Dushan Zdravkovich v. , 634 F.3d 574 ( 2011 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 19, 2010 Decided February 11, 2011
No. 10-7061
IN RE: DUSHAN ZDRAVKOVICH,
RESPONDENT
Christopher A. Teras argued the cause and filed the brief for
respondent.
Before: GINSBURG, TATEL, and GARLAND, Circuit Judges.
Opinion for the Court filed by Circuit Judge GARLAND.
GARLAND, Circuit Judge: The Court of Appeals of
Maryland has disbarred attorney Dushan S. Zdravkovich for
intentional misappropriation of client trust funds. Zdravkovich
is a member of this court’s bar. Pursuant to our Rules of
Disciplinary Enforcement, we conclude that identical discipline
is warranted, and we therefore order Zdravkovich disbarred
from the practice of law before the District of Columbia Circuit.
I
The representation that led to Zdravkovich’s Maryland
disbarment stemmed from an altercation at a motorcycle
dealership. On October 28, 1999, Charles Hunter, III attempted
to take delivery of a motorcycle from a Harley Davidson
dealership in Annapolis, Maryland. After a dispute arose over
the payment of sales tax, the dealership refused to sell Hunter
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the motorcycle. Hunter protested, refused to leave, and was
arrested for trespassing. He then hired Zdravkovich -- for whom
Hunter’s girlfriend worked as a secretary -- to represent him in
the criminal trespass matter and to obtain specific performance
on the motorcycle sale. Zdravkovich also agreed to represent
Hunter in a suit against the dealership for malicious prosecution
if Zdravkovich succeeded in defending the criminal case. See
Attorney Grievance Comm’n v. Zdravkovich, 852 A.2d 82, 85
(Md. 2004).
On November 5, 1999, Zdravkovich sent Hunter a letter
outlining anticipated fees of $1,500 for the criminal
representation, $3,500 for the specific-performance case, and
$5,000 for the malicious-prosecution case. Hunter never signed
that letter or any other fee agreement. Instead, Hunter paid
Zdravkovich $1,500 for the criminal case and gave him $15,552,
the purchase price Hunter believed he was entitled to pay for the
motorcycle. Zdravkovich deposited the $15,552 in his attorney
trust account on November 6, 1999. See id. at 85-86.
Zdravkovich proceeded to represent Hunter in a criminal
trial, which resulted in a disposition of probation before
judgment. Zdravkovich also negotiated with the Harley
Davidson dealership, offering to pay $15,552 to complete the
transaction. When those negotiations failed, he filed suit for
specific performance and petitioned, unsuccessfully, to deposit
the $15,552 with the clerk of the court in which he filed the suit.
Frustrated that Zdravkovich had been unable to complete the
sale, Hunter terminated the representation in March 2000. On
April 12, 2000, Zdravkovich refunded the full $15,552 at
Hunter’s request. See id. at 85-87.
In late 2000, Maryland Bar Counsel subpoenaed
Zdravkovich’s trust account records as part of its investigation
into an unrelated complaint against him. In the course of that
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investigation, Bar Counsel discovered that Zdravkovich had
allowed his trust account balance to drop substantially below
$15,552 almost immediately after he deposited Hunter’s funds.
Specifically, Zdravkovich withdrew $1,000 of those funds on
November 12, 1999 to pay another lawyer who had no
connection to the Hunter matters. Then, between November 18,
1999 and February 25, 2000, he made a series of electronic
transfers from the escrow account to his operating account. By
February 25, Zdravkovich had withdrawn a total of $9,292.11 of
the funds. When Hunter demanded his money back,
Zdravkovich replenished the trust account with a check from his
son for $8,000 on April 1, 2000, and with an additional $1,400
from his operating account on April 13, 2000. See id. at 86;
Attorney Grievance Comm’n v. Zdravkovich, 825 A.2d 418, 424
(Md. 2003).
The Attorney Grievance Commission of Maryland filed a
petition for disciplinary action against Zdravkovich on August
8, 2002. The Maryland Court of Appeals assigned the matter to
Judge Michael E. Loney of the Circuit Court for Anne Arundel
County, who held a hearing on December 17, 2003. Judge
Loney confirmed the facts recited above. See Zdravkovich, 852
A.2d at 84-90 (quoting Judge Loney’s findings of fact and
conclusions of law). He also found that, when Zdravkovich
offered to pay $15,552 to the dealership and then to the clerk of
court, there were insufficient funds in the trust account to cover
the payment. Id. at 89. Judge Loney did not credit
Zdravkovich’s contention that Hunter had authorized him to
withdraw funds from the trust account to pay legal fees and
expenses. Instead, he credited Hunter’s testimony that
“unequivocally denie[d] . . . any such . . . authorization” and
confirmed “that the $15,552 was to be used solely for the
purchase of the motorcycle.” Id.
