Vol. 29, No. 5
From the Courts
Colorado Disciplinary Cases
Presiding Disciplinary Judge
Appellate Discipline Commission
The Colorado Supreme Court has adopted a series of changes to the attorney regulation system, including the establishment of the Office of the Presiding Disciplinary Judge, pursuant to C.R.C.P. 251.16, and a new intermediate appellate entity known as the Appellate Discipline Commission, pursuant to C.R.C.P. 251.24. 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 Presiding Disciplinary Judge presides over attorney regulation proceedings and issues orders together with a two-member hearing board at trials and hearings. The Rules of Civil Procedure and the Rules of Evidence apply to all attorney regulation proceedings before the Presiding Disciplinary Judge. See C.R.C.P. 251.18(d).
Beginning with the September 1999 issue, The Colorado Lawyer will publish the summaries and full-text opinions of the Presiding Disciplinary Judge, Roger L. Keithley, and a two-member hearing board, whose members are drawn from a pool appointed by the Supreme Court, and the opinions of the Appellate Discipline Commission.
These Opinions may be appealed in accordance with C.R.C.P. 251.26 and C.R.C.P. 251.27.
The full-text opinions, along with their summaries, are available on the CBA homepage at http://www.cobar.org/tcl/index.htm. See page 94 for details.
Case No. 99PDJ108
Timothy Paul McCaffrey,
The People of the State of Colorado,
March 6, 2000
Original Proceeding Before the Presiding Disciplinary Judge
OPINION AND ORDER REINSTATING TIMOTHY PAUL McCAFFREY’S LICENSE TO PRACTICE LAW
Opinion by Presiding Disciplinary Judge Roger L. Keithley and Hearing Board members Marcy G. Glenn and Sisto J. Mazza, both members of the bar.
This reinstatement hearing was heard on February 15, 2000, pursuant to C.R.C.P. 251.29(b) and (c) before the Presiding Disciplinary Judge ("PDJ") and two hearing board members, Marcy G. Glenn and Sisto J. Mazza, both members of the Bar. Gregory G. Sapakoff, Assistant Attorney Regulation Counsel, represented the People of the State of Colorado (the "People") and Arthur S. Nieto represented Timothy Paul McCaffrey ("McCaffrey"), attorney registration no. 12411. The following witnesses testified on behalf of McCaffrey: Robert J. Frank, Steven Baker, Ben Graham, Andrew S. Wentworth, and Judge Larry Martin. McCaffrey testified on his own behalf. McCaffrey submitted Exhibits 1 through 9, which were admitted into evidence by stipulation.
I. FINDINGS OF FACT
The PDJ and hearing board made the following findings of fact by clear and convincing evidence:
McCaffrey was suspended from the practice of law by the Supreme Court on October 15, 1996 for a period of three years.1 See People v. McCaffrey, 925 P.2d 269, 274 (Colo. 1996). McCaffrey’s suspension arose from his conviction for first-degree criminal trespass and unlawful use of a controlled substance, neglect in allowing the statute of limitations to expire on two clients’ personal injury claims, failing to contact clients, offering to settle claims without the client’s prior authorization, misrepresenting to a client that he had filed a complaint in a personal injury matter, and failing to respond to the prior grievance committee’s requests for investigation. The misconduct which resulted in McCaffrey’s suspension, in large part, was attributable to personal and emotional problems including drug and alcohol abuse. McCaffrey filed a Petition for Reinstatement on October 14, 1999.
The Supreme Court’s 1996 suspension order required that as a condition of reinstatement, McCaffrey establish that he is mentally competent and able to engage in the practice of law, that he prove that he has complied with all of the terms and conditions of his probation in the criminal cases, and that he pay the costs of the disciplinary proceedings. The Supreme Court found that McCaffrey’s neglect had harmed his clients Blanche Thompson and Shelby Franks, but did not order that McCaffrey pay restitution to his clients.
At the time of the suspension in 1996, pursuant to C.R.C.P. 241.21,2 McCaffrey was required to wind up the affairs of his law practice, provide notice to clients in pending matters, provide notice to parties in litigation, and file an affidavit with the Supreme Court setting forth a list of all pending matters in which McCaffrey served as counsel. In October 1994, prior to the time of his suspension, McCaffrey had voluntarily closed his law practice and transferred existing clients to other attorneys. He paid the costs of the disciplinary proceeding in the amount of $171.50. The parties stipulated during the course of this proceeding that McCaffrey had fully complied with the terms and conditions of the criminal matters giving rise to his suspension, that he had fully complied with all disciplinary orders, and that he had substantially complied with all of the requirements for reinstatement under C.R.C.P. 251.29.
In the criminal trespass case, case no. 94CR2758, McCaffrey was convicted and sentenced to three years’ probation subject to certain conditions. McCaffrey complied with the terms of his probation and it was terminated. In a separate criminal case, case no. 94CR2882, McCaffrey pled guilty to the unlawful use of a schedule II substance, and received a three year deferred sentence subject to certain conditions. On February 14, 1996, case no. 94CR2882 was dismissed reflecting that McCaffrey had complied with the conditions of that sentence.
During the period of licensure suspension, McCaffrey was employed as a paralegal, first at a small law firm, then at a well-established larger law firm in Las Vegas, Nevada. McCaffrey has been and continues to be a responsible and reliable employee at that firm. He is regarded by his supervising partners as highly competent in legal matters. He is valued by the firm for his skill and knowledge in trial preparation. McCaffrey has consistently made clear to both clients and colleagues throughout his period of suspension that he is not a practicing attorney but rather a paralegal.
McCaffrey has established his competency in law by preparing for and passing the Nevada Bar Examination and the Multistate Professional Responsibility Exam. Additionally, McCaffrey read all ethics opinions issued by the Colorado Bar Association Ethics Committee through Opinion 105, as well as the abstracts of informal letter responses from the Colorado Bar Association Ethics Committee issued from 1996 to the present. He has completed ninety-three (93) general and thirteen (13) ethics CLE credits during 1999. McCaffrey is presently pursuing a Master of Business Administration degree from the University of Nevada.
