In re Barry J. Nace ( 2014 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 13-BG-1439
IN RE BARRY J. NACE, RESPONDENT.
A Member of the Bar of the District of Columbia
Court of Appeals
(Bar Registration No. 130724)
On Bar Counsel’s Statement Regarding Reciprocal Discipline
(BDN-324-13)
(Argued June 3, 2014 Decided September 4, 2014)
Christopher T. Nace for respondent.
William R. Ross, Assistant Bar Counsel, with whom Wallace E. Shipp, Jr.,
Bar Counsel, was on the Statement Regarding Reciprocal Discipline, for the Office
of Bar Counsel.
Before THOMPSON and MCLEESE, Associate Judges, and REID, Senior Judge.
PER CURIAM: Respondent Barry Nace has been a member of the Bar of this
court since 1972. Mr. Nace is also admitted to practice in Maryland, Pennsylvania,
and West Virginia. In March 2013, the Supreme Court of Appeals of West
Virginia found that Mr. Nace had committed numerous disciplinary violations and
suspended Mr. Nace for 120 days. Lawyer Disciplinary Bd. v. Nace, 753 S.E.2d
618, 621-22 (W. Va.) (per curiam), cert. denied, 134 S. Ct. 474 (2013). The
2
District of Columbia Office of Bar Counsel recommends that this court impose
reciprocal discipline upon Mr. Nace. We adopt that recommendation.
I.
Except as noted, the following facts are undisputed. In February 2004,
Barbara Miller retained a West Virginia attorney named D. Michael Burke to
represent her, in her capacity as administrator of her husband’s estate, in a potential
medical-malpractice claim to be filed in West Virginia. Mr. Burke asked Mr. Nace
to review the case and determine whether to pursue the claim. Mr. Burke and Mr.
Nace had worked together on numerous medical-malpractice cases over the
preceding twenty years.
In September 2004, Ms. Miller filed a petition for bankruptcy in West
Virginia. Ms. Miller retained separate legal counsel to handle the bankruptcy
matter. The bankruptcy court appointed Robert Trumble as the interim trustee of
the bankruptcy estate. The petition was filed as a “no asset” case and listed the
malpractice action, describing the value of the action as unknown and claiming that
the action was exempt. Mr. Trumble subsequently wrote to Mr. Burke, attempting
to determine the value of the malpractice action. Mr. Burke replied that the action
3
was being evaluated by Mr. Nace and that a valuation of the case could not be
completed until after a medical review. Mr. Trumble subsequently sent separate
letters to Mr. Burke and Mr. Nace containing the following: (1) an application to
employ Mr. Burke and Mr. Nace as special counsel for the trustee, for the purpose
of pursuing litigation on behalf of Ms. Miller; (2) a proposed order authorizing Mr.
Trumble to employ special counsel; and (3) an affidavit indicating willingness to
accept employment as special counsel.1 The letter asked Mr. Burke and Mr. Nace
to review the enclosed documents and said that, upon receipt of the signed
affidavit, Mr. Trumble would submit the documents to the bankruptcy court for
approval.
In February 2005, Mr. Nace signed and returned the affidavit, stating that he
was “willing to accept employment by [Mr. Trumble] on the basis set forth in the
Application to Employ [Special Counsel] . . . .” After receiving affidavits from
both Mr. Burke and Mr. Nace, Mr. Trumble filed the application, which the
bankruptcy court approved by entering an order in March 2005. Mr. Nace claims
1
Under the Bankruptcy Code, a trustee may request approval from the
bankruptcy court to employ special counsel. 11 U.S.C. § 327 (a) (2012). The role
of special counsel is “to represent or assist the trustee in carrying out the trustee’s
[bankruptcy] duties . . . .” Id.
4
that the order was sent to an incorrect address and that he did not receive notice of
the order.
In June 2005, Ms. Miller filed a medical-malpractice complaint in the West
Virginia state courts. Soon thereafter, Mr. Burke notified Ms. Miller that he had to
withdraw as counsel from the medical-malpractice case due to a conflict of
interest, but that Mr. Nace would continue to represent Ms. Miller. In September
2006, Ms. Miller reached a partial settlement for $75,000 with one of the medical-
malpractice defendants. Later that month, Mr. Nace wrote to Ms. Miller:
“[P]resumably you have a bankruptcy attorney and if so that person should call me
so I know whether or not a check can be written to you.” Without informing Mr.
