The Colorado Supreme Court adopted a series of changes to the attorney regulation system, including the establishment of the Office of the Presiding Disciplinary Judge (PDJ), pursuant to C.R.C.P. 251.16. The Court also made extensive revisions to the rules governing the disciplinary process, repealing C.R.C.P. 241 et seq., and replacing those rules with C.R.C.P. 251 et seq. The PDJ presides over attorney regulation proceedings and, together with a two-member Hearing Board, issues orders at trials and hearings. The Rules of Civil Procedure and the Rules of Evidence apply to all attorney regulation proceedings before the PDJ. See C.R.C.P. 251.18(d). Disciplinary Opinions may be appealed in accordance with C.R.C.P. 251.27.
The Colorado Lawyer publishes the summaries and full-text Opinions of PDJ William R. Lucero and the Hearing Board, whose members are drawn from a pool appointed by the Supreme Court. For space purposes, exhibits, complaints, and amended complaints may not be printed.
Case No: 07PDJ026 (consolidated with 07PDJ047)
THE PEOPLE OF THE STATE OF COLORADO,
ROYAL DANIEL III.
March 17, 2008
REPORT, DECISION, AND ORDER IMPOSING
SANCTIONS PURSUANT TO C.R.C.P. 251.19(c)
On January 16, 2008, the Presiding Disciplinary Judge ("the Court") held a Sanctions Hearing pursuant to C.R.C.P. 251.18(d). James C. Coyle and Julie M. Schmidt appeared on behalf of the Office of Attorney Regulation Counsel ("the People"). Royal Daniel III ("Respondent") did not appear, nor did counsel appear on his behalf. The Court issues the following "Report, Decision, and Order Imposing Sanctions Pursuant to C.R.C.P. 251.19(c)."
Disbarment is the presumptive sanction when a lawyer knowingly converts client or third-party funds and causes serious or potentially serious injury. Respondent knowingly converted sizeable amounts of third-party funds while serving as a qualified intermediary in §1031 tax-deferred real estate exchanges. He later disappeared and failed to participate in these proceedings. Is disbarment the appropriate sanction in this case?
SANCTION IMPOSED: ATTORNEY DISBARRED
II. PROCEDURAL HISTORY AND FACTUAL BACKGROUND
The People filed a complaint in 07PDJ026 on June 11, 2007, and in 07PDJ047 on July 23, 2007. Respondent failed to file an answer in either of the cases and the Court granted motions for default on October 2, 2007. The Court also consolidated 07PDJ047 into 07PDJ026 on October 2, 2007. Upon the entry of default, the Court deems all facts set forth in the complaints admitted and all rule violations established by clear and convincing evidence. People v. Richards, 748 P.2d 341, 346 (Colo. 1987).
The Court hereby adopts and incorporates by reference the factual background of this case fully detailed in the admitted complaints.1 Respondent took and subscribed the oath of admission and gained admission to the Bar of the Colorado Supreme Court on September 23, 1994. He is registered upon the official records of the Colorado Supreme Court, Attorney Registration No. 24389, and is therefore subject to the jurisdiction of the Court.
Wendy and Stacy Beaty contacted Respondent in late March 2007 to determine whether he would act as a qualified intermediary in their potential § 1031 tax-deferred real estate exchange on the sale of their condominium. Respondent told the Beatys via e-mail that he would mail them a written exchange agreement to act as their qualified intermediary. Respondent never sent an agreement to the Beatys.
On April 12, 2007, unbeknownst to the Beatys, Respondent sent e-mail to Jennifer Farrell from Land America, the title company that held the Beatys’ proceeds. Respondent told Ms. Farrell that he had signed an agreement with the Beatys to receive said funds on their behalf as a qualified intermediary. This statement was false and Respondent knew it was false at the time he made it.
On April 27, 2007, Land America advised the Beatys that Land America had already wire-transferred the Beatys’ proceeds, $80,303.10, to Respondent based on his statement. Respondent therefore knowingly exercised unauthorized dominion or ownership over funds belonging to the Beatys for his own purposes.
The Beatys thereafter contacted the Breckenridge Police Department on or about May 4, 2007, and spoke with Sergeant Susan Quesada. Sergeant Quesada informed them of an ongoing criminal investigation into Respondent’s conduct, and that a review of his bank account records revealed that the escrow account no longer held their money.
The Breckenridge Police Department, with the assistance of Certified Public Accountants, conducted a financial investigation into Respondent’s bank accounts. They found Respondent had ten accounts at U.S. Bank totaling $3,971.51 in funds, and three accounts at Alpine Bank totaling $229,820.67 in funds. While these accounts contain more funds than actually owed to the Beatys, the investigation nevertheless demonstrated that based on other documented claims, Respondent should have been holding at least $561,571.25 in trust.