McCaffrey has been candid about the events giving rise to his suspension, readily acknowledged his prior substance abuse and is committed to permanently remaining drug and alcohol free. McCaffrey’s commitment to sobriety began on or about September 7, 1994, and he has remained drug and alcohol free since that time. Since 1994 McCaffrey has participated in weekly meetings of Lawyers Concerned for Lawyers ("LCL"), a peer support group for attorneys addressing substance abuse issues in Las Vegas, Nevada. McCaffrey has sought and received professional counseling for his personal and emotional difficulties. He acknowledges and accepts his prior misconduct and displays humility regarding the behavior that gave rise to his disciplinary proceeding, and is cognizant of how easily life can be destroyed by substance abuse. McCaffrey’s recognition of his prior misconduct and its causation combined with his efforts to address the underlying causes of his misconduct resulting in over five years of sobriety, has allowed him to resume his professional undertakings and enabled his family to remain intact.
During the period of suspension, McCaffrey has not been convicted of any crime, has had no civil judgments entered against him, is not in arrears on child support payments, has had no tax liens or judgments entered against him and has not been a party to any civil or criminal actions.
An independent medical evaluation introduced as evidence opines that McCaffrey is mentally competent and able to engage in the practice of law. No evidence was offered challenging that conclusion.
II. CONCLUSIONS OF LAW
Timothy Paul McCaffrey, is subject to the jurisdiction of this court pursuant to C.R.C.P. 251.1(b).
C.R.C.P. 251.29(b) provides, in part:
An attorney who has been suspended for a period longer than one year must file a petition with the Presiding Disciplinary Judge for 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.
Consideration of the issue of rehabilitation requires the PDJ and hearing board to consider numerous factors bearing on the petitioner’s state of mind and professional ability, including character, conduct since the imposition of the original discipline, professional competence, candor and sincerity, present business pursuits, personal and community service, and the petitioner’s recognition of the seriousness of his previous misconduct. People v Klein, 756 P. 2d 1013, 1016 (Colo. 1988). In addition to the general requirements set forth in C.R.C.P. 251.29(b), the Supreme Court explicitly required in its Order dated October 15, 1996, that as a condition of reinstatement McCaffrey must establish that he is mentally competent, able to engage in the practice of law and that he has complied with all of the terms and conditions of his probation in the criminal cases.
Under the factors set forth in Klein, 756 P.2d at 1016, the PDJ and hearing board found that McCaffrey established by clear and convincing evidence that he is rehabilitated. He has maintained employment as a paralegal since August 1995 in Las Vegas, Nevada, and his current employer speaks highly of his contribution to the firm. He has taken appropriate steps to remain current with the law, particularly in the field of ethics. He has passed the Nevada bar exam, and is pursuing a degree in business administration. He possesses the requisite ability and professional competence to practice law.
McCaffrey established that he is of good moral character. He has maintained a stable relationship with his life partner and is a dedicated parent of his two children. He is active in his community. He attends weekly meetings of LCL, the Nevada equivalent of the Colorado Lawyers’ Health Program. He demonstrated remorse for his prior conduct and on his own initiative suggested making restitution to the two prior clients harmed by his actions. McCaffrey was candid and sincere during the reinstatement proceedings.
The parties stipulated during the course of the proceeding that McCaffrey fully complied with the terms and conditions of the criminal matters giving rise to his suspension, he fully complied with all disciplinary orders, and he substantially complied with all of the requirements of 251.29. McCaffrey did not, however, strictly comply with the affidavit and notice requirements of C.R.C.P. 241.21 upon his immediate suspension in 1995 or his three year suspension in 1996.
In 1995 and 1996 C.R.C.P. 241.21(d) required:
Within ten days after the effective date of the order of disbarment, suspension, or transfer to disability inactive status, or within such additional time as allowed by the Supreme Court, the lawyer shall file with the Supreme Court an affidavit setting forth a list of all pending matters in which the lawyer served as counsel and showing:
(1) That he has fully complied with the provisions of the order and of this Rule; and
(2) That he has notified every other jurisdiction before which he is admitted to practice law of the order entered against him; and
(3) That he has served a copy of such affidavit upon the Committee Counsel and Disciplinary Counsel.
A strict reading of the rule would require, as a condition of reinstatement, that McCaffrey file the affidavit with the appropriate entity ten days after he was immediately suspended in March 1995. However, McCaffrey had closed his practice in October 1994, some four or five months prior to his immediate suspension, and therefore had no clients to notify at the time this requirement was triggered. The United States District Court for the District of Colorado was the only jurisdiction, other than the courts of the state of Colorado, before which he was admitted to practice in 1995 and 1996.3
This court reasoned in People v. Berkley, 99PDJ073, slip op. at 5-7 (Colo. P.D.J. 1999) 29 Colo. Law. 111,112 (February 2000) that "compliance" for purposes of C.R.C.P. 241.21 may be tested under a substantial compliance standard:
An examination of C.R.C.P. 241.21 reveals that its primary objective was the protection of the public, the protection of the disciplined attorney’s clients, and the protection of opposing parties in pending litigation. Further protection was provided by the requirement that the disciplined attorney submit an affidavit to the Supreme Court that he had, in fact, provided the required notices and informed all jurisdictions in which he had been admitted to practice. Berkley, slip op. at 6, 29 Colo. Law. at 112.
In this case, McCaffrey had closed his practice and referred his clients to other attorneys in October 1994 before his immediate suspension in March 1995. Although McCaffrey should have filed an affidavit notifying the Supreme Court that he had no clients and was not involved in any pending litigation, under the facts of this case, as in Berkley, supra, no enhanced protection to the public, existing clients or opposing parties in pending litigation would have been provided by McCaffrey’s strict compliance with the time provisions of C.R.C.P. 241.21. See, Berkley, slip op. at 7, 29 Colo. Law at 112.