Trumble or the bankruptcy court, Mr. Nace subsequently distributed the proceeds
of the settlement to Ms. Miller. In October 2006, Ms. Miller -- represented by Mr.
Nace -- proceeded to trial against the remaining defendants, obtaining a judgment
for $500,000.
In July 2007, Mr. Trumble sent a letter to Mr. Burke asking about the status
of the medical-malpractice case. Although Mr. Burke’s records indicate that the
letter was forwarded to Mr. Nace’s address, Mr. Nace claims that he did not
receive a copy of the letter. In March 2008, again without informing Mr. Trumble
5
or the bankruptcy court, Mr. Nace sent Ms. Miller a check for over $200,000, to
reflect her share of the proceeds from the medical-malpractice judgment.
In October 2008, Mr. Trumble sent letters to Mr. Burke and Mr. Nace saying
that he had discovered that the medical-malpractice case had been resolved but had
received neither notice of that resolution nor the bankruptcy estate’s portion of the
proceeds from the case. Mr. Trumble did not send the letter to Mr. Nace’s correct
address. In November 2008, Mr. Trumble sent a second letter to Mr. Nace at the
correct address, requesting settlement documents mentioned in the October 2008
letter. In his response, Mr. Nace said that he had not received the October 2008
letter, “that there was not any settlement . . . [because] the case was tried to jury
verdict,” and that he was unsure why Mr. Trumble expected that Mr. Nace would
contact him, because “there was no settlement.” Mr. Nace indicated in a
subsequent letter that he had not heard from Mr. Trumble since signing the
affidavit in February 2005 and had not received the application to employ special
counsel or the order authorizing appointment of special counsel until January 2009.
Mr. Trumble filed a disciplinary complaint against Mr. Nace in West
Virginia, based on Mr. Nace’s failure to distribute proceeds from the medical-
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malpractice judgment to the bankruptcy estate.2 After receiving notice of the
complaint from the Office of Disciplinary Counsel (“ODC”), Mr. Nace responded
by letter, saying that he had not received a copy of the application to employ
special counsel in January 2005 when he received the affidavit and that he
“subsequently learned [the application] existed.”
The ODC issued a subpoena ordering Mr. Nace to appear at a hearing before
an Investigative Panel of the Lawyer’s Disciplinary Board (“LDB”) and to produce
his “complete client file relating to [his] representation of [Mr.] Trumble.” At the
hearing, Mr. Nace testified that he had not seen the application to employ special
counsel or the affidavit sent by Mr. Trumble until late 2009, and that -- other than
the affidavit he had signed -- he did not know about the bankruptcy proceeding
involving Ms. Miller when he distributed the settlement proceeds to Ms. Miller.
Pursuant to the subpoena, Mr. Nace turned over ninety pages of documents from
four boxes of client files. Mr. Nace did not turn over his September 2006 letter
asking Ms. Miller who her bankruptcy attorney was.
2
According to Mr. Nace, the bankruptcy estate would at most be entitled to
approximately $12,700 of the proceeds from the medical-malpractice judgment.
7
In October 2010, Mr. Trumble filed a complaint against Mr. Burke and Mr.
Nace in the Bankruptcy Court for the Northern District of West Virginia, alleging
breach of contract and legal negligence in connection with the failure to turn over
medical-malpractice proceeds to the bankruptcy estate.3 In re Miller, Nos. 04-
3365, etc., 2013 WL 3808133, at *1-2 (Bankr. N.D. W. Va. July 21, 2013).
In October 2011, Mr. Nace appeared at a second hearing, before the West
Virginia Hearing Panel Subcommittee (“HPS”). Mr. Nace testified that he had
signed the affidavit because “Mr. Burke asked [him] to sign,” but that he then did
not hear from Mr. Trumble until late 2008. Mr. Nace testified that although he did
not recall seeing the application to employ special counsel or the proposed order,
he had in fact received those documents. The HPS questioned Mr. Nace regarding
his failure to produce the September 2006 letter to Ms. Miller -- discovered in Mr.
Burke’s files -- in response to the subpoena. Mr. Nace testified that he had “many,
many, many files” relating to Ms. Miller’s medical-malpractice case and that he
3
In the bankruptcy proceeding, Mr. Nace and Mr. Burke moved to vacate
the March 2005 bankruptcy-court order authorizing their employment as special
counsel, on the basis that the order was void for lack of subject-matter jurisdiction.
