Opinions – 11/21/11: Maryland Court of Appeals

Posted: 7:00 pm Sun, November 20, 2011
By Daily Record Staff

Administrative Law

Real estate license revocation

BOTTOM LINE: The Maryland Real Estate Commission had sufficient basis for finding that a real estate broker engaged in sexually abusive behavior toward minors throughout a 15-year period, demonstrating a lack of responsibility, maturity and trustworthiness; therefore, its sanction of license revocation was neither arbitrary or capricious, despite the fact-finding ALJ’s recommendation of a six-month license suspension.

CASE: Pautsh v. Maryland Real Estate Commission, No. 9, Sept. Term, 2011 (filed Oct. 28, 2011) (Judges Bell, Harrell, BATTAGLIA, Greene, Murphy, Adkins & Barbera). RecordFax No. 11-1028-21, 41 pages.

FACTS: The Maryland Real Estate Commission revoked the licenses of Joel Pautsch, pursuant to Business Occupations and Professions §17–322(b)(24)(i), based upon his convictions for child abuse.

The Commission delegated the task of conducting Pautsch’s hearing to an administrative law judge at the Office of Administrative Hearings. The ALJ held a hearing and made certain findings of fact.

For one, the ALJ found that on Jan. 29, 2007, Pautsch pled guilty in circuit court to felony charges of sex abuse with a minor and child abuse by parent. The victims of Pautsch’s crimes were his daughter and his niece.

On March 23, 2007, as a result of Pautsch’s guilty pleas, he was sentenced to four years in prison, with three years suspended. Pautsch was required to register as a child sex offender, to have no unsupervised encounters with minors, and to continue counseling. Finally, Pautsch was placed on five years’ probation.

The ALJ also made findings regarding Pautsch’s rehabilitation efforts and other mitigation, finding that Pautsch was involved in a church recovery program called “Celebrate Recovery,” a biblically based 12-step program. The ALJ found that Pautsch was attending therapy and counseling with a clinical social worker, and that he had received treatment from a person who was a psychotherapist and certified sex therapist. The ALJ further found that Pautsch had never previously been the subject of a complaint to the Commission, and that his real estate practices had never been affected by the felonies that he committed or the therapy that he was receiving.

Based upon these findings of fact, the ALJ concluded, as a matter of law, that Pautsch’s real estate broker’s license should be not be revoked, but should be suspended for six months to allow additional treatment and therapy prior to the resumption of real estate activities.

Thereafter, the Commission adopted the ALJ’s findings of fact, but rejected the ALJ’s recommended sanction of a six-month suspension in favor of revocation. Pautsch filed exceptions to the Commission’s proposed order. Following a hearing on the exceptions, the Commission issued a final order adopting the ALJ’s findings. The Commission further found that Pautsch violated §17–322(b)(24)(i) of the Business Occupations and Professions Article relating to the effect of a conviction of a felony. In its final order, the Commission concluded that Pautsch’s real estate license should be revoked and that if, at some time in the future, Pautsch was able to demonstrate a “track record sufficient to restore a level of trustworthiness and fitness” to hold a real estate license, he could reapply.

Pautsch sought judicial review of the Commission’s decision in circuit court, which affirmed the Commission’s decision. Pautsch appealed to the Court of Special Appeals, which also affirmed. Pautsch then appealed to the Court of Appeals, which affirmed.

LAW: Pautsch asserted that the Commission could not revoke his licenses without a direct relationship between his felony convictions and his occupational license. Pautsch further argued that the Commission concluded, without substantial evidence, that there was a nexus between his convictions and his position as a real estate professional, as required by §17–322(d)(2) of the Business Occupations and Professions Article, and that the Commisson’s decision to revoke his licenses was therefore arbitrary and capricious.

In framing its analysis, the Commission stated that, as mandated by BOP §17–322(d),  it must look to five factors in determining the appropriate sanction, specifically: (1) the nature of the crime; (2) the relationship of the crime to the activities authorized by the license; (3) with respect to a felony, the relevance of the conviction to the fitness and qualification of the applicant or licensee to provide real estate brokerage services; (4) the length of time since the conviction; and (5) the behavior and activities of the applicant or licensee before and after the conviction.

The Commission emphasized the similarity in the circumstances and implications of Pautsch’s child abuse and sex abuse crimes with those in Attorney Grievance Commission v. Thompson, 367 Md. 315 (2001), which also did not occur while the attorney was representing a client.

In deriving a nexus between Pautsch’s convictions and the activities under his real estate license, the Commission noted that although Pautsch was convicted of crimes involving family members, he could potentially come into contact with unsupervised children during the course of activities authorized by his real estate license, such as use of the “lock box” system.

Pautsch asserted that because the record contained no testimony or documentary evidence referring to the lock box system, the Commission could not rely on the lock box system as one of its considerations.

However, the Maryland Court of Appeals has a longstanding practice of respecting an agency’s expertise “in its own field” when conducting a review of its decisions. Maryland Aviation Administration v. Noland, 386 Md. 556, 572 (2005). In the instant case, the Commission was almost certainly specially equipped to comprehend the functionality of lock box systems. See BOP §17–202(a).

Moreover, the Commission noted that Pautsch’s history with children, over a 15-year period, went directly to his trustworthiness and thus negatively affected his ability to engage in activities authorized by his license. See Attorney Grievance v. Thompson, 367 Md. 315 (2001).

The Commission additionally found that the real estate profession, like the legal profession, entails several duties to clients and the public. Real estate licensees similarly owe a duty of trust to the public they serve in a number of ways, including a duty to protect the public against fraud, misrepresentation or unethical practices in the real estate field.

With respect to the issue of nexus, the Commission found that Pautsch’s child abuse convictions negatively impacted Pautsch’s fitness to be a real estate professional.

BOP §17–305(b) states that a real estate professional “shall be of good character and reputation.” Section 17–322(b)(24)(i) indisputably authorizes the Commission to “suspend or revoke” a real estate professional’s licenses if, under the laws of the United States or of any state, he is convicted of “a felony.”

The only remaining issue was whether Pautsch showed that the sanction was so extreme and egregious that it amounted to arbitrary and capricious agency action.

Based upon the testimony and the exhibits before it, the Commission had sufficient basis for finding that Pautsch had been engaged in sexually abusive behavior toward minors throughout a 15-year period. That behavior, according to the Commission, showed a lack of responsibility, maturity, and trustworthiness on the part of Pautsch as a real estate professional. As such, the Commission’s sanction was neither arbitrary or capricious, and the judgment of the Court of Special Appeals was accordingly affirmed.

COMMENTARY: Pautsch additionally asserted that §1–209 of the Criminal Procedure Article precluded the Commission from revoking Pautsch’s license because that statute requires a “direct relationship” to be shown between the convictions and a “specific occupational license.” However, Pautsch raised §1–209 for the first time in the Court of Appeals, even though the statute became effective on Oct. 1, 2009, some five months before he briefed the issues in the Court of Special Appeals. Therefore, any consideration of §1–209 was not preserved.

Moreover, even were the Court to address Pautsch’s argument regarding the statute, §1–209 was not in effect at the time Pautsch’s licenses were revoked. Maryland courts have long held that statutes are presumed to operate prospectively unless a contrary intent appears. State Ethics Comm’n v. Evans, 382 Md. 370, 381 (2004). Pautsch cited nothing in the legislative record that would rebut the presumption against retroactivity. Finally, given that Pautsch was not a “nonviolent ex-offender” as the statute demands, the policy implicated by §1–209 did not apply to him.

PRACTICE TIPS: In various attorney grievance cases, Maryland courts have determined that even misconduct that was not directly related to the practice of law nevertheless bore negatively upon an attorney’s fitness to practice. For instance, a conviction for possession with intent to distribute marijuana was found to be a criminal act that reflected adversely on an attorney’s honesty, trustworthiness or fitness as a lawyer in other respects. Likewise, convictions on handgun and battery charges were found to be prejudicial to the administration of justice and as impacting adversely that attorney’s fitness to practice law.