In light of the analysis set forth above, taken together with the People’s stipulation that McCaffrey substantially complied with the rule requirements, the PDJ and hearing board find that McCaffrey substantially complied with the requirements of C.R.C.P. 241.21.
McCaffrey stipulated with the People that as a result of his conduct, he caused monetary harm to his former clients, Blanche Thompson, in the amount of $25,000, and Shelby Franks, in the amount of $10,000. Although the Supreme Court in its order of suspension did not order that McCaffrey pay restitution to these clients, McCaffrey proposed that he execute promissory notes, on reasonable and appropriate terms in light of his financial circumstances, for the above amounts to both Ms. Thompson and Ms. Franks as a condition of reinstatement. The PDJ and hearing board take McCaffrey’s willingness to pay his previous clients for harm they may have sustained as a result of his actions as evidence of his rehabilitation and good moral character. We decline, however, to accept the parties’ stipulation as to the amount agreed upon without involvement of the injured parties as being reflective of the actual damages caused by McCaffrey’s prior misconduct. No evidence was presented from which a determination could be made as to the actual monetary injury. Moreover, other forums are better suited to make that determination.
The PDJ and hearing board are required to protect the public interest in allowing McCaffrey to resume the practice of law. In accordance with that responsibility and pursuant to C.R.C.P. 251.29(e), the PDJ and hearing board impose the following conditions upon McCaffrey as express conditions of his resumption of the practice of law:
1. McCaffrey shall abstain from the abuse of all alcohol and all non-prescribed controlled substances for a period of three years from the effective date of his reinstatement;
2. For a period of three years following the effective date of this Order, McCaffrey shall submit to random urine monitoring through an agency or clinic approved by Colorado Lawyers’ Health Program ("CLHP"). As part of such monitoring, the following terms shall be required:
A. McCaffrey shall execute releases satisfactory in substance and form to the Office of Attorney Regulation Counsel allowing all monitoring results to be provided to CLHP and McCaffrey shall make such arrangements as are necessary to insure that the results of testing are provided to CLHP within ten (10) days of the testing;
B. Not less than ten (10) random urinalysis tests shall be conducted during the next three years;
C. CLHP shall submit reports regarding the monitoring and results thereof to the Office of Attorney Regulation Counsel within twenty (20) days of receipt;
3. For a three year period from the effective date of this Order, McCaffrey shall attend, at least twice monthly, the weekly meetings of the LCL program in Las Vegas, Nevada, or a substantially similar program approved by CLHP. McCaffrey shall execute releases and provide them to LCL or a similar program, so that LCL may then provide confirmation to CLHP of McCaffrey’s compliance with his attendance at meetings. McCaffrey shall make such arrangements as are necessary to insure that CLHP receive not less than quarterly reports regarding his required meeting attendance. CLHP shall, in turn, submit quarterly reports concerning McCaffrey’s compliance with this requirement to the Office of Attorney Regulation Counsel;
4. Within thirty days of both the one year and two year anniversaries of McCaffrey’s reinstatement, McCaffrey shall undergo an evaluation by a psychiatrist approved by CLHP and shall provide releases to allow a report of the evaluation to be provided to CLHP. CLHP shall provide a copy of such report to the Office of Attorney Regulation Counsel. After the issuance of each such report, the petitioner shall comply with any and all reasonable recommendations for treatment or monitoring made by the evaluator in the reports during the three year period following McCaffrey’s reinstatement;
5. The reports submitted to CLHP, and by CLHP to the Office of Attorney Regulation Counsel shall not be disclosed to third parties except in filings with the Presiding Disciplinary Judge or in conformity with the duties and responsibilities of that office under C.R.C.P. 251.1 et seq., absent further Order of court;
6. For three years from the effective date of this Order, McCaffrey shall not engage in the practice of law except in a law office environment which includes other attorneys actively practicing law and adequate support staff of the type and quantity normally found in a functioning law office;
7. McCaffrey shall make affirmative good faith efforts within twelve months from the effective date of this Order to adequately compensate Shelby Franks and Blanche Thompson for the injuries they sustained as the result of his misconduct as more fully set forth in McCaffrey, 925 P.2d at 274;
8. For a period of three years following the effective date of this Order, McCaffrey’s practice of law shall be monitored by a member of the bar of the jurisdiction in which McCaffrey maintains his primary practice. The practice monitor shall be acceptable to and approved by the Office of Attorney Regulation Counsel. The practice monitor shall meet with McCaffrey not less than twice monthly during the first year of the monitoring period and not less than monthly thereafter to review case status, docketing controls, frequency of communication with clients, and case progress. The monitor shall make recommendations to McCaffrey and determine compliance with such recommendations. The monitor shall submit written reports to McCaffrey and the Office of Attorney Regulation Counsel monthly during the first year and quarterly thereafter regarding McCaffrey’s law practice. The practice monitor must be in place and approved upon the effective date of this Order.
9. McCaffrey is required to certify compliance with paragraphs 1 through 8 of this Order to the Office of Attorney Regulation Counsel no later than thirty days following the yearly anniversary of the effective date of this Order until the periods set forth herein have expired.
10. In the event disciplinary proceedings are authorized by the Attorney Regulation Committee or the equivalent thereof and initiated against McCaffrey pursuant to C.R.C.P. 251.12 for conduct occurring within three years after the effective date of this Order, this Order of reinstatement shall be subject to immediate revocation upon proper application to the court by the Office of Attorney Regulation Counsel;
11. McCaffrey shall pay all costs incurred arising from this reinstatement proceeding. The People shall file with the PDJ an itemization of the costs and expenses attributable to this matter within ten (10) days of the date of this Order. McCaffrey shall have five (5) days thereafter to file a Response to the itemization. McCaffrey shall be solely responsible for all costs associated with compliance with the terms and conditions of this Order.
III. ORDER OF REINSTATEMENT
It is therefore ORDERED:
Upon the conditions set forth herein, the license to practice law of Timothy Paul McCaffrey, attorney registration no. 12411 is REINSTATED effective the 27th day of March, 2000.
