Disciplinary Counsel v. Wallace , 138 Ohio St. 3d 350 ( 2014 )

[Cite as Disciplinary Counsel v. Wallace, 138 Ohio St. 3d 350, 2014-Ohio-1128.]
DISCIPLINARY COUNSEL v. WALLACE.
[Cite as Disciplinary Counsel v. Wallace, 138 Ohio St. 3d 350,
2014-Ohio-1128.]
Attorneys—Misconduct—Client trust account improprieties—Engaging in
conduct involving dishonesty, fraud, deceit, or misrepresentation—Two-
year suspension, 12 months stayed on conditions.
(No. 2013-0573—Submitted September 10, 2013—Decided March 26, 2014.)
ON CERTIFIED REPORT by the Board of Commissioners on Grievances and
Discipline of the Supreme Court, No. 12-062.
____________________
Per Curiam.
{¶ 1} Respondent, Paul Lawrence Wallace of Columbus, Ohio, Attorney
Registration No. 0010369, was admitted to the practice of law in Ohio in 1980.
We suspended him from the practice of law for six months in May 2000, based on
his deliberate attempts to mislead his client into believing that the client’s civil
case was pending for more than a year after the United States District Court for
the Northern District of Ohio had dismissed it. Disciplinary Counsel v. Wallace,
89 Ohio St. 3d 113, 729 N.E.2d 343 (2000) (“Wallace I”). We denied his
application for reinstatement in February 2001 because there were additional
disciplinary proceedings pending against him and because it appeared that he had
failed to comply with the requirements of Gov.Bar R. X(3)(G) (requiring a
suspended attorney to complete one credit hour of continuing legal education for
each month of the attorney’s suspension and one hour of instruction related to
professional conduct for each six months of the suspension). Disciplinary
Counsel v. Wallace, 91 Ohio St. 3d 1434, 741 N.E.2d 896 (2001).
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{¶ 2} We dismissed the second disciplinary action against Wallace in
March 2002, finding that his resubmission of a former client’s background-
investigation documents to the Ohio Attorney General’s Office during his
suspension was a ministerial act that did not constitute the practice of law.
Disciplinary Counsel v. Wallace, 94 Ohio St. 3d 414, 763 N.E.2d 1154 (2002)
(“Wallace II”). We reinstated his license to practice law on March 6, 2002.
Disciplinary Counsel v. Wallace, 94 Ohio St. 3d 1249, 764 N.E.2d 438 (2002).
{¶ 3} On August 16, 2012, a probable-cause panel of the Board of
Commissioners on Grievances and Discipline certified a two-count complaint
filed by relator, disciplinary counsel, to the board. Having considered the parties’
stipulated facts, evidence, and misconduct, Wallace’s hearing testimony, and
three letters from character witnesses, a panel of the board found that Wallace had
engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation that
adversely reflected on his fitness to practice law by (1) failing to hold a client’s
insurance settlement and a separate cash payment in a separate client trust
account, (2) failing to maintain a record of the funds he held on behalf of the
affected client, and (3) misappropriating the client’s funds. The panel
recommended that Wallace be suspended from the practice of law for two years,
with six months stayed on conditions, and that he be required to serve one year of
monitored probation.
{¶ 4} The board adopted the panel’s findings of fact and misconduct and
agreed with the panel’s recommendation that Wallace be suspended for two years
and serve one year of monitored probation on reinstatement, but it recommended
that the stayed portion of that suspension be increased to one year. Wallace
objects to the board’s recommendation that he serve an actual suspension from the
practice of law, arguing that a fully stayed suspension with monitored probation
will adequately protect the public from future harm. We overrule his objection
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and adopt the board’s findings of fact and misconduct and its recommended
sanction.
Misconduct
Count One
{¶ 5} In December 2008, Wallace represented Nigel Jackson in multiple
legal and business matters, including (1) an insurance claim for the theft of
Jackson’s BMW, (2) the incorporation of his business, Who Done It Productions,
L.L.C., (3) his efforts to publish a book he authored, (4) some real-estate matters
involving Jackson and his cousin, (5) an unsuccessful claim for reimbursement of
funeral expenses incurred by Jackson on behalf of Glen Jones, (6) a civil
judgment against Jackson and his girlfriend, Aisha Towles, and (7) an insurance
claim for the theft of property from Towles’s vehicle.