In re Miller, 2013 WL 3808133, at *2. They also moved for summary judgment,
alleging that the bankruptcy estate lacked any interest in the medical-malpractice
claim, because Mr. Trumble had failed to properly object to Ms. Miller’s claimed
exemptions. Id. at *4. The bankruptcy court denied both motions. Id. at *1. The
matter appears to remain pending against Mr. Nace.
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had only produced documents that he thought might be appropriate. In an affidavit
executed two days after the HPS hearing, Mr. Nace explained that he did not have
a complete client file for Mr. Trumble, because he had never represented Mr.
Trumble. Mr. Nace added that the ODC had not requested his entire file on the
medical-malpractice case and that the questions and subpoena requests from the
LDB “were clearly inartful.”
The HPS found by clear and convincing evidence that Mr. Nace had violated
West Virginia Rules of Professional Conduct 1.1 (competence), 1.3 (diligence),
1.4 (a) and (b) (communication with client), 1.15 (b) (safekeeping property),
8.4 (c) (dishonesty), and 8.4 (d) (conduct prejudicial to administration of justice).
The HPS recommended that Mr. Nace be suspended from practicing law in West
Virginia for 120 days without any requirement for reinstatement, that Mr. Nace
provide fifty hours of pro bono representation, and that Mr. Nace comply with the
disposition of the pending bankruptcy action against him.
Mr. Nace challenged the proposed discipline in the Supreme Court of
Appeals of West Virginia, arguing among other things that Mr. Trumble was not
his client and that the West Virginia courts lacked jurisdiction over the disciplinary
9
case, because Mr. Nace’s responsibilities to Mr. Trumble were controlled by the
bankruptcy court.
The West Virginia Supreme Court disagreed with Mr. Nace’s arguments,
found that Mr. Nace had committed disciplinary infractions, and adopted the
sanction recommended by the HPS. The West Virginia Supreme Court determined
that it had jurisdiction, because the West Virginia Rules of Professional Conduct
governed Mr. Nace’s duties to Mr. Trumble, and the question whether Mr. Nace
had violated those Rules was subject to review by the West Virginia Supreme
Court. On the merits, the West Virginia Supreme Court found that Mr. Nace and
Mr. Trumble had formed an attorney-client relationship and that Mr. Nace
therefore did have a duty to Mr. Trumble. The West Virginia Supreme Court
stated that “any reasonable attorney, especially one with more than 40 years of
experience, would have expected that an attorney-client relationship had formed.”
The West Virginia Supreme Court further found that undisputed facts
supported the HPS’s findings that Mr. Nace had violated the West Virginia Rules
of Professional Conduct. Specifically, the West Virginia Supreme Court found
that Mr. Nace did not make any attempt to communicate with Mr. Trumble
between early 2005 and late 2008. The West Virginia Supreme Court found that
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Mr. Nace was “dishonest” and “knowingly untruthful” in his statements to Mr.
Trumble regarding the proceeds from the settlement. The West Virginia Supreme
Court also found that Mr. Nace had “intentionally obfuscated” the LDB
investigation, “deliberately avoid[ed] producing” documents that he knew the LDB
was seeking, and falsely represented for over twenty-four months that he did not
have a copy of the application to employ special counsel and the proposed order.
With respect to the severity of the proposed sanction, the West Virginia
Supreme Court recognized that Mr. Nace had no history of disciplinary violations
and was esteemed among his peers. The West Virginia Supreme Court determined
that those mitigating factors were outweighed by aggravating factors -- namely,
Mr. Nace’s refusal to accept responsibility for his failure to properly represent Mr.
Trumble, Mr. Nace’s dishonesty, and Mr. Nace’s obfuscation of the disciplinary
investigation. The West Virginia Supreme Court therefore suspended Mr. Nace
from practicing law in West Virginia for 120 days.
II.
In January 2014, this court issued an order temporarily suspending Mr. Nace
from practicing law in the District of Columbia and directing Mr. Nace to show
11
cause why identical reciprocal discipline should not be imposed. See D.C. Bar R.
XI, § 11 (d). Under Rule XI, § 14 (g), an attorney who is subject to discipline in
another jurisdiction may file an affidavit in support of a request to have discipline
in this jurisdiction run concurrently with the discipline in the original jurisdiction.