Corporations and Partnerships

Derivative claim

BOTTOM LINE: The circuit court erred in granting summary judgment to defendants in a derivative claim, where the circuit court made an inadequate inquiry into the special litigation committee’s independence and the reasonableness of its procedures, as required under the business judgment rule.

CASE: Boland v. Boland, Nos. 123, 129, Sept. Term 2010 (filed Oct. 31, 2011) (Judges Bell, Greene, Murphy, ADKINS, Barbera & Eldridge (retired, specially assigned)) (Judge Battaglia dissenting). RecordFax No. 11-1031-22, 95 pages.

FACTS: In the early 1960s, Louis Boland entered into a franchise agreement with the Trane Company to be its exclusive sales agent in the greater Washington, D.C., market. Boland established Boland Trane Associates (BTA) and Boland Trane Services, Inc. (BTS). Boland served as the chairman of the board and president of both corporations, and with his wife, Maureen, owned all the stock in the companies.

During the 1960s, Boland gave stock to each of his eight children: Colleen, Louis Jr., Sean, James, John, Kevin, Michael, and Eileen. Later, at Boland’s request, each child signed a Stock Purchase Agreement (SPA), which required the children to offer the stock to the corporations at book value before selling to anyone else, and provided for a corporate repurchase of the stock upon the death of any of the children at book value plus 25 percent.

Boland died in 2003. Before his death, Boland had set out his desired succession plan in a “Letter of Instruction.” Pursuant to the terms of that letter, Sean became chairman of the boards and CEO of BTA and BTS, James became president and chief operating officer, and Louis, Jr. became executive vice president and chief marketing officer. The letter also directed Lawrence Cain to become senior vice president and the chief financial officer. Sean, James, and Louis Jr. served on the boards of BTA and BTS along with Cain. Under the new management, BTS and BTA continued to be profitable.

After Boland’s death, Mrs. Boland owned a 20 percent share in BTS. Seeking to reduce her eventual estate for tax purposes, and to secure a more stable source of income, Mrs. Boland negotiated with BTS to exchange her stock in return for the purchase of an annuity. On June 25, 2004, she sold her holdings in BTS back to the corporation, and the corporation purchased her an annuity which provided a monthly payment of $28,544 for life.

After the repurchase of Mrs. Boland’s stock, Sean, James, and Louis Jr. (the Director siblings) designed a series of stock purchases that gave them an increased share in BTA and BTS. The directors’ stock purchases came to the attention of the non-director siblings, specifically John and Kevin, in June 2005.

Colleen died on June 7, 2006, and the corporations sent notice of their intention to repurchase the stocks on June 16, 2006. The valuation of her stock, pursuant to the SPA, was significantly lower than some estimations of its market value. Upset at the low valuation of the stock, Colleen’s personal representative resisted the corporations’ attempts.

On July 19, 2006, BTA, BTS and the Director siblings filed a complaint for declaratory judgment, seeking to enforce the repurchase provisions in Colleen’s SPA. Ten months later, John and Kevin filed a cross-claim in the corporation’s declaratory judgment action, alleging breach of fiduciary duty, self-dealing, and oppression from threats to enforce buy-back provisions in the SPAs. This was a “direct” action.

After sending the requisite demand for litigation to the corporations, John and Kevin filed a derivative complaint, on behalf of both BTS and BTA, naming Sean, James, Louis, and Lawrence Cain as the defendants. Their allegations included fraudulent conduct, oppression of minority shareholders, and breaches of the duties of good faith and loyalty, and they requested rescission of the stock transactions, compensatory damages, attorney’s fees, and dissolution of the corporations.

The corporations appointed a special litigation committee (SLC) consisting of two newly hired “independent directors” to examine the claims. The SLC investigated the issues presented in the derivative complaint, as well as an issue it apparently raised on its own: whether John and Kevin were “adequate shareholder representatives.” After an extended study, the SLC issued a report concluding that the stock transactions were legitimate and that the SPA was enforceable.

The circuit court, deferring to the judgment of the SLC, granted summary judgment in favor of the corporations on the derivative action.

After judgments against John and Kevin in the derivative action, all that remained in the circuit court was the corporations’ action for declaratory judgment, and John and Kevin’s cross-claims and counterclaims,

The two parties disputed whether the derivative claim could preclude direct claims based on similar factual events and allegations. The circuit court concluded that res judicata applied to John and Kevin’s direct claims and dismissed all of those claims.

Having dismissed the direct claims of John and Kevin, the court turned to the dispute over the enforceability of the SPAs. Finding the SPAs to be “plain and unambiguous[,]” supported by consideration, and still valid despite Louis Sr.’s death, the circuit court ordered Colleen’s estate to abide by the redemption clause.

John and Kevin appealed to the Court of Special Appeals. While that action was pending the Court of Appeals granted certiorari.

The Court of Appeals reversed the judgment in the derivative action and vacated the judgment of the circuit court dismissing cross-claims.

LAW: A derivative action alleges injury to the corporation. The common law tailored the derivative action to be a “justifiable, but limited, intrusion upon the general authority of the directors to manage the business affairs of the corporation.” Werbowsky v. Collomb, 362 Md. 581, 600 (2001). As an exception to the general rule that “the business and affairs of a corporation are managed under the direction of its board of directors[,]” the derivative action is enables shareholders to enforce a corporate right in certain circumstances.

The derivative suit thus balances the interests of the shareholders with those of the corporation and its directors. The main levers with which the courts maintain this balance are varying levels of judicial scrutiny of corporate decisions.

The default standard is the deferential business judgment rule, which insulates “the business decisions made by the director from judicial review[.]”Shenker v. Laureate Educ., Inc., 411 Md. 317, 344 (2009).

“It is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company. Absent an abuse of discretion, that judgment will be respected by the courts. The burden is on the party challenging the decision to establish facts rebutting the presumption.” Aronson v. Lewis, 473 A.2d 805, 812 (Del.1984).

The common law developed a requirement that the derivative plaintiff, at the outset, seek a corporate decision on whether to maintain a lawsuit, a prerequisite known as the “demand requirement.” See Waller v. Waller, 187 Md. 185, 192 (1946).

Judicial review of a demand refusal is subject to the business judgment rule, and the court considering a demand-refused action limits its review to whether the board acted independently, in good faith, and within “the realm of sound business judgment.” See Wasserman v. Kay, 197 Md.App. 586, 611 (2011).

A Special Litigation Committee, composed of independent, disinterested directors, either inside the corporation or specially appointed from outside the corporation, is vested with the authority to render a corporate decision. A disputed question is how rigorously a court should review an SLC’s recommendation.

In Auerbach v. Bennett, 393 N .E.2d 994 (N.Y.1979), shareholders of a corporation brought a derivative action regarding certain illegal foreign payments made by the corporation. The corporation appointed an SLC to consider the claims. After the SLC concluded that it was not in the corporations’ best interest to pursue the lawsuit, the court granted summary judgment on the derivative complaint.

On appeal, the court concluded that the SLC’s decision fell under the business judgment rule, explaining that the “ultimate substantive decision…not to pursue the claims advanced in the shareholders’ derivative actions…falls squarely within the embrace of the business judgment doctrine…[and] is outside the scope of our review.” Id. at 1002.

A more limited inquiry into methodologies and procedures, the court observed, was well within the domain of the judicial system. Id.

The Auerbach rule, like the business judgment rule generally, carves out a limited role of judicial review, and allows a “tainted” board of directors to reclaim the protection of the business judgment rule through the appointment of an SLC.

One year after Auerbach, Delaware emerged with an alternative standard in Zapata Corp. v. Maldonado, 430 A.2d 779 (Del.1980). The Zapata court thought the Auerbach approach, in a demand-refused action, failed to adequately protect shareholders. The Zapata court found the court should apply its own independent business judgment to determine whether a motion to dismiss should be granted. Id. at 788–89.

In the aftermath of Zapata and Auerbach, courts reviewing motions to dismiss or for summary judgment were presented with two alternatives: Auerbach’s adherence to the business judgment rule or Zapata’s belief that the SLC process should be independently examined, on the merits, by the courts.