1. McCaffrey had been immediately suspended from the practice of law on March 30, 1995 pursuant to C.R.C.P. 241.8 as a result of the same misconduct which led to his three year suspension.
2. C.R.C.P. 241.21 was replaced by C.R.C.P. 251.28 effective January 1, 1999.
3. The United States District Court for the District of Colorado immediately suspended McCaffrey in April 1995.
Case No. 99PDJ059
The People of the State of Colorado,
Lawrence R. Elliott,
Original Proceeding in Discipline Before the Presiding Disciplinary Judge
Opinion issued by Presiding Disciplinary Judge Roger L. Keithley and Hearing Board members Dr. David S. Wahl, a representative of the public, and Ralph G. Torres, a member of the bar.
SANCTION IMPOSED: ATTORNEY DISBARRED
This matter was heard on January 5, 2000, before the Presiding Disciplinary Judge ("PDJ") and two Hearing Board members, Dr. David Wahl, a representative of the public, and Ralph G. Torres, a member of the bar. Gregory G. Sapakoff, Assistant Regulation Counsel, represented the People of the State of Colorado (the "People"). Respondent Lawrence R. Elliott ("Elliott"), did not appear either in person or by counsel.
The People filed the Complaint in Case No. 99PDJ059 on June 2, 1999 (the "Nealy matter"). The Complaint and Citation were served on Elliott by certified mail in compliance with C.R.C.P. 251.14(b), C.R.C.P. 251.32(b), and C.R.C.P. 227(2)(a) and (b) to both Elliott’s registered home and business address. Elliott failed to answer the allegations advanced in the Complaint, and default was entered against him on September 21, 1999. The factual allegations set forth in the People’s Complaint were deemed admitted, and the charges alleged established. At the sanctions hearing, the People withdrew the charge pursuant to Colo. RPC 1.15(a)(commingling of funds).
The People filed the Complaint in Case No. 99PDJ086 on July 21, 1999 (the "McWhorter matter"). The Complaint and Citation were served on Elliott by certified mail to Elliott’s registered business address. Elliott failed to answer the allegations advanced in the Complaint, and default was entered against him on October 18, 1999. The factual allegations set forth in the People’s Complaint were deemed admitted, and the charges alleged established. Upon the People’s motion, these matters were consolidated on October 18, 1999.
At the sanctions hearing held January 5, 2000, the People offered Exhibits 1 and 2, which were admitted into evidence. The PDJ and Hearing Board considered the exhibits and the People’s argument and made the following findings of fact which were established by clear and convincing evidence:
I. FINDINGS OF FACT
Elliott has taken and subscribed the oath of admission, was admitted to the bar of the Colorado Supreme Court on January 25, 1996, and is registered upon the official records of the Court, attorney registration number 26556. Elliott is subject to the jurisdiction of this court pursuant to C.R.C.P. 251.1(b).
A. The Nealy Matter
In the Nealy matter, Helen K. Nealy ("Nealy") retained Elliott to represent her in May 1997 in regard to a dispute concerning her purchase of a mobile home in Basalt, Colorado. Nealy paid Elliott $500.00 in May and $500.00 in June 1997 as a retainer for his services, which amounts were to include filing suit against the seller and the seller’s broker in the transaction. Elliott served notice of intent to sue on the attorney for the broker. Subsequently, at Elliott’s request, Nealy sent another $1,000.00 to Elliott to research and file the lawsuit. Two months later, Nealy received a copy of a draft Complaint which she corrected and returned to Elliott. Thereafter, Elliott informed Nealy that the broker had been served and the seller would soon be served. He also stated that the case would be completed by Labor Day of 1998. Elliott requested and Nealy paid an additional $199.00 as payment for the filing fee.
Since June 1998, when Nealy tendered her final payment, she has had no contact with Elliott despite having attempted to reach him through both regular and certified mail. Elliott’s office telephone has been disconnected.
Contrary to his representations to her, Elliott never filed the lawsuit on Nealy’s behalf. Nealy has never received a billing statement nor any accounting from Elliott indicating how he used the money she paid to him. Elliott never paid the filing fee for which he collected funds from his client.1
B. The McWhorter Matter
In the McWhorter matter, Ted McWhorter ("McWhorter"), a principal in several corporations providing health care services, retained the respondent in approximately June 1998 to provide legal services in regard to disputes between the corporations and two former employees, Alexandra and Patrick Piot (the "Piots"). In approximately October 1998, McWhorter retained Elliott to file suit against the Piots alleging that they had converted corporate funds. McWhorter and/or the corporate entities paid Elliott approximately $8,000 to handle the legal disputes. Elliott filed a complaint in Garfield County District Court on behalf of McWhorter and the corporations. Elliott arranged for service of a copy of the complaint on the Piots but failed to have a summons served upon them. The Piots’ counsel moved to quash service of process, and although he received a copy of the motion, Elliott did not file a response. The court granted the Piots’ motion to quash service of process. Elliott failed to take any further substantive steps to advance the case, and the case was ultimately dismissed for failure to prosecute.
In late 1998, the Piots filed their own lawsuit in Garfield County District Court naming McWhorter and three of his corporations as defendants, and asserting various employment related claims. McWhorter retained Elliott to represent him and the corporate entities. Elliott filed an answer and a counterclaim on behalf of McWhorter and the corporate defendants, but failed to serve a copy of the answer and counterclaim on the attorney representing the Piots, and the Piots filed for default judgment. The court directed Elliott to serve a copy of his answer and counterclaim on counsel for the Piots within ten days. Although aware of the court’s order, Elliott failed to serve a copy of the answer and counterclaim upon the opposing party or their counsel. The court subsequently granted default judgment in favor of the Piots and against McWhorter and the corporate defendants in the amount of approximately $77,000.