The affidavit must be filed within ten days of an interim order of suspension. Id.
This court’s order temporarily suspending Mr. Nace issued on January 17, 2014.
Mr. Nace submitted the affidavit required by Rule XI on February 6, 2014. On
March 28, 2014, this court issued an order concluding that the affidavit was
untimely and that Mr. Nace was thus suspended from the practice of law in the
District of Columbia for a period of 120 days starting from February 6, 2014.
Although Mr. Nace and Bar Counsel dispute whether the affidavit was timely filed,
Mr. Nace’s 120-day suspension in this jurisdiction ended in June 2014. The
question whether Mr. Nace’s suspension should have been concurrent in this
jurisdiction is therefore moot.
We conclude otherwise with respect to Mr. Nace’s claim that he should not
have been subject to reciprocal discipline at all. See, e.g., In re Surrick, 338 F.3d
224, 229-30 (3d Cir. 2003) (attorney’s challenge to suspension in reciprocal-
discipline proceeding was not moot, even though suspension expired before court’s
consideration of matter, due to “continuing stigma resulting from [attorney’s]
12
suspension”). Similarly, disciplinary authorities generally consider a lawyer’s
prior disciplinary history, including the severity of the sanction imposed, in
determining future disciplinary sanctions, and thus the question whether the 120-
day suspension was an appropriate sanction could also have collateral
consequences. See Attorney Grievance Comm’n v. Post, 839 A.2d 718, 724-25
(Md. 2003) (in determining appropriate sanction, court considers “the attorney’s
prior grievance history – whether there were prior disciplinary proceedings, the
nature of the misconduct involved in those proceedings and the nature of any
sanctions imposed”). We therefore address Mr. Nace’s challenges to the
imposition of reciprocal discipline and to the length of his suspension.
III.
Mr. Nace opposes reciprocal discipline, arguing among other things that the
West Virginia Supreme Court should have held the disciplinary proceeding in
abeyance pending resolution of the bankruptcy litigation; that one of the members
of the Investigative Panel of the West Virginia LDB worked at the same law firm
as the bankruptcy trustee; that Mr. Nace was never in an attorney-client
relationship with the bankruptcy trustee; and that the West Virginia Supreme Court
erred in concluding that Mr. Nace acted dishonestly or otherwise committed
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disciplinary infractions. Bar Counsel argues that Mr. Nace has not shown good
cause why identical reciprocal discipline should not be imposed. We agree with
Bar Counsel.
A.
This court has “adopted a rigid standard for reciprocal bar discipline cases.”
In re Zdravkovich, 831 A.2d 964, 968 (D.C. 2003). “[W]e presumptively impose
identical reciprocal discipline, unless the attorney demonstrates by clear and
convincing evidence that the case falls within one of five specified exceptions
articulated in [D.C. Bar] Rule XI, § 11 (c).” Id. The exceptions are: (1) the
procedure elsewhere violated due process; (2) there was a clear infirmity of proof;
(3) the imposition of identical reciprocal discipline would result in a grave
injustice; (4) the misconduct elsewhere warrants substantially different discipline
in the District of Columbia; or (5) the misconduct elsewhere does not qualify as
misconduct in the District of Columbia. Rule XI, § 11 (c). The exceptions “should
be rare.” In re Chang, 83 A.3d 763, 766 (D.C. 2014) (per curiam) (internal
quotation marks omitted). This rigid standard reflects “the notion that another
jurisdiction has already afforded the attorney a full disciplinary proceeding” and
“the idea that there is merit in according deference . . . to the actions of another
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jurisdiction with respect to the attorneys over whom we share supervisory
authority.” In re Fuchs, 905 A.2d 160, 164 (D.C. 2006) (per curiam).
Furthermore, in reciprocal discipline cases we generally accept the ruling of the
original jurisdiction, pursuant to principles of collateral estoppel. In re Wilde, 68
A.3d 749, 761 n.18 (D.C. 2013). “Reciprocal discipline proceedings are not a
forum to reargue the foreign discipline.” In re Chang, 83 A.3d at 766 (internal
quotation marks and brackets omitted). We see no adequate basis in this case to
look behind the discipline imposed by the West Virginia Supreme Court.
B.
