/or unlawful acts and omissions that began with the Tulsa Race Massacre of 1921 and continue to this day. Plaintiffs also sought recovery for unjust enrichment for Defendants' exploitation of the Massacre for their own economic and political gain. The district court granted Defendants' motion to dismiss finding Plaintiffs' Petition failed to state a justiciable public nuisance claim and failed to allege a legally cognizable abatement remedy and dismissed Plaintiffs' unjust enrichment claim for failure to cure a defective pleading. Plaintiffs appealed, asserting the district court erred in dismissing both claims. We retained this matter on Plaintiffs' motion and hold that Plaintiffs' grievances do not fall within the scope of our state's public nuisance statute and Plaintiffs' allegations do not support a claim for the equitable doctrine of unjust enrichment.

The court noted

 The destruction inflicted upon the Greenwood community by the mob was staggering, including the killing of between 100 and 300 people, predominantly African Americans, and the destruction of more than 1,200 homes, schools, churches, and businesses. 74 O.S. § 8000.1(3).

Even after the initial violence subsided, local officials engaged in actions that exacerbated the harm. State and local officials participated in the mass arrests and detention of Greenwood residents, and black detainees could only be released upon the application of a white person. When Greenwood residents attempted to rebuild their community, they were met with frustration. In one notable example, local officials "attempted to block the rebuilding of the Greenwood community by amending the Tulsa building code to require the use of fire-proof material in rebuilding the area thereby making the costs prohibitively expensive . . . ." 74 O.S. § 8000.1(3).

Public nuisance claim

Accepting as true that the Massacre is a continuing blight within all property in the Greenwood community--and that the pall of the Massacre continues to envelop the Greenwood community over one-hundred years later--Plaintiffs' claim does not present a conflict resolvable by way of abatement. And even accepting as true Plaintiffs' claim that the lingering economic and social consequences of the Massacre still, to some extent, endanger the comfort and repose of the Greenwood and North Tulsa communities, those lingering consequences over one-hundred years later, standing alone, do not constitute a public nuisance, as that term has been construed by this Court. The continuing blight alleged within the Greenwood community born out of the Massacre implicates generational-societal inequities that can only be resolved by policymakers--not the courts.

Today's holding is consistent with our recent public nuisance jurisprudence: expanding public nuisance liability to include lingering social inequities from historical tragedies and injustices runs the risk of creating a new "unlimited and unprincipled" form of liability wherein both State and non-State actors could be held liable for their predecessors' wrongdoing, in which current actors played no part. To hold otherwise would place Oklahoma courts in the unorthodox position of fashioning remedies for these claims or venturing into the realm of outright policymaking--both of which we decline to do. As we said in Johnson & Johnson, "[t]his Court defers the policy-making to the legislative and executive branches . . . ." Johnson & Johnson, ¶ 39, 449 P.3d at 731.

Today we hold that relief is not possible under any set of facts that could be established consistent with Plaintiffs' allegations. "When a trial court is considering [its] ruling on a § 2012(B)(6) motion [it] should not ask whether the petition points to an appropriate statute or legal theory, but whether relief is possible under any set of facts that could be established consistent with the allegations." Ind. Nat'l Bank1994 OK 98, ¶ 4, 880 P.2d at 375-76. Plaintiffs' grievance with the social and economic inequities created by the Tulsa Race Massacre is legitimate and worthy of merit. However, the law does not permit us to extend the scope of our public nuisance doctrine beyond what the Legislature has authorized to afford Plaintiffs the justice they are seeking. Accordingly, we affirm the District Court's dismissal of the public nuisance claim.

Unjust enrichment

Accepting Plaintiffs' allegations as true and applying general principles of common justice and equity to the facts before us, we decline to extend our unjust enrichment jurisprudence beyond its recognized bounds necessary to encompass Plaintiffs' claim. On review, we hold that Plaintiffs' allegations do not sufficiently support a claim for unjust enrichment, nor do the allegations sufficiently support a claim for the unauthorized use of name and likeness under 12 O.S. § 1449. Accordingly, we affirm the District Court's order dismissing Plaintiffs' unjust enrichment claim.

(Mike Frisch)

June 13, 2024 in Current Affairs | Permalink | Comments (0)

Sanction Reduced

The Tennessee Supreme Court reduced an order of disbarment to a three-year suspension to run concurrently with a previous sanction for misconduct in his own child custody matter

This is a direct appeal of a disciplinary proceeding involving a Knoxville attorney who filed four motions containing pejorative statements about the trial judge in a child custody case involving the attorney’s minor child. A hearing panel of the Board of Professional Responsibility determined that the attorney violated multiple Rules of Professional Conduct and imposed a three-year suspension as punishment. The attorney appealed to the trial court. The trial court affirmed the hearing panel’s judgment in all respects with the exception of the attorney’s punishment. The trial court held that the hearing panel erred in imposing a suspension, and it increased the punishment to disbarment. The attorney appealed to this Court. We affirm the judgment of the trial court on all issues with the exception of the issue regarding the attorney’s punishment. We hold that the trial court erred in increasing the punishment to disbarment, and we reinstate the three-year suspension imposed by the hearing panel but modify it to take effect upon the filing of this Opinion.

The opinion recites the statements at issue

The hearing panel then considered applicable aggravating and mitigating factors to determine the appropriate discipline against Mr. Justice. The panel found that the following aggravating factors justified an increase in the degree of discipline to be imposed: (1) Mr. Justice’s prior disciplinary history—specifically, Mr. Justice’s disbarment from the practice of law on July 2, 2019, in a separate disciplinary matter; (2) a pattern of misconduct; (3) refusal to acknowledge the wrongful nature of his conduct; and (4) substantial experience in the practice of law. The panel did not find any applicable mitigating factors.

The hearing panel ultimately recommended that Mr. Justice be suspended from the practice of law for three years “from the date, if any, when he is reinstated to practice law, pursuant to [Tennessee Supreme Court Rule] 9, [section] 12.2

Respondent appealed

The trial court also found an aggravating circumstance not considered by the hearing panel—that Mr. Justice’s actions were dishonest and selfishly motivated. The trial court ultimately held that Mr. Justice’s sanction should be disbarment.

He then appealed to the Supreme Court, claiming First Amendment protection

In reviewing the statements Mr. Justice made that impugned Judge Ash’s integrity, it is clear that the statements went far beyond the bounds of what an objectively reasonable attorney would make. Even considering the nature of the statements and the context in which they were made, see Parrish, 556 S.W.3d at 165-66, there was no reasonable factual basis for making the statements.

For example, Mr. Justice made several statements implying that Judge Ash ignored alleged attempts by the Plaintiff to sell time with the minor child and hold the minor child hostage for ransom. These statements are a mischaracterization of a proposed settlement agreement in the child custody case that the parties advised the trial court they had reached. Under the terms of the proposed settlement agreement, which ultimately fell through, Mr. Justice would have paid $200,000 in child support and $200,000 for the Plaintiff’s attorney fees. Mr. Justice equates this agreement to the Plaintiff holding the minor child hostage for money and alleges that Judge Ash ignored this despicable behavior.

...In sum, after assessing Mr. Justice’s statements under the Gentile balancing test and the objective reasonable attorney standard, we hold that none of Mr. Justice’s statements were constitutionally protected.

Chief Judge Holly Kirby concurred

Even though I would apply ABA Standards that identify disbarment as the presumptive sanction, and even though Mr. Justice has several aggravating factors and no mitigating factors, I agree with the majority’s conclusion. As in Beier, based on the comparative cases cited by the majority, I agree with the majority’s decision to impose a suspension in this case.

In sum, I disagree with the majority’s reasoning and conclusion on whether Mr. Justice engaged in the misconduct with intent to secure a personal benefit and with the majority’s holding that ABA Standards identifying disbarment as the presumptive sanction do not apply. Nonetheless, based on the comparative cases cited by the majority, I concur in its decision to impose a three-year suspension on Mr. Justice as the sanction for the misconduct in this case. Therefore, I concur in the decision of the majority with slightly different reasoning.

