Private cause of action
BOTTOM LINE: TP §21-809, which authorizes the use of speed monitoring systems on certain roads, does not provide an express or implied private cause of action in tort.
CASE: Baker v. Montgomery County, No. 124, September Term, 2011 (filed Aug. 21, 2012) (Judges Bell, HARRELL, BATTAGLIA, Greene, Adkins, Barbera & McDonald). RecordFax No. 12-0821-22, 28 pages.
FACTS: In January 2006, the Maryland General Assembly enacted House Bill 443 (2005), which was codified as TP §21-809. Section 21-809 authorized the use of speed monitoring systems on certain highways in school zones and residential districts in Montgomery County. TP §21-809(b)(i). The “local police department “issues and mails to the “owner” a citation for the speeding offense, which carries a civil penalty not exceeding $40. TP §21-809(c), (d). A citation recipient may pay the civil penalty or may elect to contest the citation at a district court trial. TP §21-809(d)(5).
TP §21-809(j) provides, “If a contractor operates a speed monitoring system on behalf of Montgomery County, the contractor’s fee may not be contingent on the number of citations issued or paid.” TP §21-809(j).
In 2007, Montgomery County contracted with ACS State and Local Solutions, Inc. (ACS) to “provide for the implementation, use, and servicing of photo speed enforcement technology and services as requested by [Montgomery] County.” The Montgomery County-ACS contract specifies that ACS will “provide, install, and support all traffic camera equipment” and “supply an automated violation services solution.” The Montgomery County-ACS contract states that ACS shall be compensated “at a rate of $16.25 per paid citation or $18,000 per month [for the duration] of the program, whichever is greater.”
Between February 2007 and May 2007, the municipalities entered separately into similar contracts with ACS. These contracts incorporate by reference the Montgomery County-ACS contract and provide similar compensation formulae.
These speed monitoring systems recorded many individuals traveling in their vehicles at least ten miles per hour over the posted speed limit. Citations were issued, each carrying a maximum civil penalty of $40. After paying the penalties, the owners of the vehicles (collectively, the Owners) filed a complaint in the circuit court against Montgomery County, the Mayor and City Council of Rockville, City of Gaithersburg, and Chevy Chase Village (collectively, the Government) asserting that the Government’s contracts with ACS violated TP §21-809(j). The complaint asserted claims sounding in tort and sought declaratory and injunctive relief.
The circuit court concluded that §21-809(j) applied to Montgomery County only, not the municipalities. Second, the court found that the Government, not ACS, operated the speed monitoring systems. The circuit court opined further, in the alternative, that even if ACS were deemed to be the operator of the subject speed monitoring systems, §21-809 did not create a private cause of action for the Owners to sue for an alleged violation of the statute. Thus, the circuit court granted the Government’s motion for summary judgment as to all counts. The Court of Special Appeals affirmed.
The Court of Appeals affirmed.
LAW: By paying the speed monitoring system penalties for issued citations, the Owners did not waive their right to pursue subsequently a claim against the Government for violating TP §21-809(j), if such a claim is otherwise actionable.
Maryland’s permissive counterclaim rule of procedure, Rule §2-331(a), enables plaintiffs to raise such a potential counterclaim as a separate action. “[W]here the same facts may be asserted as either a defense or a counterclaim, and the issue raised by the defense is not litigated and determined so as to be precluded by collateral estoppel, the defendant in the previous action is not barred by res judicata from subsequently maintaining an action on the counterclaim.” Rowland v. Harrison, 320 Md. 223, 235-36 (1990).
The Government argued that a defendant may not bring a separate and subsequent action based on a prior counterclaim that could have been raised if “[t]he relationship between the counterclaim and the plaintiff’s claim is such that successful prosecution of the second action would nullify the initial judgment or would impair rights established in the initial action.” Rowland, 320 Md. at 232 (quoting Restatement (Second) of Judgments §22(2)(b) (1982)).
Whether the Owners were operating their vehicles ten or more miles per hour over the posted speed limits at the time of their citations and whether the Government’s contracts with ACS contravene §21-809(j) are related distantly. The factual inquiry surrounding the former question involves principally who was operating the vehicle at the time and whether the speed of the vehicle was captured accurately. See TP § 21-809(f). The factual inquiry surrounding the latter question involves whether the Government operated their speed monitoring systems within the meaning of the statute, and if not, was the means of compensating ACS in conformance with the statute. Thus, the Owners’ §21-809(j) defense, if successful, would not nullify the prior admission of speeding, represented by paying the penalty before trial in the district court.
A private cause of action in favor of a particular plaintiff or class of plaintiffs does not exist simply because a claim is framed that a statute was violated and a plaintiff or class of plaintiffs was harmed by it. Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979) (citing Cannon v. Univ. of Chi., 441 U.S. 677, 688 (1979)). Rather, the issue is a matter of statutory construction.
“In determining whether a private remedy is implicit in a statute not expressly providing one, several factors are relevant. First, is the plaintiff ‘one of the class for whose especial benefit the statute was enacted[.]’ Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?” Cort v. Ash, 422 U.S. 66, 78 (1975). See Erie Insurance Company v. Chops, 322 Md. 79 (1991).
“The central inquiry remains whether [the legislative body] intended to create, either expressly or by implication, a private cause of action.” Touche Ross, 442 U.S. at 575-76. Courts discern legislative intent whether a private cause of action was intended by analyzing the language of the statute to identify its purpose and intended beneficiaries, reviewing the statute’s legislative history, and determining whether the statute provides otherwise an express remedy.
If a statute’s language provides a right to a particular class of persons, there is a strong inference that the legislature intended the statute to carry an implied cause of action. Univs. Research Assn. v. Coutu, 450 U.S. 754, 771 (1981). Conversely, that inference becomes attenuated when the statute is framed as a “general prohibition or a command” to a governmental entity or other group or confers a generalized benefit.
TP §21-809(j) is framed as a prohibitive command and does not confer rights on a class of persons.
Furthermore, the legislative history fails to reveal an intent to benefit a particular class of persons. Instead, the bill file is replete with generalized statements from citizens, advocacy groups, and municipal politicians urging the General Assembly to authorize speed monitoring systems in order to slow down drivers; to protect pedestrians, bicyclists, and transit riders; and to free-up police officers to attend to other matters.
TP §21-809 creates rules and procedures for Montgomery County to operate a speed monitoring system. It does not provide expressly for a private cause of action. The purpose of the statute also furnishes a remedy for challenging a speed monitoring system citation. Subsections (d), (e) and (f) of §21-809 lay out a procedure for a citation recipient to demand a trial in the district court of Maryland for an alleged violation. In his or her defense, a citation recipient may argue that his or her car or license plates were stolen or “[a]ny other issues and evidence that the District Court deems pertinent.” TP §21-809(f)(1).
“ ‘[A]n elemental canon of statutory construction [is] where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it’.” Sugarloaf Citizens Assoc. v. Gudis, 78 Md. App. 550, 556 (1989) (quoting Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11 (1979)).
Under §21-809(f)(1)(iii), citation recipients may (but are not obliged to) defend against receiving a citation on the basis that the local government violated §21-809(j). This militates against finding a separate, private cause of action to enforce the statute.
Finally, the legislative history of §21-809 does not reveal a legislative intent to create an implied private cause of action. Of relevance to this factor, the U.S. Supreme Court observed that “such legislative silence is often encountered in implied-right-of-action cases; it is to be expected that ‘the legislative history of a statute that does not expressly create or deny a private remedy will typically be equally silent or ambiguous on the question.’ Therefore, ‘the failure of Congress expressly to consider a private remedy is not inevitably inconsistent with an intent on its part to make such a remedy available.’ But unless this congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.” Nw. Airlines, Inc. v. Transp. Workers Union, 451 U.S. 77, 94(1981).
“[W]here the plain language of a provision weighs against implication of a private remedy, silence within the legislative history as to a private cause of action reinforces the decision not to find such a right implicitly.” Scull v. Doctors Groover, Christie & Merritt, P.C., ___ Md. App. at ___ (2012).
Thus, the lack of discernible legislative intent to create an implied cause of action in the plain language and structure of the statute, its legislative history, or some other legitimate and reliable source cements the conclusion that the Legislature, in enacting §21-809, did not contemplate an implied private cause of action.
COMMENTARY: The Owners maintained that they were not asserting standing as taxpayers, relying instead solely on their claimed private cause of action theory. They acknowledged also that some of them are neither Maryland residents nor Maryland taxpayers. “A taxpayer may invoke the aid of a court of equity to restrain the action of a public official or an administrative agency when such action is illegal or ultra vires, and may injuriously affect the taxpayer’s rights and property.” Citizens Planning & Hous. Ass’n v. Cnty. Exec. of Balt. Cnty., 273 Md. 333, 339 (1974). Moreover, the Owners conceded at oral argument before the Court of Special Appeals that they cannot pursue their declaratory and injunctive relief claims unless a private cause of action exists under §21-809.
In the face of these concessions and the opinion as to the private cause of action issue, the Owners had no basis to obtain equitable or declaratory relief.
PRACTICE TIPS: A statute creates an enforceable duty when the plaintiff is a member of the class of persons the statute was designed to protect and the injury was of the type the statute was designed to prevent. Furthermore, the statute must set forth mandatory acts clearly for the protection of a particular class of persons rather than the public as a whole. Gourdine v. Crews, 405 Md. 722, 755 (2008).
BOTTOM LINE: In wife’s appeal of child custody case on basis that her due process rights were violated by unwritten circuit court policy limiting counsel’s access to custody investigation report, remand to circuit court for supplementation of record was appropriate because record did not illuminate sufficiently full contours of circuit court policy, its origin, balancing of the interests sought to be protected by it against competing interests, whether less restrictive alternatives were considered, and any special or compelling reasons for policy.
CASE: Sumpter v. Sumpter, No. 120, Sept. Term, 2011 (filed Aug. 21, 2012) (Judges HARRELL, Battaglia, Greene, Barbera & McDonald) (Judges Bell & Adkins dissenting). RecordFax No. 12-0821- 24, 29 pages.
FACTS: In 2010, Sean Sumpter filed for an absolute divorce from Millicent Sumpter in the circuit court. In that proceeding, the parties contested physical and legal custody of their two daughters. Prior to the merits hearing, a circuit court judge ordered preparation by court-related personnel a custody investigation report to evaluate the custodial abilities of each parent. The circuit court had in place a local, unwritten policy or rule limiting counsel of record in any child custody proceeding to viewing a single copy of such a report only in person in the Family Division Clerk’s Office during normal public business hours; counsel of record was permitted to make only hand-written notes of the contents of the report, yet are forbidden from copying verbatim significant passages.
The report in the present case was completed one week before the merits hearing. Millicent Sumpter’s counsel was able to review, in person and pre-hearing, the report for only approximately 90 minutes. As a consequence, Millicent’s attorney moved, prior to commencement of the merits hearing, to exclude the report or, alternatively, to be provided with a copy of the report. The circuit court denied the motion. At the conclusion of the hearing, the judge granted a divorce and awarded custody of the children to Sean Sumpter, with visitation to Millicent.
Millicent appealed to the Court of Special Appeals, which affirmed the circuit court’s judgment. Millicent then appealed to the Court of Appeals, which did not affirm or reverse the lower court’s decision but instead remanded the case.LAW: On appeal, Millicent argued primarily that the circuit court policy or “rule” violated her due process rights. Specifically, she claimed that her counsel’s limited access to the custody investigation report denied her the right to be aware of all of the evidence considered by the trier of fact in making an adjudicatory determination and to have the opportunity to challenge and answer that evidence. Denningham v. Denningham, 49 Md. App. 328, 337 760 (1981). Although recognizing that, unlike in Denningham, her counsel had some access to the relevant custody investigation report, Millicent maintained that the circuit court policy or rule was so restrictive that she was denied effectively the opportunity to review, challenge, and respond to the report in a meaningful manner.
The circuit court and the Court of Special Appeals, on the other hand, held that Millicent was not prejudiced by application of the policy or rule. The circuit court opined that the custody investigation report was comprehensible, without the need for intensive study. The Court of Special Appeals agreed, noting that Millicent’s counsel declined a continuance to review further the report, thereby indicating that counsel was prepared sufficiently. The circuit court justified the policy or rule also by noting that its existence protected sensitive material about the parties and their children from being re-published more generally.
One hurdle to issuing a ruling in this case was the dearth of justification in the record for the circuit court policy or rule. The limited record did not illuminate sufficiently the full contours of the circuit court policy or rule, its origin, the balancing of the interests sought to be protected by it against competing interests, whether less restrictive alternatives were considered and why they were rejected, and any special or compelling reasons to prohibit the parties’ attorneys from receiving a copy of the custody investigation report. As such, effective review of the circuit court policy or rule was not possible given the paucity of the present record. Balt. Sun v. Thanos, 92 Md. App. 227, 246 (1992).
Therefore, remand to the circuit court for supplementation of the record was appropriate.
COMMENTARY: The Court of Appeals observed, without concluding, that it was possible that the custody investigation report had been “sealed” effectively or limited by the circuit court policy or rule or otherwise subject to non-disclosure under the Maryland Access to Court Records Rules. The Maryland Access to Court Records Rules state that, generally, court records are presumed open to inspection by the public. Md. Rule 16-1002(a). The context of a custody investigation report, however, may trigger exceptions to the presumption of openness. For instance, the report may be inaccessible to the public because the hearing judge, through invocation of the Circuit Court policy or rule, “sealed” it. Md. Rules 16-1005(a)(5) & 16-1006(k). Nevertheless, in this case, it was possible that Millicent’s counsel was entitled to “access” the custody investigation report, as Maryland Rule 16-1002(f) was amended in 2006 to stated that the Maryland Access to Court Records Rules do not limit access to a case record by a party or counsel of record in the action.
DISSENT: There was no question that in this case, the circuit court applied a rule limiting counsel’s access to the custody investigative report. While the majority stated that the record was insufficient to rule on the validity of this policy, the Court of Appeals is often faced with cases having a less than desirable record. Normal procedure in such instances is to decide the case, allocating the burden of having failed to provide the record to the appropriate party and utilizing presumptions based on that burden. Moreover, here, if the record was incomplete regarding the nature of and rationale underlying the policy, it was the circuit court’s failure, not that of the parties. The procedure adopted by the majority was not only highly unusual, but, in light of the clear application of the restriction with respect to this highly relevant report, decidedly unfair. The case could in fact have been decided on the present record, and if the majority intended that the circuit court should provide some statement and explanation of the rule, its opinion should have so stated. Absent a directive to that effect, the majority opinion left the parties, especially Millicent, dangling, leaving no clear pathway for her to return to the Court of Appeals for a decision on whether the rule survived the constitutional challenges posed.
BOTTOM LINE: In defendant’s trial for counterfeiting, State was not required to prove that defendant acted with intent to defraud a particular person, because evidence showing that defendant recorded deed he had altered was sufficient to show defendant’s intent to defraud another.
CASE: State v. Neger, No. 108, Sept. Term, 2011 (filed Aug. 20, 2012) (Judges Bell, Harrell, Battaglia, Greene, Adkins, BARBERA & McDonald). RecordFax No. 12-0820-20, 23 pages.