The Court therefore concludes that Respondent’s knowing conduct in the Beaty matter caused the Beatys actual harm and violated Colo. RPC 8.4(b) (criminal act reflecting on honesty, trustworthiness, or fitness in other respects), Colo. RPC 8.4(c) (dishonest statement), Colo. RPC 8.4(c) (knowing conversion) and C.R.C.P. 251.5(b).
In 2006, Respondent agreed to provide qualified intermediary services for Gene Gregory and thereafter assisted Mr. Gregory with a §1031 property exchange. As a part of that agreement, Respondent held over $250,000.00 in trust on behalf of Mr. Gregory. At the time Mr. Gregory needed to receive the $250,000.00, Respondent could not provide the funds because he had used them. Respondent thereafter gave Mr. Gregory "the run around," before he eventually admitted to Mr. Gregory that he had used Mr. Gregory’s funds to repay §1031 funds he had used belonging to other people. He also admitted to Mr. Gregory during this time that he was $300,000.00 in debt.
Respondent eventually repaid Mr. Gregory most of his $250,000.00. However, Respondent still knowingly exercised unauthorized dominion or ownership over funds belonging to Mr. Gregory for his own purposes over a period of time. The Court therefore concludes that Respondent’s knowing conduct in the Gregory matter caused Mr. Gregory actual harm and violated Colo. RPC 8.4(c) (knowing conversion).
Jacob Miller and his wife are personal acquaintances of Respondent who had a prior attorney-client relationship with him in a real estate matter. In early July 2006, the Millers completed construction of a house in Breckenridge. They then listed the house for sale, and three days later, received an offer to purchase that house.
The Millers spoke to Respondent about the sale of this house. Respondent described numerous tax benefits of a § 1031 tax-deferred exchange, and suggested that they hire him as their qualified intermediary for the exchange. On July 13, 2006, Mr. Miller and the Daniel Law Firm entered into a written "exchange agreement" in which Respondent agreed to act as the qualified intermediary for the property exchange.
On July 21, 2006, the closing occurred on the first property ("relinquished property"). At that closing, Respondent received a check in the amount of $776,033.45. Respondent was required to hold these funds in trust on behalf of the Millers until the completion of the exchange. Respondent assured the Millers that this money would earn a good interest rate for them in a local Alpine Bank account.
The Millers thereafter located two replacement properties for the exchange. Respondent attended the closings and provided the funds for the purchase of the two replacement properties. After purchasing these two properties, the Millers still had $171,000.00 remaining in Respondent’s trust pursuant to this tax-deferred exchange. These remaining funds had been designated for startup building costs and for the Millers’ 2007 taxes.
In early April 2007, the Millers received e-mail from their accountant in Frisco, Colorado, notifying them that they needed to send the Internal Revenue Service ("IRS") $42,186.00 and the State of Colorado $8,911.00. The Millers promptly forwarded the e-mail to Respondent and requested that he transfer these amounts into their personal account. Respondent sent the Millers e-mail and notified them that he would do so. Based upon Respondent’s assurances, the Millers wrote checks to the IRS and the State of Colorado.
On April 26, 2007, Respondent advised the Millers via e-mail of some confusion with regard to the wire-transfer and thus, the wire-transfer had been returned to him. Respondent then offered to wire-transfer the funds into another personal account, but thereafter failed to do so.
On April 27, 2007, Respondent disappeared. The same day, the Millers were notified that their checks to the IRS and the State of Colorado had bounced. Respondent failed to return any of the remaining funds held in trust on behalf of the Millers. He therefore knowingly exercised unauthorized dominion or ownership over funds belonging to the Millers for his own purposes. The Millers state that they are now receiving threats of foreclosure on their personal residence, that they have no startup money for any future building on the two replacement lots, and that they may have to pay capital gains taxes on the Breckenridge property.
The Court therefore concludes that Respondent’s conduct in the Miller matter caused the Millers actual harm and violated Colo. RPC 8.4(b) (criminal act reflecting on honesty, trustworthiness, or fitness in other respects), Colo. RPC 8.4(c) (knowing conversion) and C.R.C.P. 251.5(b).
Mark and Susan Newkirk hired Respondent to act as a qualified intermediary in a § 1031 tax-deferred real estate exchange. On October 30, 2006, the Newkirks sold their first property ("relinquished property") in Breckenridge, Colorado. The same day, Land America Title issued a check for $205,305.28 to the Daniel Law Firm. Respondent was required to hold these funds in trust on behalf of the Newkirks until the completion of the exchange.
