In the Matter of James C. Wollrab ( 2018 )

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ADVANCE SHEET HEADNOTE
June 25, 2018
2018 CO 64
No. 17SA165, In the Matter of James C. Wollrab—Colorado Rules of Professional
Conduct—Attorney Discipline—Colo. RPC 1.8—Colo. RPC 4.2.
In this attorney-discipline proceeding, the supreme court is confronted with
questions as to what Colorado Rules of Professional Conduct 1.8 and 4.2 require of an
attorney who enters into a business relationship with his client. The supreme court
concludes that the attorney violated Rule 1.8(a)(1) when he signed a lease with his
client’s company without complying with any of Rule 1.8(a)’s prophylactic
requirements. The supreme court also concludes that the attorney violated
Rule 1.8(a)(3) when he entered into an option agreement with his client without
obtaining his client’s informed, written consent to his role in the deal.
Finally, because the attorney had the implied consent of his client’s independent
counsel for the purposes of the option agreement, the supreme court concludes that he
did not violate Rule 1.8(a)(1) or (2) or Rule 4.2 in that transaction. The supreme court
remands the case to the Hearing Board for determination of the appropriate sanction in
light of the court’s conclusions.
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3 The Supreme Court of the State of Colorado
4 2 East 14th Avenue • Denver, Colorado 80203
5 2018 CO 64
6 Supreme Court Case No. 17SA165
7 Original Proceeding in Discipline
8 Appeal from the Office of the Presiding Disciplinary Judge 16PDJ062
9 In the Matter of James C. Wollrab
0 Judgment Affirmed in Part and Reversed in Part
1 en banc
2 June 25, 2018
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4 Attorneys for Complainant–Appellee:
5 James C. Coyle, Attorney Regulation Counsel
6 Jacob M. Vos, Assistant Regulation Counsel
7 Denver, Colorado
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9 Attorneys for Respondent–Appellant:
0 Fennemore Craig, P.C.
1 Troy R. Rackham
2 Denver, Colorado
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8 JUSTICE HART delivered the Opinion of the Court.
¶1 In this attorney-discipline proceeding, we are confronted with questions as to
what Colorado Rules of Professional Conduct 1.8 and 4.2 require of an attorney who
enters into a business relationship with his client. Respondent James C. Wollrab asks us
to reverse the Opinion and Decision Imposing Sanctions Under C.R.C.P. 251.19(b) of the
Presiding Disciplinary Judge. Specifically, Wollrab appeals the Hearing Board’s
conclusions that: (1) he violated Rule 1.8(a) when he entered into a lifetime lease with
his client’s company without following the Rule’s requirements; (2) he violated
Rule 1.8(a) when he entered into an option agreement with his client without complying
with those requirements; (3) he violated Rule 4.2 when he drafted that same option
agreement and had his client sign it without the knowledge of the client’s independent
counsel; and (4) a suspension from the practice of law for a year and a day was the
appropriate sanction for his misconduct.1
¶2 We conclude that the Hearing Board correctly determined that Wollrab violated
Rule 1.8(a) when he signed a lease with his client’s company. We also agree that
Wollrab violated Rule 1.8(a)(3) when he entered into an option agreement with his
client without obtaining his client’s informed, written consent to his role in the deal.
Because Wollrab had the implied consent of his client’s independent counsel for the
1 We note that Respondent, in both his Advisory Listing of Issues to be Addressed on
Appeal and in the Issues section of his Opening Brief, failed to identify that he was
appealing the Hearing Board’s conclusion that he violated Rule 1.8 in entering into the
lease. The People, however, had the opportunity—and took it—to respond to his
arguments on this issue. Since there is no risk that the People were “misled as to the . . .
judgment from which the appeal is . . . taken, any technical defect in the notice of appeal
is harmless.” Widener v. Dist. Court, 615 P.2d 33, 34 (Colo. 1980).