FACTS: In 1990, Isaac Neger entered into an agreement with a man named Ephraim Ohana “to take title” to the property at issue, located at 300 S. Robinson Street, Baltimore, Maryland. The two men intended to form a corporation known as E & I Associates, owned equally by both parties, but no such entity ever was registered with the State Department of Assessments and Taxation. The parties’ written agreement explained that Neger would be responsible for settlement expenses, including the purchase price, for a total amount of $38,722. Ohana would be responsible for paying 10% annually on that amount, interest only, as well as for the normal maintenance and running expenses. A deed was recorded in Baltimore City on December 5, 1990, listing the grantor as Lorraine Izner and the grantees as Ephraim Ohana and E.I. Associates, Inc. Neger was not listed as a grantee.
In 1995, Ohana and his then-wife Cynthia Ohana filed for bankruptcy. In connection with those proceedings, the Ohanas filed a Statement of Intention indicating that they would surrender the property to Neger. In 2000, Ohana executed a power of attorney authorizing Neger to sell the property. In July 2000, Neger signed and had a notary sign a document drafted by Ohana acknowledging that, since 1992, Neger had taken over all rights and interest from Ephraim Ohana in the property. From 1990 until the deed at issue in this matter was recorded in 2008, no deed was recorded affecting the ownership of the property.
On May 26, 2005, the Ohanas’ divorce action was heard in the circuit court. In the Judgment of Absolute Divorce, the circuit court designated one-half interest in the property as the Ohanas’ marital property. The court valued that property interest at $110,000. The court also awarded Mrs. Ohana a monetary award in the amount of $70,000. The court ordered that the award be reduced to judgment immediately, thereby evidently creating a lien on the property.
In 2007, Neger, representing himself as the owner, entered into a contract to sell the property. He sought to secure a release of Mrs. Ohana’s lien on the Property. Mrs. Ohana, however, following the advice of her counsel, Larry Feldman, declined to grant the release. Feldman communicated directly with Neger with respect to the property. In a letter dated April 30, 2007, Mr. Feldman wrote to Neger that, since the 1990 transfer from Izner to Ohana and E.I. Associates, there had been no subsequent transfers of the property. Feldman further suggested that in lieu of backing out of the contract to sell this property, Neger proceed with assuring that he would get the E.I. share of the property and allow Ephraim’s share to be paid to Mrs. Ohana.
Neger thereafter cancelled the sale and notified Feldman to this effect on several different occasions. On June 5, 2008, a deed dated May 25, 2005, transferring the property from “Ephraim Ohana, sole owner of E.I. Associates, Inc.” to “Isaac Neger” was recorded in the land records in Baltimore City. Upon learning of that recorded deed, Feldman contacted the State’s Attorney’s Office, which opened an investigation. Ultimately, a Baltimore City grand jury returned an indictment, charging Neger with a violation of the Maryland counterfeiting statute, CR §8-601(a)(3). Neger elected a court trial, and defended the counterfeiting charge on the ground that there was no evidence to support that the changes to the signed deed of May 25, 2005 were made without authorization of all parties or, alternatively, while in the hands of All Star Title.
The circuit court ultimately found Neger guilty of counterfeiting. Neger appealed to the Court of Special Appeals, which reversed the judgment of the circuit court.
The State appealed to the Court of Appeals, which reversed the judgment of the Court of Special Appeals.
LAW: Neger was convicted of violating Maryland Code (2002 & 2010 Supp.), §8-601 of the Criminal Law Article (CR), which provides, in pertinent part, that a “person, with intent to defraud another, may not counterfeit, cause to be counterfeited, or willingly aid or assist in counterfeiting any…deed.” The State challenged the holding of the Court of Special Appeals that CR §8-601’s specific intent element that a defendant have acted with “intent to defraud another” requires proof of a specific individual person who was defrauded as a result of the counterfeiting. Specifically, the State argued that there was sufficient evidence for the circuit court to conclude, as it did, that Neger acted with the intent to defraud the system of recording when he materially altered and recorded the deed in question, satisfying the specific intent element.
“Counterfeit” is defined as “to forge, counterfeit, materially alter, or falsely make” CR §1-101(c). This definition is consistent with case law recognizing the synonymity of the terms “falsely make,” “forge,” and “counterfeit.” Reese v. State, 37 Md. App. 450, 457 (1977), aff’d, 283 Md. 86, 99 (1978). The plain language of CR §8-601 requires a defendant to have acted with the intent to defraud another person, as that term is defined for purposes of the Criminal Law Article. However, that recognition did not resolve the issue now before the Court, as it was still necessary to determine whether the State was required to prove the existence of a particular person whom Neger intended to defraud.
Other pertinent provisions in the Criminal Law Article helped answer this question. CR §1-401, titled “Proof of intent — Fraud, theft and related crimes,” provides that in a trial for counterfeiting, issuing, disposing of, passing, altering, stealing, embezzling, or destroying any kind of instrument, or theft by the obtaining of property by false pretenses, it is sufficient to prove that the defendant did the act charged with an intent to defraud without proving an intent by the defendant to defraud a particular person. Thus, self-evidently, the State was not required to prove that Neger acted with the intent to defraud a particular person.
The decision in Reddick v. State demonstrated how the specific intent element for forgery operates. Reddick v. State, 219 Md. 95 (1959), cert. denied, 360 U.S. 930 (1959). In that case, Reddick, the former Secretary-Treasurer of the Board of Medical Examiners, representing the Maryland State Homeopathic Medical Society, had been permanently enjoined from issuing medical licenses, but despite the injunction, issued a license to an automobile mechanic who lacked the requisite qualifications. . In affirming the forgery and uttering counts of Reddick’s conviction, the Court recognized that although, because of the outstanding injunction and notice to the various Clerks of Court, the purported license could probably not have been recorded in Maryland, as required by law, its possession by the licensee might in itself have sufficed to work a fraud on the public, in this State or elsewhere. Thus, the Reddick Court noted, intent to defraud may relate to persons not named in the indictment, or to the public generally; it is not necessary to allege in an indictment for forgery or uttering, or to prove, that it was the intent of the defendant to defraud any particular person. Id. at 99.
Similarly, in the present case, Neger’s intent to defraud the system of recordation was an intent to defraud all future purchasers and creditors, as well as the general public. As such, the trial court’s finding that Neger had committed a fraud on the system of recordation satisfied the specific intent element of CR §8-601 that a defendant have acted with the “intent to defraud another.
Accordingly, the judgment of the Court of Special Appeals reversing the conviction was reversed.
COMMENTARY: Neger additionally argued that the trial court found that Neger acted “in good faith,” thereby negating the finding of intent to defraud. It is true that good faith generally negates a finding of intent to defraud; therefore, good faith is a complete defense to a crime with the specific intent to defraud. See Ferguson Trenching Co. v. Kiehne, 329 Md. 169, 186 (1993). In the present case, however, the trial court did not actually find that Neger acted in good faith.
The trial court’s findings included two references to the concept of good faith. The trial court alluded to the concept for the first time when remarking that when Neger spoke with Mrs. Ohana’s attorney in 2007, he “truly believed” that the property was his. However, the trial court’s subsequent findings reflected its understanding of the progression of events, whereby initially, in 2007, Neger maintained a good faith belief that the property equitably was his, but that belief was undermined when he learned that he did not possess legal title to the property. Thus, the trial court recognized the distinction between legal and equitable title, as well as that Neger was experienced in real estate matters and was represented by counsel.
After Neger learned that the title to the property had never been transferred to him, even though he might have had a valid claim to it, he could not have maintained a good faith belief in his actual legal ownership. The trial court found explicitly that Neger knew he did not possess legal title to the property, and so he chose to alter material elements of a previously executed deed in an attempt to acquire legal title. The trial court’s second reference to good faith was near the end of the court’s findings, wherein the court stated that even if Neger had a good faith belief that the property was his, this belief did not dissipate his intent to file a deed which was altered in a material way.
Thus, the court’s discussion regarding Neger’s “good faith belief” could not negate his intent to defraud the system, including any individual who would later access the recorded deed, because, by materially altering the executed deed, he sought to convey to the public, although he knew otherwise, that he was the record owner of the property.
PRACTICE TIPS: Proof of intent to defraud does not require that anyone actually be defrauded.
Potential confusion of jury
BOTTOM LINE: The trial court’s refusal to allow a discussion of extraneous legal standards was not an abuse of its broad discretion in controlling the scope of closing argument so as to avoid potential confusion of the jury.
CASE: Ingram v. State, No. 121, September Term, 2011 (filed Aug. 21, 2012) (Judges Bell, HARRELL, Battaglia, Greene, Adkins, Barbera & McDonald). RecordFax No. 12-0821-23, 21 pages.
FACTS: In December 2008, a vehicle driven by Dexter Ingram, and a vehicle driven by Jeffery Nunez, were traveling closely to each other in a northbound direction on Rockville Pike in Bethesda, Maryland. At 8:10 p.m., Ingram’s vehicle veered suddenly into the leftmost lane, about a car length in front of Nunez’s car, cutting off Nunez. Nunez’s car swerved into the median, launched into the air, and landed in a southbound lane of Rockville Pike, on top of a white Toyota, killing its driver, Xuan Lai.
A grand jury indicted Ingram on charges of manslaughter by motor vehicle, reckless driving, failure to remain at the scene of an accident resulting in death or bodily injury, and engaging in a race or speed contest. The trial judge prohibited Ingram’s defense counsel, on motion of the prosecutor, from including in his anticipated argument an explanation of the significance of the legal thresholds of suspicion, reasonable articulable suspicion, probable cause, and a “tie,” by way of contrasting these thresholds along the continuum of standards, leading to the one in play in Ingram’s case, proof beyond a reasonable doubt. The trial court allowed, however, Ingram’s counsel to explain to the jury, for the same purpose, the thresholds of preponderance of the evidence and clear and convincing evidence, as well as to render a lengthy dissertation on the significance of the burden of beyond a reasonable doubt.
Ingram was convicted of reckless driving and failure to remain at the scene of an accident resulting in bodily injury and acquitted of manslaughter by motor vehicle, participating in a race or speed contest, and failing to remain at the scene of an accident resulting in death. The Court of Special Appeals affirmed Ingram’s convictions.
Ingram appealed to the Court of Appeals, which affirmed.
LAW: A trial court is in the best position to evaluate the propriety of a closing argument as it relates to the evidence adduced in a case. Mitchell v. State, 408 Md. 368, 380-81 (2009). As such, the Court will not disturb the trial judge’s judgment in that regard unless there is a clear abuse of discretion that likely injured a party. Grandison v. State, 341 Md. 175, 225 (1995).
During closing argument, counsel must confine his or her oral advocacy to the issues in the case, but is afforded generally wide latitude to engage in rhetorical flourishes and to invite the jury to draw inferences. Degren v. State, 352 Md. 400, 430 (1999). At the same time, a trial judge has broad discretion to control the scope and duration of counsel’s closing argument in order to ensure fairness. Herring v. New York, 422 U.S. 853, 862 (1975). The determination of whether a portion of counsel’s argument is improper or prejudicial rests largely within the trial judge’s discretion because he or she is in the best position to determine the propriety of argument in relation to the evidence adduced in the case. Mitchell, 408 Md. at 380-81.
Due to the binding nature of the trial court’s jury instructions on reasonable doubt, the substance of the instructions are not subject to debate by counsel before the jury during closing argument. Montgomery v. State, 292 Md. 84, 91 (1981). The trial court is required to adhere “closely” to Maryland Criminal Pattern Jury Instruction 2:02 when instructing the jury on the reasonable doubt standard. Ruffin v. State, 394 Md. 355, 371 (2006).
Counsel is not entitled to discuss issues outside the scope of the case at hand. Degren, 352 Md. at 430. Ingram conceded that his proposed discussion of the standards of proof was not generated by the evidence.
In Wilhelm v. State, 272 Md. 404 (1973), the Court of Appeals concluded that the trial court’s refusal to grant a mistrial on the basis of the prosecutor’s characterization of the victim’s murder as part of the significant murder rate in Baltimore City in his closing argument was not an abuse of discretion because the contentious comment was a matter of common knowledge at the time. Wilhelm, 272 Md. at 438-46. Wilhelm demonstrates nonetheless the ordinary deference to the trial court’s exercise of discretion in such matters. Further, Wilhelm requires that counsel’s arguments “be confined to the issues in the case on trial.” Id. at 413.
In Drake v. State, 186 Md. App. 570 (2009), Drake’s counsel sought to contrast the “in play” standard of reasonable doubt with the extraneous and inapplicable standards of reasonable articulable suspicion, probable cause, and clear and convincing evidence. Id. at 594. The trial court allowed counsel to compare reasonable doubt only to preponderance of the evidence because of the possibility that the inclusion of the other extraneous standards might confuse the jury. The Court of Special Appeals upheld the trial court’s decision to prohibit discussion of any additional standards in closing argument, citing the principle articulated in Wilhelm that closing argument should be confined to the issues in the case. Drake, 186 Md. App. at 598. See also Grillot v. State, 107 S.W.3d 136 (Ark. 2003).
Thus, extraneous legal standards may be deemed outside the latitude afforded counsel in argument and that such may be excluded by the trial court if deemed inappropriate or likely to lead to jury confusion. By allowing a discussion of preponderance of the evidence and clear and convincing evidence that compares them to beyond reasonable doubt, the trial judge properly exercised his discretion.
Even if the trial judge abused his discretion, such abuse was harmless beyond a reasonable doubt. The Court will not overturn a judgment, even where error is found, unless it is likely that the proponent of the error was injured. Grandison, 341 Md. at 225.
The trial court permitted Ingram’s counsel to present a lengthy, cohesive argument that expounded upon the trial judge’s use of the pattern jury instructions concerning reasonable doubt. Ingram’s counsel contrasted reasonable doubt with preponderance of evidence, clear and convincing evidence, and beyond a reasonable doubt. He gave descriptions and examples of these standards and explained that reasonable doubt “is way beyond clear and convincing.”
Although instructed not to discuss the effect of reaching an equilibrium in persuasion (a tie), Ingram’s counsel explained, in supplying additional context, that preponderance of the evidence was just “slightly past midfield” or the “mid-point mark.” The trial court allowed additionally defense’s counsel to guide the jury virtually along the probability spectrum mentioned in the dissent in Savoy v. State, 420 Md. 232, 266 (2011).
Furthermore, there was the substantial evidence arrayed against Ingram as to the charges for which he was convicted. Several witnesses testified that they saw Ingram’s vehicle traveling at a high rate of speed prior to the crash, seemingly in a race with Nunez’s car. Ingram’s vehicle was seen leaving the accident scene by several witnesses who saw the collision and the role played by Ingram in causing it. By Ingram’s own admission, he changed lanes abruptly in front of the silver Honda, heard a loud boom, and saw two lights swerve to the left from behind his vehicle. A witness overhead Ingram, after he left the accident scene, talking excitedly on a cell phone in a nearby parking lot about a traffic incident. Ingram admitted also that he did not inform the police about the booming noise he heard because he felt that he was involved in causing an accident and was scared. His boss overheard him discussing the traffic incident with a co-worker and reported him to the police, after Ingram failed to call them himself.
The extensive latitude allowed by the trial court to discuss the standard of reasonable doubt, coupled with the evidence against Ingram, rendered harmless any assumed abuse of discretion.
Accordingly, the judgment of the Court of Special Appeals was affirmed.