Maryland had yet to definitively decide whether to follow Zapata or Auerbach. The court here adopted the approach of Auerbach.

However, there should be no presumption that the Special Litigation Committee was independent, acted in good faith, or followed reasonable procedures. Rather, the court should not grant summary judgment on the basis of an SLC’s decision unless the directors have stated how they chose the SLC members and come forward with some evidence that the SLC followed reasonable procedures and that no substantial business or personal relationships impugned the SLC’s independence and good faith.

If the corporate directors meet this burden, then the burden shifts to the derivative plaintiffs to come forward with evidence sufficient to survive a motion for summary judgment.

If the plaintiff survives summary judgment, at trial, the burden is on the directors to prove that the SLC was independent, acted in good faith, and made a reasonable investigation and principled, factually supported conclusions. See Auerbach, 393 N.E.2d at 1001.

Regarding the SLC’s independence and good faith, judicial inquiry can involve an investigation of the SLC’s composition and its members’ relation to the director-defendants.  Regarding the reasonableness of the SLC’s methodology, the reviewing court can inquire into the procedural aspects of the SLC’s investigation. Auerbach, 393 N.E.2d at 1002–03.

Here, the Director siblings never attested to how they chose the SLC members or that the SLC members had no significant business, personal, or social relationships with them. Instead, they argued that the SLC was entitled to a presumption of independence and good faith, and from then on simply stated, without proving, that the SLC was independent.

Thus, the circuit court did not have sufficient grounds for summary judgment on the basis of the SLC’s report.

Furthermore, the circuit court incorrectly applied a presumption that the SLC’s methodology was reasonable. The ruling discussed the length and thoroughness of the investigation, and concluded that the SLC did not engage in a cursory analysis. It appeared, however, that the circuit court did not consider the scope of review and standards used by the SLC. Specifically, it was unclear whether the SLC applied a “business judgment standard” to the transactions at issue, or whether they engaged in an independent inquiry on behalf of the corporation.

The grant of summary judgment in the derivative action was vacated and the case was remanded.

COMMENTARY: With respect to the enforceability of the SPA, a right to redeem stock can be valuable consideration for a shareholder. See Mayer Hoffman McCann, P.C. v. Barton, 614 F.3d 893 (8th Cir.2010). John and Kevin did not dispute that the SPA’s promise of redemption upon the death of a shareholder formed valid consideration for the contract.

In addition, a contract may not exist in perpetuity in the absence of an express provision, and in such absence, “a reasonable duration will be implied by the court.” Lerner v. Lerner Corp., 132 Md.App. 32, 45 (2000). Yet, even absent any explicit length of time, the contract’s duration may be defined by contingent future events. See Pumphrey v. Pelton, 250 Md. 662, 665 (1968).

The duration of the SPAs until the death of the shareholder was clearly an event anticipated by the SPAs. A provision in a stock purchase agreement providing for repurchase upon the shareholder’s death is clearly intended to endure until the shareholder’s death.

Finally, John and Kevin raised their oppression argument in the wrong venue. John and Kevin will have an opportunity to have their direct claims, alleging oppression and requesting dissolution, heard. See Edenbaum v. Schwarcz–Osztreicherne, 165 Md.App. 233, 260 (2005).

Thus, the SPA’s repurchase upon death provision, a common feature of family-owned corporations, was a valid and enforceable contract. Accordingly, the circuit court’s grant of summary judgment with regard to the enforceability of the SPAs was affirmed.

The doctrine of res judicata, or claim preclusion, prevents parties from re-litigating issues that have already been decided by the courts — if: “[1] if there is a final judgment] [on the merits] in a previous litigation [and 2] where the parties, the subject matter and causes of action are identical or substantially identical as to issues actually litigated and as to those which could have or should have been raised in the previous litigation.” R & D 2001 v. Rice, 402 Md. 648, 663 (2008).

A trial court’s resolution of a derivative complaint, when based on the recommendation of a SLC, cannot be said to be a final judicial resolution of the merits of the claims. Accordingly, the circuit court erred in dismissing John and Kevin’s direct action. See Williams v. Messick, 177 Md. 605 (1940).

DISSENT: According to the dissent, as to the derivative action, the circuit court properly applied the business judgment rule to the SLC report and granted summary judgment in favor of the corporations and the defendant directors.

The dissent would also have held that the trial court’s grant of summary judgment against John and Kevin’s derivative claims, which mirror the claims raised directly, served as a final judgment on the merits for purposes of res judicata.

PRACTICE TIPS: In Maryland, the business judgment rule, codified in CA §2–405.1, assigns certain duties to directors of a corporation. CA §2–405.1(a). It further provides that “[a] person who performs his duties in accordance with the standard provided in this section shall have the immunity from liability [arising from performance of those duties]” and that “[a]n act of a director of a corporation is presumed to satisfy the standards of…this section.” CA §2–405.1(c), (e).

Criminal Law

Robbery

BOTTOM LINE: The state failed to prove an essential element of robbery: that defendant conducted himself in a manner that could cause apprehension, in a reasonable person, that he was about to apply force.

CASE: Spencer v. State, No. 87, Sept. Term, 2009 (filed Oct. 25, 2011) (Judges Bell, Greene, Murphy & ELDRIDGE (retired, specially assigned)) (Judges Harrell, Adkins & Barbera dissenting). RecordFax No. 11-1025-23, 23 pages.

FACTS: On Dec. 26, 2006, at around 3:20 p.m., Erik Leroy Spencer entered a Jiffy Lube service center, walked up to cashier Tyrone Stinnette, and said: “Don’t say nothing.”

Spencer was charged with robbery, theft over $500, and second-degree assault. At Spencer’s trial, Stinnette testified that once Spence said to him “Don’t say nothing.” Stinnette knew that a robbery was going to occur. Stinnette further testified that Spencer did not point anything at him. When asked whether he believed that Spencer had a weapon, Stinnette stated “I wasn’t taking no chances. I handed him the cash register drawer.”

After the nonjury trial, Spencer was found guilty of robbery, theft over $500, and second-degree assault. The theft and assault convictions were, for the purposes of sentencing, merged with the robbery conviction. Spencer was sentenced to 25 years without parole as a subsequent violent offender with two previous robbery convictions. The Court of Special Appeals affirmed Spencer’s robbery conviction.

The Court of Appeals reversed.

LAW: Robbery in Maryland is governed by a common law standard. CL §3–401(e) provides that “‘[r]obbery’ retains its judicially determined meaning.” From its earliest days in Maryland law, fear has been a central component in distinguishing the crime of larceny or theft from robbery. See West v. State, 312 Md. 197, 203 (1988).

In West, the defendant snatched a woman’s purse. The woman later testified at the defendant’s trial that “just [as he] snatched my purse from my hand and he ran, that’s when I noticed my pocketbook was gone.” Id. at 199. West was convicted of robbery. The Court of Appeals overturned the robbery conviction for insufficient evidence, highlighting the fact that the record demonstrated that the victim was “never placed in fear; she did not resist; she was not injured.” Id. at 206.

In so holding, the West Court traced the “ancient origins” of common law robbery, closely examining the “requirement that the larceny be accompanied by violence or putting in fear” to constitute robbery. See Raiford v. State, 52 Md.App. 163 (1982); Cooper v. State, 9 Md.App. 478 (1970).

In Dixon v. State, 302 Md. 447 (1985), the defendant with a “cold, hard look” in his eyes approached the cashier with a previously written demand for all her money, in the night, at a time when she was alone in the filling station. The defendant was carrying a newspaper tightly under his arm, folded in such a way that the cashier thought it was a weapon inside the newspaper. When given a note stating, “I want all your money and hurry,”’ the cashier dropped to the floor of her booth and pressed the alarm button and the defendant fled. Dixon was convicted of assault with intent to rob.

The Court of Appeals held the state met its evidentiary burden to prove an intent to rob. It noted that “[t]he testimony of the cashier, the attitude of the accused, the demanding note, and the reasonable inferences deducible therefrom were found by the trial court to show an intent to rob. We cannot say that its conclusion was clearly erroneous.” Id. at 455.