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purposes of the option agreement, however, we reverse the Hearing Board’s
determination that he violated Rule 1.8(a)(1) and (2) and Rule 4.2 in the option
agreement transaction. We remand this case to the Hearing Board for determination of
the appropriate sanction in light of these conclusions.
I. Facts and Procedural History
¶3 Wollrab was admitted to the Colorado bar in 1972. In 1975, he opened his own
litigation firm in Boulder, Colorado, taking both criminal and civil cases.
¶4 Laszlo and Wendy Bagi (“Laszlo Bagi” or “Bagi,” and “Wendy Bagi,”
respectively, and “Bagis,” collectively) run a residential and commercial HVAC
business, Bagi Mechanical, in Boulder. Since 1991, Wollrab has represented the Bagis in
a variety of legal matters, and he had an attorney–client relationship with them at all
times relevant to this case. Bagi considered Wollrab his attorney “in everything,”
except for matters outside of his expertise. For instance, the Bagis usually hired Clark
Edwards, a corporate attorney, as counsel for their more complex business transactions.
In addition, Wollrab and the Bagis spent holidays together, and Wollrab and Bagi were
drinking buddies. Their attorney–client relationship was informal: they established a
barter arrangement for their services in 2009, in which Wollrab “intuitively” kept track
of the balance between the two.
¶5 The Bagis ran Bagi Mechanical out of leased offices in an industrial space on the
outskirts of Boulder (“the Foothills property”). In 2010, the Bagis formed Foothills
Management Group, LLC (“FMG”), which, at Wollrab’s recommendation, obtained an
option to purchase the Foothills property. To exercise the option, FMG had to provide
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$50,000 in earnest money by April 15, 2011. After searching unsuccessfully to find
funding, and as the option was nearing expiration, Bagi inquired whether Wollrab was
interested in investing in the property. In April 2011, Wollrab decided that he wanted
to invest in the Foothills property and insisted that Bagi retain Edwards to represent
him in this deal. He did not, however, obtain the informed, written consent of the Bagis
to his involvement in the deal. Edwards understood that Wollrab and Bagi had been
having “considerable discussion[s]” about the deal, and did not prohibit or limit those
discussions in any way after he was retained.
¶6 On April 19, 2011, Wollrab, Bagi, and Edwards met for two hours to discuss the
deal and to hash out the terms of an option for Wollrab’s investment. They agreed that
for $50,000, Wollrab would obtain an option for a fifty percent ownership in BWI,
LLC—a new company to which FMG would assign its option on the Foothills
property—which could be exercised for an additional contribution of $150,000.
Edwards understood that Wollrab would thus be providing the funds to exercise the
original FMG purchase option.
¶7 Wendy Bagi had tendered a check to exercise FMG’s purchase option on
April 15, 2011, which was the last day the option could be exercised. On April 19,
however, that check was returned for insufficient funds. To keep the option alive, the
Bagis needed to provide $50,000 that very day. Thus, only hours after his meeting with
Wollrab and Edwards, Bagi came to Wollrab’s office, urgently needing $50,000.
Wollrab attempted to call Edwards in order to have him draft a document reflecting the
payment of $50,000, but could not reach him. Wollrab then quickly drafted the
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following “Option to Purchase” (the “Option”), which both he and Bagi executed that
afternoon:
Laszlo Bagi and [FMG] has [sic] a contract to purchase 105 acres known as
Foothills Business Park . . . . Laszlo Bagi and [FMG] is grants [sic] an
option to James C. Wollrab to purchase fifty percent undivided interests
[sic] in the property for $150,000.00 to be exercised at Mr. Wollrab’s
discretion at any time within the next ten years. Until the option is
exercised, Laszlo Bagi and [FMG] and any of their assigns, successions
[sic] in interest, partners, or joint ventures agree that the property will be
rented under the management of Laszlo Bagi for not less than $60,000
month [sic] until the note and deed of trust are paid . . . for approximately
2.4 million dollars.