(Mike Frisch)

June 13, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Wednesday, June 12, 2024

California Expert May Be Able To Opine On Wyoming Malpractice

The Wyoming Supreme Court reversed the grant of summary judgment in favor of law firm defendants in a legal malpractice case

Victoria Loepp appeals the district court’s summary judgment order that dismissed her legal malpractice claims and all other claims she brought against her former counsel (Appellees). The district court’s summary judgment decision was based on its concurrent order striking her malpractice expert. Because the district court did not fully analyze the proffered expert’s reliability and fitness under W.R.E 702, and because we find no other basis on which to affirm the court’s summary judgment order, we reverse and remand.

Issue

The issue presented is whether an out-of-state expert may provide opinion testimony about the standard of care in legal malpractice actions in Wyoming.

The underlying case involved an inheritance dispute between sisters over their late mother's house

Ms. Loepp hired attorney Ryan Ford of Williams, Porter, Day & Neville, P.C. to help. Mr. Ford sent Ms. Scott a demand letter. He also initiated an eviction by serving a Notice to Quit. He ultimately negotiated with Ms. Scott’s attorney to settle the dispute by Ms. Loepp selling the house to Ms. Scott for $90,000. On March 22, 2019, the title company managing the closing of the transaction received the funds from Ms. Scott. The next day, Ms. Loepp notified Mr. Ford that she would not accept the money or settlement terms. Ms. Loepp declined Mr. Ford’s advice to abide by the settlement agreement, and Mr. Ford withdrew from representation.

Scott Murray replaced Mr. Ford as Ms. Loepp’s counsel. He prepared a complaint to file against Ms. Scott for a declaratory judgment and to quiet title. However, before that complaint was filed, Ms. Scott sued Ms. Loepp for breach of contract and related claims, seeking specific performance of the agreement to sell her the house. In April 2020, the district court entered summary judgment in favor of Ms. Scott. The remainder of Ms. Scott’s suit settled when Ms. Loepp agreed to transfer the property to Ms. Scott in exchange for the $90,000.

Loepp pursued the malpractice case pro se and retained a California attorney as her expert.

Mr. Watters based his opinions on his knowledge and experience as a trial attorney, as a practice group leader and managing partner in his firm, as a torts professor, and as a frequent expert witness in fee disputes. To support his assertions that the Appellees misapplied contract law, Mr. Watters included a legal memo which cited Wyoming case law and referenced the Restatement of Contracts.

The district court

After hearing argument on both motions, the district court acknowledged that Mr. Watters brought experience, finding it “nothing short of impressive,” but found Mr. Watters did not speak with any Wyoming attorneys and that his research of legal standard  consisted only of comparing some rules between states. Accordingly, the court granted the motion to strike, concluding there was an insufficient showing that Mr. Watters had knowledge of “what a prudent Wyoming lawyer would have done.” Having stricken Ms. Loepp’s expert, the court then granted summary judgment on all claims. Ms. Loepp timely appealed.

Out of state does not necessarily mean out of luck (and court)

We therefore instruct the court on remand to analyze the reliability of Mr. Watters’s opinion under W.R.E. 702, considering the nature of each of Ms. Loepp’s malpractice claims and whether those claims are so state-specific that Mr. Watters could not assist the trier of fact.

Conclusion

Having determined that W.R.E. 702 governs the admissibility of expert opinion in legal malpractice cases and that where a proffered malpractice expert is licensed or practices is just one factor to consider in the W.R.E. 702 analysis, we reverse and remand for further proceedings on the motion to strike. Because we find no other basis on which to affirm the related summary judgment decision, we also reverse and remand the court’s summary judgment order for further proceedings consistent with this opinion.

(Mike Frisch)

June 12, 2024 in Clients | Permalink | Comments (0)

Remedies

A trial court decision that granted summary judgment against relief sought for the denial of plaintiff's law degree was affirmed by the Idaho Supreme Court

This appeal concerns a lawsuit arising from Appellant Laurie Barton’s violations of the University of Idaho, College of Law’s honor code. During her third year, Barton was charged with violating the honor code after committing academic misconduct during a final examination. Barton denied the allegations during subsequent Honor Court proceedings, but she was ultimately sanctioned with degree denial. After Barton exhausted her administrative review options, including an appeal to the Idaho State Board of Education, she petitioned for judicial review. The district court denied her petition after a hearing. Barton later stipulated to dismiss an appeal of the petition’s denial. Instead, Barton sued the Board of Regents of the University of Idaho and Idaho State Board of Education, alleging nine causes of action, all of which the district court dismissed at summary judgment. The district court also denied Barton’s subsequent motion for reconsideration. For the reasons below, we affirm the district court’s decision.

The conduct 

The complaint alleged that, during the Remedies final exam, Barton had documents open on her computer that were related to that class and that she conducted internet searches for specific topics on her exam. 

Merits hearing

the Honor Court found by clear and convincing evidence that Barton “acted with gross negligence by not logging into Examsoft after she received her password, by using her laptop computer to access a Remedies outline at 9:22 a.m., and then by performing internet searches at 10:33 am. and 11:44 a.m., all the while the hard copy of the exam was in front of her.” The final exam was a closed book examination. Barton testified, among other things, that: (1) “the browsers opened when [Barton] opened her computer”; (2) “[Barton] did not recognize the Remedies outline and did not use it”; and (3) “the browser reopened with [Barton’s] searches from the night before.” The Honor Court did not find this testimony credible.

Degree denial imposed

The Honor Court found that Barton’s “actions demonstrate[d] either an inability or an unwillingness to meet the ethical standards of the legal profession.”

The student filed suit in addition to internal appeals

Separately, Barton sued the Board of Regents of the University of Idaho and Idaho State Board of Education (collectively “University”). Barton’s complaint claimed nine causes of action, to wit: (1) breach of express contract; (2) breach of implied contract; (3) breach of implied covenant of good faith and fair dealing; (4) unjust enrichment; (5) promissory estoppel; (6) specific performance; (7) negligence; (8) defamation per se; and (9) defamation. Each of these claims stemmed from the College of Law’s decision to allow Barton “to reregister for classes after two honor [c]ode violations had been discovered,” and its decision to deny Barton a law degree.

The court here found summary judgment was properly granted.

Fees

This appeal was also pursued despite Barton’s own acknowledgment that she committed academic misconduct and stipulated to dismiss the appeal denying her petition for judicial review in that regard. As a result, we conclude that Barton’s appeal was pursued frivolously, unreasonably, and without foundation. Accordingly, we award the University attorney fees pursuant to section 12-121.

(Mike Frisch)

June 12, 2024 | Permalink | Comments (0)

Captain Hook And Peter Pan

The Idaho Supreme Court has denied an application for bar admission but will permit reapplication in two years

The Idaho State Bar has filed a petition with this Court requesting permission to reject a bar application from “John Doe” and seeking an order prohibiting him from filing future applications for either (1) a period of five years, or (2) until the applicant receives written permission from this Court. Doe filed a response and cross-petition seeking immediate admission to the Idaho State Bar (the “ISB”). For the reasons explained below, we deny the ISB’s request to impose a five-year ban on Doe filing future applications and, instead, impose an alternative remedy. However, we grant the ISB’s petition in part, concluding that it is not required to process Doe’s third application, which was filed just 36 days after the denial of his second application became final, because Doe has failed to show a substantial change in his fitness and character from the two prior denials for admission. For these same reasons, we deny Doe’s cross-petition for admission.

Applicant

Doe is 34 years old and a May 2019 graduate of Concordia University School of Law, in Boise, Idaho. In July 2019, he applied for admission to the Delaware State Bar Association after passing the Delaware Bar Examination. A passing score is a prerequisite in Delaware to apply for admission. Although Doe received a passing score on the exam, Delaware denied his application on character and fitness grounds.

Doe then applied to take the Idaho Bar Exam twice and was denied both times. The ISB cited character and fitness grounds as the basis for both denials. A little over a month after the second denial, Doe applied a third time, without showing any substantial change in circumstances.

