Kentucky Bar Association v. David Thomas Sparks , 480 S.W.3d 278 ( 2016 )

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KENTUCKY BAR ASSOCIATION MOVANT
V. IN SUPREME COURT
DAVID THOMAS SPARKS RESPONDENT
OPINION AND ORDER
The Board of Governors (the Board) of the Kentucky Bar Association
(KBA) recommends that David Thomas Sparks be suspended from the practice
of law for 181 days, 120 days of which may be probated upon condition that he
attend ethics education and business management education including the use
of escrow accounts in the amount of 30 hours, and that he establish an IOLTA
account in accordance with Supreme Court Rule (SCR) 3.830. 1 Finding
sufficient cause to do so, we adopt the Board's recommendations. Sparks,
I In its Conclusions of Law, the Board stated that: "Pursuant to SCR 3.370(5),
the Board of Governors decided . . . . that the decision of the Trial Commissioner as to
the findings of the violations and degree of discipline imposed was supported by
substantial evidence and not clearly erroneous. It adopts those findings as its own[.]"
(Emphasis added). We note that the Trial Commissioner recommended that Sparks be
suspended "for 181 days, which may be probated 120 days," which we interpret as
recommending Sparks serve a suspension of 61 days with 120 days probated.
However, the Board's recommendation states that Sparks should be suspended "for
181 days, which may be probated to 120 days," which appears to be a
recommendation that Sparks serve 120 days with 61 days probated. Because the
Board indicated its intention to adopt the Trial Commissioner's discipline as its own,
we believe that this apparent change in the length of the "to serve" portion of the
suspension was inadvertent. Therefore, we adopt the suspension as initially proposed
by the Trial Commissioner.
whose KBA number is 85840, and whose bar address is 1719 Ashley Circle,
Suite 100, P.O. Box 1925 Bowling Green, Kentucky 42102, was admitted to the
practice of law in the Commonwealth of Kentucky in October 1995.
I. BACKGROUND
In 2009, Sparks represented Bill Adams (Bill) in a personal injury lawsuit
against Beacon Construction, Inc., which was insured through Cincinnati
Insurance Co. (Cincinnati). During litigation, Cincinnati issued two partial
settlement checks to Bill; one for $4,316.67 and another for $5,000. The
distribution of funds from those checks is not in dispute. In August 2010, Bill
completely resolved his claim, and Cincinnati issued an $11,000 check,
payable to "Bill Adams 86 His Attorney, David T. Sparks." Sparks deposited the
$11,000 check in a non-IOLTA escrow account.
On December 5, 2011, Bill's son, Jeffrey Adams (Jeffrey), a practicing
attorney in Atlanta, Georgia, sent a letter to Sparks indicating that Bill was
unhappy with Sparks's representation. According to Jeffrey, Sparks had failed
to follow up with Bill regarding the status of the $11,000 settlement check
despite several previous attempts to contact Sparks made by Bill, by Jeffrey,
and by Jeffrey's sister. Additionally, Jeffrey asked Sparks to provide regular,
written status reports to Bill, as well as to release all money owed to Bill from
the settlement. Sparks did not respond to this letter.
On February 6, 2012, Jeffrey sent another letter to Sparks, which
referenced the December letter. Sparks did not respond in writing to this
letter. However, at approximately 2:00 a.m. on April 27, 2012, Sparks left a
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message on Jeffrey's voicemail stating that he was still holding the $11,000
check in his escrow account because he was waiting to hear from Medicare
about a potential lien.