In February 2007, Mr. Newkirk called Respondent to inform him of their plans for the replacement portion of the property exchange. The Newkirks discussed an April 2007 closing date. Respondent assured the Newkirks that there would be "no problem" in meeting their April 2007 deadline. When the Newkirks asked what they needed to do, Respondent told them that they only needed to tell him where to send the money when they were ready for it. When the Newkirks asked about the time limits on the §1031 exchange, Respondent told them to remind their accountant to file an extension on their tax return since the closing would occur after the IRS filing deadline.
As part of the closing document requirements for the replacement property, the Newkirks submitted a standard mortgage form to Respondent entitled, "Request for Verification of Deposit." Respondent completed and signed this form on April 4, 2007. In the form, Respondent verified that he continued to hold $205,305.28 in trust on behalf of the Newkirks in "account number 06-503."
On April 8, 2007, Mr. Newkirk called Respondent and told him that the closing on the replacement property would be held on April 25, 2007. Respondent reassured them that there would be no problem. On April 19, 2007, and over the next few days, Mr. Newkirk called and left several messages for Respondent. Respondent failed to return any of these phone calls. On April 25, 2007, Respondent’s receptionist called and stated that she had given Respondent all of the Newkirks’ messages, but that he had been "very busy." Mr. Newkirk gave the receptionist the bank account and routing numbers Respondent would need in order to send the money.
Respondent failed to transfer the money needed to close on the replacement property. As stated above, he disappeared on April 27, 2007. Respondent also failed to return any of the funds held in trust on behalf of the Newkirks. He therefore knowingly exercised unauthorized dominion or ownership over funds belonging to the Newkirks for his own purposes.
The Court therefore concludes that Respondent’s conduct in the Newkirk matter caused the Newkirks actual harm and violated Colo. RPC 8.4(b) (criminal act reflecting on honesty, trustworthiness, or fitness in other respects), Colo. RPC 8.4(c) (knowing conversion) and C.R.C.P. 251.5(b).
The ABA Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") and Colorado Supreme Court case law are the guiding authorities for selecting and imposing sanctions for lawyer misconduct. In re Roose, 69 P.3d 43, 46-47 (Colo. 2003). In imposing a sanction after a finding of lawyer misconduct, the Court must first consider the duty breached, the mental state of the lawyer, the injury or potential injury caused, and the aggravating and mitigating evidence pursuant to ABA Standard 3.0.
Respondent’s failure to participate in these proceedings leaves the Court with no alternative but to consider only the established facts and rule violations set forth in the complaints in evaluating the first three factors listed above. The Court finds Respondent violated duties owed to the public and the legal system. Respondent specifically violated his duty to preserve the property of the third-party individuals who hired him and failed to maintain his personal integrity by acting dishonestly and engaging in felonious criminal conduct. The entries of default established that Respondent knowingly engaged in this conduct and caused significant actual harm to these individuals.
The Court finds several aggravating factors exist in this case including a dishonest or selfish motive, a pattern of misconduct, multiple offenses, substantial experience in the practice of law, indifference to making restitution, and illegal conduct. See ABA Standards 9.22(b), (c), (d), (i) and (j). Due in part to the absence of any contradictory evidence, the Court finds clear and convincing evidence to support each aggravating factor. Respondent failed to participate in these proceedings and therefore presented no evidence in mitigation. However, the People acknowledge Respondent has no prior disciplinary record. See ABA Standards 9.32(a).
The ABA Standards suggest that the presumptive sanction for the misconduct evidenced by the admitted facts and rule violations in this case is disbarment. Disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client. ABA Standard 4.11. However, the Colorado Supreme Court makes no distinction between theft from a client and theft from a third-party when Respondent acts in a position of trust. See e.g. People v. Linville, 114 P.3d 104 (Colo. 2005) (attorney acting as trustee); People v. Motsenbocker, 926 P.2d 576 (Colo. 1996) (attorney acting as bar association treasurer); and People v. McDowell, 942 P.2d 486 (Colo. 1997) (attorney holding funds for real estate transaction).
Colorado Supreme Court case law applying the ABA Standards holds disbarment is the presumptive sanction for conversion of client or third-party funds. Knowing conversion or misappropriation of client money "consists simply of a lawyer taking a client’s money entrusted to him, knowing that it is the client’s money and knowing that the client has not authorized the taking." People v. Varallo, 913 P.2d 1, 11 (Colo. 1996). Neither the lawyer’s motive in taking the money, nor the lawyer’s intent regarding whether the deprivation is temporary or permanent, are relevant for disciplinary purposes. Id. at 10-11. Significant mitigating factors may overcome the presumption of disbarment, however, none are presented in this case. See In re Fischer, 89 P.3d 817 (Colo. 2004) (finding significant facts in mitigation).