He initiated litigation

Doe filed three lawsuits in the United States District Court for the District of Idaho against the ISB, the Board of Commissioners of the ISB (“the Board”), certain personnel of the ISB, and others, primarily raising constitutional and ADA claims. [Doe] v. Idaho State Bar, No. 1:22-cv00090-REP (D. Idaho March 1, 2022) (hereinafter “Doe I”); [Doe] v. Idaho State Bar, No. 4:22-cv-00253-REP (D. Idaho June 19, 2022) (hereinafter “Doe II”); [Doe] v. Idaho State Bar, No. 1:22-cv-00478-REP (D. Idaho Nov. 19, 2022) (hereinafter “Doe III”). He has also filed federal litigation in Delaware to raise constitutional challenges to certain attorney admission requirements of the Delaware Bar after being denied admission on character and fitness grounds. [Doe] v. Seitz, No. 1:21-CV-01637 (D. Del. Nov. 22, 2021).

Delaware inquiry into character and fitness

The investigation revealed multiple instances of omitted records and disclosures. These omissions included the following: the suspension of Doe’s security guard license; his participation in administrative hearings; various employment terminations and Doe’s troubles maintaining steady employment; disciplinary incidents and behavioral problems at multiple educational institutions; and Doe’s efforts to hide the fact that he “committed fraud” in claiming unemployment benefits while working a summer job. The investigation also reported a 2009 incident Doe had at a technical college in Delaware where, as part of a class practicing listening skills, he said, “I want to talk about how I think about hurting people. I can’t stop thinking about ways to hurt people that have hurt me. I think about it so much that I can’t sleep."

Idaho application

In the case of Doe’s application, the Committee recommended, and the Board agreed, that Doe failed to prove he was qualified for and entitled to admission to legal practice in Idaho under multiple eligibility requirements listed under Idaho Bar Commission Rules 201 and 210(a)(3). This was due in large part to Doe’s application omitting information of past misconduct and misstating his history, as he had in his Delaware application. These events include, but are not limited to:
• Doe’s failure to disclose to the ISB that the Delaware Board of Bar Examiners denied his bar application on character and fitness grounds.
• While employed by Delaware Animal Care and Control in 2011, Doe used the agency’s access to a criminal justice database to perform unauthorized searches of individuals. This conduct resulted in his termination. Doe initially reported to the ISB that he was terminated due to “downsizing,” but later explained that he had “cherry picked” the explanation that “portrayed him in the most favorable light.”
• Doe was terminated from another job with a security company in 2012 after misusing company equipment and “inappropriately engaging a troublemaker by challenging him to ‘meet up after work.’ ” Doe failed to disclose this termination.
• In 2015, Doe was terminated from his employment with the Delaware Office of Animal Welfare after an inappropriate interaction with a female coworker where, in his own words, Doe “made a sexual comment about ‘blowing;’ ” and “made inappropriate commentary about another employee’s sex life.” Doe later filed a lawsuit against this employer for discrimination and retaliation.

• In 2015, Doe illegally collected unemployment benefits in Delaware while employed, by continuously reporting income “that was close to, but never exceeded the cap on earnings that would trigger a reduction in [Doe’s] unemployment insurance benefits.” He challenged the Delaware Department of Labor’s determinations on this matter at each stage by personally “attacking the decision-maker,” filing a civil rights action against the decisionmaker “based upon the manner in which she treated him during the appeals hearing,” and accusing a federal judge of “misstating evidence” to benefit the opposing party.
• When engaged in litigation against the Delaware Department of Labor’s referee, Doe proceeded to have default entered against the referee even though he knew she had not been properly served. He later argued before the federal district court, the appellate circuit court, and in his petition for en banc review, that service was properly effectuated, repeating false statements to each tribunal.
• Doe initially failed to disclose that he had been a party to civil suits he filed against Delaware Animal Care and Control and the administrative proceedings concerning his unemployment benefits.
• Doe failed to disclose a 2014 incident in Delaware where he was disciplined at Wilmington University and placed on probation.
• Doe failed to disclose several informal investigations into his conduct by Concordia Law School between 2016 and 2019, including an incident of vandalism to his study carrel he committed by affixing a memorial plaque to the carrel outlining “highlights” of his academic career at Concordia and describing himself as “Concordia’s Original Overzealous Objector.” The plaque falsely listed several academic awards that Doe never received.

Also

In addition to this frivolous litigation, Doe filed a complaint with Delaware’s attorney discipline authorities (the Office of Disciplinary Counsel, “ODC”) against his then-attorney, John Brady. The complaint was dismissed by ODC attorney Jennifer Aaronson, who “found that the complaint did not warrant discipline.” In response, Doe then filed a disciplinary complaint against Aaronson. Doe later summarized his own actions:

when then ODC Counsel Jennifer-Kate Aaronson was kind enough to call me—as a courtesy—to tell me why she was dismissing the complaint against Mr. Brady, I became very hostile to her, told her she was lazy, corrupt, and incompetent, and then hung up on her. I then proceeded to file an ODC complaint against her because I did not agree with the statements she made to the court.

His multiple Idaho application proceedings - and his communications with and about bar officials - is recounted in detail.

The court here

while this is an unusual petition—with equally unique forms of relief sought by both the ISB and Doe—this Court has inherent constitutional authority to address and resolve these issues, particularly as concerns Doe’s present eligibility to practice law in Idaho.

Concerns

In the proceeding currently before this Court, Doe has continued to demonstrate an inability to be honest and candid by incorrectly representing the results obtained in his federal litigation against the Bar. For example, he claimed that “the federal court forced the schoolyard bullies [the Board] to finally issue a decision” on his second application, when, in fact, Doe was never granted any declaratory or injunctive relief from the federal court...

We conclude that there is substantial evidence indicating Doe’s continued inability to be honest and candid with clients, lawyers, courts, the Board, and others as required under Idaho Bar Commission Rule 201(a). Accordingly, Doe has failed to prove eligibility under Idaho Bar Commission Rule 201(a).

Judgment

This conduct has continued as Doe persists in exhibiting the exact behavior summarized by Justice Horton in reviewing Doe’s first application: a “pattern of demonizing those who make decisions adverse to his interests. He ascribes improper motivations, ethical lapses, and ineptitude to such individuals.” For example, in his cross-petition in this action, Doe made inappropriate statements impugning the integrity and professionalism of members of this Court, further demonstrating an ongoing pattern of attacking decision makers. In this case, he did so even before they rendered a decision.

Doe specifically accused one justice of improper conduct in another proceeding in which Doe had no involvement, stating that the justice’s comments to counsel during a particular oral argument rose “to the level of heated gratuitous–insults [sic] where [he] proceeded to passionately rail against [an attorney’s] conduct.” (Emphasis in original)...

Of particular concern are his tendencies to use unprofessional language and aim reckless attacks at attorneys and judges involved in both his state and federal lawsuits. Thus, he has failed to prove eligibility under this prong.

Disregard for the rights of others

Being disrespectful, rude, petty, defamatory, or vindictive does not constitute “reasonable advocacy” or ethical conduct. Doe’s conduct and language have consistently shown a lack of civility, extreme unprofessionalism, and a level of vindictiveness that goes beyond mere zeal. Such behavior indicates that Doe is in desperate need of correction, not commendation.

For example, Doe’s personal email communications with Bar Counsel and the Board are equally overzealous, inappropriate, and, at times, bizarre. For example, Doe has made statements like: “I am not about to let your evil and wickedness (as well as your dishonesty) change the person I am.” In one late night email, Doe stated:

You need to learn by this point that I am not just going to walk away like all the others you guys screw over; you are not going to get rid of me no matter how hard you try. I will be around for many years to come to grace you with my presence and keep you guys in check. Deep down, Joe [Bar Counsel], you know your life would be boring without me in it. You are like Captain Hook I am your Peter Pan.

This email is surprisingly similar to a statement Doe made in an earlier show cause hearing, when he described former Dean Ben Cramer of Concordia Law School as Captain Hook: “the wonderful memories I have of that law school, it’s like Neverland and he’s Captain Hook. He’s a necessary evil, and the story wouldn’t be the same without him.”