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Judge Loney concluded that Zdravkovich had “invaded the
escrowed funds of his client and used them for purposes other
than the client’s,” and he found by clear and convincing
evidence that this conduct amounted to misappropriation, misuse
of trust funds, and commingling of funds in violation of
Maryland Rules of Professional Conduct 1.15(a) and (b),
§ 10-306 of the Maryland Business Occupations and Professions
Article, and Maryland Rule 16-607. Id. at 88-91. Judge Loney
further concluded that Zdravkovich’s conduct “reflects
adversely on [his] honesty, trustworthiness or fitness as a
lawyer,” Md. R. Prof. Conduct 8.4(b), “involv[ed] dishonesty,
fraud, deceit or misrepresentation,” Md. R. Prof. Conduct 8.4(c),
and “[was] prejudicial to the administration of justice,” Md. R.
Prof. Conduct 8.4(d). Id.1
Zdravkovich filed exceptions to Judge Loney’s findings and
conclusions with the Maryland Court of Appeals. Deferring to
Judge Loney’s credibility determinations, the Court of Appeals
held that the evidence supported Judge Loney’s finding that the
parties intended the $15,552 to be used solely for completing the
purchase of the motorcycle, not for payment of attorney fees or
expenses. Zdravkovich, 852 A.2d at 92. It also concluded that,
with respect to all but $1,000 of the misappropriated funds, the
evidence was sufficient to find, by a clear and convincing
standard, that the misappropriation was intentional. Id. In
Maryland, intentional misappropriation is cause for disbarment
absent “compelling extenuating circumstances.” Id. at 96
(internal quotation marks omitted). Noting that Zdravkovich
had previously been reprimanded and indefinitely suspended in
an unrelated matter, the Court of Appeals ordered him disbarred
1
Judge Loney also found that Zdravkovich violated Maryland
Rule of Professional Conduct 8.1(b) by knowingly failing to respond
to Bar Counsel’s lawful demand for information regarding his trust
account. Zdravkovich, 852 A.2d at 88.
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from the practice of law in Maryland. Id. On February 2, 2006,
the District of Columbia Court of Appeals imposed reciprocal
and identical discipline. See In re Zdravkovich, 891 A.2d 258(D.C. 2006).
On February 5, 2007, we issued an order directing
Zdravkovich to show cause why imposition of identical
discipline by this court would be unwarranted. After
Zdravkovich answered, we discharged that order and referred
the matter to the circuit’s Committee on Admissions and
Grievances. In January 2010, after reviewing Zdravkovich’s
brief and evidentiary submissions, the Committee recommended
that we impose reciprocal and identical discipline. Thereafter,
we ordered the case scheduled for oral argument.
II
A member of this court’s bar who “has been suspended or
disbarred from practice in any other court” is subject to
reciprocal discipline in this court. Fed. R. App. P. 46(b)(1)(A).
In reciprocal discipline cases, we must undertake an “intrinsic
consideration of the state record,” Selling v. Radford, 243 U.S.
46, 51 (1917), recognizing that a state court’s decision to impose
a particular sanction “is not conclusively binding on the federal
courts,” In re Ruffalo, 390 U.S. 544, 547 (1968). Nevertheless,
the state court’s substantive findings are entitled to a high degree
of respect. Theard v. United States, 354 U.S. 278, 282 (1957).
Rule IV(c) of our Rules of Disciplinary Enforcement reflects
these principles. Under Rule IV(c), “this Court shall impose the
identical discipline” imposed by the other court “unless the
attorney demonstrates that, or this Court is satisfied” that:
(1) the procedure was so lacking in notice or
opportunity to be heard as to constitute a deprivation of
due process; or
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(2) there was such an infirmity of proof establishing
the misconduct as to give rise to the clear conviction
that this Court could not, consistent with its duty,
accept as final the conclusion on that subject; or
(3) the imposition of the same discipline by this Court
would result in grave injustice; or
(4) the misconduct warrants substantially different
discipline.
D.C. Cir. Rules, App. II, Rule IV(c) (hereinafter D.C. Cir. Rule
(IV)(c)); cf. Selling, 243 U.S. at 51 (setting forth similar criteria
for the imposition of reciprocal discipline by the Supreme
Court). This standard is narrow, for “we are not sitting as a
court of review to discover error in the [hearing judge’s] or the
[state] courts’ proceedings.” In re Sibley, 564 F.3d 1335, 1341
(D.C. Cir. 2009). And the “burden of showing why the court
should not impose reciprocal discipline rests with [the
attorney].” Id. at 1340.
Zdravkovich seeks to stave off the imposition of identical
discipline on the basis of each of Rule IV(c)’s four exceptions.
We consider those exceptions in order.