COMMENTARY: The dissent in Savoy v. State, 420 Md. 232 (2011), conceived that a jury, in its deliberations in a criminal trial, must travel an analytical spectrum of probability evaluation in order to determine if it can reach the polar extreme of guilty beyond a reasonable doubt because it must start necessarily from the opposite pole of the presumption of the defendant’s innocence. Id. at 266. The dissent did not state, however, that it was necessary or desirable that counsel walk the jury through the probability spectrum in every case, nor did it state that it is necessary for the jury to understand where each extraneous legal standard fits along the spectrum. Thus, this reasoning was inapplicable in this case.
Ingram also relied on a variety of social science studies, including the studies mentioned in Ruffin, to support his contention that more context is good always for the jury. The Court of Appeals used that data in Ruffin, however, to justify requiring trial judges to use the reasonable doubt pattern jury instruction as necessary to avoid confusing the jury. Ruffin, 394 Md. at 367-69. The data in the studies alluded to in Ruffin suggested that often jurors misunderstood the instructions on reasonable doubt, largely because trial judges failed to provide regularly instructions with consistent content. None of the additional studies that Ingram relied upon state specifically that a presentation and discussion of all seven of the legal standards will aid necessarily a jury.
In Smith v. State, 388 Md. 468 (2005), the Court of Appeals overruled a trial judge’s decision to prohibit defense counsel from discussing in closing argument certain potential pitfalls associated with the reliability of cross-racial identification in eye-witness accounts, and particularly of a white person identifying a black person. Id. at 489.
The present case was distinguishable from Smith because here the contested legal standards in question were neither relevant to the evidence adduced in the case nor to the role the jury was about to be called upon to play. The attempted discussion of cross-racial identification in Smith was sanctioned on appeal because it related directly to the “sole piece of significant evidence” against the defendant, a white eye-witness to the crime who, in identifying Smith, a black man, as the perpetrator, bolstered her credibility by professing to have an uncommon ability to retain memories of people’s faces she had seen only one time because of her training as an artist. Id. at 488. Thus, Ingram’s reliance here on Smith was misplaced.
PRACTICE TIPS: A trial court, in order to avoid the risk of jury confusion, has the power to restrict counsel from arguing to the jury against the court’s instructions regarding the standard of reasonable doubt. White v. State, 66 Md. App. 100, 118 (1986); Newman v. State, 65 Md. App. 85, 101 (1985).
Labor & Employment
Law Enforcement Officers’ Bill of Rights
BOTTOM LINE: Grievance filed by police union pursuant to its collective bargaining agreement with county did not implicate Law Enforcement Officers’ Bill of Rights, because it involved union’s assertion of its own right to train shop stewards and contained no allegation that the county’s practice increased, impinged upon, or otherwise affected the substantive rights of an officer; therefore, LEOBR did not preempt collective bargaining and subsequent arbitration of underlying grievance.
CASE: Montgomery County v. Fraternal Order of Police, No. 105, Sept. Term, 2011 (filed Aug. 20, 2012) (Judges Bell, Harrell, Battaglia, GREENE, Adkins, Barbera & McDonald). RecordFax No. 12-0820-21, 24 pages.
FACTS: This case involved a grievance by the Fraternal Order of Police, Montgomery County Lodge 35, Inc. (“FOP”), filed under the “Maintenance of Standards” provision of its collective bargaining agreement (“CBA”) with Montgomery County following the County’s unilateral decision to discontinue a long-standing practice of allowing shop stewards to sit in on disciplinary interrogations for training purposes. The County filed a motion to dismiss the grievance, arguing that arbitration of the issue was preempted by the Law Enforcement Officers’ Bill of Rights, Maryland Code (2003, 2011 Repl. Vol.), §§3-101-113 of the Public Safety Article (“LEOBR”). The arbitrator determined that the grievance was not preempted and denied the motion to dismiss.
The County then filed a petition in circuit court to vacate the “arbitration award.” The circuit court affirmed the arbitrator’s decision and granted summary judgment on behalf of the FOP. The County appealed to the Court of Special Appeals. Prior to any proceedings in the intermediate appellate court, the Court of Appeals issued a writ of certiorari on its own initiative, to address the question of whether the express preemption provision of the LEOBR precluded arbitration of the FOP’s grievance regarding the number of representatives it could have present during the disciplinary interrogation of a police officer.
The Court of Appeals affirmed the judgment of the circuit court.
LAW: The primary issue here, whether the LEOBR preempted collective bargaining and arbitration under the facts presented, was essentially one of statutory interpretation. It is a well-settled principle that the primary objective of statutory interpretation is to ascertain and effectuate the intention of the legislature. Dep’t of Human Resources v. Hayward, 426 Md. 638 (2012); see also Oaks v. Connors, 339 Md. 24, 35 (1995). The first step in this inquiry is to examine the plain language of the statute, and if the words of the statute, construed according to their common and everyday meaning, are clear and unambiguous and express a plain meaning, the court will give effect to the statute as it is written. Jones v. State, 336 Md. 255, 261 (1994). Thus, where the statutory language is plain and free from ambiguity, courts do not normally look beyond the words of the statute itself to determine legislative intent. Montgomery County Dept. of Social Services v. L.D., 349 Md. 239, 264 (1998).
The Law Enforcement Officers’ Bill of Rights, Maryland Code (2003, 2011 Repl. Vol.) §§3-101-113 of the Public Safety Article, was enacted in 1974 with the primary purpose of guaranteeing certain procedural safeguards to law enforcement officers during any investigation or interrogation that could lead to disciplinary action, demotion, or dismissal. Coleman v. Anne Arundel Cnty. Police Dep’t, 369 Md. 108, 122 (2002). Thus, the statute provides the officer’s exclusive remedy in matters of departmental discipline. Id. at 122. To establish this exclusivity, the LEOBR provides that “this subtitle supersedes any other law of the State, a county, or a municipal corporation that conflicts with this subtitle,” and that “[a]ny local law is preempted by the subject and material of this subtitle. §§3-102(a), 3-102(b) of the Public Safety Article. From the plain language of the statute, it was clear that the grievance at issue did not implicate the “subject and material” of the LEOBR because the statutory scheme is focused exclusively on the rights of law enforcement officers, and under the facts, the FOP was attempting to assert its own right under the CBA rather than that of any of its bargaining unit members. Boyle v. Maryland-Nat’l Capital Park & Planning Comm’n, 385 Md. 142, 145 n.2 (2005). Indeed, the LEOBR does not provide a union with a right to file an application for a show cause order on its own behalf, as it is not a protected “officer” under that statute. See Mohan v. Norris, 386 Md. 63, 69 (2005).
The provision allowing for an application for a show cause order, section 3-105 of the Public Safety Article, provides that a law enforcement officer who is denied a right granted by this subtitle may apply to the circuit court of the county where the law enforcement officer is regularly employed for an order that directs the law enforcement agency to show cause why the right should not be granted, and the law enforcement officer may apply for the show cause order either individually or through the law enforcement officer’s certified or recognized employee organization, at any time prior to the beginning of a hearing by the hearing board. §3-105 of the Public Safety Article. Therefore, if the union were asserting, on behalf of a union member, that the presence of a shop steward in-training is somehow a right encompassed within the LEOBR, then any contractual grievance would be preempted by the statutory remedy of an application for a show cause order. The only recourse for the FOP to allege the denial of a right owed to the union, rather than an individual officer or the bargaining unit, however, is to file a contractual grievance under the CBA.
Furthermore, even assuming, arguendo, that the FOP’s grievance implicated the LEOBR, the grievance would not be preempted by the “subject and material” of that statute. See 3-102(b) of the Public Safety Article. The section of the LEOBR at issue in the instant case was section 3-104, which deals with “the investigation or interrogation by a law enforcement agency of a law enforcement officer for a reason that may lead to disciplinary action, demotion, or dismissal.” §3-104(a). That section provides law enforcement officers under investigation with certain rights and enumerates certain requirements of interrogations including that the interrogation take place at a reasonable time and place, that questions be asked by and through only one interrogating officer, and that the officer under interrogation have the right to counsel upon request. §3-104 (f),(g),(h)(2), §3-104(h)(1), §3-104(j); see Mohan, 386 Md. at 67-68.
The particular subsection in contention was §3-104(d)(1), which states that: “(1) The law enforcement officer under investigation shall be informed of the name, rank, and command of: (i) the law enforcement officer in charge of the investigation; (ii) the interrogating officer; and (iii) each individual present during an interrogation.” §3-104(d)(1) of the Public Safety Article. The County argued that this section demonstrated that the “subject and material” of the LEOBR specifically extended to the individuals who may be present during an interrogation, thereby preempting collective bargaining on the matter and precluding the FOP’s contract grievance. It advanced this argument by citing two cases in which the LEOBR was held to preempt collective bargaining: Moats v. City of Hagerstown, 324 Md. 519 (1991); and Montgomery County v. Fraternal Order of Police Montgomery County Lodge 35, Inc., 147 Md. App. 659 (2002). However, in contrast to the situations presented in Moats and Lodge 35, where there was a direct conflict between the “subject and material” of the LEOBR and the pursuit of a grievance under a collective bargaining agreement, the FOP’s grievance in the instant case dealt only with its own right to train its employees, and did not attempt to add to or curtail existing rights under the LEOBR.
Therefore, under the facts presented, the LEOBR did not preempt collective bargaining and subsequent arbitration of the underlying grievance. The grievance did not implicate the LEOBR because the union was asserting its own right to train shop stewards during interrogations, and further, there was no allegation that the practice increased, impinged upon, or otherwise affected the substantive rights of an officer.
Accordingly, the judgment of the circuit court was affirmed.
COMMENTARY: The Court of Appeals also clarified the procedural issue raised by the trial judge when, in confirming the determination of the arbitrator, he noted confusion as to whether a petition to “vacate” was the correct terminology under the circumstances. By filing a petition to vacate the “arbitration award,” the County suggested that an award was, in fact, made by the arbitrator. It used language throughout the petition that referred to the arbitrator’s denial of its dispositive motion as an “award,” despite its preliminary nature and the fact that arbitration on the merits had not taken place.
However, pursuant to Maryland case law, a petition to vacate an arbitration award requires an actual award – that is, a final decision by an arbitrator on the merits. See Messersmith, Inc. v. Barclay Townhouse, 313 Md. 652, 663 (1988). Despite the County’s filing of an incorrect motion, the County’s “petition to vacate arbitration award” was, in the present case, treated as a motion to stay arbitration. See Gisriel v. Ocean City Bd. of Supervisors of Elections, 345 Md. 477, 496-497 (1997). The circuit court judge in the instant case engaged in the analysis necessary to rule on a motion to stay arbitration under §3-208(c) when he considered whether the parties had agreed to arbitrate the particular dispute. Therefore, when the judge confirmed the decision of the arbitrator, he effectively denied the motion to stay and ordered arbitration. That decision was subject to immediate appeal. See Addison v. Lochearn Nursing Home, LLC, 411 Md. 251, 270-271 (2009).
PRACTICE TIPS: The Maryland Uniform Arbitration Act does not govern arbitration agreements between employers and employees unless the agreement expressly provides that the Act applies.
Denial of application for admission to bar
BOTTOM LINE: Petitioner’s application for admission to the Maryland Bar was denied because, by omitting key information about his criminal history, among other things, his application was incomplete and misleading, and he thus failed to meet his burden of proving that he possessed the requisite moral character and fitness to be a member of the Maryland Bar.
CASE: Matter of the Application of Cramer, Misc. No. 19, September Term, 2006 (filed Aug. 21, 2012) (Judges Bell, Raker, Cathell, Harrell, Battaglia, Greene & Wilner (retired, specially assigned) (per curiam)). RecordFax No. 12-0821-26, 19 pages.
FACTS: In 1998, Nicholas Hamilton Cramer was arrested in Los Angeles, California for driving under the influence of alcohol. As a result, Cramer’s privilege to drive was suspended, and he was sentenced to 36 months probation and fines. Cramer was also required to complete a first offender program. In 2004, Cramer was arrested again in New Jersey for DUI. In June of 2005, Cramer was arrested in the District of Columbia and charged with disorderly conduct involving a confrontation with a Metro Transit Police Officer.
In May 2005, a month prior to the June incident, Cramer filed an application with the State Board of Examiners for admission to the Maryland Bar. On the application, Cramer failed to disclose his criminal history and left many requisite items blank, including questions regarding his credit history and credit delinquencies. In addition, Cramer indicated in response to Question 7 that he had been “dropped, suspended, placed on probation, or expelled or requested to resign from a school,” but did not complete the question by attaching any explanation of the cause, circumstances, or outcome. As to question 5 of the application — requiring the applicant to list any and all places of residency for the past ten years — Cramer only provided his residence history for the prior eight years. His responses to question 10 regarding a complete list of all lawsuits except divorce and criminal proceedings to which he was a party of the application were incomplete.
Cramer did not disclose on his application the occurrence of his arrest and conviction for DUI in California, nor did he explain that when his California license to drive expired, he did not renew it. Moreover, he did not explain that his privilege to drive had been suspended. Further, by failing to attach a certified copy of his entire driving history from the Motor Vehicle Authority, the information reported with regard to his driving record was incomplete and misleading.
Pursuant to Rule 2(d) and in accordance with Rule 5(b)(1), Cramer’s bar application was forwarded to a member of the Character Committee for the Fifth Appellate Circuit. During the Committee’s investigation, the member assigned to the investigation requested that Cramer provide supplemental information for those sections on the application that Cramer left incomplete. Cramer provided an explanation of his academic probation and an explanation as to why he did not submit details regarding his criminal history, but failed to actually provide a record of his criminal history. Additionally, he did not provide a credit report and he failed to list the lawsuits he had been a party to.
The Committee member subsequently recommended that the Committee conduct a hearing regarding Cramer’s application pursuant to Rule 5 (b)(2) because there were grounds for denial. At that time, Cramer e-mailed the member a portion of his credit report that he copied and pasted into a new document. Cramer also e-mailed the member a document containing a list of criminal proceedings in which he was involved.
The Character Committee determined that Cramer’s failure to disclose so many items raised an issue as to whether he possessed the candor and truthfulness necessary for admission to the Maryland Bar, but ultimately the Committee recommended his admission.
Pursuant to Rule 5(c), the State Board of Law Examiners gave Cramer an opportunity to be heard. The Board found, among other facts, that Cramer filed a mostly incomplete application for admission. Key items were left blank, including answers to the questions regarding criminal actions, credit and credit delinquencies for which the applicant has several issues. Cramer also provided inaccurate information. Furthermore, although Cramer submitted additional information to the Character Committee Investigator “in a piecemeal fashion,” and supplemented documents, his application was still incomplete.
The matter was set for a hearing before the Court of Appeals for Cramer to show cause why his application for admission to the Bar should not be denied. The Court of Appeals ultimately denied Cramer’s application.
LAW: An applicant must possess good moral character for admission to any Bar, denoted by “those qualities of truth-speaking, of a high sense of honor, of granite discretion, of the strictest observance of fiduciary responsibility.” In re Application of Strzempek, 407 Md. 102, 112 (2008). Additionally, “it is a given that good moral character includes truthfulness and candor, and absolute candor is a requisite of admission to the Maryland Bar.”