The record also demonstrates that Doe too often crafts his arguments in a religious light, and with a troubling tendency to literally “demonize those who make decisions adverse to his interests.” For example, in his briefing before this Court, Doe repeatedly described the Board’s actions, personnel, and decisions as “evil and wickedness,” “evil people,” “twisted,” “immoral,” and accused them of “cruel, wicked, and antagonizing ad-hominem attacks.” This tendency is also present in one of Doe’s recent emails:

Since I moved back to Idaho in June of 2021, I chose to dedicate my life to Christ and become baptized and I am a child of the King. I am not scared of you guys, I am not flustered by your bullying, and I am not about to let your evil and wickedness (as well as your dishonesty) change the person I am. It is so twisted because I am a person of paramount character and integrity and I am being blocked from my calling by persons who are (by all objective evidence available to me) immoral people who are trying to keep me out of my calling by trying to allege—falsely—that I lack requisite moral character and fitness.

In short, we find that the pattern of “demonizing” behavior found by Justice Horton three years ago persists in Doe’s conduct today. Accordingly, we conclude that Doe’s conduct continues to exhibit a disregard for the rights and welfare of others. He has failed to establish this eligibility requirement under Idaho Bar Commission Rule 201(f)

Request for immediate admission denied

Doe’s previously denied admissions were based on his conduct and moral fitness to practice law, not his pursuit of a redress of grievances in federal court. The ISB has an obligation to determine whether an applicant is fit to practice law in the state of Idaho, and that includes examining an applicant’s speech insofar as it is demonstrative of his eligibility to practice law in this state. This petition was filed in furtherance of that obligation and is not an infringement on Doe’s free speech. In sum, if Doe wishes to become an Idaho lawyer, his fitness will continue to be judged by examining his conduct.

As to ISB's sought preclusive relief

In this instance, given Doe’s track record, we conclude that a reasonable period of rehabilitation is necessary for Doe to demonstrate a meaningful change in character and fitness, and to document his rehabilitation. Thus far, Doe has hardly allowed any time for rehabilitation, much less shown any demonstrable changes in his fitness to practice law. Indeed, as Doe has filed successive applications, the same character and fitness shortcomings have continued to occur and remain unaddressed. While we cannot say that five years is necessary to make such a showing, based on the totality of the circumstances before us, we conclude that two years may be sufficient. Accordingly, we hold that Doe may not submit a fourth application to sit for an Idaho bar examination for a period of two (2) years from the issuance of this Opinion. If Doe submits a fourth application, it remains his burden to demonstrate that he can meet the standards to practice law at that time pursuant to the Idaho Bar Commission Rules. It is our hope that by turning his focus to rehabilitation and accountability for a season, Doe can make this a reality.

(Mike Frisch)

June 12, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Minnesota Disbarment

The Minnesota Supreme Court has disbarred an attorney admitted in 2011

The petition alleged that Bradley committed numerous acts of professional misconduct, including misappropriating client funds, committing fraud on the court, neglecting—and ultimately abandoning—his role as a court-appointed parenting consultant, failing to maintain trust account books and records, and failing to cooperate with the disciplinary investigation. Bradley received a copy of the petition via certified mail but did not respond, so we deemed the allegations admitted and allowed the parties to file memoranda on the appropriate discipline. Bradley did not file a memorandum or appear at oral argument. The Director asserts that the appropriate discipline is disbarment. We agree.

Misconduct

Bradley misappropriated funds from one client, violating Minn. R. Prof. Conduct 8.4(c). The client was entitled to an $8,442.23 judgment following a marital dissolution proceeding, which Bradley received from counsel for the client’s former spouse and deposited into his firm’s trust account. Bradley did not disburse any of these funds to the client and instead used the funds for purposes unrelated to the client’s representation, including for his own personal benefit. Bradley also failed to properly maintain trust account books and records for his law firm, violating Minn. R. Prof. Conduct 1.15(h). Due to Bradley’s failure to maintain all required books and records, the Director was unable to fully audit the trust account and could not determine precisely when Bradley transferred this client’s money out of the trust account and the exact amount of client funds that were misappropriated.

In addition, Bradley committed fraud on the court during his own marital dissolution proceeding by making false statements related to a judgment and decree and defying district court orders, violating Minn. R. Prof. Conduct 3.3(a)(1),3 3.4(c),4 and 8.4(c) and (d). Bradley also failed to adequately communicate with the parties in a family law matter after becoming a court-appointed parenting consultant, and he abandoned that appointment without notice, violating Minn. R. Prof. Conduct 8.4(d). And Bradley failed to cooperate with the Director’s disciplinary investigation, violating Minn. R. Prof. Conduct 8.1(b)6 and Rule 25, RLPR.

(Mike Frisch)

June 12, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Presently Fit

The Ohio Supreme Court has approved an applicant to sit for the bar exam

Applicant, Zachary Charles Daubenmire, of Thornville, Ohio, is a 2011 graduate of the Case Western Reserve University School of Law. In November 2013, we found that Daubenmire failed to carry his burden of proving that he possessed the requisite character, fitness, and moral qualifications to practice law in Ohio because of his 2007 felony conviction for pandering obscenity involving a minor and his continuing duty to register as a sexually oriented offender until February 2017. In re Application of Daubenmire, 137 Ohio St.3d 435, 2013- Ohio-4977, 999 N.E.2d 669, ¶ 1-3, 19-20. We therefore disapproved his application to register as a candidate for admission to the practice of law and authorized him to reapply as a candidate for the July 2018 bar exam. Id. at ¶ 3, 20

In November 2022, Daubenmire applied to register as a candidate for admission to the practice of law in Ohio by completing a National Conference of Bar Examiners questionnaire.

Two members of the Licking County Bar Association Admissions Committee interviewed Daubenmire in April 2023. In each of their reports to the admissions committee, the interviewers stated that Daubenmire did not possess the requisite character, fitness, and moral qualifications for admission to the practice of law. Specifically, the interviewers were concerned that Daubenmire tended to minimize his criminal conduct and that he failed to appreciate that his felony offense was not victimless. Citing several incidents that occurred from 2015 through 2017 and Daubenmire’s admission to drinking alcohol frequently, the interviewers also expressed concern that Daubenmire exhibited signs of potential alcohol abuse, a pattern of poor anger management, and a pattern of disregard for Ohio laws. Based on the interviewers’ reports, the admissions committee issued a final report recommending disapproval of Daubenmire’s character, fitness, and moral qualifications to practice law.

The applicant appealed

The matter is before this court pursuant to Gov.Bar R. I(13)(D)(5)(a) and (b), because Daubenmire’s conviction was for a second-degree felony under Ohio law. Because we find that Daubenmire has established that he presently possesses the requisite character, fitness, and moral qualifications for admission to the practice of law in Ohio, we approve his pending registration application and permit him to sit for the July 2024 bar exam.

Felony conviction

His sexual-health therapist opined in a June 2012 letter to the Office of Bar Admissions that Daubenmire’s interest in pornography “was not motivated by a sexual deviance disorder or a psychological pathology. Rather, it was the product of complicated sexual conflicts of a young man whose conservative religious background suppressed normal sexual drive.”

Alcohol use

The board found, and we agree, that Daubenmire has presented clear and convincing evidence that his alcohol use is not a character-and-fitness issue that should result in disapproval of his pending application.

Anger issues

On November 22, 2015, Daubenmire called the Hebron Police Department to report that three men had assaulted him at a bar near his home. According to the police report, Daubenmire told police that he entered the bar after the Ohio State University football team had lost a game and that to tease his acquaintances at the bar, he said, “How about them Buckeyes?” He stated that sometime thereafter, a man approached him and asked if he was a registered sex offender. Daubenmire claimed that after he answered that question in the affirmative, the man got mad, stated that he had a child, and then grabbed Daubenmire and took him to the ground. Daubenmire further stated that he was then punched and kicked by that man and two others until other people stepped in to break up the fight.

According to the police report, one of the men admitted that he had asked Daubenmire if he was a sex offender but told the officer that Daubenmire had elbowed him in the stomach before he took Daubenmire to the ground in selfdefense. The two other men purportedly involved in the incident told police that they never touched Daubenmire. No charges were filed against Daubenmire or any of the three men over the incident.