Wollrab believed the Option to be a binding document to protect his investment and
intended to rely on it if needed. Wollrab drafted a check for $50,000, which Bagi took.
Wollrab emailed and faxed the signed Option to Edwards that same day. Edwards did
not respond or object to either the email or the fax.
¶8 Weeks after Wollrab and Bagi signed the Option, Wollrab sent an email to
Edwards that stated, in pertinent part:
This letter is my offer to have a business relationship with Laszlo Bagi. I
need an acknowledgment that Laszlo Bagi has been a client of mine for
several years. That this proposal to buy real estate together was not part
of any of the legal work that I did for Mr. Bagi. . . . Your firm is
representing him throughout the negotiations and your firm is drafting
the closing documents for the purchase and the closing documents
between myself and your clients . . . .
Ultimately, the deal to have FMG or BWI purchase the Foothills property fell through.
A month later, Bagi purchased the property via a new entity, Green Hill Investments,
LLC (“GHI”). Bagi was both part-owner and manager of GHI. Wollrab was not a party
to this new deal.
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¶9 Soon after GHI purchased the Foothills property, Wollrab mentioned to Bagi that
he was looking for new office space. Bagi encouraged him to move his office into the
Foothills property, rent-free, in exchange for legal work that Wollrab had previously
performed without yet being compensated. In September 2011, Wollrab asked Bagi for
a lease to guarantee that he would not have to move again before he retired in a few
years. Wollrab also wanted to protect his use of the office space—including a below-
market lease rate—against subsequent purchasers and preserve his ability to sublease
the space. Bagi initially told Wollrab that he did not need a lease, but eventually agreed
and sent Wollrab a copy of GHI’s standard industrial lease—a fourteen-page document
with fifty-four numbered provisions—which had been approved by the company’s
mortgage provider.
¶10 Wollrab took GHI’s standard lease and “cut out everything that didn’t apply,”
reducing it to one page (the “Lease”). Wollrab excised every standard tenant
commitment that appeared in the standard lease, including tenant obligations to pay a
security deposit, to secure insurance, to pay a pro rata share of utilities, to obtain
consent to sublease or assign, to waive rights to recovery against the landlord for loss or
damage on the premises, and to comply with the law. He also removed landlord
protections from the standard lease, including the right to cancel the lease in the event
of condemnation or casualty, remedies available upon tenant’s default, and—critical to
later events—a clause providing that the parties would not record the lease. Wollrab
also added several key, unusual provisions that added additional obligations to GHI:
requirements to keep the building “clean and professional”; to make improvements to
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the ceiling, floor, and stairway “satisfactory to the tenant”; to install air conditioning;
and to prohibit other tenants from using the premises for residential uses while
allowing Wollrab to use his offices for residential or office use. Finally, Wollrab drafted
the Lease to give himself a lifetime tenancy at a rate of $3.00 per square foot, or
approximately $3000 per year in rent, including insurance, maintenance, and taxes.
¶11 Bagi, as manager for GHI, signed the Lease. Wollrab never advised Bagi to
consult another attorney about the Lease’s terms, nor did he obtain Bagi’s informed,
written consent to the essential terms of the Lease or his role in the transaction.
¶12 In 2014, Wollrab and the Bagis had a falling out stemming from Wollrab’s use of
the property. After this dispute, Wollrab recorded the April 2011 Option and the Lease
against GHI,2 clouding title to the Foothills property. The parties then sued each other
in three different actions, which were eventually consolidated and later settled.
¶13 Attorney Regulation Counsel filed a disciplinary complaint, alleging that
Wollrab violated Rule 1.8(a) (providing that an attorney should not enter into a business
transaction with a client or acquire a possessory or pecuniary interest adverse to a client
unless the terms are fair and fully disclosed, the client is advised in writing and given
an opportunity to obtain independent legal counsel, and the client gives informed
consent to the attorney’s role in the transaction) when he entered into both the Option
and the Lease without following the Rule’s requirements. The complaint further
2 Wollrab had previously recorded both of these documents against Bagi and FMG in
2011, but re-recorded them against GHI in 2014 to ensure that a grantor/grantee index
search would reveal these recordings.