Mr. Nace contends that reciprocal discipline is inappropriate because the
West Virginia court “erred dramatically in [its] interpretation of the facts[.]” He
alleges among other things that his reliance on Mr. Burke in signing the affidavit
was an “honest error”; that the affidavit indicated only a “willingness” to be
employed as special counsel rather than an acceptance of employment; that he did
not thereafter receive notice that the order of appointment had been issued; that he
never received the January 2007 letter from the bankruptcy trustee; that he “simply
erred” in saying that “there was no settlement”; that he never “intentionally failed”
to give funds to Mr. Trumble; that any failure to provide documents to the West
15
Virginia disciplinary authorities was inadvertent; and that he promptly placed the
disputed amount into the court’s registry.
Mr. Nace makes a number of points that could appropriately be considered
by a fact-finder in the first instance, but our role in this reciprocal discipline matter
is narrowly circumscribed. We would be permitted to look behind the factual
findings of the West Virginia disciplinary authorities only if “[t]here was such
infirmity of proof . . . as to give rise to the clear conviction that the [c]ourt could
not, consistently with its duty, accept as final the conclusion on that subject . . . .”
D.C. Bar Rule XI, § 11 (c)(2); see also In re Sheridan, 798 A.2d 516, 518 (D.C.
2002) (“We defer to findings of fact made by other courts in reciprocal
proceedings.”). Under that highly deferential standard of review, we are not free to
disturb the West Virginia Supreme Court’s findings. Although a reasonable fact-
finder might have resolved some of the disputed factual issues in Mr. Nace’s favor,
the evidence permitted the West Virginia authorities to resolve those issues
adversely to Mr. Nace, including the findings that Mr. Nace’s inaccurate
statements and failures to produce pertinent information reflected dishonesty and
an intent to obfuscate the West Virginia disciplinary proceedings. Cf. Potomac
Elec. Power Co. v. District of Columbia Dep’t of Emp’t Servs., 77 A.3d 351, 354
(D.C. 2013) (“[W]here there is substantial evidence to support the [agency’s]
16
findings . . . the mere existence of substantial evidence contrary to that finding
does not allow this court to substitute its judgment for that of the [agency].”)
(internal quotation marks omitted).
C.
Mr. Nace contends that he committed no disciplinary infractions in
connection with his failure to distribute proceeds from the medical-malpractice
judgment to the bankruptcy estate, because he never formed an attorney-client
relationship with Mr. Trumble. More specifically, Mr. Nace first contends that
because he never received notice that the bankruptcy court had entered the order
authorizing his employment as special counsel for the bankruptcy estate, no
attorney-client relationship formed.
The West Virginia Supreme Court concluded that, as a matter of its law, an
attorney-client relationship was formed even if Mr. Nace was truthful in his claim
that he did not receive notice that the bankruptcy court had authorized Mr. Nace to
serve as special counsel. The West Virginia Supreme Court stated that an
attorney-client relationship arises once “a client has expressed a desire to employ
an attorney and there has been a corresponding consent on the part of the attorney
17
. . . .” Those requirements were met in this case, the West Virginia Supreme Court
concluded, because Mr. Trumble asked Mr. Nace to serve as special counsel and
Mr. Nace agreed. Finally, the West Virginia Supreme Court explained, the
formation of an attorney-client relationship was “conditioned on entry of the order
[appointing Mr. Nace as special counsel], not entry of the order and delivery of
notice to Mr. Nace.” Id. at 629.
Although we do not have local law squarely on point, we agree with the
reasoning of the West Virginia Supreme Court. Mr. Nace consented to serve as
special counsel and Mr. Trumble indicated that he planned to ask the bankruptcy
court to appoint Mr. Nace.4 We can assume, as the West Virginia Supreme Court
did, that Mr. Nace’s consent was conditioned on approval of the request that he be
appointed. But Mr. Nace’s consent was not conditioned on receipt of a notice that
the request had been granted, and widely accepted principles of law suggest that,
under the circumstances, the attorney-client relationship formed at the time of
appointment, even if Mr. Nace did not receive notice of his appointment. For
4
The application for appointment of special counsel incorrectly referred to
a personal-injury claim resulting from a vehicular accident, rather than a medical-
malpractice claim, but we see no reason why that that error would affect the
question whether an attorney-client relationship had formed.