McWhorter has been unable to communicate with Elliott since March 1999. When McWhorter last communicated with Elliott, Elliott represented to McWhorter that everything was "okay" in the litigation and that McWhorter should not worry. Elliott failed to advise McWhorter that a default judgment had been entered against him and the corporate defendants. McWhorter did not learn of the default judgment until one of the corporate bank accounts was garnished in May 1999. Upon learning of the default judgment, McWhorter attempted to contact Elliott both by telephone and in person, but was unable to do so because Elliott’s telephone had been disconnected and he had vacated his residence and office.
II. CONCLUSIONS OF LAW
Both the Nealy and the McWhorter matters involve common elements of misconduct. In each of these matters, Elliott entered into an attorney/client relationship, agreed to provide specific professional services, requested and received funds from the clients as consideration for those services, failed to provide the services and failed to protect his clients or to communicate with them regarding the matters he was handling for them.
In the Nealy matter, Elliott entered into an attorney/client relationship with Nealy and accepted fees to file a lawsuit on the client’s behalf. Some eight months later, having accepted an additional sum, Elliott provided a draft complaint to his client, which she reviewed and sent back to him. Two months later, he represented to the client that he had served the defendant with a summons and complaint and that he would soon serve the other defendant. Elliott never filed the complaint with the court. Nealy attempted on several occasions to contact Elliott to determine the status of the case without success. Although a portion of the funds received by Elliott may have been consumed by the limited amount of services provided, it is uncontested that a portion of the funds received, the $199 designated for filing fees, was neither earned nor expended for its designated purpose by Elliott.
In the McWhorter matter, Elliott entered into an attorney/client relationship with McWhorter and accepted fees to file a lawsuit on behalf of McWhorter and several corporate entities. Although Elliott filed the lawsuit, he failed to properly serve the defendants, he failed to respond to the defendants’ motion to quash service of process, and he failed to take any further substantive steps to advance the lawsuit. Elliott’s neglect eventually resulted in the court issuing an order dismissing McWhorter’s action for failure to prosecute.
Prior to the dismissal of McWhorter’s case, McWhorter hired Elliott to represent him and the corporate entities in a separate suit in which they were named as defendants. Elliott filed an answer and counterclaim with the court, but failed to serve a copy on the plaintiffs. When the court ordered Elliott to serve a copy of the answer and counterclaim on the plaintiffs, Elliott failed to do so. As a direct result of Elliott’s neglect, the court entered default judgment against McWhorter and the corporate entities in the approximate amount of $77,000. Elliott failed to inform his client of the entry of default judgment. Indeed, the last communication McWhorter received from Elliott indicated that everything was "okay" in the litigation and McWhorter should not worry.
In both matters, Elliott agreed to perform professional services for the client, he failed to perform the work requested, and he failed to communicate with his clients. Such misconduct constitutes separate violations of Colo. RPC 1.3 (neglect of a legal matter) and Colo. RPC 1.4(a)(failure to keep a client reasonably informed) in each matter. Elliott’s failure to obey a court order in the McWhorter matter, which resulted in the court entering default judgment against Elliott’s clients, constitutes a violation of Colo. RPC 3.4(c)(knowingly disobeying an obligation under the rules of a tribunal).
Taking into account the nature of professional services to be provided, neglect may justify a finding of abandonment under circumstances where an attorney neglects a client’s matter and fails to communicate with the client. People v. Hotle, No. 99PDJ038, slip op. at 3 (Colo. P.D.J. November 16, 1999), 29 Colo. Law. 107, 108 (January, 2000).
In both the Nealy and McWhorter matters, Elliott agreed to initiate litigation to resolve client disputes. In the Nealy matter, although leading his client to believe he had done so, Elliott never commenced the case he agreed to file. Having created the false expectation that the case was proceeding and would soon be resolved, Elliott thereafter ceased communication with his client, moved from his office and home, disconnected his phone service and avoided his client’s requests for information. Elliott’s misrepresentations to his client, combined with his failure to provide the services he had agreed to provide and his subsequent failure to communicate with the client, taken together, establishes serious neglect which justifies a finding of abandonment.
In the McWhorter matter, Elliott’s neglect of his client’s matter also rises to the level of abandonment. Although he initially filed a complaint in that action, he failed to properly serve the complaint with a summons and service was not effective. When the defect was brought to his attention through a Motion to Quash, Elliott did nothing and allowed his client’s case to be dismissed through his neglect. Moreover, in a separate action involving the same client, Elliott ignored an order of court to serve an answer and counterclaim on opposing counsel and through his neglect allowed a default judgment to be entered against the client. Having earlier informed McWhorter that all was well in the litigation, Elliott failed to inform McWhorter of the entry of default judgment and thereafter avoided all communication with his client.
By abandoning his clients, Elliott terminated the attorney/client relationship and became obligated to account for and promptly refund any unearned fee. See Hotle, No. 99PDJ038, slip op. at 4, 29 Colo. Law. at 108; People v. Pedersen, No. 99PDJ024, slip op. at 3 (Colo. P.D.J. Sept. 21, 1999), 28 Colo. Law. 134, 135 (November 1999). Elliott failed to do so in both matters. Elliott’s effective termination of the attorney/client relationship by his abandonment of the clients triggered the mandatory provisions of Colo. RPC 1.16(d)(upon termination, an attorney shall take steps to the extent reasonably necessary to protect his client’s interests and refund unearned fees). See Hotle, supra. Notwithstanding that obligation, Elliott failed to disclose the serious difficulties he had brought upon his clients, failed to take steps to protect his clients’ interests, failed to return client documents, and failed to refund unearned fees. Elliott’s failure to do so constitutes a violation of Colo. RPC 1.16(d).2
In both matters, Elliott requested and received funds from his clients in advance for payment of his attorneys’ fees and costs. In both cases, Elliott did preliminary work on the client matters and then failed to follow through. Elliott’s minimal efforts in both the Nealy and McWhorter cases fall far short of the services he agreed to perform in return for the fees he received. Notwithstanding his clients’ efforts to contact him and secure an accounting for the moneys paid in advance, Elliott neither accounted for the funds he received nor refunded the unearned portion of those funds to either client. Elliott’s retention of unearned funds in both matters following his abandonment of his clients’ cases constitutes an unauthorized act of dominion or control over funds belonging to his clients. Misappropriation of a client’s funds includes "not only stealing, but also unauthorized temporary use for the lawyer’s own purpose, whether or not he derives any personal gain or benefit therefrom." People v. Varallo, 913 P.2d 1, 11 (Colo. 1996). Elliott’s failure to provide the services for which the funds were tendered combined with his failure to either account for the funds or refund the unearned portion constitutes conversion and is a violation of Colo. RPC 8.4(c).3
Elliott has retained the Nealy funds for approximately one year and the McWhorter funds for approximately two years. Elliott’s complete lack of communication with his clients and his failure to account for or return the unearned funds for an extended period of time, constitutes willful and knowing conduct. See Hotle, supra, citing People v. Singer, 897 P.2d 798, 801 (Colo. 1995)(holding that extensive and prolonged neglect is considered willful misconduct); People v. Silvola, 915 P.2d 1281, 1284 (Colo. 1996).