{¶ 6} Jackson paid Wallace a $300 retainer, but it is not clear whether they
reached an agreement regarding the fee for his services. Wallace claims that he
agreed to handle the insurance claim for the stolen BMW for $200 per hour, but
Jackson maintained that they never reached an agreement, and Wallace never
submitted an invoice for his time.
{¶ 7} Jackson was arrested and charged with drug trafficking in March
2009. Although Wallace did not represent him in his criminal case, he visited
Jackson in the Delaware County Jail on at least two occasions to discuss his other
legal matters. During one of those visits, Jackson executed a limited power of
attorney to permit Wallace to transfer the title for his BMW to his insurer, Liberty
Mutual. The power of attorney erroneously appointed Jackson as his own
attorney-in-fact, but Wallace testified that he successfully transferred the BMW
title to the insurer.
{¶ 8} In late July 2009, Liberty Mutual issued a $32,132.80 check to
Jackson and Towles and, pursuant to Jackson’s instructions, mailed it to
Wallace’s office. Wallace informed Jackson that he would deposit the check into
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his client trust account. Before depositing the check, he endorsed Jackson’s and
Towles’s names without obtaining their express permission to do so.
{¶ 9} From August through October 2009, Wallace misappropriated
Jackson’s entire $32,132.80 insurance settlement, paying $21,000 to himself and
using the remainder for other client obligations. In September 2009, Wallace
spoke with Jackson and informed him that he would “net $24,000.” Believing
that the check was for $24,000, Jackson authorized Wallace to disburse that
amount to others on his behalf, but Wallace did not have sufficient funds in his
client trust account to do so. He deposited $2,500 that he had received from
Towles into his client trust account and made a $1,000 distribution authorized by
Jackson. Although Wallace did not maintain any records to substantiate the
distributions he made on Jackson’s behalf or his fee, his bank records show that
he distributed $20,995 from his operating account to third parties on Jackson’s
behalf and retained $8,637.80 as his fee.
{¶ 10} In November 2009, Towles called Liberty Mutual and learned that
the check for the stolen BMW was $32,132.80 rather than the $24,000 that
Wallace had divulged to Jackson. When she confronted Wallace several days
later, he told her that the difference between the two amounts represented his legal
fees.
{¶ 11} On these facts, and in accordance with the parties’ stipulations, the
board found that Wallace violated Prof.Cond.R. 1.15(a) (requiring a lawyer to
hold the property of clients in an interest-bearing client trust account, separate
from the lawyer’s own property), 1.15(a)(2) (requiring a lawyer to maintain a
record for each client on whose behalf funds are held), 8.4(c) (prohibiting a
lawyer from engaging in conduct involving dishonesty, fraud, deceit, or
misrepresentation), and 8.4(h) (prohibiting a lawyer from engaging in conduct
that adversely reflects on the lawyer’s fitness to practice law). The board also
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found that there was insufficient evidence to establish an alleged violation of
Prof.Cond.R. 1.15(d) and therefore dismissed it.
Count Two
{¶ 12} During Jackson’s incarceration, he instructed Towles to deliver a
bag containing an undisclosed amount of cash to Wallace to be held for future
expenses associated with the publication of Jackson’s book. Towles delivered the
bag to Wallace at his office. Wallace did not retain any records to document the
receipt of this cash, but he maintains that the bag contained $7,500. He deposited
$2,500 of those funds into his client trust account on October 14, 2009, distributed
$1,000 from the account to Jackson’s company, and misappropriated the
remaining $1,500 of that deposit by issuing a check for $500 to Owen Loan
Servicing, L.L.C., and a check for $1,000 to himself. On November 24, 2009, he
deposited the remaining $5,000 into his operating account, which also contained
funds belonging to him, and issued a $10,000 check to Jackson’s company from
the account, representing the remainder of the $7,500 cash payment he had
received from Towles and a final disbursement of the Liberty Mutual settlement
proceeds.
{¶ 13} The parties stipulated and the board found that this conduct
resulted in additional violations of Prof.Cond.R. 1.15(a), 1.15(a)(2), 8.4(c), and
8.4(h).