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example, the Restatement (Third) of the Law Governing Lawyers § 14 (2000)
provides that:
A relationship of client and lawyer arises when: (1) a
person manifests to a lawyer the person’s intent that the
lawyer provide legal services for the person; and either
(a) the lawyer manifests to the person consent to do so; or
(b) the lawyer fails to manifest lack of consent to do so,
and the lawyer knows or reasonably should know that the
person reasonably relies on the lawyer to provide the
services . . . .
Accord, e.g., DG Cogen Partners, LLC v. Lane Powell PC, 917 F. Supp. 2d 1123,
1137 (D. Or. 2013) (under Oregon law, attorney-client relationship arises where
“the lawyer understood or should have understood that the relationship existed”)
(internal quotation marks omitted); Attorney Grievance Comm’n v. Kreamer, 946
A.2d 500, 521 (Md. 2008) (attorney-client “relationship may arise by implication
from a client’s reasonable expectation of legal representation and the attorney’s
failure to dispel those expectations”) (internal quotation marks omitted); cf. George
v. Caton, 600 P.2d 822, 824-28 (N.M. Ct. App. 1979) (attorneys’ statements to
purported clients that they would “handle” case created genuine issue of material
fact as to whether attorney-client relationship existed, even though purported
clients had contacted attorneys only once six months after first visit and not
thereafter for two-and-a-half years, and there was no written agreement).
19
We give substantial weight to the approach taken by the Restatement.
[T]he Restatement . . . is written by the American Law
Institute (ALI), an organization compris[ing]
. . . especially distinguished judges, attorneys, and
scholars. The Restatement may be regarded both as the
product of expert opinion and as the expression of the
law by the legal profession. Although we are not
required to follow the Restatement, we should generally
do so where we are not bound by the previous decisions
of this court or by legislative enactment, . . . for by so
doing uniformity of decision will be more nearly
effected.
District of Columbia v. Tulin, 994 A.2d 788, 797 n.10 (D.C. 2010) (citations,
internal quotation marks, and brackets omitted). Applying the Restatement’s
approach in the present case, we conclude that an attorney-client relationship arose
by the time of the order granting Mr. Nace’s appointment, because Mr. Trumble
had asked Mr. Nace to provide legal services, Mr. Nace had consented to provide
legal services, and Mr. Nace knew or should have known that Mr. Trumble would
be relying on him to provide those services. Moreover, Mr. Trumble in fact did
rely on Mr. Nace to serve as counsel, as is reflected by the letters Mr. Trumble
subsequently sent. Under our law, the understanding of the client is an “important
20
consideration in determining whether [an] attorney-client relationship existed[.]”
In re Bernstein, 707 A.2d 371, 375 (D.C. 1998) (internal quotation marks omitted).
In sum, we agree with the West Virginia Supreme Court that it was
unreasonable for Mr. Nace to act as though the plan to appoint him had failed,
because proceeding in that fashion created a risk that he was failing to fulfill his
professional responsibilities to a client. It was even more unreasonable for Mr.
Nace, without taking any steps to inform the bankruptcy court or his client and
without checking to see whether he had been appointed special counsel, to
distribute proceeds from the medical-malpractice judgment that potentially were
part of the bankruptcy estate.
Second, Mr. Nace argues that Mr. Trumble was not his client but rather was
his supervisory attorney. It is not clear whether Mr. Nace is correct on this point.
The statute authorizing the appointment of special counsel indicates that counsel
can be appointed either to “represent” the trustee or to “assist” the trustee. 11
U.S.C. § 327 (a). The application to employ special counsel refers to Mr. Nace as
“Trustee’s legal counsel” and as “special counsel for the Trustee . . . .” Courts
appear to have reached various conclusions as to whom a bankruptcy special
counsel represents. Compare In re Cont’l Coin Corp., Nos. CV 08-0093, etc.,
21
2009 WL 2589635, at *8 (C.D. Cal. Aug. 21, 2009) (bankruptcy trustee’s attorney
has attorney-client relationship only with trustee), with In re Prairie Cent. Ry., 209
B.R. 232, 235 (Bankr. N.D. Ill. 1997) (“When an attorney is retained a[t] the
trustee’s request, the attorney’s client is actually the estate, not the trustee.”). In
any event, a conclusion that Mr. Trumble was Mr. Nace’s supervisor and that the
bankruptcy estate was Mr. Nace’s client would not materially advance Mr. Nace’s
case. Simply changing the identity of Mr. Nace’s client would not undermine the
West Virginia Supreme Court’s conclusions that Mr. Nace failed to fulfill his
professional responsibilities, by failing to act with competence and diligence with
respect to the bankruptcy estate, by failing to safeguard property in which the
bankruptcy estate had an interest, and by acting dishonestly in his dealings with
Mr. Trumble and the West Virginia disciplinary authorities.