The Board’s recommendation to deny Cramer admission to the Bar is entitled to great weight. See In re Application of Stern, 403 Md. 615, 629 (2008). The Court of Appeals, however, is charged with the responsibility to conduct an independent evaluation of the applicant’s moral character based upon testimony and evidence submitted before the Committee and the Board. Id. at 630.
“[I]t is a given that good moral character includes truthfulness and candor, and absolute candor is a requisite of admission to the Maryland Bar.” Application of Stern, 403 Md. at 634. Although Cramer did accept blame for his omissions and eventually did provide all of the necessary information, he did so only at the behest of the Character Committee member and in an untimely, piecemeal fashion. Even so, the information that Cramer did manage to provide to the Committee member was insufficient and he failed to provide all necessary documents until after the Character Committee hearing.
In In re Application of G.L.S., 292 Md. 378, 383 (1982), an applicant’s candor and truthfulness was called into question after he failed to include a complete record of all criminal proceedings to which he had been a party. The applicant listed only a date and courthouse, but left the “Nature of Proceedings” and “Disposition” columns blank. What the applicant failed to disclose was that he was convicted of armed robbery and was incarcerated in a federal penitentiary for six years out of the 10-year sentence he received. Id. at 379. The Character Committee found, and the Court of Appeals agreed, that the applicant “furnished sufficient information to alert the Committee to the need for further investigation and inquiry.” Id. at 382.
Cramer, however, left an entire section blank and did not give any dates of convictions or indicate the courts in which he appeared. Therefore, there was no information that would alert the Committee for further investigation into Cramer’s criminal record until he began to address the incomplete sections during his interview with the Character Committee member.
Question 19 on the application for admission to the Bar requires applicants “to ensure that [their] responses are accurate and current at all times until [they are] formally admitted,” and to “advise the Board immediately in writing of any changes of the information disclosed.” The only change or piece of information Cramer advised the Board of was his change in address. Cramer filed his bar application without completely providing all necessary documents until after his Character Committee hearing.
The implication of Cramer’s failure to disclose material facts and supplement necessary information was further exacerbated by his apparent alcohol problem and general disregard for the law. In In Re Application of K.B., 291 Md. 170 (1981), the Court of Appeals denied the application of a candidate who disclosed on his bar application that he had committed bigamy but never faced criminal charges for the offense and committed two acts of fraud; one committed two weeks after filing his bar application and one occurring on the day after he took his first bar examination. In denying the application, the Court reasoned that the applicant’s course of criminal activity occurred while the applicant was an adult and continued after his completion of his law school studies. Id. at 180.
Likewise, Cramer’s DUI in 2004 occurred during law school and he testified that he had been drinking the night he was arrested for disorderly conduct, which occurred after he submitted his bar application.
Cramer displayed a lack of candor and truthfulness, problems with alcohol consumption, and total disregard for the bar application process. Therefore, Cramer failed to meet his burden of proving that he possessed the requisite moral character and fitness to be a member of the Maryland Bar.
COMMENTARY: Cramer attempted to minimize his behavior by distinguishing his conduct from that of the applicants in In re Application of James G., 296 Md. 310 (1983) and in In re Application of A.T., 286 Md. 507 (1979).
In James G., the Court of Appeals admitted an applicant who committed (16 years earlier) forgery and assault for which he served 21 months incarceration. James G., 296 Md. at 311. The applicant had been admitted to the District of Columbia Bar and had been practicing law for two years by the time his case came before the Court. Id. at 312. In addition, over ten years had passed since the applicant’s last criminal offense. The Court found that the applicant’s burgeoning legal career, the significant period of time that elapsed from his last transgression, and the solid character witnesses he provided evidenced his rehabilitation and possession of good moral character.
In In re Application of A.T., the Court of Appeals admitted an applicant who had a history of drug abuse and a criminal record because his last offense occurred more than thirteen years before the Board hearing and he produced character witnesses who gave strong endorsements.
Here, however, Cramer’s last offense occurred after he submitted his application for admission to the Maryland Bar. Furthermore, Cramer failed to provide any character witnesses. Moreover, although the applicants in James G. and A.T. had more severe criminal records than Cramer, “because we make an independent review of the record, we always will be confronted with behavior that is more or less egregious than in other cases related to the admission of candidates to the Bar.” Application of Strzempek, 407 Md. at 115.
BOTTOM LINE: Disbarment was the appropriate sanction where attorney violated several of the Maryland Lawyers’ Rules of Professional Conduct, including charging an unreasonable fee, while an attorney disciplinary proceeding was pending against him at the time he committed the acts in question.
CASE: Attorney Grievance Commission of Maryland v. Lawson. Misc. Docket AG No. 4, September Term, 2008 (filed Aug. 21, 2012) (Judges Bell, Harrell, Greene, Murphy, Adkins & Barbera) (per curiam). RecordFax No. 12-0821-27, 20 pages.
FACTS: Jeffrey Lawson was admitted to the Maryland Bar in 2004 and was suspended from the practice of law as a result of his improper efforts to increase a fee by threatening withdrawal after beginning representation of a client. Attorney Grievance Comm’n v. Lawson, 401 Md. 536 (2007).
Prior to his suspension, in 2006, Harry Fields engaged Lawson in connection with a property settlement and divorce. At that time, Fields was homeless, diabetic, and hypertensive, and suffered from vision impairment because of glaucoma. He knew Lawson because they were both Muslims and worshiped at the same masjid. Fields’ estranged wife had recently offered him $5,000 for his share of any marital property as part of the finalization of their divorce. Fields signed a written fee agreement in which he agreed to pay Lawson $250 per hour plus costs and expenses and in which Lawson agreed to represent Fields in his divorce.
In March 2006, Lawson filed on Fields’ behalf a complaint for temporary restraining order, a preliminary injunction, and a limited and absolute divorce and partition in the circuit court. Then, Fields was given a bill for approximately $12,000. Fields disputed the amount of the bill.
In pursuing the divorce claims, Lawson engaged in extensive discovery related to a motion for entry upon jointly owned land. Fields testified that he did not wish to enter the home or spend time with his estranged wife and that he did not authorize Lawson to take this action. The discovery documents in the record indicated that Lawson was requesting temporary entry in order to photograph and identify marital property located in the marital home. Fields also testified that he directed Lawson to contact a judgment creditor and attempt to negotiate a reduction of the amount owed prior to the settlement on the property but that Lawson did not do so.
In May 2006, the circuit court master awarded Fields temporary support, pendente lite, from his wife in the amount of $500 per month. Lawson directed Fields to send these funds to himself.
While the divorce action was still pending, Fields and his wife negotiated and signed a settlement agreement that resolved the property dispute. Fields was unable to read the settlement agreement due to his poor eyesight, so he brought a female friend to the settlement conference to assist him in reading the documents. Lawson refused to permit Fields to sit next to the woman.
In September 2006, Lawson filed a motion to enforce attorney’s lien and enjoin distribution of proceeds of sale. He filed this motion on behalf of Fields, and the motion requested, among other things, that the court order that any proceeds from the sale of the marital home be given to Lawson and not Fields. The basis for this request was a March 7, 2006, lien agreement that Lawson had persuaded Fields to sign which purported to create a lien for attorney’s fees against any proceeds recovered. Lawson entered into this business transaction with Fields without advising Fields verbally or in writing of his option to seek independent legal counsel, nor did Lawson give Fields a reasonable opportunity to do so. As a result of this agreement, Lawson received the entirety of Fields’ share of the proceeds from the sale of the marital property.
During the representation, Fields had also furnished Lawson with the title to a van. After the representation ended, Lawson did not return the title to the van.
Fields asked Lawson whether he was the same Jeffrey Lawson who was the subject of an attorney disciplinary case then pending in the circuit court for Baltimore County. Lawson denied that this was the case.
The Attorney Grievance Commission charged Lawson with violating numerous provisions of the Maryland Lawyers’ Rules of Professional Conduct (MLRPC). Lawson declined to participate a hearing in the circuit court. The court entered a judgment by default and held an evidentiary hearing at which the court received documentary and testimonial evidence. It was concluded that Lawson violated MLRPC 1.2(a) (duty to abide by the client’s decisions concerning the objectives of the representation); 1.5(a) (prohibition against charging an unreasonable fee); 1.8(a) (restriction on business transactions with clients); 1.15(a) (duty to safekeep the property of clients); and 8.4(a), (c), (d) (professional misconduct involving violation of disciplinary rules, dishonesty, and other conduct prejudicial to the administration of justice).
Neither Lawson nor the Commission filed exceptions to the findings of fact or recommended conclusions of law.
Accordingly, the Lawson was disbarred.
LAW: MLRPC 1.2 (a) provides that a lawyer shall abide by a client’s decisions concerning the objectives of the representation and, when appropriate, shall consult with the client as to the means by which they are to be pursued.
The evidence was plain that the motion for entry upon jointly owned land related solely to a brief re-entry in order to inspect the property, take photographs, and identify any of Fields’ personal property that may have been left by him. This was entirely consistent with Fields’ objective of obtaining a more favorable division of the marital property. Fields’ misunderstanding of what Lawson was doing did not mean there was a violation of MLRPC 1.2.
Additionally, the court incorrectly found that Lawson’s refusal to negotiate a reduction in Fields’ obligations to his creditors was a violation of 1.2. There was no evidence that Lawson agreed to represent Fields in any matter other than the divorce proceeding. MLRPC 1.2(c) permits reasonable limitations on the scope of representation, and Lawson’s refusal to represent Fields in an unrelated creditor dispute was not unreasonable. Therefore, there was no violation of MLRPC 1.2.
Pursuant to MLRPC 1.5, a lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. Some of the factors to be considered in determining the reasonableness of a fee include the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; the fee customarily charged in the locality for similar legal services; the amount involved and the results obtained; the experience, reputation, and ability of the lawyer or lawyers performing the services. See MLRPC 1.5.
Lawson’s fee here was unreasonable. While the agreed-to $250 per hour rate was reasonable, the number of hours logged and the $46,043 final fee, later reduced by agreement to $35,000, was unreasonable given the nature of the representation. It is generally a violation of the MLRPC for the attorney’s stake in the result to exceed the client’s stake, as was the case here. Attorney Grievance Comm’n v. Roberson, 373 Md. 328, 350 (2003). Therefore, Lawson violated MLRPC 1.5.
MLRPC 1.8 provides: “(a) A lawyer shall not enter into a business transaction with a client unless: (1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client; (2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and (3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.”
This rule is intended to prevent “overreaching” when a lawyer engages in a financial transaction with a client, given a lawyer’s skill and training and the relationship of trust with a client. MLRPC 1.8, comment (1). “It does not apply to ordinary fee arrangements between client and lawyer,…although its requirements must be met when the lawyer accepts an interest in the client’s…nonmonetary property as payment of all or part of a fee.”
Lawson induced his client to enter into a settlement agreement concerning the disputed attorney’s fee that gave Lawson a lien on the proceeds of Fields’ marital property settlement — a lien that encompassed all of Fields’ share of the settlement. Given Fields’ poor eyesight and lack of understanding of the law, as well as the legalese contained in the agreement itself, the terms of the lien were not communicated in a manner likely to be reasonably understood by Fields. Further, Fields’ poor eyesight made it unreasonable for Lawson to have believed that Fields could read a handwritten settlement agreement.
Additionally, there was no evidence that Fields was advised in any way of the desirability of seeking independent legal counsel or that he was given opportunity to do so. Finally, there was no evidence to suggest that Fields gave informed consent, written or otherwise, to the essential terms of the transaction and Lawson’s role in the transaction. Even if settlement of a fee dispute by itself would not be within the purview of MLRPC 1.8, Lawson was obligated to comply with that rule when he entered into a lien agreement to satisfy the fee. Lawson failed to do so.
Under MLRPC 1.15(a), a lawyer must hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property.
The court’s factual finding, which was in agreement with the testimony of Fields, was that there was a fee dispute over Lawson’s original $46,043 fee. However, the court further found that Lawson and Fields entered into a written settlement agreement. The record was silent as to whether Fields ever continued the dispute with Lawson after the document was signed. Where a fee dispute has been resolved by settlement and there is no evidence of later dispute, there is not an ongoing fee dispute merely because the amount of the settlement was unreasonable or in violation of the MLRPC.
In any event, Lawson’s failure to return the title to Fields’ van after the representation had concluded was a violation of his duty under MLRPC 1.15(a) duty to safeguard the property of clients.
MLRPC 8.4 provides that it is professional misconduct to: “(a) violate or attempt to violate the Maryland Lawyers’ Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another;…(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice.”
The findings that Lawson violated MLRPC 1.5, 1.8, and 1.15 justified a finding that Lawson violated 8.4(a). Lawson’s dishonesty toward Fields about his pending attorney disciplinary matter justified a finding that Lawson violated 8.4(c). Finally, Lawson’s unreasonable fees and mis-handling the subsequent fee disputes violated 8.4(d).
Accordingly, Lawson was disbarred.
COMMENTARY: Lawson had a history of creating and then mismanaging client fee disputes. See Attorney Grievance Comm’n v. Lawson, 401 Md. 536 (2007). As a result of prior disciplinary proceedings that were ongoing during Lawson’s representation of Fields, Lawson was suspended from the practice of law in Maryland. He was given a one year suspension in 2007, and he had not applied for reinstatement.
The appropriate sanction for a violation of the MLRPC generally “depends on the facts and circumstances of each case, including consideration of any mitigating factors,” Attorney Grievance Comm’n v. Zuckerman, 386 Md. 341, 375 (2005), in furtherance of the purposes of attorney discipline: “to protect the public, to deter other lawyers from engaging in violations of the Maryland Rules of Professional Conduct, and to maintain the integrity of the legal profession.”
Several of the aggravating factors found in 9.22 of the American Bar Association Standards for Imposing Lawyer Sanctions (1991) were present here. Lawson was already engaged in an attorney disciplinary proceeding at the time he committed the acts in question. His behavior was clearly motivated by a desire to obtain fees to which he was not entitled. This behavior continued over many months. When challenged by the Commission, he refused to comply with the investigation or attend a circuit court hearing on the matter. Lawson took advantage of an elderly man in poor health and with limited means. There were no efforts made by Lawson toward restitution. See ABA factors (a), (b), (c), (d), (e), (g), (h), and (i).
BOTTOM LINE: Disbarment was the appropriate sanction where attorney was unresponsive to his clients, changed offices without telling them, failed to keep them informed about their matters, and instructed them to lie to the court about the nature of his representation.
CASE: Attorney Grievance Commission of Maryland v. Nnaka, Misc. Docket AG No. 52, September Term, 2008 (filed Aug. 21, 2012) (Judges Bell, Harrell, Battaglia, Greene, Murphy, Adkins & Barbera) (per curiam). RecordFax No. 12-0821-28, 16 pages.
FACTS: Godson Nnaka was originally admitted to the Maryland Bar in 1995. He was decertified in 2009 for nonpayment of his assessment to the Client Protection Fund. In November 2006, Fred and Elizabeth Dowuona retained Nnaka to handle claims arising from a March 2006 automobile accident involving Mrs. Dowuona. Nnaka prepared a retainer agreement, signed by both parties, under which he was paid $5,000, in two installments, in November 2006 and January 2007. After the agreement was executed, Nnaka traveled to Nigeria, his home country, for an extended period without informing the Dowuonas.
