In re Chester W. Nosal , 2015 D.C. App. LEXIS 107 ( 2015 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 14-BG-455
IN RE CHESTER W. NOSAL, RESPONDENT.
A Suspended Member of the Bar
of the District of Columbia Court of Appeals
(Bar Registration No. 167668)
(BDN 57-14)
(Submitted December 4, 2014 Decided April 2, 2015)
David U. Fierst was on the brief for respondent.
Wallace E. Shipp, Jr., Bar Counsel, and William R. Ross, Assistant Bar
Counsel, were on the brief for the Office of Bar Counsel.
Before FISHER and BLACKBURNE-RIGSBY, Associate Judges, and FERREN,
Senior Judge.
PER CURIAM: By order of the Supreme Court of Illinois, respondent Chester
Nosal was suspended from the practice of law for two years and until further order
of the court for numerous acts of professional misconduct. Upon notice of
respondent’s suspension, this court notified and temporarily suspended respondent
from the practice of law in the District of Columbia, pending proceedings to
determine whether to impose reciprocal discipline, with instructions for respondent
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to show cause for why we should not do so, pursuant to D.C. Bar R. XI, § 11 (d).
Respondent requests a de novo evidentiary hearing to demonstrate that the Illinois
suspension was not supported by the evidence. Bar Counsel recommends identical
reciprocal discipline of two years suspension with a fitness requirement. Because
“reciprocal discipline proceedings are not a forum to reargue the foreign
discipline,” In re Zdravkovich, 831 A.2d 964, 969 (D.C. 2003), we adopt Bar
Counsel’s recommendation.
Respondent’s violations of the Illinois Rules of Professional Conduct
(“Illinois Rules”) stem from his involvement with Capacitive Deionization
Technology Systems, Inc. (“CDT”), a Texas company. The Illinois Attorney
Registration and Disciplinary Commission (“Commission”) found that an attorney-
client relationship existed between respondent and CDT from 1999 through 2007,
and that during this time respondent engaged in various acts of self-dealing without
disclosing conflicts of interest or obtaining informed consent, including acting as a
lender for multiple high-interest loans and converting notes given in lieu of
outstanding attorney fees to stock in CDT. Ultimately, respondent’s transactions
gave him an ownership interest in CDT between eleven and fifteen percent.
Additionally, the Commission found that respondent made false statements to the
United States District Court for the Northern District of Texas and to the
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Commission regarding the time period in which he represented CDT. Finally, the
Commission found that respondent knowingly failed to cooperate with its
investigation and ignored a subpoena requiring respondent to appear before it. In
reaching its decision to suspend respondent, the Commission considered
documentary evidence of respondent’s agreements with CDT, testimony from a
CDT board member and its CEO, and respondent’s filing characterized as a
“Motion to Strike and Dismiss,” in which he contested the facts at issue.
Respondent declined to participate in the Illinois proceedings, either in
person or through counsel. Instead, respondent repeatedly contested the
Commission’s jurisdiction through various filings, announcing that he “never
agreed to perpetual subjugation to the jurisdiction of the Illinois Supreme Court
nor the bloated Commission” and “will not be participating in the Commission’s
proceedings” and “will not file a brief,” and the Commission repeatedly informed
respondent that its jurisdiction was proper. As the proceedings commenced in his
absence, respondent threatened to take action against the Commission in federal
court and filed a “Notice to Cease and Desist,” but did not prevent the Commission
from holding a hearing and issuing its final report recommending respondent’s
suspension. Respondent now requests an evidentiary hearing in the District of
Columbia, contending that reciprocal discipline would be unfair because the
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Commission’s decision was based on a one-sided record, due to respondent’s
absence from the proceedings. Respondent contends that he was absent because he
reasonably believed, in good faith, that the Commission had no jurisdiction over
him, as he had not practiced in Illinois for several decades, had retired from the
Illinois bar,1 and the conduct at issue had no connection with Illinois.