Respondent knowingly converted sizeable amounts of third-party funds while serving as a qualified intermediary in §1031 tax-deferred real estate exchanges. His use and failure to return these funds warrants disbarment. Respondent’s complete failure to participate in these proceedings further precludes any deviation from the presumptive sanction.
One of the primary goals of our disciplinary system is to protect the public from lawyers who pose a danger to them. The facts established in the complaint, without explanation or mitigation, reveal the serious danger Respondent poses to the public. He knowingly converted sizeable amounts of third-party funds and caused significant actual harm to these individuals. This misconduct adversely reflects on his fitness to practice law. Absent extraordinary factors in mitigation not presented here, the ABA Standards and Colorado Supreme Court case law applying the ABA Standards both support disbarment. Upon consideration of the nature of Respondent’s misconduct, his mental state, the significant harm and potential harm caused, and the absence of mitigating factors, the Court concludes there is no justification for a sanction short of disbarment.
The Court therefore ORDERS:
1. ROYAL DANIEL III, Attorney Registration No. 24389, is hereby DISBARRED from the practice of law, effective thirty-one (31) days from the date of this order, and his name shall be stricken from the list of attorneys licensed to practice law in the State of Colorado.
2. ROYAL DANIEL III SHALL pay full restitution with statutory interest to each injured third-party or to the Attorney’s Fund for Client Protection for any amounts reimbursed by the fund.2
3. ROYAL DANIEL III SHALL pay the costs of these proceedings in the amount of $1,805.80 within thirty (30) days of the date of this order.
1. See the People’s complaints in 07PDJ026 and 07PDJ047.
2. The People set forth amounts of $80,303.10 owed to the Beatys, over $250,000.00 owed to Mr. Gregory, $171,033.45 owed to the Millers, and $205,305.28 owed to the Newkirks in their complaints. The People concede Respondent eventually repaid Mr. Gregory "most" of his $250,000.00. The actual amount owed to the Millers is unclear because the People allege an amount of $144,458.04 owed to the Millers in their sanctions hearing brief
Case No: 07PDJ037
ARTHUR E. PATTERSON,
THE PEOPLE OF THE STATE OF COLORADO.
March 17, 2008
OPINION AND ORDER RE: REINSTATEMENT
PURSUANT TO C.R.C.P. 251.29(b)
On January 23, 2008, a Hearing Board composed of Mickey W. Smith and Frederick Y. Yu, both members of the Bar, and William R. Lucero, the Presiding Disciplinary Judge ("PDJ"), held a Reinstatement Hearing pursuant to C.R.C.P. 251.18 and 251.29(d). Alexander R. Rothrock and Jennifer M. Osgood appeared on behalf of Arthur E. Patterson ("Petitioner"), and April M. Seekamp appeared on behalf of the Office of Attorney Regulation Counsel ("the People"). The Hearing Board now issues the following "Opinion and Order Re: Reinstatement Pursuant to C.R.C.P. 251.29(b)."
An attorney seeking reinstatement must prove rehabilitation, compliance with disciplinary orders, and fitness to practice by clear and convincing evidence. Petitioner mishandled five client matters while suffering from severe depression. Testimony from Petitioner, his mental health expert, and an attorney peer all demonstrate that he is now in good mental health, compliant with disciplinary orders, and otherwise fit to practice law. The People concur that Petitioner should be reinstated. Should the Hearing Board reinstate Petitioner?
After considering the evidence presented by Petitioner, and the position of the People in this matter, the Hearing Board finds clear and convincing evidence of rehabilitation, compliance with disciplinary orders, and fitness to practice law and concludes that Petitioner should be reinstated to the practice of law.
DECISION OF HEARING BOARD:
II. PROCEDURAL HISTORY
On May 9, 2002, the PDJ approved a Conditional Admission of Misconduct and suspended Petitioner from the practice of law for a period of one year and one day, effective June 9, 2002.1 Petitioner filed "Petitioner’s Verified Petition for Reinstatement" on June 8, 2007, nearly five years after the effective date of his suspension.2 On June 26, 2007, the People filed an "Answer to Verified Petition for Reinstatement" and therein agreed to Petitioner’s eligibility for reinstatement pursuant to C.R.C.P. 251.29. However, they took no position with regard to his reinstatement pending an investigation to determine whether he "possesses all of the qualifications required of an applicant for admission to the Bar of Colorado."
On January 11, 2008, the parties filed a "Stipulation of Facts" in which they agreed that Petitioner had substantially complied with the provisions of C.R.C.P. 251.28, and had paid all costs and restitution as ordered by the PDJ in his "Order Approving Conditional Admission and Imposing Sanctions." On January 23, 2008, the date of the Reinstatement Hearing, the People stipulated that Petitioner had fulfilled all of the technical requirements for reinstatement under C.R.C.P. 251.29. However, before taking a position on Petitioner’s reinstatement, the People chose to first hear his evidence with regard to rehabilitation.
