In re Mirabile , 1998 Mo. LEXIS 67 ( 1998 )

BENTON, Chief Justice.

The Chief Disciplinary Counsel charged that respondents James P. Moroney and Salvatore J. Mirabile filed a fraudulent petition for legal separation, and a sham stipulation, in order to avoid a child support obligation. Each information charged respondents with violating Rules of Professional Conduct 4-3.1, 4-3.3, 4-8.4(b) and (c). The informations request that both respondents be disbarred. Because this Court cannot find by a preponderance of the evidence that these respondents committed professional misconduct, the informations are dismissed.

I.

The Master’s findings of fact, conclusions of law and recommendations are advisory. In re Oberhellmann, 873 S.W.2d 851, 852-53 (Mo. banc 1994). This Court reviews the evidence de novo, determines independently the credibility, weight, and value of the testimony of the witnesses, determines the facts and draws its own conclusions of law. In re Gray, 813 S.W.2d 309, 310 (Mo. banc 1991).

This Court finds the following facts. In 1992, Joseph Leahy retained his close friend, respondent Moroney, to represent him in a child support modification action brought by his ex-wife in Jackson county circuit court. At that time, Leahy, a self-employed voice artist, was the president and sole shareholder of Jovial, Inc., a corporation that had as its sole business the sale of Leahy’s voice. At trial, Leahy submitted a Form 14 presumed child support worksheet, signed by Moroney, listing his monthly income as 17,00o.¹

On June 16, 1992, the Jackson county circuit judge (since deceased) met -with respondent Moroney and opposing counsel in chambers. The Jackson county judge advised that he was imputing income of $16,250 per month to Leahy and intended to raise Le-ahy’s child support obligation from $500 per month to $2,080 per month. Moroney immediately stated that his client would appeal. He angrily stated to the judge that his client would be better off if he and his present wife, Joyce Leahy, were divorced, and that if he had created the corporation, Joyce Leahy would have owned all the stock.

Moroney left the judge’s chambers and immediately met with Joyce Leahy in the hall nearby; Joseph Leahy was not in Missouri that day. Upon hearing that the judge planned to increase the child support for the child of Joseph’s first marriage, she also became angry. She asked Moroney to recommend an attorney to represent her in filing for divorce. Moroney recommended his friend, respondent Mirabile, among other attorneys. That day Joyce Leahy called Mirabile and asked him to represent her.

That night, Moroney and Joseph Leahy met with Mirabile at Mirabile’s family’s restaurant in Kansas City. Mirabile was serving as maitre d’ and, throughout a three-hour period, stopped at the Moroney-Leahy table to discuss the legal separation, child support, maintenance, and control of assets. Joyce Leahy was not present. By the next day, Moroney and Mirabile had prepared a petition for legal separation, a joint stipulation, and a joint motion for temporary order. Joyce Leahy, who had not yet met in person with her attorney Mirabile, appeared with opposing counsel Moroney in Ray county circuit court to file the petition.

Joyce Leahy later testified by deposition, but not in person, before the Master. She stated that her purpose for filing the petition was to protect herself and her five children’s financial interests. She testified she wanted a legal separation, and was angry with her husband for not having resolved the problems with his ex-wife.

Joyce Leahy verified the petition for legal separation, which alleged that the parties had separated the previous day. The joint stipulation provided that Joyce Leahy would receive $5,000 per month maintenance and that their five children would receive $2,000 per month child support, for a total of $7,000 — exactly the amount of the monthly income claimed on the Form 14 filed in the Jackson county case. The stipulation provided:

Petitioner and Respondent are jointly agreed, that pending a final hearing in the matter herein, all corporate assets in a certain entity known as Jovial, Inc., a corporation organized and lawfully operating in the State of California, shall be in the exclusive custody and control of Petitioner wife. Respondent further agrees forthwith, to do any and all things necessary to effectuate possession and control of corporate assets to Petitioner wife, upon execution of this Stipulation by counsel for the respective parties herein.

