Iowa Supreme Court Attorney Disciplinary Board v. Jeffrey S. Rasmussen , 823 N.W.2d 404 ( 2012 )

IN THE SUPREME COURT OF IOWA
No. 11–1925
Filed November 30, 2012
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Appellee,
vs.
JEFFREY S. RASMUSSEN,
Appellant.
Appeal from the report of the Grievance Commission of the
Supreme Court of Iowa.
Attorney appeals from grievance commission report in disciplinary
proceedings recommending we order him to cease and desist from
practicing law in Iowa for sixty days. COMPLAINT DISMISSED.
Jeffrey S. Rasmussen of Fredericks Peebles & Morgan LLP,
St. Louis Park, Minnesota, pro se.
Charles L. Harrington and Amanda K. Robinson, Des Moines, for
appellee.
2
CADY, Chief Justice.
The Iowa Supreme Court Attorney Disciplinary Board brought a
complaint against Jeffrey Rasmussen alleging numerous violations of the
Iowa Rules of Professional Conduct after he removed a computer server
containing software from a business in which his clients had a security
interest. A division of the Grievance Commission of the Supreme Court
of Iowa found Rasmussen violated the rules and recommended we order
Rasmussen to cease and desist the practice of law in Iowa for sixty days.
On our de novo review, we are unable to conclude that Rasmussen
committed any violations of our disciplinary rules. Therefore, we dismiss
the complaint.
I. Background Facts and Proceedings.
Jeffrey R. Rasmussen 1 is licensed to practice law before the courts
of the Sac and Fox Tribe of the Mississippi in Iowa (the Tribe), and he
also holds a law license issued by the State of Washington. Rasmussen
is not, and has never been, a member of the Iowa bar. At the times
relevant to the Board’s complaint, Rasmussen maintained law offices in
the State of Minnesota. His law firm regularly represented the Tribe, and
Rasmussen has occasionally represented Native American tribes in
matters before Iowa courts.
1On December 7, 2011, Rasmussen filed a motion to maintain the confidentiality
of these proceedings under Iowa Court Rule 36.18(1). On December 27, we issued an
order stating
this issue should be submitted with the appeal and both parties are
directed to address it in their appellate briefs. In the meantime, all
pleadings previously filed in this appeal and any subsequently-filed
pleadings (other than briefs) shall be treated as confidential.
Neither party addressed the issue in their appellate briefs. Therefore,
Rasmussen’s arguments regarding confidentiality under rule 36.18(1) are deemed
abandoned.
3
The underlying facts and circumstances that led to the complaint
brought against Rasmussen in this case were detailed in our decision
involving a similar complaint brought against his former law partner,
Steven Olson. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Olson, 807
N.W.2d 268 (Iowa 2011). These facts center on the conduct of
Rasmussen and Olson in the course of their representation of the Tribe
in a business transaction with a now-defunct company called DNA Today
and its president, Steven Whitehead. The Tribe loaned the company
$1 million, secured by assets of the company, including computer
software.
In essence, Rasmussen was alleged to have acted in concert with
Olson, who repeatedly communicated directly with Whitehead after
Whitehead was represented by lawyer Frank Carroll of the Des Moines
law firm of Davis Brown. However, Rasmussen is not alleged to have
personally interacted with Whitehead during this series of
communications. Rasmussen was also alleged to have acted in concert
with Olson regarding the self-help remedy pursued by Rasmussen when
he removed a computer server containing the software from the DNA
Today office on August 11, 2006. This event occurred three days after
the Tribe filed an action in tribal court for breach of the loan agreement.
Whitehead was not aware of the lawsuit or a temporary order issued by
the court allowing repossession prior to the time Rasmussen visited the
office on August 11.
Rasmussen discussed a plan with Olson to visit the DNA Today
office on August 11 for the announced purpose of verifying the company
was still in possession of the software that was the subject of the security
agreement. However, Rasmussen’s actual intent in visiting the office was
to obtain a copy of the software. As detailed in our Olson opinion, during
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the visit, Rasmussen executed his plan and removed the server that he
believed contained the software. See id. at 274. Olson, not Rasmussen,
made all of the arrangements for the visit. See id. at 273–74. Following
the incident, Whitehead sent a letter to Olson stating:
We strenuously object to your patently dishonest,
highly unethical tactics concerning the seizure of one of our
servers.