During his 2023 character-and-fitness interview and at his 2024 hearing, Daubenmire also described an incident in which he and his cousin got into a shouting match on a golf course sometime in 2016. He testified that there was no violence and that his father stepped in to calm him and his cousin down.

On October 15, 2016, at a Dollar General store, Daubenmire attempted to return or exchange a pair of earbuds that did not work. The store clerk called the Hebron Police Department and reported that Daubenmire got mad when she would not accept the return without a receipt, cursed at her, and threw the earbuds at her face. She stated that the earbuds struck her, and the officer who responded to the call observed a scratch on the right side of her face. Daubenmire told the officer that he had ripped up the earbuds and threw them into the air before leaving the store.

He pled to a minor misdemeanor.

Simce then

There was no evidence presented at the 2024 hearing that Daubenmire had engaged in any other angry outbursts since the incident with the store clerk in October 2016—a period of more than seven years—or committed any alcohol-related offenses since his July 2017 open-container offense.

The court

Daubenmire has testified candidly about each of the incidents discussed above and acknowledged the wrongfulness of his conduct. He participated in several years of mental-health counseling to address his sexually oriented misconduct and voluntarily sought and committed himself to almost two years of additional mental-health treatment to address his subsequent angermanagement issues. And most recently, he has participated in marital counseling with his wife to help with managing the everyday stresses of marriage and parenting two young children. He has demonstrated his growth and maturation through his willingness to seek help when his stress begins to affect his mental health. He also wisely delayed his second application to register as a candidate for the bar exam until he was able to demonstrate that his anger-management issues had been under control for an extended period. Moreover, in his sworn application to take the July 2024 bar exam, Daubenmire answered “no” to all questions about various types of conduct or actions that could have been taken against him since he filed his registration application. He has therefore indicated that he has no new information, conduct, or behavior to report that could call into question his ability to practice law in a competent, ethical, and professional manner.

In addition, Daubenmire has found a dedicated mentor in Weaver and demonstrated his commitment to the profession by working competently, diligently, and professionally as a law clerk at Weaver’s firm for about 12 years. In short, Daubenmire has accepted responsibility for his past actions, made efforts to learn from those actions and avoid repeating them, and has successfully demonstrated his rehabilitation.

Upon consideration of the record and the applicable rules, we find that Daubenmire has carried his burden of proving that he currently possesses the requisite character, fitness, and moral qualifications for admission to the practice of law.

KENNEDY, C.J., and FISCHER, J., dissent and would not allow Daubenmire to take the July 2024 bar exam. (Mike Frisch)

June 12, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Tuesday, June 11, 2024

"Dude I Ate A Big Ass Weed Brownie..."

The Tennessee Court of Appeals affirmed and remanded a Chancery Court decision in a law firm dispute

The plaintiff, a founding member of a law firm, filed this action against other members. The trial court found that the defendant members violated their duty of good faith and fair dealing, breached their contract with the plaintiff, violated their fiduciary duty toward the plaintiff, engaged in a conspiracy, and committed conversion. We affirm the ruling of the trial court.

This appeal arises from disagreement over the management of a new law firm. Matthew Ooten, Linda Betz, and Jason Baril, attorneys licensed to practice law in Tennessee, previously worked together at the Knoxville law firm of Ogle, Elrod and Baril (“OEB”) until they left OEB to start a new law firm, a separate disability practice, a supporting call center, and a holding company. They are the founding members of Ooten Betz & Baril, PLLC (“OBB”); Disability Advantage Group, LLC (“DAG”); Summit Conversions, LLC (“SC”); and Summit Partners, LLC (“SP”) (collectively the “LLCs”). OBB, DAG, SC, and SP were formed as limited liability companies through the Tennessee Secretary of State on December 1, 2018, with delayed effective dates: DAG, December 14, 2018; SP, SC, and OBB, January 1, 2019. Each LLC is member managed. Of these four entities, only OBB is a law firm.

At their former firm

The disability group that Ooten managed at OEB was very profitable, growing from essentially nothing in 2014 to roughly $1.6 million in 2018. Around this time, Baril approached Ooten about leaving OEB with him. Ooten understood that the entire disability practice would be moving from OEB. He thereafter approached [case managers] Freers and Cozart, his team at OEB, about leaving to start the new venture with Betz and Baril.

Initial agreements

Betz, Baril, and Ooten executed four separate documents titled “Partnership Agreements” referencing the LLCs.

But trouble ensued

Betz, who had managed the personal injury practice at OEB, was tasked with implementing the personal injury case management system for OBB. According to Ooten, however, Betz failed to make the personal injury system operationally sound and opposed his efforts to assist her. He claims that she became increasingly hostile, aggressive, and combative toward him when he suggested improvements. Ooten contends that he made good faith efforts to avoid conflict with her by outlining how the ownership of the LLCs could be restructured among the members to avoid interaction between Betz and Ooten.

As set forth below, there was ongoing interaction between Betz and Baril. 

Ooten sought to restructure the agreements

On March 20, 2019, Ooten and Baril were scheduled to go to Las Vegas for the NCAA basketball tournament. That morning, however, Baril texted Freers to ask if she wanted to meet for lunch at Calhoun’s, a Knoxville restaurant. Freers met with Betz and Baril for lunch, at which time Baril inquired if she would stay at DAG and assume the disability practice responsibilities if Ooten departed the firm. Freers informed them that she and Ooten were not a package deal; she would make a decision that was best for her and her family. She indicated, nonetheless, that she hoped things would work out. They discussed a raise if Freers assumed Ooten’s responsibilities. Freers mentioned that Cozart was a vital member of DAG’s leadership team and that she would like to see her remain with the firm. Betz and Baril subsequently invited Cozart as well as Freers to a second meeting. Cozart testified that Betz and Baril informed her that they were planning to meet with Ooten because the members were not all getting along and that Ooten would not be working there anymore. Betz and Baril expressed to Cozart their belief that she was a valuable employee at DAG and their desire for her to stay. As with Freers, an increase in Cozart’s salary was addressed. According to Cozart, she was to make close to six figures when the proposed profit sharing was included. As to Ooten, instead of meeting up with him in Las Vegas as planned, Baril texted him on March 21, 2019, at 10:48 a.m., stating “Dude I ate a big ass weed brownie and just woke up I think so I missed my flight[.] I’ll call you in a couple of hours to talk[.]”

Baril directed his attorney to advise Ooten by letter that the computer passwords and the locks on the doors had been changed at OBB, he had been removed from all partnership bank accounts, and that if he came around the physical premises, law enforcement would be notified. Upon Baril approving the letter, it was hand-delivered to Ooten on April 2, 2019. The letter outlined that if Ooten chose to litigate and/or request a formal market valuation of his vested partnership interest, Betz and Baril, pursuant to the Partnership Agreements, would hold a meeting and vote their majority interest to choose an appraiser to set the market value for the entities.

Two days after Ooten received the letter, the record reflects that Betz and Baril began making draws and distributions from DAG based on a 70/30 split—i.e., 70 percent to Baril and 30 percent to Betz, diminishing Ooten’s interest in the entities to zero. In July 2019, Betz filed for divorce, and she and Baril formally announced that they were a couple to firm personnel. Ooten opines that it can be reasonably inferred that the relationship existed before he was shutout on April 2, 2019.

Upon Ooten’s departure, Freers’ salary increased from $55,000 to $115,000, and Cozart’s salary increased from the low $40,000s to approximately $93,000. Freers took over most of Ooten’s role, and Cozart stepped into Freers’ shoes. Initially, Freers was granted access to Ooten’s emails in order for her to utilize Ooten’s vendor contacts and services as well as to see whether any matters needed to be addressed. Around December 2019, however, she no longer had access to Ooten’s account. Upon notifying Betz and Baril that the account had become unavailable to her, she was advised to ask them if she needed something.