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alleged that Wollrab violated Rule 4.2 (providing that an attorney shall not
communicate with a represented party unless the attorney has the consent of the other
lawyer) when he communicated with Bagi about the Option without Edwards’s
consent.
¶14 After a three-day hearing, the Hearing Board3 concluded that Wollrab had
violated Rule 1.8(a) when he entered into both the Lease and Option without complying
with the Rule’s requirements.4 The Board also concluded that Wollrab violated
Rule 4.2’s prohibition against communicating with a represented party when he drafted
the Option for Bagi’s signature. For these violations, the Board imposed a sanction of
suspension from practice for one year and one day.
¶15 Wollrab filed a motion for post-judgment relief, which the Board denied.
Wollrab then petitioned this court to review the Board’s Opinion under C.R.C.P. 251.27.
II. Analysis
¶16 Wollrab argues that the Hearing Board misconstrued Rule 1.8 to apply to the
Lease, which was not a transaction with a client, but a transaction with a non-client
corporate entity (albeit one that was partially owned by a client). Wollrab also contends
that the Board erred in applying Rule 1.8 to the Option, as the overarching deal of
which the Option was a part was never consummated, and therefore the Option itself
3 The Hearing Board was composed of Hon. William R. Lucero, Presiding Disciplinary
Judge, and two attorneys, Sherry A. Caloia and Thomas J. Herd.
4 Hearing Board Member Caloia concurred that Wollrab violated Rule 1.8(a) with
regards to the lease. She believed, however, that Wollrab had violated only
Rule 1.8(a)(3), and not Rule 1.8(a)(1) or (2) when he entered into the Option.
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could not have been a “business transaction.” Next, Wollrab argues that Rule 4.2
should not apply to the Option, either because he was acting as a business investor in a
deal, and thus not “representing a client,” or because he had Edwards’s implied consent
to communicate with Bagi. We address these arguments in turn.
A. Standard of Review
¶17 “This court has exclusive jurisdiction over attorneys and the authority to
regulate, govern, and supervise the practice of law in Colorado to protect the public.”
In re Kleinsmith, 2017 CO 101, ¶ 11, 409 P.3d 305, 308 (internal quotation marks
omitted) (quoting Colo. Supreme Court Grievance Comm. v. Dist. Court, 850 P.2d 150,
152 (Colo. 1993)), cert. denied sub nom. Kleinsmith v. Colorado, 138 S. Ct. 1559 (2018).
In this role, we have the plenary power to “review any determination made in the
course of a disciplinary proceeding.” C.R.C.P. 251.1(d). We review de novo the
Hearing Board’s legal conclusions. C.R.C.P. 251.27(b).
¶18 We generally overturn factual findings of the Board only if they are clearly
erroneous. Kleinsmith, ¶ 11, 409 P.3d at 308 (citing C.R.C.P. 251.27(b)). However,
where a respondent fails to designate the hearing record, depriving us of a transcript of
the testimony, “review of the sufficiency of factual findings [is] unavailable under any
standard,” In re Roose, 69 P.3d 43, 46 (Colo. 2003), and “we consider the board’s factual
findings binding on review,” People v. Lutz, 897 P.2d 807, 808 (Colo. 1995) (citing
People v. Podoll, 855 P.2d 1389, 1390 n.1 (Colo. 1993)). Although Wollrab noted in his
notice of appeal that “a transcript of the Hearing Board action is necessary,” he failed to
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designate the record. Without the transcript of the three-day hearing, we treat the
Board’s factual findings as binding in our review of this case.