We have adopted a “rigid standard” in reciprocal discipline cases,
“presumptively impos[ing] 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)].” In re
Zdravkovich, supra, 831 A.2d at 968. These five exceptions are:
(1) The procedure elsewhere was so lacking in notice or
opportunity to be heard as to constitute a deprivation of
due process; or
(2) There was such infirmity of proof establishing the
misconduct as to give rise to the clear conviction that the
Court could not, consistently with its duty, accept as final
the conclusion on that subject; or
1
Respondent was on “inactive” status when the investigation began and
subsequently received “retirement status.” The Illinois Supreme Court Rules on
the Admission and Discipline of Attorneys provide multiple registration statuses,
including “inactive status,” Rule 756 (a)(5), and “retirement status,” Rule 756
(a)(6), neither of which serves to “bar, limit, or stay any disciplinary investigations
or proceedings against an attorney,” Rule 756 (i), with the exception of “permanent
retirement status,” Rule 756 (a)(9), for which respondent was not eligible due to
this pending investigation.
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(3) The imposition of the same discipline by the Court
would result in grave injustice; or
(4) The misconduct established warrants substantially
different discipline in the District of Columbia; or
(5) The misconduct elsewhere does not constitute
misconduct in the District of Columbia. Unless there is a
finding by the Court under (1), (2), or (5) of this
subsection, a final determination by another disciplining
court that an attorney has been guilty of professional
misconduct shall conclusively establish the misconduct
for the purpose of a reciprocal disciplinary proceeding in
this Court.
D.C. Bar R. XI, § 11 (c). This standard “comports with constitutional due process
requirements because the attorney either has had an evidentiary hearing or had the
right to one.” In re Zdravkovich, supra, 831 A.2d at 969 (citation omitted).
Accordingly, “reciprocal discipline proceedings are not a forum to reargue the
foreign discipline.” Id.Respondent has not met his burden to show that his case falls within any of
these exceptions. With regard to exceptions one and two, respondent received
notice and the opportunity for a full evidentiary hearing in Illinois in which he
opted not to participate. Respondent’s challenges to jurisdiction and subsequent
filings indicate that he chose a tactic of non-participation, but this tactic did not
deprive him of due process. See D.C. Bar R. XI, § 11 (c)(1). Even without
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repeated notice from the Commission, respondent, as a member of the Illinois bar,
knew or should have known that he remained subject to the Commission’s
jurisdiction. We note, as well, that the proper forum for an appeal of the
Commission’s jurisdiction is with an Illinois court. In the evidentiary hearing, the
Commission considered, inter alia, the terms of respondent’s agreements with
CDT and the testimony of a board member who would have been the recipient of
any disclosure from respondent in his duty to seek informed consent. There is no
basis for us to conclude that the Commission rendered its decision on inadequate
proof, such that the presumption in favor of identical reciprocal discipline in this
jurisdiction has been rebutted. See D.C. Bar R. XI, § 11 (c)(2). We will not now
hold a de novo evidentiary hearing after respondent deliberately waived his right to
participate in the Illinois hearing. See In re Steele, 914 A.2d 679, 681 (D.C. 2007)
(treating as waived additional arguments against a Florida Bar Counsel proceeding
that respondent declined to attend); see also In re Zdravkovich, supra, 831 A.2d at
969 (“Underlying our strict standard in reciprocal bar discipline cases is not only
the notion that another jurisdiction has already afforded the attorney a full
disciplinary proceeding, but also the idea that there is merit in according deference,
for its own sake, to the actions of other jurisdictions with respect to the attorneys
over whom we share supervisory authority.”).
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With regard to the remaining exceptions, respondent argues that imposing
reciprocal discipline would be “unduly harsh,” as the District of Columbia would
not have imposed a two year suspension with reinstatement dependent on an order
of the court. In support, respondent essentially argues that the District of Columbia
Rules of Professional Conduct (“D.C. Rules”) proscribe different conduct than the
Illinois Rules and that, unlike prior cases where this court has imposed such a
suspension, he did not benefit from the transaction at issue. See, e.g., In re
McLain, 671 A.2d 951 (D.C. 1996) (suspending an attorney who did not repay
funds borrowed from a client and who lived rent-free in a client’s home). We do
not agree. Respondent’s violations of the Illinois Rules correlate to violations of
the D.C. Rules.2 Respondent’s attempt to distinguish his conduct by the absence of
2
Respondent’s primary challenge in this regard concerns the Commission’s
determination that he violated Illinois Rule 1.8 (a) regarding conflicts of interest.