With regard to assault, the Dixon court adopted the test set forth in Lyles v. State, 10 Md.App. 265, 267 (1970): “[A]ny attempt to apply the least force to the person of another constitutes an assault. The attempt is … any action or conduct reasonably tending to create the apprehension in another that the person engaged therein is about to apply such force to him. It is sufficient that there is an apparent intention to inflict a battery and an apparent ability to carry out such intention.”

The Court of Appeals addressed the requirement of intimidation or threat of force in Coles v. State, 374 Md.114 (2003). There, the defendant, on three separate occasions, entered a bank and handed the teller a note demanding money. For each incident, Coles was convicted of robbery.

The Court of Appeals upheld the convictions, citing the Dixon “test” that required evidence demonstrating that the perpetrator engaged in “conduct reasonably tending to create the apprehension in another that the person engaged therein is about to apply…force to him.” Coles, 374 Md. at 126.

In particular, the court noted that the clothing Coles wore “could have easily concealed a weapon,” that he gave the teller a “note constitut[ing] an unequivocal demand for money and an intimidating command not to let anyone know that [he] was stealing the money,” and that, during one of the robberies, his note stating “‘no one will get hurt’ “was “sufficient to suggest bodily harm for non-compliance.” Id. at 129–130.

When considering whether there has been a threat of force or intimidation, an objective test must be employed. This test should consider whether an ordinary, reasonable person under the circumstances would have been in fear of bodily harm. It need not be proven that “the person assailed was actually put in fear, if the means employed are calculated to instill fear in the heart or mind of a reasonable man.” Hayes v. State, 211 Md. 111, 116 (1956).

After reviewing this record in the light most favorable to the State, a rational trier of fact could not have found that the State proved all the essential elements of robbery beyond a reasonable doubt. Merely uttering the words, “Don’t say nothing,” without anything more, would not intimidate a reasonable person or be viewed by a reasonable person as a threat of harm.

The threat of force or intimidation was simply absent in this case. In both Dixon and Coles, the defendants handed notes demanding money to the victims. It made no difference whether the notes actually threatened bodily harm; there was an implicit threat attached to the act of demanding money in the context of those cases. The notes in both cases constituted conduct that would intimidate a reasonable person.

Spencer, however, never handed a note to the cashier, no demand for money was made, and no reference to money or the cash register was made by Spencer. Even when the cashier was asked by the State if Spencer pointed anything at him or implied anything during their interaction, the cashier responded “no.”

The threat of a weapon also figured prominently in the decisions to uphold the robbery convictions in Dixon and Coles. In Dixon, the folded newspaper carried tightly under the defendant’s arm could have led a reasonable person to believe that a gun was hidden there. In Coles, there was testimony that the defendant’s attire might have concealed a weapon.

Absolutely no evidence in this case suggested that Spencer possessed a concealed weapon. There was no testimony regarding his dress and, when the cashier was asked whether he thought Spencer had had a weapon, he responded, “I wasn’t taking no chances.” This self-reflective answer, which conveys the subjective state of mind of the cashier, did not support an inference that Spencer might have had a weapon.

A reasonable person in the cashier’s shoes on the day that Spencer entered the Jiffy Lube, when faced with the statement not to say anything, would not automatically hand over the cash register drawer. The statement to remain silent was simply not enough to create apprehension that force was about to be applied.

Accordingly, the State failed to prove an essential element of the robbery charge, and Spencer’s robbery conviction could not stand.

COMMENTARY: The distinction between robbery and theft has important sentencing implications beyond the statutory penalties available for each crime. In the instant case, although the penalty for robbery is 15 years, with the possibility of parole, robbery constitutes a violent crime. With two previous robbery convictions in his criminal history, the trial judge was constrained to sentence Spencer to 25 years imprisonment without parole. See CL §14–101(d).

DISSENT: According to the dissent, a reasonable jury could have concluded that Stinnette felt compelled to part with the money or face a risk of escalation by Spencer. This was classic intimidation.

Robbery is “the felonious taking and carrying away of the personal property of another from his person or in his presence by violence or putting in fear.” West, 312 Md. at 202. The record supported the jury verdict that Spencer obtained a thing of value from the victim’s presence by intimidation. By departing with the cash drawer and driving away, Spencer established the intent to deprive Stinnette of the cash in the drawer.

Criminal Procedure

Offensive collateral estoppel

BOTTOM LINE: The offensive use of collateral estoppel foreclosed the jury from finding for itself all of the ultimate facts that made out the charged crime, and was, therefore, in violation of the Sixth Amendment’s guarantee of a jury trial “[i]n all criminal prosecutions.”

CASE: State v. Allen, No. 76, Sept. Term, 2010 (filed Oct. 28, 2011) (Judges Bell, Harrell, Battaglia, Greene, Murphy, Adkins & BARBERA). RecordFax No. 11-1028-20, 23 pages.

FACTS: Jeffrey Edward Allen was at the home of John Butler when the two got into an argument. A scuffle ensued, during which Allen repeatedly stabbed Butler with at least one kitchen knife. Allen later turned himself into the police.

Allen was tried before a jury on charges of first degree premeditated murder, first degree felony murder, second degree (specific-intent) murder, robbery with a deadly weapon and related offenses. The jury found Allen guilty of first degree felony murder, second degree murder, robbery with a deadly weapon, and lesser related charges.

The Court of Special Appeals affirmed all but the felony murder conviction, which it vacated. The Court of Appeals affirmed the holding of the Court of Special Appeals and held that Allen was entitled to a new trial on the charge of felony murder.

During voir dire at Allen’s retrial on the felony murder charge, the trial court informed the venire that Allen had previously been convicted of second degree murder and robbery in connection with the incident and that the only matter before the jury was the felony murder charge related to the robbery incident.

The court instructed the jury that Allen had been convicted of second degree murder. The court added, though, that the jury should also be informed of the procedural history of the case, including that Allen had been convicted of robbery.

The trial court instructed the jury that the only charge before it was first degree felony murder and instructed it on the elements of that offense. The Court also instructed the jury on the elements of second degree murder, for which Allen was already convicted, and advised the jury that Allen had been convicted of the underlying robbery.

Both the State and Allen excepted to the instruction. In an attempt to clarify, the trial court added that the question of whether Allen committed second degree murder or robbery or robbery with a deadly weapon was not before them. The only question was whether the circumstances and the proof amounted to first degree felony murder as the court defined that.

The jury convicted Allen of first degree felony murder. The Court of Special Appeals reversed.

The state appealed to the Court of Appeals, which affirmed the Court of Special Appeals’ decision.

LAW: A defendant in a criminal proceeding may invoke the doctrine of collateral estoppel to preclude the state from trying an ultimate fact found in favor of the defendant at a prior trial. Ashe v. Swenson, 397 U.S. 436, 445 (1970). This defensive use of collateral estoppel derives from the Double Jeopardy Clause of the Fifth Amendment. Id.

The question in Ashe was whether the doctrine of collateral estoppel, born in civil litigation yet also a long-established rule of federal criminal law, is also “a part of the Fifth Amendment’s guarantee against double jeopardy.” Id. at 442. The Court held that the defensive use of collateral estoppel is a constitutional requirement of the Double Jeopardy Clause. Id. at 445–46.

“Much like the Supreme Court has done in recognizing collateral estoppel as a form of constitutionally based double jeopardy, we recognize the collateral estoppel form of double jeopardy as a part of Maryland common law.” Odum v. State, 412 Md. 593, 606 (2010).

The question here was whether the collateral estoppel doctrine can be employed in a criminal case not just as a shield that protects the defendant from having litigated against him an ultimate fact found in his favor, but also as a sword that relieves the State of the burden to re-prove an ultimate fact previously found against the defendant.

The overwhelming majority of federal and state courts that have addressed the question have held that collateral estoppel may not be used against a criminal defendant.