III. SANCTIONS/IMPOSITION OF DISCIPLINE
The PDJ and Hearing Board found that Elliott’s conduct constituted a violation of duties owed to the legal system, the profession and to the public. The ABA’s Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") is the guiding authority for selecting the appropriate sanction to impose for lawyer misconduct.
ABA Standard 4.11 provides:
Disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client.
ABA Standard 4.41(a) provides:
Disbarment is generally appropriate when a lawyer abandons the practice and causes serious or potentially serious injury to a client.
ABA Standard 6.22 provides:
Suspension is appropriate when a lawyer knowingly violates a court order or rule, and there is injury or potential injury to a client or a party, or interference or potential interference with a legal proceeding.
Elliott’s conduct in the Nealy and McWhorter matters meet the criteria under ABA Standards 4.11 and 4.41(a). Elliott knowingly converted client funds and caused injury to McWhorter and potential injury to Nealy. Elliott’s abandonment of the McWhorter matter involved serious injury to his client: the dismissal of one matter and the entry of default judgment in the amount of $77,000.00.
Elliott’s failure to obey the court’s order in the McWhorter matter would ordinarily be grounds for suspension under ABA Standards 6.22. In this case, however, this additional misconduct only reinforces the sanction of disbarment.
The case law is consistent with the ABA Standards in holding that disbarment is the presumed sanction for abandonment of a client coupled with knowing misappropriation of client funds. People v. Righter, No. GC98A120, slip op. at 5-6 (Colo. P.D.J. June 17, 1999), 28 Colo. Law. 140, 141 (September, 1999)(disbarring attorney for agreeing to represent clients, accepting funds from the clients but failing to pursue their legal matters, failing to communicate with them, and failing to return unearned fees); People v. Skaalerud, 963 P.2d 341, 344 (Colo. 1998)(approving conditional admission of misconduct agreeing to disbarment where attorney misappropriated settlement proceeds from multiple clients and abandoned or failed to communicate with them); People v. Holmes, 951 P.2d 477, 479 (Colo. 1998)(disbarring attorney, in part, for misappropriating fees and abandoning clients); People v. McDowell, 942 P.2d 486, 492 (Colo. 1997)(holding that disbarment was the presumed sanction for knowing misappropriation of funds); People v. Gilbert, 921 P.2d 48, 50 (Colo. 1996)(disbarring attorney in default proceedings where attorney converted client funds in conjunction with abandonment of practice).
The PDJ and Hearing Board considered aggravating and mitigating factors pursuant to ABA Standards 9.22. The People offered unrebutted evidence in aggravation that Elliott’s conduct demonstrated a dishonest or selfish motive, id. at 9.22(b); he committed multiple offenses, id. at 9.22(d), and he failed to participate in this consolidated matter, id. at 9.22(e). In mitigation, the People stated that Elliott has no prior disciplinary record. See ABA Standards 9.32(a). The lack of prior discipline is insufficient mitigation to reduce the presumptive discipline.
It is therefore ORDERED:
1. Lawrence R. Elliott, registration number 26556, is DISBARRED from the practice of law effective thirty-one days from the date of this Order, and his name shall be stricken from the roll of attorneys licensed to practice law in this state.
2. Prior to the submission of any Petition for Readmission pursuant to C.R.C.P. 251.29, Lawrence R. Elliott shall pay to Ms. Nealy the sum of $2,199.00, plus statutory interest from June 30, 1998, and Elliott shall pay to Mr. McWhorter the sum of $8,000.00, plus statutory interest from March 31, 1999.
3. Elliott is ORDERED to pay the costs of these proceedings within sixty (60) days of the date of this Order.
4. The People shall submit a Statement of Costs within ten (10) days of the date of this Order. Respondent shall have five (5) days thereafter to submit a response thereto.
1. Based upon his conduct in the Nealy matter, Elliot was immediately suspended from the practice of law by the Colorado Supreme Court on May 28, 1999.
2. Colo. RPC 1.16(d) was a charged violation in only the Nealy case, 99PDJ059. The violation of that rule is limited to Case No. 99PDJ059.
3. Elliott was also originally charged with a violation of Colo. RPC 1.5(charging an unreasonable fee) based upon the same facts relied upon by the People to establish the conversion claim. The People withdrew the Colo. RPC 1.5 charge at the time of trial.
Case No. 99PDJ004
The People of the State of Colorado,
Kenneth Edward Kolbjornsen,
November 9, 1999
Original Proceeding in Discipline Before the Presiding Disciplinary Judge
OPINION AND ORDER IMPOSING SANCTIONS
Opinion issued by Presiding Disciplinary Judge Roger L. Keithley and Hearing Board members Pat Cortez, a representative of the public, and Gail C. Harriss, a member of the bar.