Respondent contends that the commission found a violation because “CDT had no
independent advice,” which would not be a violation in the District of Columbia,
where the client must simply have “a reasonable opportunity to seek independent
counsel.” Respondent is incorrect. The Illinois and District of Columbia rules
regarding conflicts of interest are virtually the same. Illinois Rule 1.8 (a) provides:
Unless the client has consented after disclosure, a lawyer
shall not enter into a business transaction with the client
if: (1) the lawyer knows or reasonably should know that
the lawyer and the client have or may have conflicting
interests therein; or (2) the client expects the lawyer to
exercise the lawyer’s professional judgment therein for
the protection of the client.
(continued…)
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any actual benefit to him ignores the evidence in the record on which the
Commission relied: that he charged CDT a high rate of interest and had acquired
an ownership interest in CDT of between eleven and fifteen percent without
disclosure or informed consent. That respondent had not yet received this benefit
was of no consequence; rather, the Commission noted that “the attorney need only
stand to benefit.” Relying on the principles of collateral estoppel, which we have
repeatedly held applicable in reciprocal discipline cases, we accept this ruling. In
re Shearin, 764 A.2d 774, 777 (D.C. 2000) (citation omitted) (“Under principles of
collateral estoppel, in reciprocal discipline cases we generally accept the ruling of
the original jurisdiction.”); accord In re Zdravkovich, supra, 831 A.2d at 969.
(…continued)
Similarly, D.C. Rule of Professional Conduct 1.8 (a) provides:
A lawyer shall not enter into a business transaction with a
client or knowingly acquire an ownership, possessory,
security, or other pecuniary interest adverse to a client
unless: (1) The transaction and terms on which the
lawyer acquires the interest are fair and reasonable to the
client and are fully disclosed and transmitted in writing to
the client in a manner which can be reasonably
understood by the client; (2) The client is given a
reasonable opportunity to seek the advice of independent
counsel in the transaction; and (3) The client gives
informed consent in writing thereto.
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Further, the Commission treated respondent’s failure to cooperate or
participate as an aggravating factor in its decision because it demonstrated “a
conscious disregard for his professional obligations.” In the District of Columbia,
failure to cooperate with the disciplinary process could, in itself, result in the
imposition of a fitness requirement, which is our functional equivalent to
subjecting reinstatement to further order of the court. See In re Ras, 884 A.2d 44,
46 (D.C. 2005) (equating Illinois’s “reinstatement subject to further order of the
court” to the District of Columbia’s “fitness requirement”); In re Lea, 969 A.2d
881, 891 (D.C. 2009) (citations and internal quotation marks omitted) (noting that
evidence of “deliberate disregard for the disciplinary process” is a factor in
imposing a fitness requirement, and that such disregard may, in itself, “raise[] a
serious question about the attorney’s continuing capacity and willingness to fulfill
his or her professional obligations”).
Respondent has not rebutted by clear and convincing evidence the
presumption in favor of imposing identical reciprocal discipline. See D.C. Bar R.
XI, § 11 (c); In re Zdravkovich, supra, 831 A.2d at 968. Accordingly, it is
ORDERED that Chester Nosal is suspended from the practice of law in the
District of Columbia for two years, with reinstatement conditioned upon proof of
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fitness, pursuant to D.C. Bar R. XI, §§ 16 and 3 (a)(2). We direct respondent’s
attention to the requirements of D.C. Bar R. XI, § 16 (c) and their effect on his
eligibility for reinstatement, and note his timely compliance with the requirements
of § 14 (g).
So ordered.