Bill died shortly after Jeffrey sent the February letter. Jeffrey, who was
appointed co-executor of his father's Estate, contacted the law firm of English,
Lucas, Priest, 86 Owsley to represent Bill's Estate. Attorney Charles English, a
member of the firm, investigated the handling of the $11,000 settlement check
and ultimately requested a final accounting from Sparks. Sparks did not
respond. 2
On August 20, 2012, Jeffrey filed a complaint with the KBA against
Sparks. The complaint was served on Sparks on October 12, 2012. Sparks
failed to respond within the allotted 20-day time period and the Inquiry
Commission then issued a six-count charge against Sparks, which was served
on January 12, 2013. The charge alleged that Sparks violated:
1. SCR 3.130-1.4(a)(4) by failing to respond to requests for information
from his client;
2. SCR 3.130-1.15(a) by failing to properly maintain a client's funds in
an escrow account;
2 English originally sent a letter to Mike Breen, of Breen & Morgan Associates at
Law PSC, asking about the $11,000 check. English believed that Sparks was working
for Breen 86 Morgan when he represented Bill because Cincinnati's $4,316.67 and
$5,000 checks were made payable to "Bill Adams and Breen & Morgan Associates at
Law PSC." However, Breen informed English that Sparks had never worked for Breen
86 Morgan. Sparks disputed this claim during his hearing with the Trial
Commissioner. The nature of the relationship between Sparks and Breen & Morgan is
not clear, but it is not at issue here.
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3. SCR 3.130-1.15(b) by failing to properly notify his client upon
receiving funds, by failing to promptly deliver funds his client was
entitled to, and by failing to render a full accounting as requested by
his client;
4. SCR 3.130-8.1(b) by failing to respond to the bar complaint, despite
receiving notification from the Disciplinary Clerk that the Inquiry
Commission, through the Office of Bar Counsel, required information
regarding the complaint, and despite having received a warning that
failure to respond to that demand for information could result in
additional charges;
5. SCR 3.130-8.4(b) by taking funds, subject to a known obligation to
make a specified distribution of those funds, with the failure to make
the required distribution constituting a violation of KRS 514.070(1)
(Theft by Failure to Make Required Disposition of Property); and
6. SCR 3.130-8.4 by keeping a client's funds for his personal use.
The Inquiry Commission remanded the matter for Bar Counsel to
determine if Sparks had an escrow account and if documentation regarding the
account could be obtained. Sparks filed for leave to file an answer to the
charge on March 29, 2013, which was granted. On April 11, 2013, attorney
Brandon Marshall agreed to represent Sparks, pro bono, and on April 19, 2013,
Sparks wired $11,000 into Marshall's escrow account to be appropriately
dispersed. On April 25, 2013, Marshall, on behalf of Sparks, filed an Answer to
the charge stating that Sparks was prepared to make substantial admissions of
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fault and raising concerns regarding Sparks's mental and emotional health,
which may have resulted in his inattention to his client and the KBA.
A Trial Commissioner was appointed and, after preliminary hearings and
depositions, she held an evidentiary hearing on July 31, 2014. During these
proceedings Sparks, now representing himself, testified that he always
maintained contact with his client, Bill. However, he refused to respond to
Jeffrey, Jeffrey's sister, or English, because he was not given authorization by
Bill to discuss the case with them, and he did not want to breach his duty of
confidentiality to his client. Sparks further testified that he did not respond to
the KBA's requests because they seemed to imply he had partaken in criminal
activity, and he believed his Fifth Amendment rights protected him from having
to respond to such accusations. Sparks also testified that he had mistakenly
spent most of the $11,000 from the settlement on other case-related material.
Sparks stated that he believed he was spending money he had earned from
another case, which he accidentally put into his personal account instead of
his escrow account, and did not realize his error until formal charges were
brought against him. However, Sparks did not produce any documentation to
support his testimony.
On November 4, 2014, the Trial Commissioner filed her Report, finding
that five of the six counts (Counts I, II, III, IV, and VI) against Sparks had been
proven by a preponderance of the evidence. The Trial Commissioner found that
Count V, the alleged violation of SCR 3.130-8.4(b), had not been proven by a
preponderance of the evidence. In her Report, the Trial Commissioner
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expressed concerns about Sparks's mental status as well as his understanding
of the use of escrow accounts and stated that she could not conclude that
Sparks intentionally took his client's property pursuant to KRS 514.070(1).
