Thursday, July 9, 2020

Negligent Not Reckless

The District of Columbia Court of Appeals rejected a disbarment recommendation of Disciplinary Counsel and the Board on Professional Responsibility, concluding that the attorney's mishandling of entrusted funds involved  negligent, rather than reckless, misappropriation.

In determining that respondent’s conduct here amounted to merely negligent misappropriation, we reaffirm that Rule 1.15, to support a finding of recklessness, requires more than poor, careless, or non-existent record-keeping in addition to the use of client funds and commingling.

..Despite an investigation of respondent’s trust account, Disciplinary Counsel was only able to identify one instance of misappropriation and one check that was dishonored. In fact, Disciplinary Counsel rests the entire case of misappropriation on evidence that the amount in respondent’s trust account fell below $554 during a single two-month period. The fact that respondent’s commingling and poor recordkeeping did not harm any client or third-party appears to be more than “serendipity,” as Disciplinary Counsel argues, but rather evidences a lack of additional violations or conduct amounting to recklessness. Additionally, Disciplinary Counsel does not present any evidence to contradict respondent’s assertion that paying his office rent from his trust account, and thus the resulting overdraft, was a mistake. We cannot say that respondent’s conduct evidences a flagrant disregard for third-party or client funds. While respondent did engage in extensive commingling and had a poor system of recordkeeping, that conduct, combined with one instance of misappropriation, is insufficient to support a finding of recklessness. Therefore, we conclude that respondent’s conduct amounts to negligent misappropriation.

The court remanded for a renewed sanction recommendation.

The court agreed that the attorney had engaged in a non-waivable (and undisclosed) conflict of interest vis-a-vis a former romantic partner that included suing a current client

In representing Ms. Fitzgerald in the association’s litigation, respondent never informed Ms. Fitzgerald that she had a third-party claim against him in that matter (premised on his promise to pay the condo fees for which she was being sued), and he never pled such a claim in that litigation. Instead, respondent urged her to sign a confessed judgment in favor of the condo association. He later filed a lawsuit against her (while still representing her in the association’s litigation) seeking a declaratory judgment that he was the actual owner of the unit.

The per curiam decision was issued by BLACKBURNE-RIGSBY, Chief Judge, THOMPSON, Associate Judge, and GREENE, Senior Judge of the Superior Court of the District of Columbia. (Mike Frisch)

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