B. Rule 1.8(a)
¶19 The Colorado Rules of Professional Conduct include general prohibitions on
conflicts between a lawyer’s own personal interests and those of his current or former
clients. See Colo. RPC 1.7, 1.9. They also include, in Rule 1.8, eleven circumstances in
which the risk of conflict is so significant that it warrants setting out in detail the nature
of the potential conflict and the steps that a lawyer must take to avoid that conflict. See
Colo. RPC 1.8. As relevant here, Rule 1.8(a) provides that a lawyer who seeks to “enter
into a business transaction with a client or knowingly acquire an ownership,
possessory, security, or other pecuniary interest adverse to a client” must comply with
three prophylactic provisions to ensure that the lawyer is not taking advantage of the
client. Colo. RPC 1.8(a). First, the terms of the transaction or agreement must be “fair
and reasonable to the client” and “fully disclosed and transmitted in writing in a
manner that can be reasonably understood by the client.” Colo. RPC 1.8(a)(1). Second,
the client must be “advised in writing of the desirability of seeking” independent legal
advice and must be “given a reasonable opportunity” to do so. Colo. RPC 1.8(a)(2).
And, finally, the client must give “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.” Colo. RPC 1.8(a)(3).
With these requirements, Rule 1.8(a) seeks to “prevent an attorney, who likely benefits
from a considerable advantage when dealing with a client, from exploiting the
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attorney–client relationship, given that the client should be free to repose a great deal of
trust and confidence in the attorney.” Calvert v. Mayberry, 2016 COA 60, ¶ 28, ___ P.3d
___ (quoting Rafel Law Grp. v. Defoor, 308 P.3d 767, 774 (Wash. Ct. App. 2013)).
1. The Lease
¶20 Wollrab argues that Rule 1.8(a) applies exclusively to transactions between an
attorney and his client and that the Board therefore erred in applying it here. We
disagree.
¶21 Although Bagi (as GHI’s manager) signed the Lease, it was formally a transaction
between Wollrab and GHI and not between Wollrab and Bagi. Wollrab is correct that
GHI itself was not his client at the time of the Lease. The Lease thus was not a
“business transaction with a client.” But Rule 1.8(a) does not stop at putting guardrails
around lawyers transacting business directly with their clients. It also applies its
prophylactic requirements to situations in which an attorney “knowingly acquire[s] [a]
. . . possessory . . . interest adverse to a client.” Colo. RPC 1.8(a). The relevant question
here is whether, in negotiating the Lease, Wollrab (1) knowingly acquired a
(2) possessory interest adverse to a client. We agree with the Hearing Board that he did.
¶22 The Board found that Wollrab was aware that the Bagis “owned a substantial
interest in GHI” and “knew that he was acquiring a possessory interest adverse to both
GHI and the Bagis.” Wollrab argues that the Board incorrectly presumed that Bagi and
GHI were the same. We disagree. The Bagis partially owned GHI and Laszlo Bagi
managed the company. The edited Lease omitted standard landlord protections and
added provisions that were unusually protective of Wollrab’s rights as a tenant. Any
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negative impact on GHI from this Lease would necessarily impose negative
consequences on the company’s owners and manager.
¶23 The Hearing Board properly determined that Rule 1.8(a) applied to the Lease
because the Lease gave Wollrab a possessory interest that was adverse to his clients.
Because Wollrab does not contest the Board’s determination that he failed to properly
follow any of the three prophylactic requirements, we agree with the Board’s conclusion
that he violated Rule 1.8(a) with regards to the Lease.
2. The Option
¶24 We next turn to whether Wollrab violated Rule 1.8 when he entered into the
Option with Bagi. As an initial matter, we must determine whether Wollrab and Bagi
entered into a “business transaction” that would trigger Rule 1.8(a)’s prophylactic
requirements. Colo. RPC 1.8(a). While the Rule does not itself define business
transaction, we have previously said a “business transaction” is an “action that affects
the actor’s financial or economic interests, including the making of a contract,” Allen v.
Steele, 252 P.3d 476, 484 (Colo. 2011) (quoting Black’s Law Dictionary, 227 (9th ed.