Petitioner and Respondent jointly agree, pending final disposition and hearing in the matter herein, that all joint checking, savings and financial accounts shall be immediately transferred to Petitioner wife. Respondent agrees to such transfer, forthwith, upon the execution of this Stipulation by counsel for the respective parties.

The petition was filed in Ray county on June 18, 1992. Seven days later, on June 25, the judge entered a temporary order implementing the stipulation.

■ Two days earlier, on June 23, the Jackson county judge had entered his order, in accordance with his previous conference with the attorneys. On June 26, the Jackson county judge met with Mirabile, Moroney and the opposing attorney in chambers. The judge told the respondents that he had learned about the Ray county filings and order, and that something “smelled.” The respondents denied any wrongdoing.

The attorney for Leahy’s ex-wife filed a complaint against Moroney based on this sequence of events. The Circuit Bar and Advisory Committees, after testimony by all involved counsel, found probable cause. Joseph Leahy refused to pay the Jackson county child support order until he was held in contempt in October 1992, four months after the Ray county order and while it was in effect.

On April 14,1993, nearly nine months after issuing the order - and after the disciplinary hearings began - the Ray county court, on its “own motion for the reason that there is some suggestion that there was impropriety in the issuance of the Temporary Order,” rescinded its order. The Leahys neither appealed this Ray county decision nor took any further action in that case. The Leahys reconciled and now live together in the state of California.

II.

Respondents allege that their prior testimony under oath before the Circuit Bar Committee and the Supreme Court Advisory Committee in this case may not be used against them. The Master admitted the pri- or testimony, over the respondents’ objection, after respondents had testified and were cross-examined before the Master.

Respondents object to admission of the prior testimony as a whole. They argue that the statements constitute hearsay, lack a proper foundation for impeachment, and do not constitute admissions of a party-opponent. The CDC argues that the prior testimony was properly admitted as admissions of a party-opponent.

A statement by a party-opponent is admissible if it meets the following requirements: (1) a conscious or voluntary acknowledgment by a party-opponent of the existence of certain facts; (2) relevant to the cause of the party offering the admission; and (3) unfavorable to, or inconsistent with, the position now taken by the party-opponent. Nettie’s Flower Garden, Inc. v. SIS, Inc., 869 S.W.2d 226, 229 (Mo.App. E.D. 1993).

The respondents’ prior testimony meets this three-part test. First, their testimony described the circumstances surrounding the filing of the petitions, thereby acknowledging the existence of certain facts. As for parts two and three of the test, key details of the prior testimony were inconsistent with respondents’ testimony before the Master, which inconsistency is clearly relevant in an attorney discipline ease. See Egelhoff v. Holt, 875 S.W.2d 543, 551 n. 4 (Mo. banc 1994). Respondents’ point is denied, and this Court will consider the prior testimony.

III.

The Master found that respondents initiated a frivolous, sham proceeding for legal separation, with the actual purpose of avoiding collection of a child support judgment in violation of Rules 4-3.1, 4-3.3 and 4-8.4(b) and (c). Under Rule 4-3.1, it is professional misconduct for an attorney to bring a frivolous proceeding. Rule 4-3.3 details a lawyer’s duty of candor toward a tribunal, and Rule 4-8.4 provides that conduct involving dishonesty, fraud, deceit or misrepresentation is professional misconduct. The respondents counter that they had a duty to follow their clients’ instructions.

Attorneys generally must follow their clients’ instructions, but only within the limits of the law. Jarnagin v. Terry, 807 S.W.2d 190 (Mo.App. W.D.1991). “The client has ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by law and the lawyer’s professional obligations.” Comment, Rule 1-1.2. The knowing failure to pay child support without good cause is a crime. Section 568.04.0 RSMo 1994; cf. In re Warren, 888 S.W.2d 334, 336 (Mo. banc 1994). Fraudulent conveyances of assets are void. Section 428.020 RSMo 1986 (repealed Aug. 28, 1992). The Rules of Professional Responsibility prohibit other improper conduct. Rule 4-8.4. An attorney may not assist or induce a client to engage in criminal or fraudulent or other improper conduct, Rule 4-8.4(a), but a lawyer may discuss the legal consequences of any course of conduct with a client. Rule 4-1-2.