Sanction
{¶ 14} When imposing sanctions for attorney misconduct, we consider
relevant factors, including the ethical duties that the lawyer violated and the
sanctions imposed in similar cases. Stark Cty. Bar Assn. v. Buttacavoli, 96 Ohio
St.3d 424, 2002-Ohio-4743, 775 N.E.2d 818, ¶ 16. In making a final
determination, we also weigh evidence of the aggravating and mitigating factors
listed in BCGD Proc.Reg. 10(B).
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{¶ 15} The panel and board adopted the parties’ stipulated aggravating
factors, agreeing that Wallace has a prior disciplinary record, acted with a selfish
motive, and engaged in multiple offenses. See BCGD Proc.Reg. 10(B)(1)(a), (b),
and (d). With regard to mitigation, they adopted the parties’ stipulation that
Wallace made a full and free disclosure during the disciplinary process, that he
has a positive reputation in the legal community, and that the client was paid in
full and suffered no financial harm as a result of Wallace’s misconduct. See
BCGD Proc.Reg. 10(B)(2)(d) and (e). They also accorded some mitigating effect
to the fact that the six-month suspension we imposed in Wallace I resulted in an
actual suspension of over 20 months because we had denied his application for
reinstatement during the pendency of Wallace II, which was ultimately dismissed.
{¶ 16} Relator argued that the appropriate sanction for Wallace’s
misconduct is a two-year suspension with one year of monitored probation on his
reinstatement to the practice of law. Wallace argued that a fully stayed
suspension with monitored probation would adequately protect the public from
future harm.
{¶ 17} The panel acknowledged our precedent, which identifies
disbarment as the presumptive sanction for misappropriation of client funds but
permits the imposition of lesser sanctions in the presence of significant mitigating
factors. See, e.g., Disciplinary Counsel v. Burchinal, 133 Ohio St. 3d 38, 2012-
Ohio-3882, 975 N.E.2d 960, ¶ 17 (stating that the presumptive sanction for
misappropriation of client funds is disbarment, but imposing a two-year
suspension with 18 months stayed, in recognition of significant mitigating factors,
including the absence of a disciplinary record, full cooperation with the
disciplinary process, letters attesting to the attorney’s diligence and good
character, and a documented mental impairment that was being treated with good
prognosis).
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{¶ 18} But in recommending that we suspend Wallace for two years with
six months stayed and require him to serve one year of monitored probation upon
reinstatement, the panel considered five cases cited by relator in which we
imposed sanctions ranging from an indefinite suspension to a six-month
suspension.
{¶ 19} In Columbus Bar Assn. v. Peden, 134 Ohio St. 3d 579, 2012-Ohio-
5766, 984 N.E.2d 1, we indefinitely suspended an attorney, who had a prior
disciplinary record, because he had neglected several client matters, commingled
personal and client funds, failed to maintain adequate records of the client funds
in his possession, failed to return unearned funds, and failed to cooperate in the
disciplinary investigation. Id. at ¶ 16, 22, 27, 33, 38, 43, 54.
{¶ 20} We imposed a two-year suspension, followed by one year of
monitored probation, and continuing-legal-education requirements on an attorney
who had misappropriated client funds to pay personal and business expenses,
failed to promptly deliver funds that clients were entitled to receive, and
fabricated a fee dispute in an effort to defend his actions. Columbus Bar Assn v.
King, 132 Ohio St. 3d 501, 2012-Ohio-873, 974 N.E.2d 1180, ¶ 6, 16. Unlike
Wallace, King did not have a prior disciplinary record in his more than 30 years
of practice. Id. at ¶ 13.
{¶ 21} In Disciplinary Counsel v. Simon-Seymour, 131 Ohio St. 3d 161,
2012-Ohio-114, 962 N.E.2d 309, ¶ 3-6, 12, we suspended an attorney for two
years with six months stayed on conditions after she had misappropriated money
from a decedent’s estate, overdrew her client trust account, falsely represented to
the probate court that she had satisfied certain estate obligations that she had not
paid, and failed to reasonably communicate with her clients. Mitigating factors
included that Simon-Seymour had no prior discipline, made complete restitution
to the affected client, and cooperated in the disciplinary process, while the only
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aggravating factor was that she had engaged in a pattern of misconduct by
mishandling client funds over a period of several years. Id. at ¶ 9.