The Trial Commissioner recommended that Sparks be suspended from the
practice of law for 181 days, 120 days of which should be probated on the
condition that Sparks attend 30 hours of ethics education and business
management education including the use of escrow accounts; that he establish
an IOLTA account; and that he pay the costs of the proceedings. Sparks then
appealed to the Board, which held oral arguments on May 15, 2015. The
Board approved the Trial Commissioner's decision by a vote of 18 to 1 and filed
its "Findings of Fact, Conclusions of Law, and Recommendation of the Board of
Governors" on August 5, 2015. Bar Counsel then filed a Notice for the Court to
review the Board's decision pursuant to SCR 3.370(7)
II. ANALYSIS
Before we consider the substance of the parties' arguments, we address a
procedural issue raised by Sparks. SCR 3.370(6) provides that "[t]he Board
shall issue a written decision within forty five (45) days of voting on [a case]."
Sparks argues that the Board missed this deadline, issuing its written decision
some 82 days after voting.
Setting aside whether the Board missed the preceding deadline, we do
not dismiss a disciplinary proceeding for such a procedural error absent some
prejudice to the attorney. Kentucky Bar Association v. Deters, 465 S.W.3d 30,
33 (Ky. 2015), reconsideration denied (Aug. 20, 2015) (denying an attorney's
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motion to dismiss the Board's late filing of its findings because the attorney
failed to show any prejudice). Furthermore, as we pointed out in Deters, even if
we grant Sparks's motion and strike the Board's findings, "the trial
commissioner's findings and report would remain within the record. And the
trial commissioner found [Sparks] guilty with a recommended suspension .. .
." Id. Therefore, "[s]triking the Board's findings would have little impact on our
review of [Sparks's] conduct." Id.
We therefore decline to dismiss this disciplinary action against Sparks
because Sparks has failed to show how he was prejudiced by any delay by the
Board.
Turning now to the substantive arguments on appeal, we find that more
than sufficient evidence exists to support the Board's findings of fact and
conclusions. Therefore, we accept the Board's recommendation and find
Sparks guilty of violating Counts I, II, III, IV, and VI of the charge against him
but not guilty of violating Count V. We address each count below in turn.
A. Count I
Sparks violated SCR 3.130-1.4(a)(4) by refusing to respond to multiple
requests for information about his client's $11,000 settlement check. SCR
3.130-1.4(a)(4) states that "[a] lawyer shall promptly comply with reasonable
requests for information[.]" Sparks concedes that he ignored multiple requests
for information regarding the handling of the settlement check. However,
Sparks argues that he did not violate this rule because his client did not give
him authorization to speak with anyone about his case, and that he was
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worried about breaching his duty of confidentiality under SCR 1.130(6). This
argument is not persuasive because Sparks did not reach out to his client for
permission to reveal this information, nor did he inform any party who
requested information that they needed authorization from his client.
Furthermore, despite his concern about client confidentiality, Sparks left a
message regarding the status of the funds on Jeffrey's voicemail. Therefore,
Sparks clearly violated SCR 3.130-1.4(a)(4).
B. Count II
Sparks violated SCR 3.130-1.15(a) by failing to properly maintain client
funds. This issue is not in dispute, as Sparks admits to comingling his clients'
funds in his escrow account in violation of this rule.
C. Count III
Sparks violated SCR 3.130-1.15(b) by failing to promptly deliver funds to
which his client was entitled. SCR 3.130-1.15(b) states that "a lawyer shall
promptly deliver to the client any funds or other property that the client is
entitled to receive[.]" Sparks claims that his delay in delivering the client his
share of the settlement was due to a potential Medicare lien. However, Sparks
failed to contact Medicare about this matter until receiving his bar complaint,
which occurred two years after Sparks received the $11,000 settlement check.
Once contacted, Medicare informed Sparks that no lien existed on his client's
settlement. Thus, Sparks's stated reason for holding the settlement funds is
unpersuasive. Finally, while it is true that Sparks paid Bill's Estate the full
amount of the settlement, he did not do so until more than two years after the
receipt of the funds and after being threatened with discipline.
D. Count IV
Sparks violated SCR 3.130-8.1(b) by failing to respond to the KBA's
complaint. SCR 3.130-8.1(b) states that a lawyer shall not "knowingly fail to
respond to a lawful demand for information from an admissions or disciplinary
authority[.]" Sparks claims that he did not realize how much time he had to
respond to the complaint. However, the letter he received specified the time in
which he had to respond. We find no justification for Sparks's confusion
regarding this violation.