In State v. Ingenito, 432 A.2d 912 (N.J.1981), Ingenito was charged with the unlicensed transfer of weapons and possession of a firearm by a convicted felon. Ingenito was tried separately on the two charges. At the second trial, for possession of a firearm by a convicted felon, Ingenito stipulated to the fact that he was a convicted felon, leaving only the element of possession to prove. The prosecution met that burden by introducing, over Ingenito’s objection, “the county clerk’s testimony of the record of [the] defendant’s recent conviction for the unlicensed transfer of the weapons.” Id. at 913–14.

Ingenito was convicted of possession of a firearm by a convicted felon. The Supreme Court of New Jersey reversed and held that the offensive use of collateral estoppel against a defendant “impinged upon [the] constitutional right of trial by jury.” Id. at 915.

The Ingenito court identified several constitutionally-based functions of the jury that would be undermined by allowing the prosecution to invoke collateral estoppel against a criminal defendant. Prime among them is “the nondelegable and nonremovable responsibility of the jury to decide the facts.” Id. at 915.

The Ingenito court concluded that “the right to a jury in a criminal trial ordinarily includes the right to have the same trier of the fact decide all of the elements of the charged offense. Unless the same jury is permitted to deliberate meaningfully upon all of the issues that are crucial to a verdict of guilt or innocence of the particular crime charged, a defendant will not have secured the jury right contemplated by the Constitution. Collateral estoppel against a defendant in the context of the criminal trial is inconsistent with this proposition.” Id. at 919.

In United States v. Pelullo, 14 F.3d 881 (3rd Cir.1994), Pelullo was convicted of 49 counts of wire fraud, and a single count of racketeering. Id. at 885. The 3rd Circuit overturned all but one of the wire fraud convictions. Id. However, the one affirmed wire fraud conviction was “alleged to constitute one of the [racketeering] predicate acts.” Id. at 887.

At retrial on the racketeering charge, the Government introduced evidence of the prior conviction to prove the predicate act for the racketeering charge. Id. Based on that evidence, the trial judge instructed the jury that, “as a matter of law, the defendant has committed the wire fraud offense described in [the indictment for racketeering]. That means you don’t have to consider whether the government has proved this [racketeering] offense.” Id. The jury convicted Pelullo of the racketeering charge. Id. at 885.

The 3rd Circuit reversed the conviction, holding that the offensive use of collateral estoppel against Pelullo “deprived him of his right to a jury trial.” Id. at 889. That court relied on the Ingenito analysis to support its own conclusion that “collateral estoppel against a defendant in criminal cases violates the defendant’s constitutional right to a jury trial.” Id. at 892.

The Pelullo court noted that the Sixth Amendment’s reference to the right to a jury in “all criminal prosecutions,” “guarantee[s] a right that is absolute in the sense that it applies to all criminal prosecutions or, put differently, to the prosecution of every crime.” Pelullo, 14 F.3d at 895.

Moreover, the Sixth Amendment’s jury trial right could not yield to “public policy” or reasons of “common sense judicial administration.” Id. at 891 (quoting Pena–Cabanillas v. United States, 394 F.2d 785, 787 (9th Cir.1968)).

The right to have a jury decide one’s fate is of paramount importance in this country’s system of criminal justice. Invocation of offensive collateral estoppel to establish conclusively an element of a charged crime impairs that constitutional right.

Here, when the trial court informed the jury that the question of whether Allen committed second degree murder or robbery or robbery with a deadly weapon was not before them, the court necessarily informed the jury that those two elements of felony murder were established as a matter of law, and thereby withdrew from the jury any consideration of them. The instruction impermissibly estopped litigation on ultimate facts necessary to a finding that Allen committed the crime charged, thereby impairing the function of the jury and depriving Allen of the constitutionally guaranteed right to a trial by jury in all criminal prosecutions.

COMMENTARY: There is one case that endorses offensive collateral estoppel in a criminal trial and has not, since its issuance, been directly overruled: Hernandez–Uribe v. United States, 515 F.2d 20 (8th Cir.1975).

Hernandez–Uribe, was charged with and convicted of unlawfully reentering the boundaries of the United States under 8 U.S.C. §1326. Id. at 20–21. Hernandez–Uribe contested only one element of the crime—whether he was an alien—and offered evidence that he was born a natural citizen of the United States. Id. at 21. To refute that evidence, the government entered certified copies of two prior convictions that Hernandez–Uribe had received for violating 8 U.S.C. §1326. Id. Based on that evidence, the trial judge instructed the jury that “[t]here has been a judicial determination…that…defendant was an alien. The defendant is bound by that determination. Evidence of his status as citizen or alien prior to [that date] is therefore immaterial and you will not consider it.” Id.

Hernandez–Uribe was convicted of the charge and appealed his conviction, arguing that the court’s instruction concerning the prior convictions estopped him from litigating an element of the crime in violation of his Sixth Amendment rights to a jury and to confront witnesses. Id.

The 8th Circuit rejected the claim without giving any consideration to the Sixth Amendment issues raised. Instead, the court merely found that “there would be less to deter future entries [into the United States] than at the present,” if the courts were to allow fresh prosecutions every time the defendant attempted to subvert 8 U.S.C. § 1326. Id. (quoting the since-overruled Pena–Cabanillas, 394 F.2d at 787–88). Repeated “trial[s] de novo on the issue of alienage,” would result in subsequent repeated attempts to enter, with the hope that “on one occasion, [one trial would] result in a favorable verdict.” Id. (quoting Pena–Cabanillas, 394 F.2d at 787–88)).

No weight was accorded to Hernandez–Uribe here. It is an old case, its holding is narrow and it contains no analysis of the Sixth Amendment.

PRACTICE TIPS: As applied in the civil context, the collateral estoppel doctrine is two-sided; that is, it may be “defensive,” where a defendant uses a previously determined issue as a shield against liability, or “offensive,” where a plaintiff uses a previously determined issue as a sword to establish liability. See Rourke v. Amchem Prods., Inc., 384 Md. 329, 341 (2004).

Evidence

Cross-Examination

BOTTOM LINE: The trial court properly refused to allow defendant to cross-examine an investigating officer regarding the contents of a search warrant return that was prepared by another police officer and of which the testifying officer had no personal knowledge.

CASE: Sweetney v. State, No. 103, Sept. Term, 2010 (filed Oct. 25, 2011) (Judges Bell, Harrell, Battaglia, Greene, MURPHY, Adkins & Barbera). RecordFax No. 11-1025-25, 22 pages.

FACTS: A robbery occurred on the afternoon of Friday, July 14, 2006, when two men forced their way into the victim’s apartment. One of the intruders was unmasked, and the other was wearing a ski mask. Both intruders used handguns to strike the victim’s face and head. After the victim had been forced into the bedroom, he lost consciousness. After the victim regained consciousness, one of the intruders grabbed the silver chain that the victim was wearing around his neck, and ripped the chain off the victim’s neck. After stealing several items of the victim’s personal property, the intruders threw him into a closet, where he remained until after the intruders left the apartment.

The victim did not initiate the investigation of the robbery, which was first reported by an employee of the Southern Maryland Hospital Center, after the victim had been transported there by a friend. At the hospital, while being interviewed by Detective Chris Shankster of the Charles County Sheriff’s Department, the victim initially stated that he did not know who robbed him. Approximately an hour later, however, the victim told Shankster that James Sweetney was the masked intruder.

On July 26, 2006, Detective Shankster and other members of the Charles County Sheriff’s Department accompanied Washington, D.C. Metropolitan Police Officers who executed a search warrant at the residence in which Sweetney had been residing with his girlfriend and her children. Sweetney was present at the apartment when the warrant was executed. Shelley Progovitz, a Charles County evidence technician, who had responded to the call to the victim’s residence the day of the robbery, also accompanied the D.C. officers. Progovitz collected and bagged a black tee-shirt, a pair of black Nike boots, and two pairs of brown Timberland boots. She also processed a small box collected from the window sill in the bedroom that contained items of jewelry, including a pendant and necklace without a clasp.