It may be true, as Mr. Nace contends, that Mr. Trumble failed to carry out
his responsibilities as a supervising attorney, both under federal law and under
West Virginia’s Rules of Professional Conduct. But any failings by Mr. Trumble
would not constitute a defense to the findings in this case that Mr. Nace committed
disciplinary infractions under either West Virginia’s rules or the rules of this court.
W. Va. R. Prof. Conduct 5.2 (subordinate lawyer is bound by Rules of Professional
Conduct, but does not violate Rules if subordinate lawyer relies on supervisory
22
lawyer’s reasonable resolution of arguable question of professional duty); D.C. R.
Prof. Conduct 5.2 (same).
D.
Mr. Nace argues that it was premature for the West Virginia Supreme Court
to decide the disciplinary matter while relevant litigation was pending in federal
bankruptcy court. Mr. Nace further asserts that the bankruptcy litigation might
resolve issues -- such as whether the bankruptcy court had jurisdiction over the
proceeds of the medical-malpractice judgment and whether Mr. Trumble was
negligent in performing his duties as trustee -- in a way that would absolve Mr.
Nace of committing any disciplinary infractions. We do not agree that the West
Virginia Supreme Court was required to await resolution of the bankruptcy
litigation.
The question whether Mr. Nace committed the disciplinary infractions -- by
failing to act competently and diligently, by failing to safeguard property in which
his client had an interest, and by acting dishonestly -- turns almost entirely on
questions of West Virginia law (and for current purposes, also on the law of this
jurisdiction), rather than on questions of federal bankruptcy law. In theory, a
23
conclusion that the bankruptcy estate lacked even an arguable claim to any
proceeds of the medical-malpractice action might draw into question the
determination of the West Virginia Supreme Court that Mr. Nace failed to
safeguard property in which the bankruptcy estate had an interest. D.C. R. Prof.
Conduct 1.15 (b); cf. In re Edwards, 808 A.2d 476, 483 (D.C. 2002) (substantial
evidence did not support finding that attorney misappropriated client funds by
drawing check from escrow account, where “there [was] no evidence that [client] .
. . had any interest in the money remaining in the escrow account at the time that
[attorney] drew the check”). Such a conclusion seems unlikely, however, given the
ruling of the bankruptcy judge denying Mr. Nace’s motion for summary judgment.
In re Miller, 2013 WL 3808133, at *4-6 (bankruptcy trustee’s failure to object to
debtor’s claimed exemption of medical-malpractice action did not divest
bankruptcy estate of any interest in action).
More generally, the federal courts have broadly upheld the authority of state
courts to impose discipline upon attorneys under state professional-conduct rules
based on conduct that occurred in front of federal tribunals. See, e.g., Gadda v.
Ashcroft, 377 F.3d 934, 943-46 (9th Cir. 2004) (state supreme court had
jurisdiction to impose discipline upon attorney for performing incompetently in
federal immigration proceedings, where attorney failed to demonstrate that federal
24
regulation of attorneys in immigration matters preempted state regulation of
attorney’s conduct); Kroll v. Finnerty, 242 F.3d 1359, 1364 (Fed. Cir. 2001)
(federal statute authorizing Patent and Trademark Office to regulate practice of
patent law before Office did not preempt “the authority of states to punish
attorneys who violate ethical duties under state law”); see generally Sperry v.
Florida, 373 U.S. 379, 402 (1963) (“[T]he State maintains control over the practice
of law within its borders except to the limited extent necessary for the
accomplishment of the federal objectives.”). Cf. In re Bridges, 805 A.2d 233, 234-
35 (D.C. 2002) (rejecting argument that Maryland Court of Appeals had no
jurisdiction over attorney’s federal practice; “The court disciplined [attorney]
solely because he did not cooperate with a state investigation into whether his legal
practice was authorized. Nothing in Sperry limits the state’s power to either
conduct such an investigation or to sanction an attorney for obstructing it.”).