We find your conduct and that of your partner, Jeffrey
Rasmussen, to be reprehensible, dishonest, unscrupulous
and totally devoid of moral and professional ethics. . . .
You purposely lied to us about the tribe’s agreement to
provide immediate short term financing [and] you purposely
lied to us about the intent of the visit. You also made these
arrangements directly with me instead of through our legal
[counsel] in an obvious intent to disguise your motives.
The Board filed a joint complaint against Olson and Rasmussen.
Subsequently, Rasmussen filed numerous motions including a “Motion
to Strike and to Dismiss—Board Violations of Confidentiality.” The
commission construed this as a motion to bifurcate and granted the
motion ordering the Board to file any future claims against Rasmussen
in a separate complaint. 2 On December 22, 2006, the Board filed a
separate complaint against Rasmussen alleging violations of Iowa Rules
of Professional Conduct 32:8.4(c) (engaging in conduct involving
misrepresentation), 32:4.1(a) (knowingly making a false statement of
material fact or law), 32:4.2(a) (communicating about the subject of
representation with a person known to be represented by counsel),
32:8.4(d) (engaging in conduct prejudicial to the administration of
justice), and 32:8.4(b) (committing a criminal act that reflects adversely
on the lawyer’s honesty, trustworthiness, or fitness as a lawyer).
2We reject Rasmussen’s alternate interpretation of this ruling that the
commission dismissed the Board’s claims against him with prejudice.
5
Rasmussen appeared at the hearing and denied all of the Board’s
allegations. The commission found that Rasmussen violated rules
32:4.2(a), 32:8.4(c), and 32:8.4(d) and dismissed the other counts. The
commission recommended we order Rasmussen to cease and desist the
practice of law in Iowa for sixty days.
II. Scope of Review.
Our review of attorney disciplinary proceedings is de novo. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Thomas, 794 N.W.2d 290, 293 (Iowa
2011). “We give respectful consideration to the findings and
recommendations of the commission, but are not bound by them.” Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Vilmont, 812 N.W.2d 677, 679 (Iowa
2012). “The board must prove ethical misconduct by a convincing
preponderance of the evidence. This burden is less than proof beyond a
reasonable doubt, but more than the preponderance standard required
in the usual civil case.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Knopf,
793 N.W.2d 525, 528 (Iowa 2011) (citations and internal quotation marks
omitted).
III. Findings and Disposition.
A. Choice of Law. Rasmussen contends the Tribe’s disciplinary
rules, not the Iowa disciplinary rules, should govern the conduct at issue
in this proceeding under rule 32:8.5(b), the choice-of-law provision in our
attorney disciplinary rules. Although this argument was raised in
Rasmussen’s answer to the Board’s complaint, it does not appear the
commission addressed it in its ruling. 3 Rule 32:8.5(b)(1) states:
3On February 23, 2011, the commission issued an order denying numerous
motions filed by Rasmussen and stated that in the future any “motion to reconsider will
also be immediately denied.”
6
In any exercise of the disciplinary authority of Iowa, the
rules of professional conduct to be applied shall be as
follows:
(1) for conduct in connection with a matter pending
before a tribunal, the rules of the jurisdiction in which the
tribunal sits, unless the rules of the tribunal provide
otherwise . . . .
Rasmussen argues the underlying conduct at issue in this
proceeding—the repossession of the server—occurred in connection with
the action commenced against Whitehead and DNA Today in tribal court
on August 8, 2006. The Board concedes the tribal court constitutes a
tribunal in another jurisdiction. Moreover, the Board does not argue in
its brief that Rasmussen’s act of repossessing the DNA Today server did
not occur in connection with the proceeding before the tribal court.
Rather, the Board argues we should not consider the action in tribal
court to be a matter pending at the time the repossession took place
because Whitehead and DNA Today had not yet been served with notice
of that action. Therefore, the Board asks us to interpret rule 32:8.5(b) as
requiring service of notice before an action is considered pending.
According to the Board, an action is not necessarily pending after the
filing of a complaint because “the term pending implies some
advancement in the case beyond initiation, such that there has been
progression toward a decision.”