The Dowuonas were unable to communicate with Nnaka, despite making several attempts to contact him about their case between December 2006 and the beginning of 2007. Furthermore, Nnaka did not notify the Dowuonas when he relocated his office within Baltimore in the summer of 2007. The Dowuonas did not hear from Nnaka until June 2007.
In November 2007, Nnaka met with the Dowuonas, who requested that Nnaka provide them with documents relating to any work Nnaka had performed. He was unable to do so. Nnaka instead demanded an additional $15,000 to continue his representation. After the Dowuonas declined, Nnaka did not return their documents so that the Dowuonas could retain new counsel.
Nnaka was also retained by Jacqueline and Jerry Shupe in February 2004, to represent them in claims arising from dental work performed by Vivencio R. Reyes in February 2003. Mrs. Shupe alleged medical malpractice against Reyes, and Mr. Shupe sought a loss of consortium claim. In June 2005, the Shupes paid Nnaka an initial retainer of $3,000.
Shortly before the statute of limitations was to run, Nnaka filed a complaint against Reyes on behalf of the Shupes in the circuit court. In the complaint, Nnaka attached a document captioned “Certificate of Merit and Report of Expert Witness,” signed by Richard M. Rosenthal, D.M.D. The Certificate failed to comply with the statutory requirement that a report of the expert be attached. Nnaka served a designation of experts upon the defendant, in which he identified Rosenthal as the plaintiffs’ expert, but he again did not provide an expert report.
While the Shupes’ case was pending, Nnaka did not cooperate with discovery, causing defense counsel to file a motion to dismiss or, in the alternative, to compel discovery. The motion was granted. Nnaka failed to comply with the court’s order, and he did not advise his clients about the failure to file the expert report, the motion to compel, or any of the outstanding discovery in their case. Instead, in November 2006, Nnaka left the United States for Nigeria, apparently to run for president of Nigeria. While Nnaka was out of the country, defense counsel filed a motion to strike plaintiffs’ certificate of qualified expert and to dismiss for failure to comply with the corresponding statutes.
A hearing was scheduled on the defense’s motions to strike and dismiss. Nnaka did not notify the Shupes about the hearing until the morning of the hearing. Nnaka instructed the Shupes to appear without representation and tell the judge that they had fired him. Nnaka further told the Shupes that they should request a postponement, and Nnaka advised them to prepare a letter discharging his services and a subsequent letter re-hiring him.
The Shupes followed his instructions and appeared in court alone. After the hearing, the court ordered the case dismissed without prejudice for failure to comply with the statutes regarding experts. The dismissal effectively extinguished their claims because re-filing the case would have been barred by the statute of limitations.
The Attorney Grievance Commission of Maryland, acting through Bar Counsel, filed a petition for disciplinary or remedial action against Nnaka, charging Nnaka with violating the Maryland Lawyer’s Rules of Professional Conduct (MLRPC) (1) Rule 1.1 (Competence); (2) Rule 1.3 (Diligence); (3) Rule 1.4 (Communication); (4) Rule 8.1 (Bar Admission and Disciplinary Matters); and (5) Rule 8.4(c)-(d) (Misconduct).
Following a hearing before the circuit court for Baltimore County, Judge Robert N. Dugan issued findings of fact and conclusions of law, in which he found by clear and convincing evidence that Nnaka violated MLRPC Rules 1.3, 1.4(a), 1.4(b), 8.1(b), 8.4(c), and 8.4(d). Neither party filed exceptions.
The Court of Appeals disbarred Nnaka.
LAW: MLRPC 1.3 requires an attorney to act with reasonable diligence and promptness in representing a client. Nnaka traveled to Nigeria and was uncommunicative with the Dowuonas between December 2006 and June 2007. In his representation of the Shupes, Nnaka did not comply with initial discovery requests, nor did he comply with a subsequent court order compelling discovery. This conduct violated MLRPC 1.3. See also Att’y Griev. Comm’n v. London, ___ Md. ___ (2012) (Misc. AG No. 12, September Term, 2011).
MLRPC 1.4 requires an attorney to keep his clients reasonably informed about the status of legal matters and to explain matters to the client to the extent reasonably necessary to allow the client to make informed decisions about the representation. Nnaka did not do so for either the Dowuonas or the Shupes. He was out of communication with the Dowuonas for months and did not advise them that he was traveling to Nigeria. Nnaka also failed to inform the Dowuonas that he was relocating his law office and was unable to produce documents relating to work he had performed for their case.
With respect to the Shupes, Nnaka did not advise them of his failure to file the expert report, of any outstanding discovery requests, or defense counsel’s motion to compel discovery. Nnaka did not inform the Shupes when the defendant in the Shupes’ case filed a motion to strike plaintiffs’ expert, as he was still out of the country. He also did not notify the Shupes about their hearing on the motion to strike until that morning. Furthermore, he instructed the Shupes to lie to the judge about his representation, resulting in the dismissal of their lawsuit past the running of the statute of limitations. Nnaka also effectively abandoned his law practice by leaving the country. These are all clear violations of MLRPC 1.4(a) and (b). See, e.g., Att’y Griev. Comm’n v. Kreamer, 404 Md. 282, 303 (2008); Att’y Griev. Comm’n v. Hodgson, 396 Md. 1, 6 (2006).
MLRPC 8.1(b) prohibits an attorney from knowingly failing to respond to a lawful demand for information from a disciplinary authority. Nnaka did respond to the Dowuonas’ initial complaint and he did acknowledge that the Shupes had filed a grievance against him, but he did not respond to it. Since then, Nnaka did not file an answer to the charges in the petition and failed to appear in circuit court for his hearing. The failure to respond to Bar Counsel clearly violated MLRPC 8.1(b). See, e.g., Att’y Griev. Comm’n v. Park, ___ Md. ___ (2012) (Misc. AG No. 15, September Term, 2009) (filed June 25, 2012).
Finally, MLRPC 8.4 states that it is misconduct for an attorney to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation, or to engage in conduct prejudicial to the administration of justice. When Nnaka instructed the Shupes to lie to the court concerning the nature of his representation, he clearly violated the prohibition against deceitful conduct in MLRPC 8.4(c). And taken as a whole, Nnaka’s conduct was prejudicial to the administration of justice and violated MLRPC 8.4(d). See, e.g., Park, ___ Md. at ___.
COMMENTARY: The Court sanctions unscrupulous attorneys to protect the public and the public’s confidence in the legal profession. See, e.g., Park, ___ Md. at ___. Sanctions accomplish these goals by deterring the conduct that will not be tolerated and by removing those unfit to practice law from the rolls of authorized practitioners. See, e.g., Att’y Griev. Comm’n v. Usiak, 418 Md. 667, 689 (2011).
In Hodgson, the Court of Appeals disbarred an attorney for violations of MLRPC 1.3, 1.4(a), 1.4(b), 8.1(b), and 8.4(d). See Hodgson, 396 Md. at 6-8. The respondent in that case failed to explain the consequences of the dismissal of her client’s case; did not respond to repeated requests for information; did not respond to lawful demands for information from the disciplinary authority; and acted in such a manner that was prejudicial to the administration of justice. See also Att’y Griev. Comm’n v. Tinsky, 377 Md. 646, 653 (2003).
The Court of Appeals has also disbarred attorneys for deceitful conduct similar to the kind demonstrated by Nnaka here, when he instructed his clients to lie to the court about the nature of his representation. See, e.g., Att’y Griev. Comm’n v. Pak, 400 Md. 567, 575 (2007). This deceit alone could merit disbarment, without consideration of the other violations. See, e.g., Att’y Griev. Comm’n v. Keiner, 421 Md. 492, 523 (2011).
Disbarment was the appropriate sanction for Nnaka, considering the full extent of his misconduct. He was unresponsive to his clients, changed offices without telling them, failed to keep them informed about their matters, and instructed them to lie to the court about the nature of his representation.
PRACTICE TIPS: The Court of Appeals disbarred an attorney for misconduct that included advising his client to obtain credit card loans to pay legal fees with the intent of having the debt discharged in bankruptcy. Att’y Griev. Comm’n v. Culver, 381 Md. 241 (2004).
BOTTOM LINE: Disbarment was appropriate sanction for attorney who engaged in conduct involving fraud, dishonesty and deceit, failed to communicate with clients about status of cases, misappropriated clients’ funds, and created false records to conceal his behavior in response to disciplinary investigation.
CASE: Attorney Grievance Commission of Maryland v. Ross, No. 19, Sept. Term, 2011 (filed Aug. 21, 2012) (Judges Bell, Harrell, Battaglia, Greene, Adkins, Barbera & MCDONALD). RecordFax No. 12-0821-25, 40 pages.
FACTS: This case involved the manner in which a relatively new Maryland attorney, David Ross, handled client funds, billing, and communications for several matters in which he represented Brian Murphy. Murphy, a former Maryland State Police trooper, had been convicted of possession of child pornography. He had been represented in that case by Constance Camus. Shortly after he began practicing law, Ross met Camus through a mutual acquaintance.
On May 8, 2008, Murphy and Ross entered into a retainer agreement for services in the criminal matter pending before the circuit court. In accordance with the agreement, Murphy paid an initial retainer of $5,000. Although the agreement recited that the initial retainer would be deposited in the firm’s trust account, Ross deposited the check into his personal checking account. In addition to the criminal case, Ross agreed to represent Murphy in an administrative proceeding to review a determination by the Washington County Department of Social Services (“DSS”) that Murphy was responsible for child sexual abuse. At about the same time, Ross also agreed to assist Murphy and his wife, Dawn Murphy, with a contract dispute they had with Richmond American Homes concerning construction of a new house in West Virginia and with the establishment of a family trust. The family trust was apparently intended to shield their assets from future law suits and to protect funding for the purchase of the West Virginia residence.
On June 4, 2008, there were significant developments in both the criminal case and the DSS administrative hearing. On that day, pursuant to an agreement with the State’s Attorney, Murphy dropped his appeal in exchange for the State’s Attorney’s agreement not to pursue additional criminal charges arising from allegations that Murphy had abused a child of a family friend. On that same day in the administrative proceeding, Camus requested and was granted permission to withdraw as counsel, and Ross became Murphy’s sole counsel of record in that matter. At that time, Murphy gave Ross another personal check, this time in the amount of $4,565. Again, Ross deposited this check in his personal bank account rather than in an attorney trust account.
The DSS administrative hearing concerning alleged child abuse by Murphy resulted in a favorable determination for Murphy that no child sexual abuse had occurred. In June and July of 2008, the Murphys discussed with Ross the establishment of a “personal trust” into which the couple would place their financial assets. Ross drafted a “Trust Indenture” designed so that the Murphys’ parents could, using the Murphys’ money, potentially purchase a home and obtain a mortgage on the couple’s behalf. Ross met with Mrs. Murphy and her father to discuss the trust, and later prepared another draft of the document.
On July 24, 2008, the Murphys gave Ross a bank check for $85,000, made payable to Ross and the “IOLTA Trust Account” for the “Brian & Dawn Murphy Trust.” However, Ross took no further steps to establish any trust for the Murphys. Ross subsequently told Murphy that that he was unable to deposit a check that referenced “Brian & Dawn Murphy Trust.” Murhpy obtained a new bank check in the same amount that omitted that reference. Ross deposited it into his attorney trust account on August 8, 2008. Murphy obtained another bank check, this time in the amount of $8,000, which he gave to Ross as an additional deposit into the “personal trust” that the Murphys believed Ross had established for the their benefit. Ross deposited that check into the attorney trust account on November 3, 2008. On that same day, Ross cashed a check in the amount of $8,000, drawn on the same account and made payable to himself. Ross later made several other questionable withdrawals from his attorney trust account.
Through the end of 2008 and into 2009, Ross had intermittent correspondence with the Murphys regarding the Murphys’ contract dispute with RAH. Meanwhile, the DSS appealed the administrative decision concerning Murphy to the circuit court, where a hearing was scheduled for April 30, 2009. Ross represented Murphy in that hearing, and the administrative decision in Murphy’s favor was upheld. Ross wrote to Murphy on March 25, 2010, to inform him of outstanding legal fees. Murphy responded by requesting a detailed bill accounting for the hours worked. On March 31, 2010, Ross e-mailed Murphy an invoice on letterhead showing a balance due of $134,710. Ross later reduced the amount to $94,710.
The Attorney Grievance Commission subsequently charged Ross with violating numerous provisions of the Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”), several other Maryland Rules, and Maryland Code, Business Occupations & Profession Article (“BOP”), §10-306. The alleged violations all concerned the manner in which Ross handled client funds, assessed and collected fees, and maintained records relating to his representation of Murphy. The matter was referred to the circuit court of Montgomery County to conduct a hearing and to provide findings of fact and recommended conclusions of law.
The circuit court concluded that Ross had committed all the violations charged, including violations of MLRPC 1.4 (communication), 1.5 (fees), 1.15 (safekeeping property), and 8.4 (misconduct); Maryland Rules 16-604 (trust accounts – required deposits), 16-606 (name and designation of trust account), 16-606.1 (trust account record keeping), and 16-609 (prohibited transactions); and BOP § 10-306 (misuse of trust money).
Ross filed multiple exceptions to the findings of fact and conclusions of law. Upon review, the Court of Appeals found that the circuit court’s assessment of the facts was not clearly erroneous, that Ross misappropriated client funds and created false records in response to a disciplinary investigation, and that disbarment was the appropriate discipline.
Accordingly, Ross was disbarred.
LAW: MLRPC 1.4(a)(2) requires a lawyer to “keep the client reasonably informed about the status of the matter.” Section 1.4(b) requires a lawyer to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. In this case, the record was replete with failures of communication. Ross did not provide Murphy with monthly billing statements as required by the Agreement, nor did Ross otherwise inform the Murphys of the actions he was taking on their behalf and how much those efforts would cost. The Murphys believed that Ross was establishing a trust on their behalf; in fact, Ross failed to establish this trust and did not communicate his progress on the matter. The Murphys believed they had placed $93,000 in that trust; Ross did not tell them that he had taken that money for legal fees. These lapses in communication violated MLRPC 1.4(a)(2) and (b).
MLRPC 1.5(a) forbids an attorney from making an agreement for, charging, or collecting an unreasonable fee or an unreasonable amount for expenses. Rule 1.5(b) provides that the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. Here, the circuit court found persuasive the testimony of Paul Kemp, a local attorney with extensive experience representing criminal defendants, who opined that Ross billed an unreasonable number of hours related to the DSS proceeding and appeal. Although Ross excepted to these findings, a review of Ross’s invoices revealed numerous questionable expenditures of time, and the favorable results obtained by Ross were outweighed by consideration of the time required to do the work and the fees customarily charged in the community for that work. As such, the circuit court judge properly concluded that Ross’ fees were excessive and unreasonable, violating MLRPC 1.5(a). The circuit court judge also correctly concluded that Ross violated MLRPC 1.5(b) by failing to adequately communicate to the Murphys the basis for his fees.
MLRPC 1.15(c) provides that unless the client gives informed written consent to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred. The circuit court judge found that the initial $5,000 retainer payment paid by the Murphys were legal fees that had been paid in advance and had not been earned by Ross at the time he received them. Ross did not place that payment into a client trust account as required by MLRPC 1.15(c), and therefore violated the Rule.