Petitioner testified on his own behalf and presented the testimony of Charles Kline, an attorney from Longmont, and Suzanne M. Pinto, Ph.D., a forensic psychologist, in support of his petition. The PDJ admitted Petitioner’s Exhibits 1-3 based upon the stipulation of the parties. The People did not present any witnesses and at the close of the case agreed, subject to the Hearing Board’s approval, that Petitioner should be reinstated without conditions.
III. FINDINGS OF FACT
The Hearing Board finds the following facts by clear and convincing evidence.
Petitioner has taken and subscribed the Oath of Admission, was admitted to the Bar of the State of Colorado on September 29, 1978, and is registered as an attorney upon the official records of the Colorado Supreme Court, Attorney Registration No. 09126. Petitioner is therefore subject to the jurisdiction of the Colorado Supreme Court and the Office of the Presiding Disciplinary Judge in these proceedings.
On or about April 24, 2002, Petitioner submitted a "Stipulation Agreement and Affidavit Containing the Petitioner’s Conditional Admission of Misconduct." The factual basis of the stipulation reveals that Petitioner failed to communicate with clients, neglected client matters, failed to abide by the rules of a tribunal, and failed to promptly return client files and refund any advanced fees not earned in the five client matters described below.
In January 2001, a wife hired Petitioner to represent her in a dissolution matter. The client paid Petitioner $124.00 for the filing fee. Petitioner prepared a dissolution petition and served the husband, but thereafter failed to file it with the court. When the husband’s lawyer tried to file a response to the petition, he was unable to do so because the petition had not been filed. The client thereafter tried to communicate with Petitioner to no avail. On May 11, 2001, the client and her husband filed their own petition for dissolution and terminated Petitioner’s representation. Because Petitioner had not filed the petition, he was required to return the filing fee in the amount of $99.00. The remaining $25.00 had been used for service of process.
In March 2000, a husband hired Petitioner to represent him in a modification of parenting time in a post-dissolution matter. The client paid Petitioner $750.00 to draft an agreement following mediation. In November 2000, Petitioner had a heart attack. In January 2001, Petitioner drafted the agreement and sent it to his client who sent it back to Petitioner with revisions. Petitioner thereafter did nothing further. The client attempted to contact Petitioner, but he failed to communicate with the client over a period of months. When the client finally contacted the Petitioner and asked him to return the file, Petitioner failed to do so in a timely fashion.
Petitioner represented the wife in a dissolution matter. In March 2000, a permanent orders hearing was held, and thereafter, opposing counsel prepared and submitted a proposed order signed by opposing counsel and her client. Petitioner failed to approve the order, send it to his client, or provide his input to opposing counsel. Opposing counsel submitted the permanent orders with the court and the court approved them. Petitioner’s neglect caused opposing counsel to incur additional fees to mitigate the effect of his neglect. Opposing counsel requested that Petitioner pay those fees in the amount of $96.85, which he had not paid at the time of the stipulation.
In 2001, Petitioner represented the wife in a dissolution matter. A decree of dissolution was entered, but the parties were ordered to attend mediation for unresolved issues. The parties settled all property matters, so the husband’s attorney prepared the settlement agreement and submitted the signed settlement to Petitioner. Thereafter, Petitioner failed to take any action on the proposed agreement. When the client later contacted Petitioner, he failed to comply with the client’s requests for information regarding the status of the matter. Opposing counsel then filed a motion to enforce the settlement and for sanctions. The court entered an order enforcing the written property settlement and ordering Petitioner to pay the husband $500.00 for attorney fees within ten days of August 6, 2001. Petitioner knew of the order but failed to pay within the ten-day requirement. Petitioner ultimately paid the $500.00 in full with interest in January 2002, but only after the client filed the request for investigation.
In July 2000, Petitioner represented the wife in post dissolution matters concerning two issues: (1) seeking reimbursement from the husband for half of the house payment that the wife had made for a period of six months, and (2) addressing whether the wife was entitled to maintenance under court orders following the sale of the home. Petitioner eventually provided his client with motions and requests to set hearings, but failed to file the pleadings with the court. The parties reached a stipulation regarding the marital home, but the husband failed to comply with it. Petitioner took no action regarding the husband’s non-compliance. The client finally filed her own pro se motion for a hearing regarding the husband’s failure to comply with the stipulation concerning the marital home. A hearing was held. Petitioner was aware of the hearing, but he did not appear. At the hearing, the husband was ordered to comply with the stipulation, but he failed to do so. The court directed the wife to file a contempt citation and authorized her to proceed pro se. Nevertheless, the client attempted to obtain new counsel. At the time of the stipulation, she had not yet filed a motion for contempt. In March 2002, Petitioner filed a motion to withdraw from the case.