Sparks also argues that he believed he had a Fifth Amendment right not
to respond; however, he did not advise the KBA that he was asserting this
right. Furthermore, the right would have applied only to Count V, and would
not have relieved Sparks of the duty to respond to Counts I, II, III, IV, and VI of
the charge.
E. Count V
SCR 3.130-8.4(b) states that ``lilt is 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 KBA alleges
that Sparks violated this rule by committing theft under KRS 514.070(1), which
states the following:
A person is guilty of theft by failure to make required disposition of
property received when:
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(a) He obtains property upon agreement or subject to a known legal
obligation to make specified payment or other disposition . . . .;
and
(b) He intentionally deals with the property as his own and fails to
make the required payment or disposition.
In order to show a violation of SCR 3.130-8.4(b), "[w]e only require a
Respondent's actions to be shown, by a preponderance of the evidence, to fit
within a crime under state or federal law." Kentucky Bar Association v.
Edwards, 377 S.W.3d 557, 563 (Ky. 2012). Thus, neither a criminal conviction
nor filed charges are necessary to discipline Sparks for potential criminal acts.
Id.
Sparks argues that he did not intentionally spend his client's money.
The Trial Commissioner agreed, finding that Sparks believed he was
appropriately spending money he had earned from another client, which he
had mistakenly put in the wrong bank account. Although we are not bound by
the findings of fact of the Trial Commissioner, Kentucky Bar Association v.
Greene, 386 S.W.3d 717, 722 (Ky. 2012), we believe that those findings herein
are supported by the evidence.
As noted by the Trial Commissioner, Sparks indicated in his answer that
he has some mental health issues. The Trial Commissioner also found that
Sparks exhibited a remarkable lack of knowledge regarding the need for and
use of escrow accounts. These findings support the Trial Commissioner's
conclusion that Sparks lacked the intent to commit theft. Furthermore, we
note that Sparks eventually distributed the entirety of the settlement proceeds
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without taking a fee. While this does not negate his misuse of the funds, it
does mitigate against a finding of intent to commit theft. Therefore, we agree
with the Trial Commissioner that the KBA did not meet its burden of proving
that Sparks's actions constituted theft under KRS 514.070(1).
F. Count VI
Sparks violated SCR 3.130-8.4 by using his client's funds for personal
use. This issue is not in dispute, as Sparks admitted to spending the majority
of the $11,000 settlement check on other case-related activity in violation of
this rule.
G. Suspension
The KBA asks this Court to permanently disbar Sparks, or at least
suspend him for several years. The punishment sought by the KBA is far more
severe than the suspension recommended by the Trial Commissioner and the
Board. SCR 3.380 describes the degrees of discipline available:
Upon findings of a violation of these rules, discipline may be
administered by way of private reprimand, public reprimand,
suspension from practice for a definite time, all of which may be
with or without such conditions as the Court may impose, or
permanent disbarment.
The KBA cites Fitzgerald v. Kentucky Bar Association, 381 S.W.3d 318
(Ky. 2012), Kentucky Bar Association v. Rice, 229 S.W.3d 903 (Ky. 2007), and
Caudill v. Kentucky Bar Association, 155 S.W.3d 725 (Ky. 2005) to support its
contention that Sparks deserves a more stringent penalty. All of these cases
involve attorneys who were permanently disbarred. However, the disciplined
attorneys were also convicted of criminal financial misconduct. In Fitzgerald,
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the attorney, who was the designated payee for a social security disability
recipient, converted the recipient's benefits to his own use and pled guilty to
theft by failure to make disposition under KRS 514.070, a Class D felony. 381
S.W.3d at 318. In Rice, the attorney obtained two credit cards by using
someone else's identity, used those credit cards to make purchases totaling
$14,322.42, and, after his indictment, fled the country. 229 S.W.3d at 903.