2009)). That definition was used in a different context in Allen, but we hold that it is
appropriate for Rule 1.8 purposes as well. See LK Operating, LLC v. Collection Grp.,
331 P.3d 1147, 1159 (Wash. 2014) (adopting the same definition of “business
transaction” under Washington’s former Rule 1.8).
¶25 In Wollrab’s view, the Hearing Board erred in looking to the Option as a
“business transaction” because it was only part of a larger deal to purchase the Foothills
property. And since the larger deal ultimately failed, he argues, Rule 1.8(a) cannot
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apply, as it does not apply to a proposed or failed transaction. We express no view here
as to whether Rule 1.8(a) can apply to a proposed or failed business transaction because
the Option itself was a business transaction, regardless of the failure of the larger deal.
¶26 When the larger Foothills deal fell apart, the Option remained as a consummated
contract that affected Wollrab and Bagi’s financial and economic interests. In exchange
for $50,000—which he needed immediately—Bagi gave Wollrab valuable consideration:
a ten-year opportunity to buy a 50% stake in a potentially much more valuable
endeavor. Although the Option’s condition subsequent never came to fruition, this
does not change the fact that at the time the Option was entered into, it was a binding,
complete document that affected both parties’ financial and economic interests.
Certainly, the parties’ extensive litigation around the Option and the fact that they
entered into a monetary settlement in part because of the Option demonstrates that they
believed the Option affected their financial interests. Entering into the Option was thus
sufficient to trigger Wollrab’s obligations under Rule 1.8(a).
¶27 To what extent, then, did Wollrab comply with those obligations in the context of
the Option? Rule 1.8(a)(1) requires that the terms of the deal be reasonable, fair, and
explained to the client clearly; Rule 1.8(a)(2) requires that the client be notified of his
right to consult with an independent attorney; and Rule 1.8(a)(3) requires that the client
give informed consent in writing. These basic requirements are modified in an
important way by Comment 4 to Rule 1.8(a):
If the client is independently represented in the transaction,
paragraph (a)(2) of this Rule is inapplicable, and the paragraph (a)(1)
requirement for full disclosure is satisfied either by a written disclosure by
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the lawyer involved in the transaction or by the client’s independent
counsel. The fact that the client was independently represented in the
transaction is relevant in determining whether the agreement was fair and
reasonable to the client as paragraph (a)(1) further requires.
Colo. RPC 1.8 cmt. 4.
¶28 At the time Wollrab and Bagi entered into the Option, the Bagis were
represented by Edwards, at Wollrab’s urging. And as we will discuss further below,
Edwards implicitly consented to Wollrab and Bagi’s discussion about and signing of the
Option. Thus, Bagi was represented for the purposes of the Option agreement,
rendering Rule 1.8(a)(2) inapplicable. Moreover, the terms of the Option—which
generally hewed to those discussed earlier that day between Wollrab, Bagi, and
Edwards—were fully disclosed and transmitted in writing in a manner that could be
understood by Bagi. The fact that the terms mirrored those discussed with Edwards
earlier in the day also weighs in favor of the conclusion that they were fair and
reasonable. See Colo. RPC 1.8 cmt. 4. We thus conclude that Wollrab did not violate
either Rule 1.8(a)(1) or (2) with regard to the Option, and reverse the Hearing Board’s
decision as to those violations.
¶29 The Board made no finding, however, that Wollrab ever obtained Bagi’s
informed, written consent to the essential terms of the transaction or his role in it. And
Comment 4 to Rule 1.8, which relieves a lawyer from his obligations under
Rule 1.8(a)(1) and (2) when the client is represented by another attorney in the
transaction, does not contain any suggestion that the lawyer is excused in that context
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from complying with the requirements of Rule 1.8(a)(3). Thus, we affirm the conclusion
that Wollrab violated Rule 1.8(a)(3) as to the Option.