Although Mr. Nace also argues that the West Virginia Supreme Court ought to
have stayed disciplinary proceedings pending resolution of the bankruptcy
litigation, he cites no authority in support of that argument. Essentially for the
reasons already stated, we conclude that the West Virginia Supreme Court was free
to resolve the disciplinary matter without awaiting the resolution of the bankruptcy
litigation (which appears to still be pending before the bankruptcy court).
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E.
Mr. Nace contends that the West Virginia proceedings violated his due-
process rights, because the chairperson of the Investigative Panel of the LDB was a
partner at the same law firm as Mr. Trumble. The function of the Investigative
Panel, which has seven members, is “to determine whether probable cause exists to
formally charge a lawyer with a violation of the [West Virginia] Rules of
Professional Conduct.” W. Va. Lawyer Disciplinary Procedure R. 2 and 2.1.
Although we do not know the extent of the Investigative Panel chairperson’s
involvement in the West Virginia disciplinary proceedings, Mr. Nace argues that
he has been trying to obtain that information and that the West Virginia
disciplinary authorities have been unwilling to provide it. Assuming for current
purposes that the Investigative Panel chairperson did participate, we note that there
is no suggestion that the Investigative Panel did anything other than determine
whether to file formal charges. Furthermore, after formal charges are filed, a three-
member hearing panel subcommittee conducts hearings and recommends sanctions
to the West Virginia Supreme Court. W. Va. Lawyer Disciplinary Procedure R. 3
and 3.3. The West Virginia Supreme Court then determines whether an infraction
occurred and if so what discipline to impose, “giv[ing] respectful consideration to
the Hearing Panel Subcommittee’s recommendations while ultimately exercising
26
its own independent judgment.” Lawyer Disciplinary Bd. v. Kupec, 505 S.E.2d
619, 626 (W. Va. 1998) (internal quotation marks and brackets omitted). Given
the limited function served by the Investigative Panel, and the subsequent
independent determinations by the West Virginia disciplinary authorities, we
conclude that there was no due-process violation warranting a denial of reciprocal
discipline. Cf., e.g., Standing Comm. on Discipline v. Yagman, 55 F.3d 1430,
1435-36 (9th Cir. 1995) (participation of standing committee that allegedly
included members with conflict of interest did not deny attorney due process in
disciplinary proceeding, where committee conducted investigations and issued
formal complaints but had no authority to impose sanctions, and attorney did not
allege that members of committee were biased or would personally benefit; “So
long as the judges hearing the misconduct charges are not biased . . . , there is no
legitimate cause for concern over the composition and partiality of the . . .
[c]ommittee.”).
F.
Finally, Mr. Nace argues that a 120-day suspension was unduly harsh and
that the court should reduce the sanction pursuant to D.C. Bar Rule XI, § 11 (c)(4)
(permitting court to decline to impose reciprocal discipline where misconduct in
27
original jurisdiction would result in substantially different discipline in District of
Columbia). Specifically, Mr. Nace argues that he did not personally profit from
the potential misdistribution of funds and that he had no disciplinary record for
over forty years. Nevertheless, the West Virginia Supreme Court determined that
Mr. Nace committed numerous ethical violations by, among other things, acting
dishonestly and failing to competently and diligently protect his client’s interests.
A 120-day suspension is not substantially different from sanctions that have been
imposed for similar misconduct in the District of Columbia. See, e.g., In re Artis,
883 A.2d 85, 89-91, 103 (D.C. 2005) (attorney suspended for thirty days for failure
to cooperate with disciplinary investigation, where attorney failed to respond to
questions and to provide documents subject to subpoena); In re Mitchell, 822 A.2d
1106, 1109-10 (D.C. 2003) (per curiam) (upholding ninety-day suspension for
failure to notify interested third party of money judgment, making false statements
to that party about judgment, and acting dishonestly); In re Balsamo, 780 A.2d
255, 261-62 (D.C. 2001) (per curiam) (upholding thirty-day suspension for
violations of Rules 1.1 (competence), 8.4 (c) (dishonesty), and 8.4 (d) (conduct
interfering with administration of justice); “For conduct involving dishonesty . . .
[in violation of] Rule 8.4 (c), the discipline this court has imposed has ranged from
censure to disbarment.”) (citing cases). We therefore adopt Bar Counsel’s
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recommendation of reciprocal discipline, including a 120-day suspension from the
practice of law in the District of Columbia.
So ordered.