We find it is unnecessary to address the issue. Even assuming our
disciplinary rules governed this matter, we find no violations occurred.
B. Alleged Rule Violations.
1. Rule 32:4.2(a). Rule 32:4.2(a) states:
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.
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This rule is designed to protect a party represented by counsel
from “ ‘the imbalance of legal skill and acumen between the lawyer and
that party.’ ” Olson, 807 N.W.2d at 277 (quoting Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Schmidt, 796 N.W.2d 33, 40 (Iowa 2011)). The rule
“ ‘promotes the integrity of the attorney–client relationship and serves to
prevent a variety of overreaching.’ ” Id. (quoting Iowa Supreme Ct. Bd. of
Prof’l Ethics & Conduct v. Herrera, 626 N.W.2d 107, 113–14 (Iowa 2001)).
To find a violation under the complaint, we must infer that
Rasmussen was complicit in numerous communications between his
former partner Olson and Whitehead—a represented party. Yet, even if
we accept this proposition, we have previously decided in Olson there
was insufficient evidence that Olson’s communications with Whitehead
prior to August 8, 2006, were not authorized by Whitehead’s attorneys.
Id. at 278. The record in this case provides just as much, if not more,
evidence that Olson had permission to negotiate with Whitehead directly.
Olson sent a letter on July 25, 2006, on behalf of the Tribe directly
to Whitehead with a copy to Carroll. This letter discussed the terms
under which the Tribe would provide additional financing to DNA Today
and invited DNA Today personnel to meet with the Tribe the next day to
make a presentation regarding additional financing. The next day,
July 26, Whitehead appeared for the meeting with the Tribe without an
attorney. An e-mail sent to Olson by Whitehead on July 27 with a copy
to Carroll suggested Olson was present for the July 26 meeting. 4 Yet,
Carroll never lodged any objection. Instead, an e-mail sent by Whitehead
on August 7 to DNA Today shareholders demonstrated Whitehead
4The e-mail opens with “As I stated yesterday.” It also instructs Olson to refer to
the “executive summary I handed out yesterday.”
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diligently initiated additional communications with Olson numerous
times after July 27.
On August 10, Whitehead sent an e-mail to another attorney in the
Davis Brown law firm relating an earlier conversation with Olson stating,
“We won . . . . Olson called me today to confirm their interest in moving
forward without us giving them the code.” The response by the attorney
to this e-mail did not support a conclusion that the Davis Brown law firm
was handling DNA Today’s substantive negotiations with the Tribe.
Importantly, the attorney did not express any surprise and did not object
that Olson and Whitehead had been negotiating directly with each other.
Instead, he sent Whitehead a response warning Whitehead to “secure the
source code tomorrow and take steps to ensure that the Tribe cannot
easily obtain a copy of it while they are there.”
Even after the events of August 11, Whitehead continued to
communicate directly with Olson. On August 16 and 22, Whitehead sent
Olson additional letters with copies to Carroll, among others. For the
first time, these letters requested future communications from Olson be
directed to Carroll. In his August 22 reply directed to Carroll, Olson
stated, “We have not received any similar correspondence from you,
directing that correspondence be sent to your attention.” Indeed, the
record is devoid of any such correspondence from Whitehead’s attorneys.
Moreover, there is no response on record from Carroll refuting Olson’s
statement.
In light of the foregoing, we need not decide whether Rasmussen
was complicit in the communications that occurred between Olson and
Whitehead in the weeks leading up to August 8. We are unable to find
by a convincing preponderance of the evidence these communications
were not authorized by Whitehead’s attorneys.
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2. Rule 32:8.4(c). Under rule 32:8.4(c): “It is professional
misconduct for a lawyer to . . . engage in conduct involving dishonesty,
fraud, deceit, or misrepresentation . . . .”
The commission concluded Rasmussen violated this rule when he
acted “in concert with Olson [to mislead] Whitehead about the purpose of
the visit on August 11.” At the hearing, Rasmussen explained that he
and Olson agreed he would visit DNA Today offices to verify DNA Today
was in possession of an executable copy of the software. However, he
admitted that he and Olson agreed not to disclose the plan to demand a
copy of the software during this visit and seize the DNA Today server if
Whitehead refused.