SANCTION IMPOSED: ATTORNEY DISBARRED
This matter was heard on August 9, 1999, before the Presiding Disciplinary Judge ("PDJ") and two Hearing Board members, Pat Cortez, a public representative, and Gail C. Harriss, a member of the bar. Debora D. Jones, Assistant Regulation Counsel, represented the People of the State of Colorado (the "People"). Kenneth Edward Kolbjornsen ("Kolbjornsen"), the respondent, did not appear either in person or by counsel.
On January 7, 1999, the People filed a Complaint in this disciplinary matter. The Complaint and Citation were served on Kolbjornsen by certified mail in compliance with C.R.C.P. 251.14(b), C.R.C.P. 251.32(b), and C.R.C.P. 227(2)(a) and (b). Kolbjornsen failed to answer the allegations advanced in the Complaint, and default was entered against him on April 29, 1999. The factual allegations set forth in the People’s Complaint were therefore deemed admitted. See People v. Pierson, 917 P.2d 275, 275 (Colo. 1996).
The People offered Exhibits 1 through 5, which were admitted into evidence, and presented testimony from Larry MacPhale. The PDJ and Hearing Board considered the exhibits, the testimony of the witnesses, assessed the credibility of the witnesses and made the following findings of fact which were established by clear and convincing evidence:
I. FINDINGS OF FACT
Kolbjornsen has taken and subscribed the oath of admission, was admitted to the bar of the Colorado Supreme Court on April 15, 1971, and is registered upon the official records of the Court, attorney registration number 06259. Kolbjornsen is subject to the jurisdiction of this court pursuant to C.R.C.P. 251.1(b).
Prior to June 1990, Kolbjornsen was employed, first as a sales person and later as sales manager, with a lawyer-referral firm owned by Larry MacPhale ("MacPhale"). Kolbjornsen signed a non-compete agreement as part of his employment contract with MacPhale. In April 1990, MacPhale terminated Kolbjornsen after receiving information that Kolbjornsen intended to set up a competing business. Notwithstanding the provisions of his agreement with MacPhale, on or about October 1, 1990, Kolbjornsen formed a competing lawyer-referral company, National Lawyer Referral Network, Inc. ("NLRN"), d/b/a Law Trackers, with Kolbjornsen and his wife as the only shareholders. NLRN operated in the same manner as MacPhale’s referral business. Shortly after Kolbjornsen formed his new company and commenced doing business, MacPhale brought suit against Kolbjornsen to enforce the non-compete agreement and recover damages. After five years of extensive and costly litigation, default judgment issued against Kolbjornsen in early 1996.
On or about February 6, 1996, the assets of NLRN were sold to Lawyers America, Inc., a separate corporation owned entirely by Kolbjornsen’s wife. Two days later, on February 8, 1996, Kolbjornsen filed for Chapter 13 bankruptcy. Thereafter, MacPhale objected to the confirmation of the proposed Chapter 13 plan with the bankruptcy court.
During a June 26, 1996, hearing on the confirmation of Kolbjornsen’s proposed Chapter 13 plan, Kolbjornsen submitted financial information relating to NLRN and testified that the value of his NLRN stock at the time of the sale of the NLRN assets was zero. He also testified that NLRN had no accounts receivable at the time of the asset sale. U.S. Bankruptcy Judge Brumbaugh, relying in part upon Kolbjornsen’s testimony, confirmed the Chapter 13 plan.
MacPhale filed an adversary proceeding, pursuant to 11 U.S.C. § 1330(1993) for revocation of the order confirming the Chapter 13 plan. MacPhale alleged in the adversary proceeding that the confirmation order was procured by fraud. At the hearing for revocation, conducted before Judge Brooks, it became evident that the evidence provided to Judge Brumbaugh in support of the Chapter 13 plan was not reliable and in several respects, outright false. Judge Brooks determined that Kolbjornsen had destroyed or discarded much of his personal and business accounting records both before and after the petition seeking Chapter 13 protection was filed. The destruction of those records required MacPhale to obtain banking records and reconstruct both the NLRN business and Kolbjornsen’s personal financial records through experts. Judge Brooks found that Kolbjornsen’s testimony regarding the business affairs of NLRN, his income, his expenditures, the value of the NLRN stock immediately prior to the filing of the petition for bankruptcy and the existence of NLRN accounts receivable at the time of sale was inconsistent with the reconstructed financial records. Kolbjornsen sought to explain the inconsistencies between his testimony and MacPhale’s reconstructed financial records evidence by attributing the discrepancies to Kolbjornsen’s gambling episodes and related frequent cash transactions. Judge Brooks found Kolbjornsen’s testimony to not be credible.
Judge Brooks found by clear and convincing evidence that: (1) Kolbjornsen significantly understated his income on tax returns and bankruptcy schedules; (2) he supplied false information on schedules B, I, and J, particularly with regard to his income for 1995 and 1996; and (3) he provided false and misleading information in his asset schedule, as to the stated zero value of the NLRN stock shares. Each of these false and misleading statements by Kolbjornsen related to facts which were material to the bankruptcy court’s confirmation determination. Judge Brooks further determined that Kolbjornsen’s submission of false and misleading information to the bankruptcy court deprived Judge Brumbaugh from having correct, complete and accurate information from which to render his confirmation decision. Judge Brooks, pursuant to 11 U.S.C. §1330 (1993), ordered revocation of the Chapter 13 confirmation based on fraud.
II. CONCLUSIONS OF LAW
The Complaint alleged violations of The Colorado Rules of Professional Conduct ("Colo. RPC") 3.3(a)(1) (a lawyer shall not knowingly make a false statement of material fact or law to a tribunal); Colo. RPC 8.4(a)(violation of a rule of professional conduct); Colo. RPC 8.4(c) (conduct involving dishonesty, fraud, deceit or misrepresentation), and Colo. RPC 8.4(d) (conduct prejudicial to the administration of justice).