Shankster was present for the collection of the necklace and pendant during the execution of the search warrant, and the police officers left a search warrant return which documented the items seized from the residence. The return, prepared by Detective Brett Smith of the D.C. Police Department, described the box and its contents that were seized as: “Box w/chain w/broken clasp w/Jesus & Cross.” After execution of the warrant, Shankster returned with the victim on July 27, 2006, to the victim’s apartment. Shankster claimed that he took a picture of the bloodstained area in the bedroom that showed a “clasp” but did not collect it or request that it be collected.

After Shankster left the victim’s apartment, the crime scene technician, Progovitz, arrived. Her specific duties were to photograph the scene, search for evidence, collect evidence, and process any evidence.

Progovitz photographed the victim’s apartment and collected items of evidence from it, including a dust particle mask from the bedroom floor near the dresser in the area where Shankster testified the clasp was present. Neither Progovitz, nor any of the other police officers, who had each been through every room in the apartment, observed any broken items of jewelry or a clasp on the bedroom floor.

At Sweetney’s criminal trial, his attorney made two attempts to place before the jury the search warrant return prepared by Detective Smith, but the trial court would not allow the defense to cross-examine Shankster or any State’s witness about the contents of the return.

Sweetney was convicted of robbery and related offenses, including use of a handgun in the commission of a crime of violence. He appealed to the Court of Special Appeals, which affirmed his convictions, then to the Court of Appeals, which also affirmed.

LAW: Sweetney argued that the Court of Special Appeals erred in finding that the constitutional right of confrontation was not violated where the trial court curtailed Sweetney’s cross-examination of Detective Shankster regarding the contents of the search warrant return, which directly contradicted the detective’s direct testimony about recovering a key piece of evidence.

It is well settled that the hearsay statement of a police officer cannot be introduced into evidence during the cross-examination of another officer in the very same police department.

Sweetney obviously had a constitutional right to secure the presence of Detective Smith and question him about what he had written on the search warrant return. However, during the cross-examination of Shankster, Sweetney was not entitled to establish what another police officer, Detective Smith, had written on the return.

For instance, in Wiggins v. State, 90 Md.App. 549 (1992), the Court of Appeals noted that the mere fact that an officer was the lead investigator did not mean he could testify to everything that occurred in the case; rather, the officer could properly testify only to that of which he had personal knowledge. And specifically, the Wiggins Court noted that the question posed to the investigating officer called for hearsay, as the officer had earlier testified that he did not personally examine the vehicle and therefore could not have testified from personal knowledge as to whether examination of the car had disclosed or failed to disclose appellant’s fingerprints. Id. at 576; see also Bell v. State, 114 Md.App. 480 (1997); Farewell v. State, 150 Md.App. 540 (2003). Statements that are otherwise inadmissible are not salvaged by invoking the mantra of “impeachment.”

Thus, if the State could not properly use the statement under the applicable rules of evidence, it could not instead read the statement to the jury, apparently line by line, through the questions it posed to the defendant. Bell v. State, 114 Md.App. at 496-97. Similarly, witnesses are not impeached by prior inconsistent statements of other witnesses, but by their own prior inconsistent statements. United States v. Tarantino, 846 F.2d 1384, 1416 (D.C.Cir.1988).

In this case, it was clear that the search warrant return prepared by Smith was ambiguous, as his written description stated merely, “Box w/chain w/broken clasp w/Jesus & Cross.” The detective might have intended to document the seizure of a box containing a chain to which a broken clasp was attached at that time and place, or a box containing both a chain and a broken clasp, or a box containing a chain that at one time, but no longer, had a clasp.

While Sweetney was entitled to take advantage of the ambiguous return, he was required to do so in conformity with the Rules of Evidence. Sweetney had a right to introduce the return into evidence through the testimony of Smith. However, the circuit court neither erred nor abused its discretion when it prohibited Sweetney from cross-examining Shankster about ambiguous language in an out-of-court statement written by Smith.

Accordingly, the judgment of the Court of Special Appeals was affirmed.

COMMENTARY: Sweetney also contended that the Court of Special Appeals erred in failing to reverse his conviction due to prosecutorial misconduct under a plain error analysis. While the Court of Appeals has discretion to review “unpreserved” arguments, Sweetney’s “prosecutorial misconduct” arguments should have been presented to the circuit court at a point in time when that court could consider and respond, and which would be more appropriately resolved in a post-conviction proceeding. As such, the Court declined to undertake a “plain error” review.

PRACTICE TIPS: It is improper under the guise of “artful cross-examination” to tell the jury the substance of inadmissible evidence, including inadmissible hearsay evidence. There are three primary “risks” associated with hearsay evidence: first, that the speaker might say one thing but mean another (a slip of the tongue); second, that even if the speaker uses words well and chooses the best possible ones to convey his intended meaning, he might still be misinterpreted; third, that the language, while rich in nuance and variety, may not capture the point of detail, or the qualification or limit, that lies at the heart of a litigated dispute.

Professional Responsibility

Disbarment

BOTTOM LINE: Disbarment was the appropriate sanction, where attorney made false or misleading statements about residency in his applications for admission pro hac vice filed in California state and federal courts, in violation of several Maryland Rules of Professional Conduct.

CASE: Attorney Grievance Commission of Maryland v. Joseph, Misc. Docket AG No. 11, Sept. Term, 2010 (filed Oct. 27, 2011) (Judges Bell, Harrell, Battaglia, GREENE, Murphy, Adkins & Barbera). RecordFax No. 11-1027-20, 39 pages.

FACTS: Joel David Joseph, admitted to the Maryland Bar on April 1, 1981, was self-employed as an attorney and also worked for the Made in U.S.A. Foundation, which he founded.

In March 2007, Joseph contacted the Law Offices of Robert M. Moss, the law firm of a solo practitioner, located in Santa Monica, California. He spoke with Moss’ office administrator and paralegal assistant, Suzanne Brewer, and told her he was a Maryland lawyer looking for local counsel to sponsor his admission pro hac vice and act as co-counsel in cases to be filed in California courts. Joseph told Brewer that he lived in Maryland, had an office in Maryland and had been practicing for years.

On March 23, 2007, Joseph and Moss entered into an agreement to work together on two cases, one in federal court and one in state court. In both cases, Moss prepared a document entitled, “Application of Non–Resident Attorney to Appear in a Specific Case” and signed by Joseph, under the penalty of perjury.

The Application indicated that Joseph’s “out-of-state business information” was: Law Offices of Joel D. Joseph, 7272 Wisconsin Avenue, Suite 300, Bethesda, Maryland 20814. It also contained the following statement: “I am not a resident of, nor am I regularly employed, engaged in business, professional or other activities in the State of California. I am not currently suspended or disbarred in any court.”

The Office of Special Admissions & Specialization of the State Bar of California subsequently contacted Brewer and advised her that it would not approve the application until it had Joseph’s residence address. In response, Joseph stated that his residence address in Maryland was 4938 Hampden Lane, Apt. 118, Bethesda, MD.

In June, 2007, Brewer learned that Joseph maintained an apartment located on Ocean Avenue in Santa Monica, Calif. Joseph told Brewer that he rented the apartment because it was cheaper than staying in a hotel when he came to California several times a month.

Also in 2007, Joseph filed a complaint, pro se, against Whole Foods Market California. In the complaint, Joseph represented that venue was proper in the County of Los Angeles because he resided there.

Joseph also represented that his address was 1223 Wilshire Blvd., Suite 1413. However, this was the address of a UPS Store or other mailbox rental business. There are no residences or other offices at that address. Furthermore, it was determined that the Hampden Lane address that Joseph said was his apartment in Maryland was actually a UPS store.

Business records provided by the UPS Store indicated that, in July 2007, Joseph applied for his mail to be received by the UPS Store located at 4938 Hampden Lane. The form signed by Joseph proved that the applicant’s “home address” was 1223 Wilshire Blvd., #1413, Santa Monica, CA, 90403. The UPS Store was authorized to receive mail for both Joseph and the Made in America Foundation.

Joseph provided the UPS Store with his California Driver License with a date issued of May 14, 2007. The California Driver License displayed the 1223 Wilshire Blvd. address.