In the inevitable litigation initited by Ooten

Dismissed were claims for punitive damages, intentional interference with business relationships, and a derivative action by Ooten on behalf of DAG. The trial court ordered that Ooten should recover from Betz and Baril, jointly and severally, the amount of $897,913 plus prejudgment and post-judgment interest at the maximum rate allowed by law and reasonable and necessary attorney fees. On January 10, 2023, the court further awarded Ooten discretionary costs pursuant to Rule 54.04 of the Tennessee Rules of Civil Procedure in the amount of $12,039.05. Additionally, on February 28, 2023, the court awarded Ooten attorney fees in the amount of $255,892.50 and expenses (not otherwise recoverable as discretionary costs) in the amount of $28,610.41.

Baril and Betz appealed; Betz's was dismissed on procedural grounds

Merits and non-applicablity of ethics rule of sale of law practice

Ooten was not selling his disability practice in an arm’s length transaction and leaving the industry—a requirement of Rule 1.17. The disability practice was continued as a going concern without interruption. Further, only one entity involved in this matter was a law firm, OBB. Rule 1.17 would have no application to the other three non-law firm entities.

Ooten's expert

Harvey demonstrated that he was qualified to testify about the “fair value” of law practices and his opinions were generally accepted in the financial community. His testimony established that he has degrees in accounting and business administration. He is a certified public accountant and accredited in business valuation. Harvey has conducted more than 1,000 business valuations since approximately 1999 and has experience as a broker applying the appropriate valuation approaches to businesses. Harvey observed that he had valued approximately five law practices, the last being three or four years prior to the January 2022 trial.

Conclusion

the judgment of the trial court is affirmed, and the case is remanded for enforcement of the court’s judgment.

Oral argument linked here. (Mike Frisch)

June 11, 2024 in Law Firms | Permalink | Comments (0)

Permanent Disbarment Imposed

From the web page of the Tennessee Board of Professional Responsibility

Effective May 10, 2024, the Supreme Court of Tennessee permanently disbarred Christopher Shawn Roberts from the practice of law and ordered him to close his law firm IOLTA account, pay restitution to his former client, and pay all costs incurred to the Board of Professional Responsibility.

Following a final hearing upon the disciplinary petition, the Hearing Panel found, by a preponderance of evidence, that Mr. Roberts committed disciplinary misconduct and should be permanently disbarred. Mr. Roberts, in two matters, charged an unreasonable fee, failed to diligently represent a client, failed to provide competent representation, failed to turn over client materials upon termination of representation, failed to reasonably communicate with his client, knowingly violated court orders, concealing documents meant for others, advised his client to lie to a court officer, provided false information to the court, and engaged in conduct involving dishonesty, deceit, misrepresentations.

(Mike Frisch)

June 11, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Pardoned Felon Ineligible For Public Office

The Missouri Supreme Court has held that a convicted (and pardoned) felon is ineligible for elective office

Respondent Jeff Fletcher, in his official capacity as Cass County clerk (“Clerk”), filed a petition in the circuit court seeking a declaratory judgment as to whether Herschel Young is qualified to be a candidate for elective public office in the state of Missouri and eligible to be placed on the ballot at the primary election to be held August 6, 2024. The circuit court determined Young is not a qualified candidate for elective public office and ineligible to be on the primary election ballot under Missouri law because he previously pleaded guilty to a felony, notwithstanding a gubernatorial pardon of Young’s felony conviction. Finding no error, this Court affirms.

The crime

In 1995, Herschel Young pleaded guilty to assault in the second degree, a class C felony, in Cass County, Missouri, and was sentenced to one year imprisonment. The circuit court suspended execution of his sentence and placed him on probation for three years. Young successfully completed his probation. In 2023, the governor granted Young a pardon from the 1995 conviction.

On February 27, 2024, Young submitted a declaration of candidacy to Clerk, announcing himself as a candidate for the south district commissioner of Cass County at the primary election to be held on August 6, 2024.

Conclusion

In section 115.306.1, the legislature has determined anyone who has pleaded guilty to a felony offense under Missouri law is disqualified from holding elective public office. Accordingly, this Court affirms the circuit court’s judgment declaring Herschel Young unqualified to be a candidate for elective public office in the state of Missouri and ineligible to be on the primary election ballot for the election to be held on August 6, 2024

Dissent of Justice Ransom

I respectfully dissent. Because there was not compliance with Rule 87.04 in the circuit court, I would reverse and remand to the circuit court to permit notice to the Attorney General to allow the challenge to the constitutional validity of section 115.306.1. RSMo Supp. 2023, to proceed. Without the required notice to the attorney general, I do not believe this Court should be able to reach arguments touching upon the constitutional validity of the statute in an appeal.

(Mike Frisch)

June 11, 2024 in Current Affairs | Permalink | Comments (0)

NextGen Bar Exam Adopted In Oklahoma

An order of the Oklahoma Supreme Court

ORDER

The Oklahoma Supreme Court, pursuant to its general administrative authority, Okla. Const. art. VII, § 6, and pursuant to its sole authority to regulate the admission to the practice of law in Oklahoma, hereby votes to adopt the NextGen Bar Examination in Oklahoma. The Court orders the NextGen Bar Examination to be administered beginning July 1, 2027.

DONE BY ORDER OF THE SUPREME COURT IN CONFERENCE this 10th day of June 2024. /S/CHIEF JUSTICE

Kane, C.J., Rowe, V.C.J., Kauger (by separate writing), Winchester, Edmondson, Gurich, Darby and Kuehn, JJ., concur;

Combs, J. (by separate writing), dissents.

KAUGER, J., with whom Kane, C.J. joins, concurring:

¶1 Presently, the only known available bar examination in 2027 will be the NextGen. I agree with the approval of its use beginning in 2027. However, the adoption of the NextGen does not forclose other options which may become available for admission to the Oklahoma Bar Association. It does not forclose the resumption of our inherent power to determine the qualifications for admission to the Bar. Likewise, this approval does not prevent the extension or reduction of the time of the NEXTGEN exam, nor prevent offering both the NEXTGEN and other Oklahoma options.

COMBS, J., dissenting:

1 The majority today approves the implementation of the NextGen bar examination provided by the National Conference of Bar Examiners. This Court previously approved the implementation of the Uniform Bar Exam (UBE) provided by the National Conference of Bar Examiners on June 8, 2020. In hindsight, the adoption of the UBE was a significant abdication of our oversight of the admission of members of the Bar for the State of Oklahoma. It was made upon recommendation of those who believed the portability of a Bar exam score was of utmost importance to those taking the Oklahoma exam.

¶2 What we have seen since the imposition of the UBE is a significant reduction of the passage rate. In response, we have seen our three law schools alter their course curriculum in an effort to teach to the test, rather than focusing on training students on the law and how to practice law. We have also seen many states--including Oklahoma--reduce their passing score.

¶3 We live in Oklahoma. We are the Supreme Court of Oklahoma, and since our decision in In re Integration of State Bar of Oklahoma1939 OK 37895 P.2d 113, this Court has had the inherent power to regulate the practice of law. We are entrusted with the power and duty of determining the qualifications for admission to the Bar. In my opinion we are abdicating our duty to a vendor, the National Conference of Bar Examiners. Our responsibility is to see that admittees to our Bar Association are competent to practice law in Oklahoma. If an individual wishes to have portability and flexibility to practice in multiple states we should not stand in their way; however, that is an individual decision, not this Court's responsibility. There are states who will continue to offer either the UBE in the near term or the NextGen at some point in the future. Prior to this Court's adoption of the UBE, this Court authorized an Oklahoma Bar Exam. There would appear to me to be no reason why we could not authorize a new version of the Oklahoma Bar Exam to those individuals seeking to be licensed to practice in this state.

¶4 In my opinion, it is this Court's responsibility to determine the admission requirements for all admittees who choose to practice in Oklahoma. I no longer believe the adoption of a national test that does not provide an examination on topics unique to Oklahoma is in the best interest of Oklahomans.

¶5 For these reasons, I respectfully dissent.