1. Zdravkovich contends that Maryland’s attorney
disciplinary system violates due process “because the Maryland
Court of Appeals is centrally involved in both the
investigative/charging process and the final decision on the
merits.” Br. 15. We pause at the outset to note that this claim
argues for an exception that falls outside the text of Rule
IV(c)(1). That provision is concerned with whether the
procedure was so lacking in “notice or opportunity to be heard”
as to violate due process. Zdravkovich makes no such claim,
nor could he. It is undisputed that he was given notice of the
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charges against him, was represented by counsel, and had a
hearing at which counsel had the opportunity to call and cross-
examine witnesses, make arguments, and submit evidence.
Nonetheless, because we would hesitate to impose reciprocal
discipline if Maryland’s disciplinary system violated due
process on some ground other than that contained in the text of
Rule IV(c)(1), we proceed to examine Zdravkovich’s argument.
That examination reveals that the argument has two fatal flaws
-- one of fact and one of law.
First, although Zdravkovich is correct that the Maryland
Court of Appeals makes the “final decision on the merits,” see
Md. Rule 16-759 (providing that the Court of Appeals reviews
exceptions to the findings of fact and conclusions of law
prepared by the hearing judge), it is simply not true that the
Court “is centrally involved in . . . the investigative/charging
process,” Br. 15. Under the Maryland Rules, the Court of
Appeals appoints Attorney Grievance Commission members,
who in turn appoint Bar Counsel, subject to the Court of
Appeals’ approval. Md. Rules 16-711, 16-712. Bar Counsel
investigates professional misconduct, files statements of
charges, and prosecutes all disciplinary and remedial actions.
Md. Rule 16-712. Upon completion of an investigation, Bar
Counsel may file with the Grievance Commission a Statement
of Charges. Md. Rule 16-741. A Peer Review Panel reviews
statements of charges to determine whether the charges have a
substantial basis and to make a recommendation as to whether
a Petition for Disciplinary or Remedial Action should be filed.
Md. Rules 16-742, 16-743. Finally, if the Grievance
Commission directs Bar Counsel to file a Petition, the Court of
Appeals designates a Circuit Court judge to hear the action. Md.
Rule 16-752. As this description makes clear, the Court of
Appeals has no connection to the investigative/charging process
other than its role in the appointment of Grievance Commission
members and Bar Counsel and in the designation of a hearing
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judge -- roles that have no connection to the substance of any
particular case.
Second, it would not matter legally even if the Court of
Appeals were more involved in the investigative process than it
is. In Withrow v. Larkin, the Supreme Court expressly rejected
the claim that due process is violated where “[t]he initial charge
or determination of probable cause and the ultimate
adjudication” are made by the same agency. 421 U.S. 35, 58
(1975). “[T]he combination of investigative and adjudicative
functions,” the Court held, “does not, without more, constitute
a due process violation.” Id. In this case, there is nothing more;
there is only less. This is not a case in which “special facts and
circumstances [demonstrate] that the risk of unfairness [was]
intolerably high.” Id. To the contrary, there are no such facts or
circumstances here.2
2. We next consider Zdravkovich’s contention that, at
most, the evidence supports a charge of negligent rather than
intentional misappropriation. To support this contention,
Zdravkovich must do more than simply challenge the
factfinder’s weighing of the evidence. Under the second
exception to Rule IV(c), he must demonstrate that there was
“such an infirmity of proof” establishing the charge of
intentional misconduct “as to give rise to the clear conviction”
that accepting the Maryland Court of Appeals’ conclusion would
be “[in]consistent with [our] duty” as a court. D.C. Cir. Rule
IV(c)(2). This is a difficult showing to make, and Zdravkovich
has failed to make it.
2
Zdravkovich further maintains that “Maryland Bar Counsel’s
office engaged in several actions which can be considered
misconduct.” Br. 16. Even if this charge were true (which does not
appear to be the case), nothing Zdravkovich alleges comes close to
establishing a due process violation.
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Maryland law “distinguishes between the intentional
misappropriation of client funds and the misappropriation of
client funds resulting from negligent or otherwise unintentional
behavior.” Attorney Grievance Comm’n v. Cafferty, 831 A.2d
1042, 1057 (Md. 2003). Intentional misappropriation includes
“conscious indifference in the use and management of the client
trust account.” Id. (internal quotation marks omitted). In this
case, there was sufficient evidence from which the Maryland
courts could conclude that Zdravkovich intentionally rather than
negligently misappropriated Hunter’s funds. Hunter hired
Zdravkovich to negotiate and complete the purchase of a
motorcycle. Shortly thereafter, Hunter gave Zdravkovich
$15,552 -- the precise amount that Hunter told Zdravkovich he
wanted to pay for the motorcycle -- which Zdravkovich
immediately deposited into his attorney trust account. The
common sense inference is that Hunter handed over that precise
amount because he wanted it to be used to purchase the
motorcycle, not to serve as a fund from which Zdravkovich
could withdraw payments for legal fees and expenses. See Md.