The Master concluded that the respondents crossed this line, finding only the complainant’s testimony credible, and finding unbelievable most of the other witnesses (including the circuit judge and the present Mrs. Leahy, both of whom testified only by deposition). The Master found suspicious that the respondents filed the legal separation so quickly after the Jackson county order, and that the respondents and their clients were close friends. According to the Master, the contempt order against Joseph Leahy, and his contumacious refusal to pay child support, demonstrated that the respondent attorneys intended to use the Ray county filings to assist or induce the Leahys in avoiding the child support obligation. Ultimately, however, the Master recommended public sanctions less than disbarment, but the CDC recommends that respondents be disbarred.

This Court disciplines attorneys in order to protect the public and to maintain the integrity of the profession. In re Maier, 664 S.W.2d 1, 2 (Mo. banc 1984). To disbar an attorney, it must be clear that the attorney is not fit to continue in the profession; disbarment is reserved only for clear cases of severe misconduct. In re Forge, 747 S.W.2d 141, 145 (Mo. banc 1988).

The evidence does not support any sanction. In disciplinary proceedings, the CDC must prove the charges by a preponderance of the evidence. In re Howard, 912 S.W.2d 61 (Mo. banc 1995); In re Elliott, 694 S.W.2d 262, 263 (Mo. banc 1985); In re Harris, 890 S.W.2d 299, 299 (Mo. banc 1994); In re Griffey, 873 S.W.2d 600, 601 (Mo. banc 1994); Highfill v. Brown, 320 S.W.2d 493, 497 (Mo.1959). In this case, the CDC has not proved the charges of professional misconduct by a preponderance of the evidence.

The CDC argues that Moroney and Mira-bile knew that the legal separation was frivolous and a sham. To the contrary, the Leah-ys testified that they actually separated, that they told their attorneys that they desired a legal separation, and that they, in fact, complied with the terms of the Ray county order. The respondent attorneys testified that they believed the separation was real. Lawyers are responsible for pleadings and other documents prepared in litigation, but need not have personal knowledge of matters asserted in documents submitted to courts because such documents contain assertions of the client, not the lawyer. See comment, Rule k-3.3. Lawyers must make an inquiry reasonable under the circumstances. Rule 55.03(b).

Emphasizing that the Master found all this testimony incredible, the CDC argues that this credibility finding indicates that respondents acted fraudulently. The Master’s determinations of credibility are advisory only and do not constitute evidence of professional misconduct. In this case, the CDC may not meet its burden of proof merely by showing inconsistencies in the testimony of the respondents and their clients. True, this Court has considered false statements to a disciplinary tribunal as an aggravator in imposing sanctions, but only where the CDC offered sufficient additional evidence to support the charges. In re Waldron, 790 S.W.2d 456, 461 (Mo. banc 1990).

The CDC also argues that the respondents have failed to rebut or explain the suspicious circumstances surrounding the filings, and that this constitutes circumstantial evidence of fraud. A charge of professional misconduct does not create a rebuttable presumption of professional misconduct.

It is professional misconduct for a lawyer to engage in conduct involving fraud. Rule i~8.Jf(c); see also Rule 1-9.1 (defining fraud). Fraudulent intent may be shown by “badges of fraud,” one of which is “inability to pay debts as they become due.” Adams v. Richardson, 337 S.W.2d 911, 916 (Mo.1960); see also Vaughn v. Christian, 472 S.W.2d 337, 338-39 (Mo.1971). The Master and the separate opinion both emphasize that the Ray county judge ordered Leahy to pay his present wife all his “claimed” income. The Ray county order did not convey all of Le-ahy’s income but rather $7,000 of his $16,250 monthly income. Leahy was solvent at all relevant times. As the later contempt judgment held, Leahy — while subject to the Ray county order — was able to pay his child support obligations because he controlled the income his personal services produced.