Ross likewise violated MLRPC 1.15(a), which requires that a lawyer hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Because Ross had not yet earned the first $5,000 he received from Murphy, it remained the property of his clients, and he was required by MLRPC 1.15(a) to hold the funds separate from his own property in an account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules. Ross instead placed the money directly into his personal bank account. In addition, Ross later deposited at least three personal checks, totaling nearly $74,000, into his client trust account. He therefore did not hold client funds separate from his own property, also violating MLRPC 1.15(a) in that regard.
MLRPC 1.15(d) states that a lawyer shall deliver promptly to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall render promptly a full accounting regarding such property. The circuit court judge found that the Murphys periodically questioned Ross about the status of their deposits, which the Murphys believed were being used to establish a trust. Ross failed to give the Murphys any accounting of these deposits until the March 31, 2010, invoice, after he had taken all the money for his claimed legal fees. Ross therefore did not, upon request by the Murphys, promptly render a full accounting of their property, a violation of MLRPC 1.15(d).
Under MLRPC 8.4(a), it is professional misconduct to violate or attempt to violate any of the rules of professional conduct; accordingly, its violation follows from the other violations of the MLRPC. MLRPC 8.4(c) and (d) prohibit a lawyer from engaging in “conduct involving dishonesty, fraud, deceit or misrepresentation” and “conduct that is prejudicial to the administration of justice. Ross took, without permission, client funds that were intended for a trust. He then created fraudulent and inflated billing statements and records not delivered to his clients to justify those fees and disguise his mismanagement of client funds. These actions and misrepresentations were dishonest, fraudulent, deceitful, and prejudicial to the administration of justice. Ross therefore violated MLRPC 8.4(c) and (d). See Attorney Grievance Comm’n v. Braskey, 378 Md. 425, 451-452 (2003).
Conduct involving fraud, dishonesty, or deceit will ordinarily result in disbarment absent compelling extenuating circumstances. Attorney Grievance Comm’n v. Keiner, All Md. 492, 523 (2011). Misappropriation of funds by an attorney is an act infected with deceit and dishonesty and ordinarily will result in disbarment. Attorney Grievance Comm’n v. Elliott, 417 Md. 659, 676 (2011). Furthermore, the submission to the Attorney Grievance Commission of fabricated evidence in a carefully contrived effort to conceal prior misconduct also warrants disbarment. Attorney Grievance Comm’n v. Smith, 425 Md. 230, 236 (2012).
Based on the circuit court’s finding that Ross misappropriated client trust money and fabricated a document trail to hide his actions, disbarment was the appropriate sanction. Accordingly, Ross was disbarred.
COMMENTARY: Ross also violated Maryland Rule 16-604, which provides that “all funds, including cash, received and accepted by an attorney or law firm in this State from a client or third person to be delivered in whole or in part to a client or third person, unless received as payment of fees owed the attorney by the client or in reimbursement for expenses properly advanced on behalf of the client, shall be deposited in an attorney trust account in an approved financial institution.” Because Murphy’s payment of $5,000 to Ross on May 8, 2008, was not intended to pay for past services by Ross, Ross was required to place this payment in an attorney trust account. He did not do so, and thus violated Maryland Rule 16-604.
Ross also violated Maryland Rule 16-606, which requires that an attorney or law firm shall maintain each attorney trust account with a title that includes the attorney or law firm and that clearly designates the account as “Attorney Trust Account,” “Attorney Escrow Account,” or “Clients Funds’ Account” on all checks and deposit slips. Ross’s trust account was titled “DAVID A. ROSS, ESQ., IOLTA CLIENT TRT FUND.” This title clearly violated the rule. Attorney Grievance Comm’n v. Ellison, 384 Md. 688, 708 (2005).
In addition, Ross did not create records that accurately and chronologically accounted for deposits of and disbursements from client funds, nor records for each client matter for which funds were received in trust, thereby violating Maryland Rule 16-606.1(a). Ross received $93,000 to be placed into a personal trust for his clients’ benefit, but took the funds for his legal fees without obtaining his clients’ permission to do so. This act constituted an unauthorized use of funds from his attorney trust account, in violation of MLRPC 16-609(a). By so doing, Ross also violated BOP §10-306, which provides that a lawyer may not use trust money for any purpose other than the purpose for which the trust money is entrusted to the lawyer.
PRACTICE TIPS: Whether a client is “a saint, a sinner, or someone in between,” an attorney has a duty not only to represent a client diligently, but also to act as a fiduciary with respect to client funds entrusted to the attorney and to maintain appropriate documentation as to the attorney’s services, fees, and disposition of client funds.
BOTTOM LINE: Disbarment was appropriate sanction for attorney who engaged in conduct violating numerous Rules of Professional Conduct, including charging an unreasonable fee by requiring two clients to pay a “non-refundable engagement fee,” which did not require attorney to perform any legal services or other duties in return.
CASE: Attorney Grievance Commission of Maryland v. Stinson, Nos. AG 30, AG 70, Sept. Term, 2009 (filed Aug. 21, 2012) (Judges Bell, Harrell, Battaglia, Greene, Adkins, Barbera & Eldridge (retired, specially assigned)). RecordFax No. 12-0821-29, 55 pages.
FACTS: This case involved a disciplinary action brought by the Attorney Grievance Commission of Maryland against attorney Katrice Stinson, arising from Stinson’s representation of two clients, Dr. Rose Merchant and Kara McIntosh. Stinson was admitted to practice law in Maryland on December 16, 1999. From June of 2008 to the time of her deposition by Bar Counsel on April 28, 2010, Stinson did not maintain an attorney trust account.
With regard to Stinson’s representation of Merchant, Stinson and Merchant first came into contact on June 3, 2008, when Merchant contacted Stinson regarding possible legal representation for two matters: a potential wrongful termination claim against her former employer, and a possible wrongful arrest claim against Fairfax County, Virginia. However, Stinson and Merchant later began discussing the possibility of ending Merchant’s marriage to her husband. At their first in-person meeting, Stinson told Merchant that Merchant would need to pay $7,000 for an engagement and retainer fee. Stinson did not provide Merchant with a written fee agreement at that time and did not explain the basis of this fee. Merchant presented Stinson with a $7,000 check. Stinson deposited into an account that was not an attorney trust account.
Following the June 4 consultation, Merchant believed that Stinson was going to provide representation for the employment law matter and for a possible divorce or annulment of her marriage. The parties agreed to meet on June 5, 2008, at the local courthouse, so that Stinson could assist Merchant with filing for a temporary restraining order (“TRO”) against her husband. Stinson was late to the meeting, and the time she met with Merchant at 4:30 p.m., the courthouse was closing and it was too late to file the TRO or the divorce/annulment complaint. Several days later, Stinson and Merchant discussed topics related to Merchant’s husband. On June 9, 2008, Stinson provided Merchant with an “Engagement Fee Agreement,” which Merchant signed. During the meeting, Stinson drafted a Complaint for Annulment. Merchant thought that Stinson was going to provide representation for the annulment matter, but Stinson informed her that she would not enter her appearance as counsel and Merchant would have to file the complaint pro se.
On June 12, 2008, Merchant went to the circuit court intending to file the pro se complaint for annulment. However, after speaking with two legal services attorneys at the courthouse, Merchant decided to terminate her attorney-client relationship with Stinson. Stinson told Merchant that she would not provide any refund because the $5,000 payment was non-refundable and the $2,000 retainer had already been spent on billable hours. Stinson also informed Merchant that additional money was owed based on the billable hours that Stinson had already spent on Merchant’s cases. Stinson sent a letter dated June 13, 2008, notifying Merchant that she was terminating the Engagement Fee Agreement. Stinson enclosed a legal services billing summary with the letter, which stated that Merchant owed a balance of $11,257 after crediting the $2,000 retainer. Merchant subsequently confirmed with Stinson her desire to terminate the attorney-client relationship and requested a refund of the $5,000 fee.
Merchant obtained other counsel to represent her in the annulment process. The other attorney drafted a Complaint for Annulment, using a majority of the averments that Stinson had drafted in her pro se complaint given to Merchant. Merchant was subsequently granted a judgment of annulment by the circuit court.
With regard to Stinson’s representation of Kara McIntosh, on October 1, 2008, McIntosh called Stinson to discuss some legal concerns regarding her business activities. On October 2, 2008, Stinson gave McIntosh an “Engagement Fee and Retainer Agreement.” The fee agreement required McIntosh to pay Stinson a $10,000 nonrefundable engagement fee and a separate initial retainer fee of $10,000. McIntosh chose not to employ Stinson because she did not have the necessary funds to pay the two advance fees.
However, on November 5, 2008, the Federal Bureau of Investigation (“FBI”) executed a federal search warrant at McIntosh’s home, and McIntosh subsequently contacted Stinson. McIntosh subsequently signed two agreements, an “Engagement Fee Agreement” and a “Retainer Agreement.” The Engagement Fee Agreement required McIntosh to pay Stinson a “non-refundable” engagement fee of $10,000. The Retainer Agreement provided for an initial retainer fee of $10,000, which would be applied towards future legal services, which were to be billed at the hourly rate of $335. McIntosh wrote Stinson a check for $6,000 to cover the initial deposit for the Engagement Fee Agreement. McIntosh requested that Stinson wait to cash the check because she needed to make a deposit into the account. Stinson said that she wanted the money that day. McIntosh’s business partner obtained a cash advance of $5,000 on a credit card and used these funds to purchase a cashier’s check in the same amount made payable to Stinson.
Stinson made two phone calls on behalf of McIntosh on November 13, 2008, to obtain information about the federal criminal case. Stinson then met with McIntosh to discuss what she had learned. At that time, Stinson told McIntosh that she had arranged a meeting with the prosecutor to discuss a plea agreement. Stinson also told McIntosh that she needed an additional $5,000 by the next morning to continue the representation. When McIntosh told Stinson that she could not come up with the $5,000, Stinson emailed McIntosh to say that she would not be representing her and that she would be mailing a refund check for any remaining balance from the amount tendered minus the hours that Stinson had already worked on the matters. Stinson refused McIntosh’s subsequent requests for a refund.
The Commission subsequently filed a Petition for Disciplinary or Remedial Action, charging Stinson with professional misconduct arising out of the fees she charged Merchant and McIntosh. Both matters were referred to the circuit court to conduct evidentiary hearings and to submit to the Court of Appeals proposed findings of fact and conclusions of law for each complaint. The circuit court judge found that Stinson’s conduct in the McIntosh complaint amounted to violations of Maryland Rules of Professional Conduct (“MRPC”) 1.4 (Communication), 1.5 (Fees), 1.15 (Safekeeping Property), 1.16 (Declining of Terminating Representation), 7.5 (Firm Names and Letterheads), 8.1 (Bar Admission and Disciplinary Matters), and 8.4 (Misconduct). The judge also found that regarding the McIntosh complaint, Stinson violated Rules 1.5, 1.15, 1.16, 7.5, and 8.4.
Stinson filed numerous written exceptions to the judge’s findings of fact. Based upon an independent review of the record, the Maryland Court of Appeals upheld nearly all of the factual findings of the hearing judge and all of the judge’s conclusions of law, and ordered Stinson’s disbarment.
LAW: With regard to the Merchant complaint, the hearing judge found that Stinson violated MLRPC 1.4(b) because at the time that Merchant issued the check for $7,000, Stinson failed to explain, to the extent reasonably necessary to permit the client to make informed decisions, that she did not intend to appear as counsel of record in the divorce/annulment proceeding. From the record, including Stinson’s and Merchant’s own statements, it was apparent that there was confusion regarding the scope of the agreement. It was Stinson’s responsibility under the Rules of Professional Conduct to explain these matters to the client to the extent of reasonable necessity, and she failed to do so. As such, Stinson did violate MLRPC 1.4(b).
Stinson excepted to the hearing judge’s finding that violated MLRPC 1.5(a) when she did little work to justify the initial $7,000 fee and the billed charges of $11, 257. Stinson argued that engagement fees such as the fee she charged Merchant were permissible. However, Stinson did not file any pleadings, attend any hearings, or obtain any results for Merchant. Engagement fees are the same as a general retainer or an “availability fee.” See In re Gray’s Run Technologies, Inc., 217 B.R. 48, 53 (Bankr.M.D.Pa.1997). This type of retainer binds a lawyer to represent a particular client while foreclosing that attorney from appearing on behalf of an adverse party, and is generally considered “non-refundable.” Att’y. Griev. Comm’n. v. Kreamer, 404 Md. 282, 296, 946 (2008).
To be valid, an engagement-retainer fee must bear a reasonable relationship to the income the lawyer sacrifices or expense the lawyer incurs by accepting it, including such costs as turning away other clients or hiring new associates so as to be able to take the client’s matter. Restatement (Third) of the Law Governing Lawyers §34 cmt. e (2000). Engagement-retainer fees agreed to by clients not so experienced should be more closely scrutinized to ensure that they are no greater than is reasonable and that the engagement-retainer fee is not being used to evade the rules requiring a lawyer to return unearned fees. Here, however, the only purported detriment to Stinson or benefit to Merchant as the result of the engagement fee was the “ensuring of her availability to the Client” and the “willingness to provide legal advice and services.” Stinson was therefore providing no benefit to the client in exchange for the fee, and the hearing judge correctly found that the fee paid was neither an engagement fee by definition nor a reasonable fee under the circumstances. Accordingly, all of Stinson’s exceptions pertaining to MLRPC 1.5(a) were overruled.
The hearing judge was likewise correct in concluding that Stinson violated MLRPC 8.4(c), which prohibits an attorney from engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. Stinson violated MLRPC 8.4(c) first in retaining unearned fees, and second in submitting to Merchant a falsified billing statement, which included double charges for document preparation and other misrepresentations. In addition, as the hearing judge correctly found, Stinson, by her conduct, committed the other violations charged by the Commission.
When considering the appropriate sanction for violations of the Maryland Lawyers’ Rules of Professional Conduct, a court takes into account the aggravating factors found in Standard 9.22 of the American Bar Association Standards for Imposing Lawyer Sanctions (1991). Att’y. Griev. Comm’n. v. Mininsohn, 380 Md. 536, 575 (2004). These aggravating factors include prior disciplinary offenses, dishonest or selfish motive, a pattern of misconduct, multiple offenses, bad faith obstruction of the disciplinary proceeding, and refusal to acknowledge wrongful nature of conduct. As the hearing judge concluded, several of these aggravating factors, including multiple offenses and refusal to acknowledge wrongful nature of conduct, were present here.
Given the numerous aggravating factors, the appropriate sanction for Stinson’s misconduct was disbarment.
COMMENTARY: With regard to the McIntosh complaint, the hearing judge correctly found that Stinson’s conduct amounted to a violation of MLRPC 1.5 and other Rules. Rule 1.5 states that a lawyer shall not make an agreement for, charge, or collect an “unreasonable fee.” Stinson made an agreement for a $10,000 “non-refundable engagement fee” to represent McIntosh. However, calling a fee “non-refundable” does not make it so. See M. Hirshman, Aspects of Attorneys’ Fees: Engagement Fee, Non-Refundable Retainer, Limitations on the Ability of Counsel to Set a Fee, MARYLAND BAR JOURNAL, Apr. 17, 1984 at 17.