We already considered this identical issue on the same facts when
we decided the Olson case. There, we explained that a lawyer’s failure to
disclose facts with the intent to deceive can constitute a violation of rule
32:8.4(c) when there is an “underlying duty to disclose.” See Olson, 807
N.W.2d at 280 (citing Iowa Supreme Ct. Att’y Disciplinary Bd. v. Powell,
726 N.W.2d 397, 406 (Iowa 2007) (holding attorney violated predecessor
to rule 32:8.4(c) by placing a lien on his client’s property without
disclosing this fact to her)). However, “[a] commercial debtor that is in
default is not entitled to a Miranda warning that its collateral may be
repossessed if it consents to the creditor’s entry on the premises.” Id.
Thus, we concluded Olson had not violated rule 32:8.4(c). See id. at 281.
Whitehead gave Rasmussen permission to enter the premises. The
record does not show that either Rasmussen or Olson affirmatively
misled Whitehead, only that they declined to disclose the second purpose
of the visit—securing a copy of the source code and software. Because
the facts are identical to those before us in Olson, we decline to reach a
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different conclusion regarding whether Olson and Rasmussen defrauded
DNA Today and Whitehead.
3. Rule 32:4.1(a). Rule 32:4.1(a) states: “In the course of
representing a client, a lawyer shall not knowingly . . . make a false
statement of material fact or law to a third person . . . .”
The commission concluded that Rasmussen did not violate this
rule. We agree. Rasmussen made no statements to Whitehead prior to
August 11, 2006, and made no false or misleading statements to him on
August 11, 2006.
4. Rule 32:8.4(b). We also agree with the commission’s finding
that the record cannot support a finding Rasmussen violated rule
32:8.4(b). Rule 32:8.4(b) makes it professional misconduct for a lawyer
to “commit a criminal act that reflects adversely on the lawyer’s honesty,
trustworthiness, or fitness as a lawyer in other respects.”
The Board claimed Rasmussen committed theft and trespass.
However, the Board cannot demonstrate the first element of theft—that
the defendant took “possession or control of the property of another” with
intent to deprive the owner of the property. Iowa Code § 714.1 (2007).
DNA Today was in default under the security agreement, and therefore,
the Tribe had the right to take possession of the property covered under
the security agreement. Id. § 554.9609(1)(a). Even though the Tribe did
not actually have a security interest in the server, as opposed to the
software, because DNA Today did not own the server, there is insufficient
evidence Rasmussen knew the server was not covered by the Tribe’s
security interest at the time he took possession. Regarding the Board’s
allegation of trespass, it is undisputed that Whitehead gave Rasmussen
permission to enter the DNA Today offices. See id. § 716.7(2)(a).
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5. Rule 32:8.4(d). Rule 32:8.4(d) makes it professional misconduct
for a lawyer to “engage in conduct that is prejudicial to the administration of
justice.” Rule 32:8.4(d)
provide[s] a basis for a violation when an attorney’s conduct
hampers “ ‘the efficient and proper operation of the courts or of
ancillary systems upon which the courts rely’ by violating the
well-understood norms and conventions of the practice of law.”
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96, 102–
03 (Iowa 2012) (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Netti, 797
N.W.2d 591, 605 (Iowa 2011)); accord Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Templeton, 784 N.W.2d 761, 768 (Iowa 2010).
The commission concluded that Rasmussen’s conduct in repossessing
the DNA Today server under false pretenses and waiting until after the
repossession to serve the tribal court order violated this rule. Under the
facts of this case, we cannot conclude the exercise of a self-help remedy in
lieu of a court-provided remedy is prejudicial to the administration of
justice. A creditor is legally permitted to self-repossess, and the facts of this
case did not support a finding that the repossession breached the peace. 5
See Tim O’Neill Chevrolet, Inc. v. Forristall, 551 N.W.2d 611, 617 (Iowa 1996).
IV. Conclusion.
Rasmussen did not violate any disciplinary rule. The case is
dismissed. The motion for sanctions is denied.
COMPLAINT DISMISSED.
All justices concur except Zager, J., who takes no part.
5We express reservations about the practice of a lawyer in carrying out self-help
repossession of secured collateral on behalf of a client. The obvious pitfalls should
normally make such conduct unadvisable.