(Mike Frisch)

June 11, 2024 | Permalink | Comments (0)

Digital Wallet A Bit Light

The Georgia Supreme Court has disbarred an attorney who has sought to resign from the Bar while facing that sanction

McDonald filed general exceptions to the Review Board’s Report and Recommendation, arguing that disbarment is not the appropriate discipline. She also filed a document styled as a “Petition for Voluntary Retirement,” in which she requests that she be “transferred to retired status” in lieu of being disbarred. The Bar responded to both filings. After consideration of the entire record in this matter, we dismiss McDonald’s petition for voluntary discipline and order that she be disbarred for her violations of the Georgia Rules of Professional Conduct.

Facts

Although the record in this case is large and comprehensive, the general facts are that McDonald, a solo practitioner who joined the State Bar of Georgia in 1985, did business both as the McDonald Law Group, LLC and Law Offices of Diana McDonald, LLC. She maintained IOLTA accounts at Wells Fargo Bank in the name of both businesses.

In the course of her practice, McDonald provided legal advice to a client who purported to conduct deals wherein the client was to provide goods or services to third parties in exchange for payment. As early as 2017, McDonald agreed to act and did act as an escrow agent for several of those deals. Despite the facts that none of the client’s deals seemed to close smoothly and that the third parties in most, if not all, of those deals complained to McDonald about not receiving the promised goods or services, McDonald again agreed in early 2019 to act as the escrow agent in a deal wherein her client and his associate promised to sell 1,000 Bitcoin to a third party through intermediary companies.

On January 3, 2019, the third party in this deal transferred $4,000,000 into one of McDonald’s IOLTA accounts with the understanding that it would be held in escrow and not released until the promised Bitcoin was confirmed to be in the third party’s “digital wallet”—an event which all parties expected to occur quickly, but which all parties now agree never happened. Several days later, after no Bitcoin was delivered, the third party, through its attorney, reached out via email to McDonald, demanding return of its funds.

In responding to the third party over the next several days, McDonald first encouraged it to provide her client with additional time to deliver the Bitcoin, assuring the third party that her past experiences with her client gave her faith that her client would deliver, but that, if he did not do so, she would commence the process of transferring the third party’s escrowed funds back to it on January 8, 2019.

Then, on January 9, 2019, after the third party again demanded return of its $4,000,000, McDonald informed the third party that she had received confirmation from her client that the Bitcoin would be delivered “before the end of business today”; represented that, “[a]s a gesture of good faith and recognition for the delay,” she had negotiated with her client to deliver 2,000 Bitcoin, instead of the 1,000 for which the third party had paid; and assured the third party that its funds were “safe and protected.” In midJanuary, the State Bar became involved at the third party’s request in trying to obtain assurances from McDonald that she still had the $4,000,000 in her IOLTA account. McDonald advised the Bar that her client represented to her that he had sent the Bitcoin, and that he needed time to investigate why the Bitcoin had not shown up in the third party’s digital wallet. She assured the Bar that the matter would be resolved by the end of the business day on January 15 and that “the funds [we]re safe.” The Bar responded to McDonald informing her that it was relieved to hear that “the money was still safely in [her] trust account,” and reminding her of her fiduciary duties under Rule 1.15 (I)

The third party pursued a bar complaint and civil suit

Unsatisfied with the return of only half of its money, the third party filed a federal lawsuit against McDonald, her business entities, and various other parties on March 1, 2019, seeking an immediate temporary restraining order, injunctive and equitable relief, and compensatory and punitive damages. In connection with this lawsuit, McDonald provided sworn testimony in which she admitted that $440,000 of the third party’s money had already been transferred to her operating accounts and to her personal accounts (and that of her sister), and explained her position that, even though her client never provided, and the third party never received, any Bitcoin, she was entitled to those funds and more, as fees for her services to her client. She also took the position that she did not need the third party’s permission to distribute its funds to herself or any other entity, because she was doing so at her client’s direction and for his benefit. Further, McDonald told the federal court that she intended to keep the fees if the court allowed her to do so.

But when the federal court determined that McDonald still had $310,000 left in two of her Wells Fargo IOLTA accounts, the court directed her to transfer that amount back to the third party (which she did), and the court issued an order restraining any future transfer or spending of any money that was part of the third party’s $4,000,000. Later, it became clear that McDonald was continuing to use the third party’s money to operate her business, so the federal court ordered McDonald to deposit all monies in any of her accounts that could be traced back to the third party’s $4,000,000 into the registry of the court. As a result, $104,200 was put into the court’s registry and eventually returned to the third party. So, in the end, the third party only recovered $2,414,200 of its $4,000,000 from McDonald, with the remaining $1,585,800 having been retained by McDonald and her family ($335,800) or paid out to various third parties seemingly unrelated to this Bitcoin transaction ($1,250,000).

It appears that more than $400,000 of the third party’s money was used to repay amounts McDonald owed to individuals or entities who had previously deposited money into her IOLTA account to be held in escrow in connection with her client’s earlier “deals,” but whose funds had been distributed from her escrow account (in violation of escrow agreements) despite the fact that the earlier “deals” had never closed.

Sanction

McDonald’s admitted lies (or misrepresentations) to the Bar and to the third party about the status of the third party’s funds in her trust account together with her conversion of a large portion of those funds (i.e., the violations of Rules 8.4 and 4.1) alone support disbarment. Moreover, when those actions are combined with McDonald’s continuing refusal to see or acknowledge the pivotal role she played in the misdeeds apparently being perpetrated by her client and the fact that she has not made the third party whole, we cannot fathom a punishment less than disbarment. On top of those violations, McDonald also blatantly violated Rules 1.15 (I) and (II) in her handling of the money that was entrusted to her and deposited into her IOLTA account. McDonald’s complete disregard for her role as a fiduciary in this transaction (and apparently other transactions) is staggering and would support disbarment on its own as well.

Details on related litigation from the Robbins firm web page

A federal judge has frozen multiple trust accounts of Georgia attorney Diana McDonald and ordered her to turn over a slew of financial records and communications.

A federal judge in Atlanta has issued a temporary restraining order against a Gwinnett County attorney and the bank where she housed her law firm trust accounts in what appears to be an international fraud case involving bitcoin sales.

Judge Mike Brown of the U.S. District Court for the Northern District of Georgia issued the March 8 order after GSR Markets Limited—an international trader in digital assets—sued after it wired over $4 million to Suwanee attorney Diana McDonald to buy bitcoin it never received, according to court documents.

Brown said in his order that McDonald shifted GSR’s escrowed funds into other accounts, including her own operating accounts for the payment of “alleged fees.”

“It is apparent that defendant McDonald has dissipated funds and is unlikely to have sufficient funds to satisfy a subsequent judgment absent this relief,” Brown wrote.

GSR, based in Hong Kong, also sued Wells Fargo—where McDonald banked, and Florida-based Valkyrie Group and Valkyrie principals Hugh and Brandon Austin, who acted as sellers of the bitcoin their firm was to purchase from another company. That company is identified in court records as Alivic Corp. The purchase agreement listed McDonald as the closing attorney for the deal.

McDonald is a sole practitioner in Suwanee—a town of less than 20,000 people 23 miles northeast of Atlanta. McDonald advertises online as handling wrongful death and personal injury cases, wrongful detention shoplifting cases, bankruptcy reorganizations, probate cases, as well as business acquisitions, escrow services and corporate and contract law.

Brown’s order froze McDonald’s multiple firm fiduciary trust, or IOLTA, accounts and directed McDonald to immediately pay GSR Markets $310,000, which is all that remains of more than $1.6 million GSR is still owed for the never completed bitcoin sale. GSR has been able to recoup only $2 million of its $4 million initial deposit from McDonald after repeatedly emailing and calling the lawyer, according to a complaint and motion for a restraining order filed March 1. The complaint alleges that McDonald kept or disbursed the remainder of GSR’s escrowed funds.

The suit also claims that Wells Fargo “failed to take even basic steps to protect GSR Markets’ money. When alerted to the disappearance of GSR’s funds, “Wells Fargo, rather than investigate or show any concern as to the missing funds, vouched for McDonald, which only led to more delays and allowed the money trail to go cold,” the suit said.