The fee Stinson sought to charge without having to perform any legal services in return for such payment was unreasonable, and was not in fact a true “engagement fee”, which would allow it to be earned upon receipt. See Maryland v. Barbara Osborn Kreamer, 404 Md. 282 (2008).
PRACTICE TIPS: Under the Maryland Rules of Professional Conduct, upon termination of representation, a lawyer must take steps to the extent reasonably practicable to protect a client’s interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred.
BOTTOM LINE: Disbarment was appropriate sanction for attorney who misappropriated client funds, despite fact that attorney was acting as caretaker for her parents who were ill with cancer, because attorney’s family obligations did not constitute sufficient mitigation of attorney’s dishonesty and deceit.
CASE: Attorney Grievance Commission of Maryland v. Zimmerman, No. 32, Sept. Term, 2011 (filed Aug. 21, 2012) (Judges Bell, Harrell, Battaglia, Greene, ADKINS, Barbera & McDonald. RecordFax No. 12-0821-20, 29 pages.
FACTS: Donya Zimmerman, was admitted to the Maryland Bar in December of 2001. She maintained a solo practice. Zimmerman began representing Monique Shilling in 2008 regarding a modification of child custody and child support. Shilling made a number of payments on her bill, the last one in the amount of $3,000, made on or about May 28, 2010. A portion of that payment was an advance payment of costs and expenses. In July of 2010, Shilling terminated Zimmerman’s services and requested a refund of the unearned portion of the retainer. Zimmerman determined that the unearned amount was $805, which Zimmerman eventually returned to Shilling.
During Zimmerman’s representation of Shilling, Zimmerman had only one escrow account, which was at M&T Bank. However, Zimmerman did not hold the funds paid by Shilling in the escrow account. Zimmerman made a number of promises and representations to Shilling regarding the return of her retainer. On August 5, 2010, she promised to mail the balance of the retainer by the end of the following week. On August 23, she promised again to mail a check. On September 3, 2010, Zimmerman claimed to have sent the check by certified mail. However, Zimmerman later acknowledged that the mailing of the money order in November of 2010 was her first attempt to refund the retainer to Shilling.
Zimmerman began representing Deedra Danner in July of 2010 regarding a divorce. On July 22, 2010, Danner signed a retainer agreement and gave Zimmerman a $2,000 retainer check. One week later, Danner reconciled with her husband and she notified Zimmerman that her services would no longer be needed. Zimmerman suggested that she hold the retainer for a month in case Danner changed her mind. After a month, Danner received an invoice indicating that $1,610 would be returned, but no check was ever sent.
Zimmerman acknowledged having four overdrafts on her escrow account during September and October of 2010, despite the fact that she should have been holding $805 for Shilling and $1,610 for Danner in her escrow account at that time. Zimmerman regularly paid her business expenses out of the escrow account. She paid her federal taxes with an escrow account check, using funds that belonged to Shilling. She drew 14 checks on her escrow account to pay her secretary from June through September of 2010. She also paid bar association dues and malpractice insurance premiums from the escrow account. On November 5, 2010, Zimmerman drew a check for “cash” in the amount of $1,100 from her escrow account.
The Attorney Grievance Commission of Maryland filed a Petition for Disciplinary for Remedial Action against Zimmerman, charging her with violating several rules and statutes in her capacity as representative of Shilling and Danner. Specifically, Bar Counsel alleged that Zimmerman violated Maryland Rules 16-604 (Trust Account – Required Deposits) and 16-609(a) (Prohibited Transactions); Maryland Code (1989, 2010 Repl. Vol.), Section 10-306 of the Business Occupations and Professions Article (Misuse of Trust Money); and the following Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”): Rule 1.4 (Communication); Rule 1.15(a) and (c) (Safekeeping Property); Rule 1.16(d) (Declining or Terminating Representation); and Rule 8.4(b)-(d) (Misconduct). A hearing was held in the circuit court, following which the hearing judge issued findings of fact and conclusions of law. With regard to Shilling’s complaint, the hearing judge found that Zimmerman violated MLRPC Rules 1.15(a) and (c), 1.16(d), and 8.4(b)-(d), as well as Maryland Rule 16-609(a)-(c). With regard to Danner’s complaint, the hearing judge found that Zimmerman violated MLRPC Rules 1.3, 1.4, 1.15 (a) and (c), 1.16(d), and 8.4 (b)-(d), as well as Maryland Rule 16-609 and Section 10-306 of the Business Occupations and Professions Article.
Zimmerman appeared before the Court of Appeals on June 11, 2012, and the Court disbarred her in a per curiam order the next day.
LAW: Rule 1.15(a) requires that a lawyer hold property of clients separate from the lawyer’s own property and that those funds be kept in an attorney escrow account. The records of Zimmerman’s bank account show that Zimmerman did not deposit the check she received from Shilling on May 28, 2010 in her escrow account. The unearned portion of that payment, in the amount of $1,500, was deposited in Zimmerman’s escrow account June 8, 2010. Thus, from May 28 until June 8, 2010, Zimmerman failed to hold Shilling’s funds in her escrow account. Zimmerman violated Rule 1.15(a) by her failure to hold Shilling’s funds in her escrow account during that period of time.
Rule 1.15(c) requires that a lawyer deposit advance payments of legal fees and expenses in an escrow account and prohibits the lawyer from withdrawing the funds for her own benefit until earned, absent the client’s informed consent confirmed in writing. At all times after June 8, Zimmerman should have held at least $805 in her escrow account on behalf of Shilling until she returned those funds to the client in November of 2010. In fact, Zimmerman’s balance in her escrow account was $2 as of the end of June 2010. Zimmerman drew check no. 1162 on her escrow account to pay her federal tax obligation pertaining to her business. That check was identified on the client ledger for Shilling as coming from Shilling’s funds. When the check to the IRS was posted to Zimmerman’s escrow account on June 14, 2010, the balance remaining in the account was $427, substantially less than the amount still belonging to Shilling. By withdrawing funds belonging to Shilling for Zimmerman’s own benefit when those funds had not been earned, Zimmerman violated Rule 1.15(c).
Rule 1.16(d) requires a lawyer, upon termination of representation, to take steps to the extent reasonably practicable to protect a client’s interest, including refunding any advance payment of fee or expense that has not been earned or incurred. In July of 2010, Shilling terminated Zimmerman’s services, but Zimmerman did not return the retainer balance until November. Zimmerman’s delay in refunding the balance was unreasonable, particularly in light of the fact that she failed to maintain those funds in her escrow account. The delay in refunding the unearned portion of the payment to Ms. Shilling was a violation of Rule 1.16(d).
Zimmerman’s use of the unearned portion of Shilling’s retainer for her own use, including the payment of taxes to the IRS, was a willful misuse of client funds. The willful misuse of client funds was a violation of section 10-306 of the Business Occupations and Professions Article, Annotated Code of Maryland. Zimmerman’s blatant misappropriation of Shilling’s money was a criminal act adversely reflecting on her honesty and trustworthiness in violation of Rule 8.4(b) of the MLRPC, particularly in light of Zimmerman’s false promises to mail the check in August of 2010 and her later false claim that she had mailed the check. Zimmerman’s conduct of misappropriation and misrepresentation to the client violated Rule 8.4(c), conduct involving dishonesty, fraud, deceit or misrepresentation; as well as Rule 8.4(d), conduct prejudicial to the administration of justice.
Based on the findings of fact, the hearing judge made the certain conclusions of law about Zimmerman’s use of her escrow account. The judge found that Zimmerman violated Rule 1.15(a) by not depositing her clients’ checks directly in the escrow account. She violated Rule 1.15(c) by disbursing funds from her escrow account to pay her business expenses, thereby invading the funds she should have been holding for these clients. Her willful and deliberate use of client funds to pay her own expenses was a misappropriation and misuse of trust funds in violation of section 10-306 of the Business Occupations and Professions Article, as well as criminal conduct in violation of Rule 8.4(b) of the MLRPC. Zimmerman’s misuse of client money was dishonest conduct and was prejudicial to the administration of justice in violation of Rules 8.4(c) and (d). The use of client funds to pay her taxes and other business expenses was a use of trust funds for an unauthorized purpose in violation of Maryland Rule 16-609(a).
The hearing judge discussed several potential mitigating factors, such as Zimmerman’s testimony that between January and December of 2010, her mother was diagnosed with cancer, and Zimmerman began acting as her mother’s primary caretaker. Zimmerman further testified that later in 2010, her father was diagnosed with prostate cancer and that she also cared for him. However, even if Zimmerman was burdened with family responsibilities during 2010, those circumstances failed to mitigate use of trust funds for her own business expenses, and dishonesty with her clients when she kept telling them she had sent the money, when in fact she had not.
The Commission recommended disbarment as the appropriate sanction for Zimmerman’s violation of MLRPC 1.15(a) and (c), 1.16(d), 8.4(b)-(d), Maryland Rules 16-604 and 16-609, and Section 10-306 of the Business Occupations and Professions Article. Misappropriation of funds by an attorney is an act infected with deceit and dishonesty and ordinarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanction. Att’y Grievance Comm’n v. Vanderlinde, 364 Md. 376, 410, 419 (2001). It has long been settled that an attorney’s misappropriation of funds entrusted to his care, be the amount small or large, is of great concern and represents the gravest form of professional misconduct. Att’y Grievance Comm’n v. Stern, 419 Md. 525, 558 (2011).
The mitigating circumstances offered by Zimmerman did not alter the fundamental fact that she misappropriated funds from both clients. As such, the appropriate sanction was disbarment.
COMMENTARY: As of the date of the hearing in circuit court, Zimmerman still had not returned the retainer funds to Danner. As with Shilling, Zimmerman repeatedly lied to Danner about the status of those funds. This inaction and coverup was a consequence of her clear failure to properly maintain her escrow account according to the strictures of the applicable rules and statutes, which alone is a severe offense. And, as with the Shilling matter, there was not sufficient mitigation to warrant imposition of a sanction less severe than disbarment.
PRACTICE TIPS: In those cases in which Maryland courts have found family illness to be sufficient mitigation of an attorney’s misconduct, the illness has generally had a causal connection to the misconduct.
BOTTOM LINE: Although a notice of intent to foreclose should ordinarily identify each “secured party,” failure to do so is not automatically a basis for dismissing the action where, as here, the notice identifies a secured party and contains other required information to allow the borrower to pursue loan modification, the other secured party is elsewhere disclosed well in advance of the sale, and the borrower failed to move to dismiss the action on the grounds of defective notice for more than a year after such disclosure.
CASE: Shepherd v. Burson, No. 110, Sept. Term, 2011 (filed Aug. 20, 2012) (Judges Bell, Harrell, Battaglia, Greene, Adkins, Barbera & MCDONALD). RecordFax No. 12-0820-23, 23 pages.
FACTS: During national foreclosure crisis of 2008, one of the issues that surfaced was a concern that some homeowners received insufficient warning of an impending foreclosure and, as a result, lacked time to prepare a defense or to pursue loan modification. In response, the General Assembly enacted a statute in 2008 to require that a foreclosing lender provide advance written notice to the borrower of its intention to foreclose. Among the information to be provided in that notice was the identity of “the secured party,” although the statute did not specifically define that phrase. The present case involved the appropriate definition of the “secured party” that must be identified in the Notice of Intent to Foreclose required by RP §7-105.1(c).
On April 27, 2007, Camille Shepherd, an attorney residing in Greenbelt, Maryland, obtained a loan of $416,900 from the Independent National Mortgage Corporation, FSB (“IndyMac Bank”), secured by a deed of trust on her home. Shortly thereafter, IndyMac Bank went into receivership and its assets, including Shepherd’s debt, were transferred to a newly created bridge bank, IndyMac Federal Bank, FSB (“IndyMac Federal”). On August 18, 2008, Shepherd entered into a loan modification agreement with IndyMac Bank, which lowered the interest rate on her loan and, as a result, reduced the monthly payment.
Shepherd failed to make the monthly payment due in November of 2008 and defaulted on the loan. The bank took no immediate action with respect to the default. On March 19, 2009, IndyMac Federal transferred its assets, including Shepherd’s loan, to another newly created bank, One West Bank FSB. On June 5, 2009, the substitute trustees, on behalf of One West, sent Shepherd a Notice of Intent to Foreclose pursuant to RP §7-105.1. The Notice, on stationery of the substitute trustees, was in a standard format established by the State Commissioner of Financial Regulation. Among other things, it listed the borrower, the mortgage loan number, the dates of the most recent loan payment and of the default, and the extent to which loan payments were past due. It identified the “secured party” on the loan as One West and provided the name and phone number of a person with authority to modify the terms of the loan.
On June 26, 2009, Shepherd filed a bankruptcy petition under Chapter 7 of the Bankruptcy Code, which automatically stayed the foreclosure proceeding. In a schedule attached to that petition she identified One West as a secured creditor as a result of the assignment from IndyMac Federal. On August 4, the Bankruptcy Court lifted the stay as to One West so as to enable it to exercise its rights under state law. In October 2009, Shepherd received a discharge from other debts in the Chapter 7 proceeding.
After the bankruptcy stay was lifted, the substitute trustees initiated the instant foreclosure action on October 28, 2009, in the circuit court. Among the various documents filed to commence the action was a copy of the Notice of Intent to Foreclose which, as discussed, identified One West as “the secured party,” and an Affidavit Certifying Ownership of Debt Instrument, which identified the Federal Home Loan Mortgage Corporation (“Freddie Mac”) as the owner of the loan and One West as the holder of the note secured by a deed of trust. Shepherd was served with the documents the following day. This was apparently the first time that Freddie Mac’s involvement was disclosed to Shepherd.
In February of 2010, one day prior to the scheduled sale, Shepherd filed a second bankruptcy petition, this time under Chapter 13 of the Bankruptcy Code, which again stayed the foreclosure proceeding. This petition was eventually dismissed, as was another Chapter 13 bankruptcy petition filed by Shepherd in September, 2010. The foreclosure sale was rescheduled for January 2011. On December 15, 2010, Shepherd moved to dismiss the foreclosure sale pursuant to Maryland Rule 14-207.1, based on irregularities in the Notice of Intent to Foreclose. Specifically, she contended that the failure to identify Freddie Mac as the secured party in the notice violated RP §7-105.1(c)(4)(ii)(1)(A).
The circuit court canceled the foreclosure sale in order to review the motion, which it ultimately denied. Shepherd moved for reconsideration. The court denied the motion, and the foreclosure sale was held on March 8, 2011. Freddie Mac purchased the property for $237, 276. Shepherd filed exceptions reiterating her allegation that the notice was defective. The exceptions were denied, and the court ratified the sale. Shepherd appealed to the Court of Special Appeals. Prior to a decision in that court, she petitioned the Court of Appeals for a writ of certiorari, which was granted. The Court of Appeals affirmed.
LAW: On appeal, Shepherd argued that “the secured party” mentioned in RP §7-105.1(c) was necessarily the owner of the loan, and that a mortgage servicer – even if a holder of the promissory note – could not also be “the secured party.” As Freddie Mac was the owner of her loan, she asserted that it, and not One West, was “the secured party” that should have been identified in the Notice of Intent to Foreclose that the substitute trustees sent to her prior to the foreclosure action. In addition, she argued that the failure to identify Freddie Mac in that Notice meant that the Notice was deceptive and therefore ineffective. For those reasons, she asserted that the foreclosure action should be dismissed.