On the key issue, the respondents and their clients testified consistently and adamantly that the clients truly desired a legal separation, and under the terms in the stipulation. The CDC’s evidence does not overcome this clear, consistent evidence. Most importantly, the Ray county judge testified, by deposition, that the respondent attorneys told him of the Jackson county order at their first appearance in Ray county. In fact, the Ray county judge testified that he and the Jackson county judge discussed the cases shortly after both orders were entered, and months later at a judicial conference. The Ray county judge’s deposition shows that the respondent attorneys did not perpetuate a fraud on the Ray county court. The Ray county judge testified that he, in fact, agreed with the position of Joseph Leahy in the Jackson county proceeding.

The CDC also invokes a judgment, where another Jackson county judge determined that, for purposes of service of process, Joseph Leahy resided at the same address in California as Joyce Leahy, in October 1992, during the period of alleged separation. First, there is absolutely no evidence that Mirabile knew anything about this judgment. Second, Moroney, who actually opposed this judgment, had a reasonable basis in fact to believe that the Leahys were still separated in October, because their living arrangements were, by all accounts, complex during the nine-month life of the Ray county order of legal separation.

The CDC points to other evidence suggesting that the Leahys still lived together after the petition was filed, including evidence that Joyce Leahy moved to the Los Angeles area, where.Joseph Leahy was living. Both respondents testified that they were advised by their clients that they were separated. Mira-bile testified that when he called Joyce Le-ahy at her Missouri address, she answered. Mirabile’s contemporaneous billings were to Joyce Leahy at her Missouri address, never at the California address where the CDC claims they lived together. That the Leahys reconciled by the summer of 1993 is not inconsistent with separation a year earlier.

The Master and the CDC infer collusion because Moroney and Mirabile are friends and were also friends of their clients. Absent some other restriction, attorneys may represent their close friends.

The Master found that the order of contempt against Joseph Leahy — issued four months after the Ray county filings — shows that their purpose was to avoid the Jackson county child support order. There is no evidence that the respondents encouraged Joseph Leahy to refuse to pay his child support, nor any proof that he was ever unable to pay the child support (as he candidly testified he had the resources to pay it). The contempt order only shows that Joseph Leahy did not want to pay the child support, and does not constitute evidence of misconduct on the part of the respondents.

The CDC also suggests that the fact that Joseph Leahy appealed the child support order demonstrates that Moroney and Mirabile tried to help him avoid the obligation. See Leahy v. Leahy, 858 S.W.2d 221 (Mo. banc 1993). An attorney does not commit professional misconduct by filing a nonfiivolous appeal. The question here is whether the respondents knew, or should have known after an inquiry reasonable under the circumstances, that they were filing a fraudulent, sham petition for legal separation. See Rule 55.03(b). There is no question that Joseph Leahy did not want to pay the child support, fought the order, and was ultimately held in contempt for nonpayment. This does not demonstrate that the respondents unethically assisted him in avoiding the obligation.

The CDC proves that Moroney angrily stated to the Jackson county judge, the day before he filed a petition for legal separation, that his client would be better off divorced and that if he had been his attorney at the time, the corporation would have been created with Joyce Leahy as the owner. An attorney may discuss the legal consequences of any course of conduct with a client, so long as the attorney does not assist or induce a client to engage in criminal, fraudulent, or other improper conduct. In this case, the preponderance of the evidence does not support the charges of professional misconduct.

IV.

Given the balance of evidence in these discipline cases, this Court dismisses the in-formations against both Moroney and Mira-bile.

COVINGTON, WHITE and WOLFF, JJ., concur. HOLSTEIN, J., concurs in part and dissents in part in separate opinion. PRICE and LIMBAUGH, JJ., concur in separate opinion of HOLSTEIN, J.

1 . Moroney was not charged with any misconduct concerning the Form 14 filed in Jackson county.