On March 14, 2008, Joseph sent Bar Counsel a letter in which he represented that he had “recently relocated to California.” As of 2007, Joseph owned no real estate in Maryland. In 2007, Joseph owned one motor vehicle. It was registered in Maryland as of Jan. 31, 2007, however, Joseph registered the vehicle in California in mid–2007.

On or about March 1, 2007, Joseph entered into a lease to rent an apartment in Santa Monica. The lease was for a period of 12 months. This was the only residential property Joseph rented in California during 2007. As of June 2010, Joseph maintained an office at 9935 South Santa Monica Blvd. He rents this property. He runs Made in the USA Foundation, and practices law from this location. Joseph filed tax returns with a California address and paid taxes in California in 2008 and 2009. He paid no income taxes in Maryland in 2008 or 2009.

After the Attorney Grievance Commission charged Joseph violating various MRPC rules, a hearing judge found clear and convincing evidence that Joseph left Maryland on Jan. 31, 2007, and traveled to California with the intent to reside and/or live there. Accordingly, Joseph violated MRPC 3.3(a)(1), as he was not candid in his applications for admission pro hac vice filed in California state and federal courts. Furthermore Joseph engaged in dishonesty, deceit and misrepresentation in violation of MRPC 8.4(c), and his dishonest and deceptive conduct was prejudicial to the administration of justice,” in violation of MRPC 8.4(d).

The Court of Appeals disbarred Joseph.

LAW: Based upon an independent review of the record, the hearing judge’s factual findings were supported by clear and convincing evidence. Attorney Grievance Comm’n v. Theriault, 390 Md. 202, 209 (2005). There was clear and convincing evidence that Joseph left Maryland on Jan. 31, 2007, traveled to California with the intent to reside there, and attempted to practice law in that state by making false or misleading statements in his pro hac vice applications.

MRPC 3.3(a)(1) provides that “A lawyer shall not knowingly: (1) make a false statement of material fact of law to a tribunal.” An attorney must not only refrain from misrepresentations, but also correct any false information previously provided. See, e.g., Attorney Grievance Comm’n v. Bleecker, 414 Md. 147, 176 (2010).

Rule 8.4(c) provides that an attorney may not “engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.” Indeed, “candor by a lawyer, in any capacity, is one of the most important character traits of a member of the Bar.” Attorney Grievance Comm’n v. White, 354 Md. 346, 364 (1999).

Rule 8.4(d) further provides that it is professional misconduct for a lawyer to “engage in conduct that is prejudicial to the administration of justice.” Conduct, which is likely to impair public confidence in the legal profession, engenders disrespect for the Court, and is therefore prejudicial to the administration of justice. Attorney Grievance Comm’n v. Clark, 363 Md. 169, 183 (2001).

California courts do not allow pro hac vice admission if the applicant is a “resident” of the state. See Cal.Rules of Court, Rule 9.40; Paciulan v. George, 38 F.Supp.2d 1128, 1141 (N.D.Cal.1999). “’Residence’” connotes any factual place of abode of some permanency, more than a mere temporary sojourn.” Johnson v. Johnson, 53 Cal.Rptr. 567, 569 (Cal.App. 2nd Dist.1966). “Domicile” is “the one location with which for legal purposes a person is considered to have the most settled and permanent connection, the place where he intends to remain and to which, whenever he is absent, he has the intention of returning.” Johnson, 53 Cal.Rptr. at 569; accord Blount v. Boston, 351 Md. 360, 366–68 (1998). “‘Domicile’ normally is the more comprehensive term, in that it includes both the act of residence and an intention to remain.” Johnson, 53 Cal.Rptr. at 570; accord Stevenson v. Steele, 352 Md. 60, 69 (1998). When a person leaves his or her former domicile with the intention to abandon it, the former domicile is maintained until a new domicile has been acquired by actual residence coupled with the intention to remain. See Walters v. Weed, 246 Cal.Rptr. 5 (Cal.1988); Blount, 351 Md. at 371.

Pro hac vice admission is an accommodation for “out-of-state” attorneys. The rule’s provision against “resident” attorneys gaining pro hac vice admission without going through the California admissions process is meant to apply to those who maintain an “abode of some permanency” in the state, irrespective of their domicile. See Johnson, 53 Cal.Rptr. at 569–70.

If Joseph did not know of this limitation when he moved to California, he most certainly was aware of it when Ms. Brewer told him, after receiving a phone call from a California Bar official, that the Bar needed his residence address, describing it as “the address where you live.” At that point, Joseph chose to describe his rented UPS mailbox as either an apartment or a suite to both Moss and Brewer and on declarations filed with the California courts, signed under the penalties of perjury.

When questioned about the 4938 Hampden Lane address by Ms. Brewer, Joseph indicated, on more than one occasion, that it was an apartment where he lived with his girlfriend and had his home office.

If Joseph had believed that renting a UPS mailbox made him a resident of Maryland, he would not have needed to make these representations. He did so because, in fact, the only property Joseph maintained after Jan. 31, 2007 was an apartment in Santa Monica, Calif.

The evidence established, under the clear and convincing standard, that in 2007 he was a resident of California because he was actually living there for a substantial period of time. See Johnson, 53 Cal.Rptr. at 570.

Thus, his misrepresentation about where he actually lived, including misrepresentations about an office he no longer rented and a UPS box he labeled as an apartment or suite, demonstrated a clear intent to deceive the California courts.

Accordingly, the hearing judge’s conclusions of law were legally correct and Joseph violated MRPC 3.3(a)(1) and 8.4(c) and (d).

COMMENTARY: Sanctions for attorneys in disciplinary matters are based on the duty to protect the public and maintain the public’s confidence in the legal system rather than to punish the attorney for his or her misconduct. Attorney Grievance Comm’n v. Powell, 369 Md. 462, 474 (2002).

Ordinarily, disbarment is the sanction for intentional dishonest conduct. Attorney Grievance Comm’n v. Blum, 373 Md. 275, 304 (2003). “Intentional dishonest conduct is closely entwined with the most important matters of basic character to such a degree as to make intentional dishonest conduct by a lawyer almost beyond excuse.” Attorney Grievance Comm’n v. Vanderlinde, 364 Md. 376, 418 (2001).

Here, Joseph’s conduct lacked candor, was dishonest, misleading, prejudicial to the administration of justice, and beyond excuse. There were no mitigating circumstances.

Accordingly, Joseph was disbarred.

PRACTICE TIPS: Where the word “resident” in a statute is interpreted to be synonymous with “domicile,” then the rules pertaining to domicile are applicable. See Boer v. Univ. Specialty Hospital, 421 Md. 529 (2011) (No. 67, Sept. Term, 2008) (filed Aug. 19, 2011).

Professional Responsibility

Disbarment

BOTTOM LINE: Attorney’s conduct in engaging in the unauthorized practice of law following suspension of his license to practice law warranted disbarment, where attorney had been indefinitely suspended from the practice of law, and it had been previously determined that attorney had previously engaged in the unauthorized practice of law following suspension of his license.

CASE: Attorney Grievance Commission of Maryland v. Maignan, No. 23, Sept. Term, 2010 (filed Oct. 28, 2011) (Judges Bell, Harrell, BATTAGLIA, Greene, Murphy, Adkins & Barbera). RecordFax No. 11-1028-22, 14 pages.

FACTS: Attorney Peter Maignan was admitted to the Maryland Bar on Dec. 13, 1995, and was suspended indefinitely from the practice of law on Dec. 22, 2005. On Jan. 29, 2007, Jeffrey Smith, on behalf of Smith–Myers Mortgage Group, entered into a client representation and fee agreement, ostensibly with the Law Offices of Herbert A. Callihan, LLC (“HAC”). That agreement stated that HAC would represent Smith’s company in a civil action in Maryland in which Smith’s firm had been named as a defendant, and that HAC had obtained the services of Maignan and/or his associates to be in the court for all proceedings.

Smith testified that he never met Callihan and that the only contact he had with the Callihan firm was with Maignan. Smith also testified that he understood, because of the representations made by Maignan, that the Maignan was his lawyer. On Jan. 29, 2007, Smith gave Maignan a check for $8,000 in payment of the attorney’s fees set forth in the agreement. The check was made out to Maignan, and only he endorsed it.