Petitioner grew up in Akron, Ohio and received his Bachelor of Arts degree from the University of Colorado in 1974. He received his law degree from Capital University Law School in Columbus, Ohio in 1978. Petitioner passed the Colorado Bar Examination in 1978 and went to work as an attorney in the oil and gas industry until 1983. He and his first wife moved to New Jersey in 1983, where they lived until returning to Colorado in 1987. Upon their return, Petitioner entered into a partnership with James Keen, which lasted until 1995. Petitioner specialized in dependency and neglect matters and held a contract for these cases with Boulder County until 1999.
Petitioner married his first wife during his second year of law school. One morning, after Petitioner left for work, a man broke into their home and raped his first wife. Petitioner and his first wife suffered significant emotional distress as a result of this traumatic event. Petitioner’s first wife sought mental health counseling for posttraumatic stress syndrome and depression. Petitioner decided against seeking similar treatment, as he believed he could handle any issues on his own.
Petitioner testified that despite his wife’s depression, she attempted to make a good life with him. However, she ultimately moved to New Jersey and shortly thereafter asked him for a divorce. Petitioner testified that her request devastated him, because no one in his family had ever been divorced. Nevertheless, they amicably divorced in 1992. They decided that she would raise their baby daughter in New Jersey, and that he would raise their son in Colorado.
Petitioner became a "workaholic" as a way to deal with his emotional problems. He engaged in a high-volume solo practice specializing in dependency and neglect, domestic, and criminal law matters. Petitioner maintained approximately 100 cases a year and provided pro bono services for many of his clients. He seldom worked with a support staff, as he typically preferred to perform the work himself, rather than delegate to others.
Petitioner testified that he consumed himself with his practice and rarely socialized with others. Although he coached his son’s football and baseball teams, Petitioner recognizes that he was not "emotionally available" for his son at that time. He enjoyed the practice of law and he thought that he did not have to be a good friend or father because he was a good lawyer.
When his father died of a heart attack, Petitioner attended the services and then returned to work immediately following the funeral. Again, the way he handled the emotional issues attendant with his father’s death was to absorb himself in his work.
In November 2000, Petitioner suffered a heart attack shortly after arriving in Newark, New Jersey. His daughter had been elected homecoming queen and had asked Petitioner to attend the ceremonies. When he returned to Colorado, Petitioner noticed, "something was happening." Work he normally performed in fifteen minutes now took him over an hour. Petitioner also noticed that he no longer enjoyed courtroom work. He became more aggressive and even received an off-the-record rebuke from a judge for his behavior. In the spring of 2001, Petitioner decided to quit the practice of law and wind down his practice, because as he described it, "I did not have the butterflies when I went into court."
During this time, Petitioner admittedly neglected client matters. He felt as though he scrambled to complete tasks with diminished energy for the practice. Petitioner hired an assistant, but now realizes that he expected her to complete his work. He expressed remorse for his misconduct in the five client matters discussed above. Petitioner did not fight the disciplinary action taken against him, and he entered into a stipulation where he took full responsibility for his misconduct. Petitioner has since made restitution to those clients and now recognizes that he should have handled their cases responsibly.
During the course the disciplinary process, which ultimately led to his suspension, Petitioner began communicating with a woman he first met in college. She has two children from a previous marriage and a successful medical transcription business in Florida. In December 2001, they married and Petitioner moved to Florida. Thereafter, Petitioner passed his mortgage broker’s exam and has been successfully working as a mortgage broker in Florida. With business slow due to the declining real estate market, he has assisted his sons in starting up a small business in Florida. Since moving to Florida, he has maintained a "balanced and proportional" life. He lives simply and frugally and he no longer feels the need to bury himself in his work.
Approximately six years ago, Petitioner’s sister died tragically in Longmont. Petitioner testified that losing his sister was difficult, but that he has learned to grieve by honoring her memory. Contrary to the way he dealt with emotional trauma in the past, he now seeks out family and friends instead of pushing them away. He maintains a close relationship with his wife and stepchildren, his mother, and his deceased sister’s husband who still resides in Longmont.