Code Ann., Bus. Occ. & Prof. § 10-306 (“A lawyer may not use
trust money for any purpose other than the purpose for which
the trust money is entrusted to the lawyer.”). Hunter’s testimony
-- which Judge Loney found credible -- confirmed that this was
the agreement and that it was never modified. The only written
document discussing the terms of the representation,
Zdravkovich’s November 5, 1999 letter to Hunter, contains no
evidence to the contrary.
Zdravkovich’s subsequent actions confirm that he knew the
money was to be used to purchase the motorcycle. Zdravkovich
contacted the dealership and offered to pay $15,552 for the
vehicle, representing that he had that amount in escrow. When
that effort failed, Zdravkovich sought to deposit the full $15,552
with the clerk of the court in which he brought the suit for
specific performance. And when Hunter lost patience with the
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specific performance case and demanded a complete refund of
the $15,552, Zdravkovich “scrambled to add, at the eleventh
hour, enough cash to the escrow account to allow him to return
Hunter’s money to him.” Zdravkovich, 852 A.2d at 96.
Zdravkovich does not dispute these basic facts, but he does
attempt to discredit Hunter’s testimony. Zdravkovich contends
that Hunter was an unreliable witness because he failed to
remember certain facts and gave inconsistent testimony.
Zdravkovich further maintains that Hunter’s testimony was
insufficient to establish intent by clear and convincing evidence,
because it contradicted Zdravkovich’s testimony that Hunter’s
girlfriend -- who was, at the relevant time, Zdravkovich’s
secretary -- told Zdravkovich that Hunter had approved the trust
account withdrawals. These arguments are unavailing, however,
because this court -- like the Maryland Court of Appeals --
defers to hearing judges’ determinations regarding the
credibility of witnesses. See United Servs. Auto. Ass’n v. NLRB,
387 F.3d 908, 913 (D.C. Cir. 2004). Hunter’s girlfriend did not
testify, so the only support for Zdravkovich’s report of what she
told him was Zdravkovich’s own testimony. Judge Loney
disbelieved Zdravkovich and believed Hunter instead. We have
no reason to second-guess the judge’s credibility determination.
In sum, Hunter’s testimony, combined with the other
evidence indicating that Zdravkovich understood that the
$15,552 was intended to purchase the motorcycle, was sufficient
to support the Maryland court’s finding of intentional
misappropriation. It is therefore sufficient to warrant the
imposition of identical discipline under Rule IV(c)(2).
3. Zdravkovich further maintains that this case falls within
Rule IV(c)’s third exception, because “the imposition of the
same discipline by this Court would result in grave injustice.”
D.C. Cir. Rule IV(c)(3). Because he sees his conduct as “at
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worst . . . merely negligent,” Zdravkovich contends that his
disbarment would result in grave injustice. Br. 28.
There might be something to this argument if it were true
that Zdravkovich’s conduct was merely negligent. This court
has declined to automatically impose the reciprocal discipline of
disbarment on an attorney whose misappropriation of client
funds was not intentional. See In re Pels, No. 96-7153, 1998
WL 796430 (D.C. Cir. Oct. 22, 1998). Indeed, the Maryland
Court of Appeals, itself, does not generally disbar attorneys for
misappropriation that is not intentional, reckless, or dishonest.
See Cafferty, 831 A.2d at 1057. But as we explained above,
there was no infirmity in the finding of the Maryland Court of
Appeals that Zdravkovich committed intentional
misappropriation. Accordingly, there is no injustice in our
imposing reciprocal disbarment for that conduct, especially in
light of Zdravkovich’s previous reprimand and indefinite
suspension.
4. Finally, Zdravkovich insists that his “misconduct
warrants substantially different discipline” than that imposed by
the Maryland Court of Appeals. D.C. Cir. IV(c)(4). In support,
he offers nothing more than the arguments that we have rejected
above, plus the contention that “he is extremely unlikely to
repeat the same conduct.” Br. 34. Given that he was
“reprimanded and indefinitely suspended by” the Court of
Appeals in a previous case, Zdravkovich, 852 A.2d at 96, that
promise rings hollow.
III
For the foregoing reasons, we accept the recommendation
of the Committee on Admissions and Grievances to impose
upon the respondent the reciprocal and identical discipline
imposed upon him by the Court of Appeals of Maryland. We
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therefore order that Zdravkovich be disbarred from the practice
of law before the United States Court of Appeals for the District
of Columbia Circuit. He is prohibited from holding himself out
to be an attorney at law licensed to practice before this court.
So ordered.