Meanwhile, on Nov. 8, 2007, it was again determined that Maignan had again violated the Maryland Rules of Professional Conduct, and his indefinite suspension was continued. Nevertheless, from June, 2008, through March, 2009, Maignan provided legal representation to Smith and other defendants in a case filed in the United States District Court for the District of Columbia, a court in which Maignan was not authorized to practice. Maignan drafted and filed on Smith’s behalf an answer, a motion to dismiss, and a memorandum in support of the motion. Each of these pleadings were styled as pro se, ostensibly signed by Smith; Maignan, however, drafted, signed the pleadings in Smith’s name and filed them in court.

Smith testified that a default judgment was entered against his interests in the Maryland case, and he was concerned about Maignan’s apparent lack of attention which may have been cause of that outcome. Maignan’s communications with Smith demonstrated that he was acting as an attorney, giving counsel, drafting documents to be filed in court and holding himself out as able to practice. The email communications to Smith from Maignan had no other party’s name, and the checks written by Smith were all made payable to Maignan individually.

Although there came a time when Maignan told Smith that he had been suspended from the practice of law, he did so in a manner that did not give Smith the essence of the problem and did not alert Smith to his status at the commencement of the engagement in 2007. Instead, he gave the impression that with three letters of recommendation, one of which was Smith’s, his readmission would be approved. Maignan wrote the letter in May 2008, and Smith signed it at Maignan’s request. Maignan subsequently continued to act as Smith’s lawyer, and no further discussion of Maignan’s status took place.

On July 28, 2010, the Commission, acting pursuant to Maryland Rule 16–751, filed a Petition for Disciplinary or Remedial Act against Maignan, charging numerous violations of the Maryland Rules of Professional Conduct, including Rule 1.5 (Fees), Rule 5.5 (Unauthorized Practice of Law), and Rule 8.4(a), (b), (c), and (d) (Misconduct.

On Nov. 3, 2010, Maignan was personally served with process. Maignan did not respond, and the judge entered an order of default on Dec. 14, 2010. At a hearing on Feb. 4, 2011, Bar Counsel introduced the Admissions of Fact and the documents underlying the complaint, and the complainant, Smith, testified. Maignan appeared at the hearing and was permitted to cross-examine Smith and testify on his own behalf.

In its conclusions of law, the court found that Maignan violated Rules 1.5(a), 5.5(a) and (b), 8.4(a)(b)(c) and (d) of the Maryland Rules of Professional Conduct, and the case was referred to the Court of Appeals to decide the appropriate sanction. The Court of Appeals ordered that Maignan be disbarred, effective immediately, from the practice of law in the state of Maryland.

LAW: The findings of fact clearly established Maignan’s violations of Rules 1.5(a), 5.5(a) and (b), and 8.4(a) through (d). As to Rule 1.5(a), which prohibits the collection of an unreasonable fee, Maignan negotiated and collected a fee from Smith for legal services while Maignan was suspended from the practice of law. An attorney’s suspension from the practice of law renders a legal fee paid by a client unreasonable. See Attorney Grievance v. Fallin, 371 Md. 237, 241–42 (2002).

With respect to Rule 5.5(a), to determine the unauthorized practice of law, the focus of the inquiry should be on whether the activity in question required legal knowledge and skill in order to apply legal principles and precedent. Attorney Grievance Comm’n v. Hallmon, 343 Md. 390, 397 (1996). Here, although Smith’s client representation and fee agreement ostensibly reflected the signature of Herbert Callihan of the Law Offices of Herbert A. Callihan, LLC, it was Maignan alone who addressed Smith’s defense in the Maryland case. Maignan alone met with Smith to address legal problems, and when a default judgment was entered against Smith’s interests in the case, Maignan provided legal advice by offering to file a motion to vacate. Clearly, Maignan’s exercise of legal knowledge, skills and education while suspended from the practice of law violated Rule 5.5(a).

Maignan’s failure to inform Smith of his suspension from the practice of law prior to May 2008 also demonstrated a violation of Rule 5.5(a). From January, 2007, through May, 2008, Maignan performed legal services for Smith without any reference to the fact that he was indefinitely suspended. Maignan’s failure to notify his client of the suspension was a ground for a violation of Rule 5.5(a). Attorney Grievance v. Awuah, 374 Md. 505, 523–24 (2003).

In May 2008, when Maignan disclosed his suspension to Smith, he misrepresented that he could be reinstated upon the submission of letters of recommendation by Smith and two others. Maignan never told Smith that he continued to be suspended from the practice of law. Therefore, even after May 2008, Maignan violated Rule 5.5(a) in that he continued to distort his inability to practice law. See Awuah, 374 Md. at 523–24.

Maignan’s misrepresentations of his ability to practice law also fell under the purview of Rule 5.5(b), which prohibits a suspended attorney from holding out to the public that he or she is able to practice law in Maryland. See Attorney Grievance v. Shryock, 408 Md. 105, 109, 125 (2009). In addition, Maignan’s conduct violated Rules 8.4(a) through (d). Under Rule 8.4(b), Maignan committed a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer. Section 10–601 of the Maryland Code (1989, 2004 Repl.Vol.), Business Occupations & Professionals Article criminalizes the unauthorized practice of law.

When disciplining an attorney, the primary goal is to protect the public. See Attorney Grievance v. Stern, 419 Md. 525, 559 (2011). To effectuate that goal, the court must consider the aggravating factors listed in Section 9.22 of the American Bar Association Standards for Imposing Lawyer Sanctions. These factors include prior disciplinary offenses, dishonest or selfish motive, a pattern of misconduct, and multiple offenses. Attorney Grievance v. Bleecker, 414 Md. 147, 176–77 (2010).

The present case was the third time in seven years that Maignan violated the Rules of Professional Conduct. In 2005, Maignan was indefinitely suspended from the practice of law for a trust account violation when he deposited a client’s settlement funds into his operating account. In 2007, Maignan, prior to his suspension in 2005, failed to deposit a retainer fee in his escrow account, and, following his suspension, engaged in the unauthorized practice of law by appearing in court and representing to the court that he could practice law in spite of his indefinite suspension.

In January 2007, the same month that these complaints were filed against Maignan, Maignan entered into the client representation and fee agreement with Smith and negotiated with Smith a legal fee of $8,000. And, after the decision was issued against Maignan in November 2007, Maignan continued to practice law and misrepresent his ability to practice law to Smith.

When, as in this case, a member of the legal profession consistently violates the Rules of Professional Conduct and continues to disregard repeated admonishments in derogation of the trust and confidence of the public, disbarment is the only remedy. As such, Maignan’s prior disciplinary offenses warranted the gravest sanction of disbarment. Accordingly, Maignan’s disbarment was ordered.

COMMENTARY: Maignan’s representation of Smith also constituted “conduct involving dishonesty, fraud, deceit or misrepresentation” under Rule 8.4(c). Maignan accepted fees for legal work when he was not entitled to and misrepresented his status throughout his representation of Smith. See Attorney Grievance v. Velasquez, 380 Md. 651, 657 (2004).

With regard to Rule 8.4(d), which defines professional misconduct as engaging in conduct that is prejudicial to the administration of justice, it is axiomatic when it is discovered and made public that a person who represents by word and deed that he can practice law when in fact he is under the disability of an indefinite suspension erodes the public’s confidence in the practice of law. Awuah, 374 Md. at 523–24. Moreover, multiple Rule violations, such as found here, may establish a violation of Rule 8.4(a). Attorney Grievance v. Carithers, 421 Md. 28, 57 (2011).

PRACTICE TIPS: Under Maryland law, the hearing of a disciplinary or remedial action is governed by the rules of evidence and procedure applicable to a court trial in a civil action tried in a circuit court. Before the conclusion of the hearing, the judge may permit any complainant to testify, subject to cross-examination, regarding the effect of the alleged misconduct. In addition, a respondent attorney may offer, or the judge may inquire regarding, evidence otherwise admissible of any remedial action undertaken relevant to the allegations.