In May 2006, Petition began working for Charles Kline, a lawyer with whom he previously worked and tried cases against when he practiced law in Colorado. Mr. Kline has asked Petitioner to provide him with legal research, case analysis, trial preparation, and drafts of pleadings. Petitioner provides this work remotely; that is, Petitioner researches issues on his computer in Florida and provides his work product to Mr. Kline for review. Petitioner is in daily contact with Mr. Kline. He has drafted two appellate briefs for matters before the Colorado Court of Appeals, as well as legal research concerning domestic, probate, criminal, and civil law. In addition, Petitioner’s mortgage broker business affords him the opportunity to encounter principles of real estate, title, and contract law on a regular basis. In addition, Petitioner completed a number of CLE courses in advance of filing his petition for reinstatement.3
Respondent testified that he is not planning to return to Colorado to practice law. He will likely continue to work with Mr. Kline by providing pleadings, case analysis, and briefs to him. Petitioner does not want to practice law as he practiced in the past in Colorado or Florida. His primary motivation in seeking reinstatement is to close the gap in his life that his suspension from the practice of law brought him. If the mortgage business picks up again, Petitioner may primarily work in that endeavor to the exclusion of the law. He nevertheless believes that he is fully rehabilitated from the depression that led to his suspension. If Petitioner ever returns to the practice of law, he would limit himself to ten to fifteen cases a year. Although he does not want to return to a volume practice, he admits to missing the courtroom.
While Petitioner has not engaged in any formal community service, he began to train his dog as a "therapy dog," but later had to abandon that effort when his dog developed cataracts. In addition, he provided assistance to neighbors during the hurricane season in Florida. Petitioner engaged in these activities because he believed they were the right things to do as a citizen. He testified that he would not, however, take on the number of pro bono cases he handled in the past. He now understands the importance of balance in his life.
Testimony of Suzanne M. Pinto, Ph.D.
Suzanne M. Pinto, Ph.D., has examined and provided forensic evaluations in more than 500 cases involving domestic, criminal, competency, insanity, and sex offense matters. Dr. Pinto previously knew Petitioner professionally from her work with the Boulder courts, where she observed his excellent reputation in the Boulder legal community. In November 2007, Dr. Pinto examined Petitioner and issued a report on her findings.4 In preparing her report she took a full history form Petitioner, conducted cognitive and personality testing, and conducted a clinical interview.
Dr. Pinto testified that Petitioner suffered from severe depression at or about the time of his suspension as a direct result of a combination of events. Petitioner initially suffered from the rape of his first wife and later suffered from the death of his father. He managed to maintain a degree of stability by immersing himself in his work. However, following his heart attack, Petitioner’s depression started to affect his work. Dr. Pinto confirmed that depression often follows a heart attack. In Petitioner’s case, he began to realize his own mortality and the law could no longer keep him vigilant about his professional responsibilities.
Shortly after his heart attack, Petitioner reported a lack of energy, easy distraction, and loss of interest in his work. Dr. Pinto’s opinion is that Petitioner’s depression is not chronic, but episodic and related to a confluence of events ending in his heart attack.
Based upon Dr. Pinto’s psychological interview and testing, she finds that Petitioner is of above average intelligence and that he has experienced a substantial change in thinking in an effort to correct his past negligence in dealing with clients. He has insight into his depression and now has a substantial support group. Most important, he no longer buries himself in work to avoid emotional conflict. Dr. Pinto opined that it is possible, but not likely, that Petitioner may suffer a relapse. She therefore recommends his reinstatement to the practice of law.
Testimony of Charles Kline
Charles Kline is a lawyer who practices in the Boulder area. Mr. Kline met Petitioner in 1987 when Petitioner was appointed as a GAL in one of his dissolution cases. Over the years, Mr. Kline came to respect Petitioner’s work as a trial lawyer. He testified that Petitioner had a good courtroom demeanor and presence. On cases he worked with Petitioner, Mr. Kline found that he and Petitioner often evaluated them the same way. Before his heart attack, Petitioner had energy and interest in his cases. After his heart attack, Petitioner quickly tired and seemed lethargic. Mr. Kline often asked Petitioner if he felt all right and Petitioner always assured Mr. Kline that everything was fine. In 2001, Petitioner met his second wife and started to talk to Mr. Kline about retiring from his law practice. Shortly thereafter he moved to Florida. Nevertheless, Mr. Kline kept in contact with Petitioner.
In 2006, Petitioner, under Mr. Kline’s supervision, began assisting Mr. Kline on legal matters, including appellate briefs, legal memoranda, and other pleadings. Mr. Kline testified that this arrangement has worked so well that he no longer feels the need to hire an associate. Petitioner’s work is "just great." Mr. Kline sometimes asks for assistance on his way to court and receives an answer before he arrives. Mr. Kline would like to see Petitioner move back to Colorado and if he did, Kline would welcome him at his law firm.
Mr. Kline testified that Petitioner is a changed man. In his words, Petitioner is a "completely different person" from the man he knew immediately following the heart attack. Mr. Kline believes that Petitioner now enjoys his life and that he maintains a healthy and positive outlook. Mr. Kline therefore recommends that Petitioner be reinstated to the practice of law.