Although the Complaint in this action does not specifically allege that Kolbjornsen "knowingly" misled the bankruptcy court, the evidence established by a clear and convincing standard that Kolbjornsen’s misconduct was knowing. Kolbjornsen’s sworn testimony regarding the value of the NLRN stock and the absence of accounts receivable, along with his submission under oath of false information on his tax returns and the bankruptcy schedules, were, if not outright intentional, sufficiently reckless to constitute knowing conduct. See In the Matter of Patrick Anene Egbune, 971 P.2d 1065, 1073 (Colo. 1999) cert. denied, 67 U.S.L.W. 3697 (U.S. May 17, 1999)(No. 98-1552) (holding that reckless conduct, not mere negligent conduct, is equivalent to knowing conduct and citing People v. Small, 962 P.2d 258, 260 (Colo. 1998)); People v. Rader, 822 P.2d 950, 953 (Colo. 1992)(holding that an attorney’s conduct can be so careless or reckless that it must be deemed to be knowing and thus constitutes a violation of a specific disciplinary rule).
Kolbjornsen’s knowing submission of false information concerning material facts to the bankruptcy court is a violation of Colo. RPC 3.3(a)(1)(a lawyer shall not make a false statement of material fact or law to a tribunal) and Colo. RPC 8.4(c)(conduct involving dishonesty, fraud, deceit or misrepresentation).
By virtue of his submission of false information to the Bankruptcy Court, Kolbjornsen succeeded in securing a confirmation order of the Chapter 13 plan. The confirmation order deprived MacPhale of his right to pursue a valid civil judgment, forced MacPhale to expend substantial sums of money and time to challenge the fraudulently obtained confirmation order and required the unnecessary expenditure of the judicial resources of the bankruptcy court to revoke the confirmation order. As such, Kolbjornsen’s misconduct constitutes a grievous violation of Colo. RPC 8.4(d)(conduct prejudicial to the administration of justice).
By his violations of Colo. RPC 3.3(a)(1), Colo. RPC 8.4(c) and Colo. RPC 8.4(d), Kolbjornsen’s misconduct also violated Colo. RPC 8.4(a)(violation of a rule of professional conduct).
III. SANCTIONS/IMPOSITION OF DISCIPLINE
The PDJ and Hearing Board found that Kolbjornsen’s conduct constituted a violation of duties owed to the legal system, the profession and to the public. The ABA’s Standards for Imposing Lawyer Sanctions (1991 & Supp. 1992) ("ABA Standards") is the guiding authority for selecting the appropriate sanction to impose for lawyer misconduct.
ABA Standard 5.11 provides:
Disbarment is generally appropriate when:
(b) a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer’s fitness to practice.
ABA Standard 6.11 provides:
Disbarment is generally appropriate when a lawyer, with the intent to deceive the court, makes a false statement, submits a false document, or improperly withholds material information, and causes serious injury to a party, or causes a significant or potentially significant adverse effect on the legal proceeding.
ABA Standard 6.21 provides:
Disbarment is generally appropriate when a lawyer knowingly violates a court order or rule with the intent to obtain a benefit for the lawyer … [and] causes serious or potentially serious interference with a legal proceeding.
Kolbjornsen’s conduct in the bankruptcy matter meets all of the criteria under ABA Standards 5.11, 6.11, and 6.21.
An attorney’s misrepresentation of material facts to a court with the aim of benefiting himself or others to the detriment of his adverse party cannot be tolerated under an adversary system which depends upon the honesty of its officers to render fair and just decisions. Judicial officers, members of the profession and the public at large must be able to rely upon the truthfulness of an attorney’s statements to the court. Confidence in the truth-seeking process engendered in our system of justice cannot exist absent such reliance. Kolbjornsen’s misconduct, therefore, is of the most serious nature. The misconduct caused significant financial harm to MacPhale, it deceived and misled a court charged with the responsibility of rendering a just and fair decision, it necessitated further unnecessary judicial proceedings and it reflected adversely upon the profession.
Colorado law provides that, in the absence of substantial mitigating factors, disbarment is the presumed sanction when an attorney knowingly makes a false statement of material fact to a court. People v. Lopez, 980 P.2d 983, 984(Colo. 1999)(disbarring attorney subject to conditional admission for making misrepresentations of material fact on liquor license application, misrepresenting material information to liquor licensing authority, and to prospective investors); People v. Rudman, 948 P.2d 1022, 1026 (Colo. 1997) (in light of mitigating circumstances, suspension for three years, rather than disbarment is appropriate for lawyer who engaged in intentional pattern of lies); People v Kolbjornsen, 917 P.2d 277, 279(Colo. 1996)(suspending Kolbjornsen for one year and one day for testifying falsely to a tribunal under oath).
The PDJ and Hearing Board considered aggravating factors pursuant to ABA Standards 9.22. The People offered unrebutted evidence in aggravation that Kolbjornsen: had prior disciplinary offenses,1 see id. at 9.22(a); he had a dishonest or selfish motive, see id. at 9.22(b); he engaged in a pattern of serious misconduct, see id. at 9.22(c); he committed multiple offenses, see id. at 9.22(d); he failed to appear when ordered to do so in this action, see id. at 9.22(e), and he had substantial experience in the practice of law, see id. at 9.22(i). Kolbjornsen did not appear for the scheduled trial of this matter and no evidence of mitigation was presented.
It is therefore ORDERED:
1. Kenneth Edward Kolbjornsen, registration number 06259, is DISBARRED from the practice of law effective thirty-one days from the date of this Order, and his name shall be stricken from the roll of attorneys licensed to practice law in this state.
2. Kolbjornsen is ORDERED to pay the costs of these proceedings within sixty (60) days of the date of this Order.
3. The People shall submit a Statement of Costs within ten (10) days of the date of this Order. Respondent shall have five (5) days thereafter to submit a response thereto.
1. In 1996, Kolbjornsen was suspended for one year and one day for making false statements under oath to a court while testifying on his own behalf. In that case the Supreme Court questioned whether suspension or disbarment was the appropriate discipline. Kolbjornsen also had received a private censure in 1994.
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