C. Rule 4.2
¶30 Wollrab next argues that the Hearing Board erred in concluding that he violated
Rule 4.2 when he communicated with Bagi about the Option—including drafting a
binding document for Bagi’s signature—outside of Edwards’s presence. He makes two
arguments here: (1) Rule 4.2 by its plain language does not apply to an attorney who is
acting as a participant or an investor in a business transaction; and (2) he did not violate
Rule 4.2, even if it did apply, because he had the implied consent of Bagi’s attorney,
Edwards. Because we agree on the latter issue, we have no need to reach the former.
¶31 We begin again with the text of the Rule:
In representing a client, a lawyer shall not communicate about the subject
of the representation with a person the lawyer knows to be represented by
another lawyer in the matter, unless the lawyer has the consent of the
other lawyer or is authorized to do so by law or a court order.
Colo. RPC 4.2 (emphasis added). An opposing lawyer may consent or acquiesce to
direct discussions with his client. Restatement (Third) of the Law Governing Lawyers
§ 99 cmt. j (Am. Law Inst. 2000). Such “consent may be implied rather than express,
such as where such direct contact occurs routinely as a matter of custom, unless the
opposing lawyer affirmatively protests.” Id.
¶32 The Board found that Edwards had “implicitly consented to . . . ongoing business
discussions” between Wollrab and Bagi. Did that consent extend to Wollrab’s drafting
of the Option for Bagi’s signature without Edwards’s knowledge or review? The Board
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concluded that the consent did not encompass Wollrab “presenting legal documents for
Mr. Bagi’s signature in Edwards’[s] absence.” We disagree, and believe the preparation
and signing of the Option was within the scope of Edwards’s implied consent.
¶33 As an initial matter, we must determine the correct standard of review for
determining the extent or scope of implied consent. As discussed above, the Board’s
factual findings are binding on this court. See Lutz, 897 P.2d at 808. Thus, we can only
question the Board’s determination that Edwards’s consent did not extend to the
drafting and signing of legal documents if the inquiry into the scope of implied consent
under Rule 4.2 is a legal one subject to de novo review.
¶34 We have not before addressed whether the scope of implied consent in this
context is legal or factual. The one context in which we have previously considered this
question is in evaluating whether a police search was reasonable under the Fourth
Amendment based on whether it was within the scope of consent given by the
defendant who was searched. See People v. Arapu, 2012 CO 42, ¶ 17, 283 P.3d 680, 684;
People v. Minor, 222 P.3d 952, 955 (Colo. 2010). In that context, we have “delineate[d]
between a clear error review of the facts and circumstances surrounding the charge and
a de novo review of questions of law, including the scope of consent provided.” Minor,
222 P.3d at 955 (emphasis added) (citing Florida v. Jimeno, 500 U.S. 248, 251 (1991)).
Under the Fourth Amendment, we concluded that “[r]eview of a trial court’s order on
the scope of a suspect’s consent to search is a mixed question of fact and law.” Arapu,
¶ 17, 283 P.3d at 684 (citing Minor, 222 P.3d at 955).
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¶35 Tempting as it would be to simply extend the rule from Minor and Arapu to our
current situation, we do not believe it is appropriate to do so. We rested those decisions
on the Supreme Court’s holding in Florida v. Jimeno that “[t]he standard for measuring
the scope of a suspect’s consent under the Fourth Amendment is that of ‘objective’
reasonableness—what would the typical reasonable person have understood by the
exchange between the officer and the suspect?” 500 U.S. at 250–51 (citations omitted).
In applying Jimeno in our decision in Minor, we did not examine whether the nature of
the scope-of-consent inquiry is inherently legal. See 222 P.3d at 955. Instead, we were
persuaded by the fact that Jimeno prescribes a legal test for the scope of consent in a
Fourth Amendment inquiry. Id. Thus, we still must perform our own analysis as to
whether the scope of implied consent is factual or legal in the context of Rule 4.2.