IV. LEGAL ANALYSIS
When an attorney has been suspended for longer than one year, the reinstatement process begins with the submission of a verified petition for reinstatement under C.R.C.P. 251.29(c). C.R.C.P. 251.29(c) states, "[a]n attorney who has been suspended for a period longer than one year must file a petition with the Presiding Disciplinary Judge for an order of reinstatement and must prove by clear and convincing evidence that the attorney has been rehabilitated, has complied with all applicable disciplinary orders and with all provisions of this chapter, and is fit to practice law." The petition must set forth, in part:
(3) The facts other than passage of time and absence of additional misconduct upon which the petitioning attorney relies to establish that the attorney possesses all of the qualifications required of applicants for admission to the Bar of Colorado, fully considering the previous disciplinary action taken against the attorney;
(4) Evidence of compliance with all applicable disciplinary orders and with all provisions of this Chapter regarding actions required of suspended lawyers;
(5) Evidence of efforts to maintain professional competence through continuing legal education or otherwise during the period of suspension.
C.R.C.P. 251.29(c). A hearing board makes the reinstatement decision. C.R.C.P. 251.29(e). An attorney may be reinstated to the practice of law upon demonstration, by clear and convincing evidence, that the attorney (1) has been rehabilitated, (2) has complied with all applicable disciplinary orders and all rules regarding reinstatement, and (3) is fit to practice law. C.R.C.P. 251.29(b) and (d). All three elements must be shown before the hearing board may authorize reinstatement. The hearing board may also consider the attorney’s past disciplinary record. C.R.C.P. 251.29(e). If an attorney is unable to satisfy the burden of proof and the petition for reinstatement is denied, the attorney may not reapply for a period of two years. C.R.C.P. 251.29(g).
The concept of rehabilitation has been described in many different ways. It has been characterized as "the reestablishment of the reputation of a person by his or her restoration to a useful and constructive place in society." In re Cason, 294 S.E.2d 520, 522 (Ga. 1982). It has also been defined as "regeneration," denoting an overwhelming change in the applicant’s state of mind. In re Cantrell, 785 P.2d 312, 314 (Okla. 1989). The analysis of rehabilitation should be directed at the professional or moral shortcoming(s) out of which the discipline arose. Tardiff v. State Bar, 612 P.2d 919, 923 (Cal. 1980). It is not enough to show that the attorney is doing what is proper; rather, there is a requirement of positive action. See In re Sharpe, 499 P.2d 406, 409 (Okla. 1972). In People v. Klein, 756 P.2d 1013, 1016 (Colo. 1988), the Colorado Supreme Court declared that the rehabilitation assessment "must include the consideration of numerous factors bearing on the [attorney’s] state of mind and ability."5 These factors include but are not limited to:
- Conduct since the imposition of discipline;
- Professional competence;
- Candor and sincerity;
- Recommendations of other witnesses;
- Present business pursuits;
- Personal and community service; and
- Recognition of the seriousness of previous misconduct.
The Hearing Board finds that Petitioner experienced a substantial change in his state of mind and his ability to complete legal tasks since the time of his suspension. Petitioner has fully addressed the issues that led to his severe depression and his subsequent discipline for neglect of client matters. He appeared candid, sincere and remorseful in these proceedings and he appreciated the seriousness of his past ethical lapses. The Hearing Board also finds that Petitioner maintained his professional competence during his suspension and complied with all applicable orders since that time. Therefore, the Hearing Board finds clear and convincing evidence that Petitioner is now rehabilitated, is in compliance with all the applicable rules in the reinstatement, is otherwise fit to practice law, and should be reinstated to the practice of law. We therefore accept and agree with the People’s recommendation that Petitioner be reinstated without conditions.
It is therefore ORDERED:
1. The Hearing Board GRANTS "Petitioner’s Verified Petition for Reinstatement." Petitioner, ARTHUR E. PATTERSON, Attorney Registration No. 09126, SHALL be reinstated to the practice of law effective immediately.
2. Petitioner SHALL pay the costs of these proceedings; the People shall submit a Statement of Costs within fifteen (15) days of the date of this order, and Petitioner may submit a response within ten (10) days thereafter.
1. See "Petitioner’s Verified Petition for Reinstatement," Exhibit A.
2. See "Petitioner’s Verified Petition for Reinstatement."
3. See "Stipulation of Facts."
4. See Petitioner’s Exhibit 2.
5. While this case interpreted the previous rule, C.R.C.P. 241.22, it looks to the ABA factors for determining rehabilitation and provides valuable guidance in this area.