In his March 8 order, Brown directed Wells Fargo to “take reasonably necessary and appropriate action” to ensure that the $310,000 McDonald was ordered to give GSR will clear.

Brown also barred McDonald from stopping the payments. Should McDonald fail to deliver the funds, Brown directed Wells Fargo to wire the money from her IOLTA accounts to GSR’s Atlanta law firm. GSR is represented by Richard RobbinsVincent Russo and Heather Huggins Sharp of The Robbins Firm.

Brown also barred McDonald from disbursing any money “in any way related” to nearly $1.7 million that she will still owe GSR in the event her client—Alivic Corporation of Australia and the supposed source for the bitcoin at issue—wired her additional funds. And he barred McDonald “from spending, using, or disbursing any of the GSR escrowed funds.”

Brown also ordered the attorney to surrender financial records, emails and other communications related to GSR’s wire transfer. He also ordered McDonald to surrender bank statements for all of her operating and IOLTA accounts. Brown noted that, in addition to the Wells Fargo accounts, McDonald had three additional IOLTA accounts at two other banks.

McDonald’s counsel, James Ward Howard in DeKalb County, acknowledged Tuesday that, while there appears to be “a fraudulent scheme” at play, he insisted McDonald “ is as much a victim as anyone else.”

Wells Fargo counsel Brent Hitson at Burr & Forman in Birmingham, Alabama, referred requests for comment to a bank spokeswoman who said, “We do not believe the claims in the complaint have merit and will vigorously defend the suit.”

No attorney has entered an appearance for Valkyrie or the Austins.

Robbins labeled the disappearance of more than $1.6 million as “clearly just a fraud.”

“In the crypto age, it’s easy to do. The money is so vast,” he said.  The failed bitcoin transaction was initiated after GSR “was approached by a broker based in Malta, who allegedly had a huge seller based in Australia, who had teamed up with a broker in Florida,” Robbins said. “That’s not unusual in the crypto world, where brokers, seller and buyers are often based overseas.”

GSR’s initial $4 million bitcoin purchase was intended as an initial investment in what eventually would be $70 million, he said.

Robbins said that, before transferring $4 million to McDonald, GSR “did call and confirm the escrow account at Wells Fargo.” He said GSR also “was led to believe she had done other transactions in the past.  My clients assumed, if an attorney trust account was involved, the money was safe.”

Based on assurances that the bitcoin would be transferred on receipt of the funds, GSR also shorted the based on a $3,635 purchase price, the suit alleged. When the transfer never took place, GSR was out an additional $380,000, which it is also seeking to recoup, according to the complaint.

Howard said that McDonald “has no agreement” with GSR and was “unaware” that she was listed as closing attorney in the bitcoin sale agreement between GSR, the Valkyrie Group and brokerage OTC Desks LTD in Malta, neither of whom she represents.

He acknowledged that McDonald represents Alivic, which is not a defendant in the GSR suit,  and carries out that firm’s instructions. “Alivic appeared to be legitimate,” Howard said.

“Once it became apparent the whole deal was falling apart, she got permission [from Alivic] to return $2 million” to GSR, he added.

“It appears there is some type of fraudulent scheme,” Howard said. He said he is concerned that McDonald “may have been used by another party to facilitate the scheme without her knowledge or understanding.”

Howard wouldn’t address why McDonald accepted the funds or what happened to the balance of the money if she was unaware of the agreement. “The only thing I can say is she abided by her client’s instructions,” Howard said. He said he has not been in touch with Alivic or anyone else, besides McDonald, who is representing the firm. “I do not know how to get in touch,” he said.

Robbins said that McDonald testified she transferred some of the GSR escrowed funds to her accounts. “We all know what an escrow account is,” Robbins said. “We put money in escrow. The deal closes; she has everybody’s authority to release the funds. This is not complex.”

But McDonald appeared to believe that, even if the deal didn’t close, “Whatever the seller [Alivic] tells me I can do with the [escrowed] money, I can do."

(Mike Frisch)

June 11, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Remote Practice "In Georgia"

The Georgia Supreme Court has approved a Formal Advisory Opinion on remote law practice

QUESTION PRESENTED:

Under Georgia Rule of Professional Conduct 5.5, may a Domestic Lawyer or a Foreign Lawyer provide legal services by remote means from Georgia while residing in Georgia, when the services have no relationship with Georgia other than the lawyer’s physical location?

SUMMARY ANSWER:

Yes, under certain conditions. A Domestic or Foreign Lawyer residing and working in Georgia may provide legal services by remote means that have no relationship to Georgia other than the lawyer’s physical location if: (a) the lawyer does not hold out or otherwise represent that they are licensed in Georgia; (b) the lawyer takes reasonable steps to ensure that the lawyer’s Georgia location is not generally known; and (c) the lawyer takes reasonable steps to correct any misunderstanding about the lawyer’s licensure.

Limits

It is important to highlight the limits of this opinion. We conclude that a Domestic or Foreign Lawyer does not violate Rule 5.5 by providing legal services by remote means from Georgia (but not “in Georgia”) while residing in Georgia, under specific conditions. The lawyer must not misrepresent the lawyer’s lack of Georgia law license. The lawyer also must take reasonable steps to ensure that the Georgia location of the lawyer is not generally known and to correct any misunderstanding of the lawyer’s licensure. For Domestic and Foreign Lawyers who wish to practice from Georgia, this Opinion provides a safe harbor from the limits of Rule 5.5. This Opinion does not purport, however, to provide guidance beyond that. Domestic or Foreign Lawyers who provide services “in Georgia” or whose presence in Georgia becomes generally known must consult Rule 5.5 and other applicable law to determine the propriety of such activities.

(Mike Frisch)

June 11, 2024 in Bar Discipline & Process | Permalink | Comments (0)

Reciprocal Sanction For Deposition Misconduct

A public censure has been imposed as reciprocal discipline by the New York Appellate Division for the First Judicial Department

The material facts underlying this disciplinary matter are undisputed as respondent, represented by counsel, entered into a June 12, 2023 stipulation with the Massachusetts Bar Counsel admitting to deposition-related misconduct and consenting to a public reprimand.

Respondent represented a defendant in a civil action brought in the United States District Court for the District of Massachusetts. During his client’s 2021 deposition, which took place remotely with respondent and his client in a conference room, both wearing face masks, respondent repeatedly muttered answers to questions posed to his client by opposing counsel. Respondent’s client repeated the same or substantially the same answers. Several hours into the deposition, opposing counsel first overheard respondent provide an answer to the client, which the client repeated. Confronted by opposing counsel, respondent denied that he had given an answer to his client. When opposing counsel later reviewed the video of the deposition, he noticed several dozen instances of respondent surreptitiously providing his client with answers.

Opposing counsel moved for sanctions in the district court. At the sanctions hearing, respondent acknowledged coaching his client and blamed his conduct on frustration with opposing counsel’s examination, which he described as unnecessarily intrusive into sensitive topics with limited relevance to the case. In addition, he stated that he was concerned about his client’s well-being as she suffered from healthmchallenges and had been anxious about the deposition.

The district court judge who conducted an initial screening of the alleged misconduct for possible referral to the District of Massachusetts disciplinary process granted the sanctions motion in part and denied it in part. The court noted that respondent had acknowledged that his conduct was unacceptable and took responsibility for becoming too emotionally invested in the case. Nevertheless, the court noted that respondent had taken advantage of the remote proceeding and his interruptions did not constitute a momentary and isolated incident or a single lapse in judgment. Among other penalties, the court disqualified respondent from further participation in the litigation. The court denied the motion insofar as it sought more extreme sanctions, such as dismissal of respondent’s client’s case or imposing an adverse inference on the client’s testimony, noting that the wrongdoing was primarily that of respondent, not his client. The court referred the matter to the presiding judge of the district court for further proceedings.

Reciprocal discipline for Massachusetts sanction

Here a public censure is the appropriate reciprocal discipline as it is commensurate with the public reprimand imposed by Massachusetts and in general accord with this Court’s precedent involving arguably comparable misconduct.

(Mike Frisch)

June 11, 2024 in Bar Discipline & Process | Permalink | Comments (0)