¶36 In Miller v. Fenton, the U.S. Supreme Court adopted a methodology for
distinguishing questions of fact from questions of law. 474 U.S. 104, 113–17 (1985). In
that case, the Court was faced with the question of whether voluntariness of a
confession was an issue of fact or law for purposes of determining whether a state
court’s conclusions should be presumed to be correct in a federal habeas review. Id.
at 113. The Court laid out considerations for how to determine whether an issue is legal
or factual when “the issue falls somewhere between a pristine legal standard and a
simple historical fact.” Id. at 114. We find the Court’s approach instructive for our
purposes here.
¶37 Making this determination requires us to examine both “the nature of the inquiry
itself” and practical considerations as to whether “one judicial actor is better positioned
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than another to decide the issue in question.” Id. at 114–15. In looking at the nature of
the inquiry, we consider whether the issue is simply one of discerning historical facts or
whether it is a hybrid inquiry that also requires ascribing legal significance to those
historical facts. See id. at 116. The practical considerations to examine include whether
the question requires assessing demeanor or credibility, and is thus better suited to a
trial court, or whether it is an inquiry in which the “relevant legal principle can be given
meaning only through its application to the particular circumstances of a case,” id.
at 114, and is thus appropriate for resolution by an appellate court.
¶38 Taking this approach here, we conclude that the inquiry into the scope of implied
consent under Rule 4.2 is a mixed question of fact and law. An important aspect of the
inquiry, of course, is the discernment of historical fact: observations about the parties’
interactions such as what they did or said in the particular situation. Those questions
are factual in nature. But a determination that there was implied consent—and the
scope of that consent—necessarily requires ascribing legal significance to those facts:
namely, whether they give rise to an inference that a party has implicitly consented to a
course of action. As such, we conclude that the inquiry into the scope of implied
consent is a mixed question of fact and law. Thus, while we defer to the Board’s
findings as to the underlying facts, we review the Board’s conclusions about the legal
consequences of those facts de novo.
¶39 The Hearing Board correctly concluded that Edwards had implicitly consented to
Wollrab and Bagi’s continued communications about the Foothills transaction. The
Board was incorrect, however, in limiting the scope of that consent to exclude the
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drafting and signing of the Option. Wollrab and Bagi had known each other for many
years, and spoke “all the time” about a variety of matters. They had significant one-on-
one contact about the Foothills deal before Bagi had retained Edwards, and Wollrab
was the person who recommended that Bagi retain Edwards for that deal. Edwards
testified that “it was clear that there was considerable discussion” between the two men
about the deal, and he “did not prohibit those sorts of discussions.” Indeed, we find it
significant that Edwards never limited Wollrab and Bagi’s communications, despite
knowing that they frequently spoke and worked together. Edwards also knew that
Wollrab would be providing Bagi with the money for the Foothills transaction. Finally,
the fact that Edwards never responded or objected to Wollrab’s actions when Wollrab
emailed and faxed the signed Option agreement to him is further evidence that his
actions fell within Edwards’s implied consent. See People v. Quintana, 665 P.2d 605,
610 (Colo. 1983) (citing United States v. Hale, 422 U.S. 171, 176 (1975)) (“In some
situations, however, where the normal reaction is to speak out in response to a
statement, silence may have some probative value.”).
¶40 Since we conclude that Edwards had implicitly consented to Wollrab’s
interactions with Bagi, including the drafting and signing of the Option, we reverse the
Board’s conclusion that Wollrab violated Rule 4.2.
III. Conclusion
¶41 We affirm the Hearing Board’s determination that Wollrab violated Rule 1.8(a) as
to the Lease. We also affirm the determination that Wollrab violated Rule 1.8(a)(3)
when he entered into the Option with Bagi without obtaining his informed, written
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consent to the terms of the deal and Wollrab’s role in it. Because we conclude, however,
that Wollrab had Edwards’s implied consent for the purposes of the Option, we reverse
the Board’s determination that he violated Rule 1.8(a)(1) and (2) and Rule 4.2 in the
Option transaction. We remand this case to the Hearing Board for determination of the
appropriate sanction in light of these conclusions.
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