When he returned to Kentucky, the attorney was arrested and he pled guilty to
two counts of false statement as to identity under KRS 434.570. Id. In Caudill,
the attorney sought permanent disbarment after pleading guilty to
embezzlement of money belonging to the United States in violation of Title 18
U.S.C. § 641 and to two counts of theft by failure to make required disposition
of property. 155 S.W.3d at 725. These cases are distinguishable because
Sparks was not charged with and did not plead guilty to committing any crime.
The KBA also cites to Kentucky Bar Association v. Isenburg, 329 S.W.3d
327 (Ky. 2011) in which we suspended an attorney for five years for depositing
a client's settlement check into his personal account, never sending the client
his portion of the check, and making a series of misrepresentations to the
client. While Sparks was not responsive, and while Sparks may have made a
misrepresentation to Jeffrey, no evidence exists that he made any
misrepresentations to Bill about the settlement check. Therefore, we do not
find this case to be persuasive.
Instead, we find the cases relied on by the Trial Commissioner to be more
analogous. In King v. Kentucky Bar Association, 440 S.W.3d 378 (Ky. 2014),
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the attorney deposited settlement checks into his escrow account; however, he
used his escrow account to pay personal expenses and failed to maintain a
sufficient balance to pay his clients. Id. at 379. King, who had previously been
publicly reprimanded for a DUI conviction, moved for a 181 day suspension
with conditions, which the KBA essentially did not oppose and which we
granted. Id. at 380.
In Kentucky Bar Association v. Francis, 439 S.W.3d 750 (Ky. 2014), the
attorney paid personal expenses from his escrow account, failed to maintain
sufficient funds in that account, failed to respond to notices from Bar Counsel,
.and failed to return unearned fees to a client. Id. 750-53. The Board, after
noting the attorney had been privately admonished twice before, recommended
a 181 day suspension, which this Court imposed. Id. at 753.
Sparks's actions here are more in line with those of the attorneys in King
and Francis, who misused client funds, but were not charged with or convicted
of crimes. Therefore, we believe that the sanctions recommended by the Board
are appropriate.
ACCORDINGLY, IT IS ORDERED THAT:
1. David Thomas Sparks, KBA Member No. 85840, is found guilty of violating
SCR 3.130-1.4(a)(4), SCR 3.130-1.15(a), SCR 3.130-1.15(b), SCR 3.130-
8.1(b), and SCR 3.130-8.4.
2. Sparks is suspended from the practice of law for one-hundred-eighty-one
(181) days, with sixty-one (61) days to serve 3 and the balance probated for
3 See footnote 1.
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two years from the date of this Order conditioned on Sparks completing the
conditions set forth below.
3. Sparks shall attend at his own cost and successfully complete thirty (30)
hours of ethics education and business management education including
the use of escrow accounts and shall establish an IOLTA account. Sparks
will not apply for CLE credit for his attendance at these programs.
Furthermore, Sparks will provide an appropriate release form so that his
CLE records can be reviewed for one year following his completion of those
programs.
4. Sparks shall not commit any crimes, including misdemeanors and felonies,
during the period of probation.
5. Sparks shall not receive any new disciplinary charges during the
probationary period related to conduct discovered or occurring after the date
of this Order.
6. Sparks shall notify all necessary courts and clients of his sixty - one (61) day
suspension in accordance with SCR 3.390(b). Those notifications shall be
made by letter placed in the United States mail within ten (10) days from the
date of this Opinion and Order. Sparks shall also simultaneously provide a
copy of all such letters to the Office of Bar Counsel. Also, to the extent
possible, Sparks shall cancel and cease any advertising activities in which
he is engaged.
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7. As stated in SCR 3.390(a), this order shall take effect on the 10th day
following its entry. Sparks is instructed to promptly take all reasonable
steps to protect the interests of his clients.
8. Pursuant to SCR 3.390, Sparks shall not, during the term of suspension,
accept new clients or collect unearned fees.
9. Pursuant to SCR 3.450,- Sparks is directed to pay all costs associated with
this disciplinary proceeding for which execution may issue from this Court
upon finality of this Opinion and Order.
All sitting. All concur.
ENTERED: February 18, 2016.
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