An initial question was the meaning of “the secured party” for purposes of the notice requirement in RP §7-105.1(c). As noted, the statute itself does not define that phrase. In the absence of a statutory definition, it was reasonable to conclude that the Legislature contemplated a meaning consistent with the commonly understood meanings of the phrase in connection with residential mortgages and deeds of trust at the time it enacted the statute. See Board of Education v. Lendo, 295 Md. 55, 63 (1982). Informative in this regard were the statutes that determine the rights of secured parties and the court rules that govern foreclosure proceedings.
A deed of trust secures a promissory note that embodies the promise to repay a loan. The promissory note and related security interests are subject to the Maryland Uniform Commercial Code (“Maryland UCC”), Maryland Code, Commercial Law Article (“CL”), §1-101et seq. In the Maryland UCC, “secured party” is defined as: (A) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding; (B) A person that holds an agricultural lien; (C) A consignor; (D) A person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold; or (E) A trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for, or (F) A person that holds a security interest arising under §2-401, §2-505, §2-711(3), §2A-508(5), §4-210, or §5-118 of the Maryland UCC. CL §9-102(a)(73) (emphasis added). Under this definition, Freddie Mac was certainly a secured party with respect to Shepherd’s promissory note, as an entity to which the promissory note had been sold.
However, that did not necessarily mean that One West did not also qualify as a secured party, as the definition can encompass trustees and agents in some instances. At the time that the Legislature enacted RP §7-105.1 in 2008, the court rules governing foreclosure stated that a “secured party” for purposes of a foreclosure action is “a mortgagee, the holder of note secured by a deed of trust, a vendor holding a vendor’s lien, a condominium council of unit owners, a homeowners’ association, a property owners’ or community association, and any other party secured by a lien; the rules also provided that “secured party” includes an assignee or successor in interest of a secured party. Maryland Rule 14-201(b)(10) (2008). Thus, Freddie Mac was a “secured party” under this definition as an assignee or successor in interest of the prior owner of the note. One West was also a “secured party,” as the holder of Shepherd’s note.
The determination that One West was a secured party for the purposes of RP §7-105.1(c) did not resolve Shepherd’s appeal. Shepherd was correct that Freddie Mac was also a secured party with respect to her loan. Under the broad definition of “secured party” in both the Maryland UCC and the foreclosure rules, there may, as in this case, be more than one secured party. The statute, however, requires that a Notice of Intent to Foreclose contain the name and telephone number of “the secured party.” RP §7-105.1(c)(4)(ii)(1)(A). This language prompted the question of whether a Notice of Intent to Foreclose may name any secured party, must name one particular secured party, or must name every secured party.
The present case was not unlike U.S. Bank Nat’l Ass’n v. Guillaume, 209 N.J. 449, 38 A.3d 570 (2012), in which the New Jersey Supreme Court considered the application of a similar notice provision in the New Jersey Fair Foreclosure Act. The New Jersey Supreme Court ultimately held that the New Jersey statute clearly required identification of the lender, in addition to the servicer, in the notice of intent to foreclose, and that the failure to do so rendered the notice defective. The Court held, however, that given that the homeowner/borrower had sufficient information to enter into loan modification negotiations and had been otherwise notified of the identity of the lender, the revised notice was sufficient to remedy that defect and there was no need to vacate the foreclosure judgment. Id. at 585. For this reason, the Court rejected the homeowner’s argument that the foreclosure proceeding should have been dismissed.
In the present case, Shepherd had as much information, within the critical time frame, as the homeowner in Guillaume concerning the status of her mortgage, the possibility of seeking a loan modification, and the identity of the owner of her loan. The statutory purpose of providing the borrower with advance notice and information to seek a loan modification or to negotiate some other alternative to foreclosure would be best served by identifying all secured parties in the Notice of Intent to Foreclose. However, in the circumstances of this case, the defect in the Notice of Intent to Foreclose did not require dismissal of the foreclosure action.
Accordingly, the circuit court properly exercised its discretion to deny the motion to dismiss the foreclosure action, and the judgment of the Court of Special Appeals was affirmed.
COMMENTARY: Shepherd also asserted that the circuit court unconstitutionally relied on Maryland Rule 1-201(a) to override the notice requirements of RP §7-105.1(c). However, the circuit court’s reference to Rule 1-201 was simply to the basic principle that the failure to specify consequences of non-compliance in a statute or rule grants discretion to a court to determine the consequences in light of the particular facts and the purpose of the rule or statute. Schaller v. Castle Development Corp., 347 Md. 90, 96 (1997). As the circuit court correctly observed, the statute that establishes the advance notice requirement does not prescribe a specific remedy for defects in a Notice of Intent to Foreclose.
PRACTICE TIPS: Under the Maryland Rules, if the court determines that the pleadings or papers filed do not comply with all statutory and Rule requirements, it may give notice to the plaintiff and each borrower, record owner, party, and attorney of record that the action will be dismissed without prejudice. If no consequences are prescribed, the court may compel compliance with the rule or may determine the consequences of the noncompliance in light of the totality of the circumstances and the purpose of the rule.
Protecting Tenants at Foreclosure Act
BOTTOM LINE: Under the Protecting Tenants at Foreclosure Act, when a purchaser at a foreclosure sale sends a bona fide tenant contradictory and misleading notices concerning the right to remain in a residence, the purchaser has not met its obligation to provide accurate advance notice.
CASE: Curtis v. US Bank National Association, No. 96, September Term, 2011 (filed Aug. 20, 2012) (Judges Bell, Harrell, Battaglia, Greene, Adkins, Barbera & MCDONALD). RecordFax No. 12-0820-22, 18 pages.
FACTS: In 2007, Harrison Price refinanced a loan on a single-family detached house he owned. Mr. Price executed a promissory note and a deed of trust, pledging the property as security for repayment of the loan. The promissory note was assigned to a mortgage-backed securities trust for which US. Bank National Association (USBNA) serves as trustee.
Later that year, Judy Curtis leased the property from Mr. Price and resided there with her children. She renewed that lease in 2009, extending it to October 31, 2010. Under the terms of the lease she paid $1,419 per month in rent.
In 2009, Mr. Price defaulted on his obligations under the promissory note. USBNA caused foreclosure proceedings to be initiated against the property. The lawyers acting as substitute trustees on USBNA’s behalf mailed several notices addressed to the “Occupant” of the property concerning the anticipated foreclosure and the possibility of future eviction.
When the foreclosure sale finally took place, USBNA was the successful bidder. The circuit court ratified the sale on November 10, 2010. After USBNA paid the purchase price, title to the property was conveyed to USBNA on November 24, 2010. USBNA recorded the deed in the land records of Anne Arundel County on December 3, 2010.
In the meantime, Ms. Curtis’ written lease with Mr. Price ended on October 31, 2010, according to its terms. She continued to occupy the property, however, as a month-to-month tenant and paid Mr. Price $1,175 in rent during October. Thereafter, she paid Mr. Price two additional rental payments of either $1,175 or $587 in November and December 2010.
On December 22, 2010, USBNA sent, by certified mail, two notices addressed to the “Occupant” of the property. One notice, entitled “Notice to Quit and Vacate Property,” advised Ms. Curtis that “the purchaser is unwilling to enter into any rental or other compensation agreement in exchange for continued occupancy of the Property” and stated that she was to “immediately vacate, quit and surrender possession of the premises.” However, it also advised that she might have “certain rights with respect to the property,” not otherwise specified, if she was a bona fide tenant.
The second notice stated that Ms. Curtis “must vacate the premises on or before March 23, 2011” and warned that, if she did not do so by that date, USBNA would proceed with “appropriate legal action to gain possession of the property.”
On January 7, 2011, USBNA filed a motion for possession under Rule 14-102. The motion stated that “the Occupant” was still in possession of the property and had “failed or refused to surrender possession” to USBNA.
After receiving a copy of USBNA’s motion for possession, Ms. Curtis filed a motion to intervene in the foreclosure proceeding, which the circuit court granted. The circuit court granted USBNA’s motion for possession. The court reasoned that Ms. Curtis had had at least 90 days from the time she was notified of the foreclosure sale to put her affairs in order. The circuit court stayed execution of the writ of possession for 10 days and later extended that stay pending appeal. It also ordered Ms. Curtis to pay, in lieu of rent, a supersedeas bond of $1,419 each month into the court registry until a reviewing court resolved her appeal.
Prior to proceedings in the Court of Special Appeals, the Court of Appeals granted certiorari and reversed and remanded.
LAW: The federal Protecting Tenants at Foreclosure Act (PTFA), which became effective on May 20, 2009, was part of the federal government’s response to the recent foreclosure crisis. It requires at least 90 days advance notice to a tenant who resides on a foreclosed property about whether and when the tenant must vacate that residence. In particular, in cases involving foreclosure of a residential property, “any immediate successor in interest in such property pursuant to the foreclosure” — which presumably includes a purchaser at foreclosure — must provide a bona fide tenant who resides on the property with a notice that advises the tenant of the right to occupy the residence for the remainder of the leaseor, if there is no lease or the lease is terminable at will under state law, for the 90-day notice period. PTFA, §702(a).
The General Assembly amended Maryland’s real property law in 2010 to provide parallel rights and obligations under State law. See RP §7-105.6(b). The Maryland statute requires that a “successor in interest” of a residential property in foreclosure provide at least a 90-day advance notice to bona fide tenant whether and when the tenant must vacate the property. The State statute, however, provides greater detail as to the content and method of delivery of the notice. RP §7-105.6(b)(4).
The foreclosure in this case preceded June 1, 2010, the effective date of amendment of RP §7-105.6 that incorporates and elaborates upon the PTFA requirements. As the legislation also specifies that it does not apply to foreclosures docketed before the effective date, id., §2, the parallel provisions of the State statute did not apply here.
The Court of Appeals amended the Maryland Rules governing foreclosure in 2009 expressly to incorporate the PTFA’s requirements and in 2010 to add references to the parallel requirements of RP §7-105.6. Before the 2009 amendment, the rules provided a procedure by which a purchaser at a foreclosure sale could obtain possession of a foreclosed property “when another person in actual possession fails or refuses to deliver possession.” Rule 14-102 (2009). That rule was amended to make clear that the purchaser “or successor in interest” — the broader term also encompassing purchasers used in the PTFA and RP §7-105.6 — who claims a right to “immediate possession” could file such a motion. Rule 14-102(a)(1).
At the same time, the rule was amended to provide that, if the right to possession arose from a foreclosure sale, the motion must include: “averments, based on a reasonable inquiry into the occupancy status of the property and made to the best of the movant’s knowledge, information, and belief, establishing either that the person in actual possession is not a bona fide tenant having rights under the [PTFA] or [RP] §7-105.6 or, if the person in possession is such a bona fide tenant, that the notice required under these laws has been given and that the tenant has no further right to possession.” Rule 14-102(a)(3). The motion must also include a copy of the notice to vacate under the PTFA or RP §7-105.6.
Thus, under the PTFA and the Maryland Rules, a purchaser at a foreclosure sale must provide a bona fide tenant notice whether the tenant will need to vacate the property, must provide that notice at least 90 days in advance, and may move to oust the tenant only when it has an immediate right to possession at the conclusion of the notice period.
A purchaser at a foreclosure sale is ordinarily entitled to possession of the property upon ratification of the sale, payment of the purchase price, and conveyance of legal title. Legacy Funding LLC v. Cohn, 396 Md. 511, 516 (2007); RP §7-105.6(a). That general rule, however, is qualified under RP §7-105.6 (and the PTFA) when the purchaser steps into the shoes of a landlord. If the lease was created prior to the mortgage, the purchaser at foreclosure takes the property subject to the rights of the tenant. See RP §7-105.6(a); Southern Md. Oil v. Kaminetz, 260 Md. 443 (1971). Even if, as in this case, the mortgage precedes the lease, the tenant may have a right to remain on the property under the PTFA (and RP §7-105.6(b)). Under elementary principles of real property law, a tenant properly on the premises of a property has a right of possession as against a landlord. E.g., Kessler v. Equity Management, Inc., 82 Md. App. 577, 586-87 (1990). It follows that a landlord — or a person who has succeeded to the position of a landlord — would have no right of “immediate possession” as against a tenant legally in possession of the property under the PTFA (and RP §7-105.6).
The critical notices for purposes of the PTFA were those sent after the foreclosure sale by the “successor in interest” or purchaser — USBNA. Shortly after ratification of the foreclosure sale, Ms. Curtis received, in quick succession, several conflicting communications from USBNA about her ability to remain in her residence: one notice told her to “immediately vacate, quit, and surrender possession” but said she might have unspecified rights “with respect to the property” as a bona fide tenant if she filled out a questionnaire (there is no dispute she promptly filled out the questionnaire); another notice at approximately the same time told her USBNA would take legal action if she did not get out by March 23, 2011; a motion served on her by USBNA during the first week of January 2011-two and half months before March 23-asserted its right to “immediate possession” and sought to oust her from the residence, but also conceded at that time that she was a bona fide tenant.
USBNA failed to comply with the PTFA and Maryland Rules in its efforts to oust Ms. Curtis from her residence. In particular, its notice to vacate was confusing and ineffective for purposes of the PTFA. Moreover, at the time it filed its motion for possession it did not have a right to “immediate possession”-a prerequisite to a motion under Rule 14-102. The motion for possession that it did file was premature and at odds with the purpose of the PTFA.
The obligation to provide advance notice is a forward-looking requirement intended to allow the tenant to plan for the future. Compliance should not be measured in hindsight, particularly when a misleading notice has never been corrected. Such a “cure” would countenance violations “capable of repetition, yet evading review.” See, e.g., Hammen v. Baltimore County Police Department, 373 Md. 440 (2003).
Finally, a notice to vacate under the PTFA is not necessarily keyed to the end of a lease term. The PTFA was designed to permit a tenant to remain in his or her residence for 90 days or the duration of a bona fide lease, whichever is longer. If Ms. Curtis had received an accurate and effective notice on December 22, 2010, the longer period would have been 90 days from that date-or March 23, 2011-as her lease terminated well before that date.
Thus, under the PTFA, a purchaser at a foreclosure sale of a residential property must provide advance notice to a bona fide tenant on the property whether and when the tenant will be required to vacate the residence. Misleading and contradictory notices concerning the tenant’s right to remain in a residence temporarily are ineffective to satisfy the purchaser’s obligation under the PTFA. Moreover, a motion for possession under Rule 14-102 is premature when it is filed prior to the expiration of the period that the PTFA permits a bona fide tenant to remain in a residential property subject to foreclosure.
COMMENTARY: The concerns in this case were somewhat ameliorated by the required content of the notice to vacate that the General Assembly specified in RP §7-105.6(b)(4)-the Maryland analog that did not apply to this case. The State statute requires that the successor in interest-or purchaser — explicitly state the basis for the termination of the tenancy, the date on which the termination of a tenancy becomes effective, and the date on which the notice is being given. When a foreclosure purchaser complies with those requirements, there will be little basis for a tenant in the same position as Ms. Curtis to claim confusion or uncertainty as to his or her legal status in the property.
PRACTICE TIPS: A tenancy is considered bona fide for purposes of the PTFA only if: “(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy.” PTFA, §702(b).