{¶ 22} Likewise, in Disciplinary Counsel v. Gildee, 134 Ohio St. 3d 374,
2012-Ohio-5641, 982 N.E.2d 704, ¶ 5-14, 18, we suspended an attorney for two
years, with the second year stayed on the conditions that she commit no further
misconduct and make full restitution to the affected client after she had
misappropriated more than $8,000 in client funds and made false statements to the
relator during the course of the disciplinary investigation. Mitigating factors in
that case, including the absence of a prior disciplinary record, full and free
disclosure to the board during the disciplinary process, positive character
evidence, and Gildee’s genuine expression of remorse at the disciplinary hearing,
were balanced against aggravating factors, including a dishonest and selfish
motive, multiple offenses, resulting harm to the victim, and Gildee’s failure to
make restitution. Id. at ¶ 16-17.
{¶ 23} At the opposite end of the spectrum, we imposed a six-month
suspension to be served consecutively to an attorney’s ongoing suspension for
previous misconduct, after finding that he engaged in fraud and dishonesty, failed
to deposit and maintain client funds in a separate client trust account, failed to
maintain complete records of client funds in his possession, and used funds
belonging to a client to pay personal and business expenses. Disciplinary
Counsel v. Manning, 119 Ohio St. 3d 52, 2008-Ohio-3319, 891 N.E.2d 743.
{¶ 24} Based on these cases, the panel’s recommended sanction of a two-
year suspension with six months stayed, plus one year of monitored probation,
falls within the range of sanctions we have imposed for comparable misconduct.
The board, however, modified the panel’s recommendation to stay the entire
second year of the suspension.
{¶ 25} Wallace objects to the board’s recommendation and argues that any
suspension we impose should be stayed in its entirety because he has put systems
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in place to prevent future misconduct and he has already served an additional 14
months of actual suspension beyond the six-month suspension imposed in
Wallace I, despite our dismissal of the alleged misconduct in Wallace II. But the
only case that Wallace cites in which we imposed a fully stayed suspension for
comparable conduct is Disciplinary Counsel v. Edwards, 134 Ohio St. 3d 271,
2012-Ohio-5643, 981 N.E.2d 857. And Edwards involved significant mitigating
factors that are not present in this case—the attorney had practiced more than 30
years with no prior discipline and his diagnosed mental disability was found to
have contributed to the charged misconduct. Id. at ¶ 10, 15.
{¶ 26} Although the misconduct, aggravating factors, and mitigating
factors in the cases cited by the panel and board are not identical to the
circumstances presented here, they are more analogous to the present case than
are the factors in Edwards. We universally impose a period of actual suspension
for attorney misconduct involving dishonesty and the misappropriation of client
funds. See Disciplinary Counsel v. Fowerbaugh, 74 Ohio St. 3d 187, 190, 658
N.E.2d 237 (1995) (holding that misconduct involving dishonesty, fraud, deceit,
or misrepresentation warrants an actual suspension from the practice of law).
{¶ 27} Despite Wallace’s protests to the contrary, the recommended
sanction already takes into account the mitigating factors that he urges us to
consider. Indeed, in its report, the panel stated that its recommendation that the
final six months of the suspension be stayed is based solely on the fact that he had
served an additional 14 months in excess of the six-month suspension we imposed
in Wallace I. The board recommended extending the stay to the entire second
year of the two-year suspension. Based on the foregoing, we overrule Wallace’s
objections, adopt the findings of fact and conclusions of law of the board, and find
that a two-year suspension, with the second year stayed, plus a one-year period of
monitored probation upon Wallace’s reinstatement to the practice of law is the
appropriate sanction in this case.
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{¶ 28} Accordingly, Paul Lawrence Wallace is suspended from the
practice of law in Ohio for two years, with the second year stayed on the
condition that he commit no further misconduct. On reinstatement to the practice
of law, he will serve a one-year period of monitored probation in accordance with
Gov.Bar R. V(9). Costs are taxed to Wallace.
Judgment accordingly.
PFEIFER, O’DONNELL, KENNEDY, and FRENCH, JJ., concur.
O’CONNOR, C.J., and LANZINGER and O’NEILL, JJ., dissent and would
decline to stay any portion of the two-year suspension.
____________________
Scott Drexel, Disciplinary Counsel, and Joseph M. Caligiuri, Senior
Assistant Disciplinary Counsel, for relator.
Paul Lawrence Wallace, pro se.
_________________________
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