In the Matter of Eric J. Davidson ( 2014 )

THE STATE OF SOUTH CAROLINA
In The Supreme Court
In the Matter of Eric J. Davidson, Respondent.
Appellate Case No. 2013-000691
Opinion No. 27432
Heard August 7, 2013 – Filed August 13, 2014
DISBARRED
Disciplinary Counsel Lesley M. Coggiola and Assistant
Disciplinary Counsel Barbara M. Seymour, of Columbia,
for Office of Disciplinary Counsel.
Eric J. Davidson, of Baltimore, Maryland, pro se
Respondent.
PER CURIAM: In this attorney discipline matter, the Office of Disciplinary
Counsel (ODC) filed formal charges against Eric J. Davidson (Respondent) based
on allegations of misconduct. On July 9, 2012, Respondent was served with a
notice of filing of formal charges and formal charges by certified mail. After two
extensions, Respondent did not file an answer.
By administrative order dated December 14, 2012, the Commission on
Lawyer Conduct (the Commission) declared Respondent in default for failing to
respond to the formal charges against him; thus, it deemed the facts contained in
the formal charges admitted.1
1
See Rule 24(a), RLDE, Rule 413, SCACR ("Failure to answer the formal charges
shall constitute an admission of the allegations. On motion of disciplinary counsel,
the administrative chair may issue a default order setting a hearing to determine the
appropriate sanction to recommend to the Supreme Court.").
On February 26, 2013, a Panel of the Commission (the Panel) held a hearing
to determine the appropriate sanctions. Following this hearing, the Panel
recommended that Respondent be disbarred, as well as other conditions.
We adopt the Panel's recommendation of disbarment.
FACTUAL/PROCEDURAL HISTORY
A. Complaint
Respondent hired a lawyer to represent him in a domestic matter (the
domestic lawyer). After the representation ended, the domestic lawyer hired
another lawyer (the settlement lawyer) to collect unpaid attorneys' fees from
Respondent. The settlement lawyer negotiated an agreement with Respondent
whereby Respondent agreed to pay the domestic lawyer two payments of $2,000.
In January 2009, Respondent made the first payment. In March 2009,
Respondent sent the settlement lawyer the second $2,000 payment. Upon receipt
of the check, the settlement lawyer noticed that Respondent wrote the check from
his trust account. He telephoned Respondent, who stated that he had earned a fee
and that he was paying his settlement obligation from that fee. The settlement
lawyer informed Respondent that it was improper to pay his personal obligations
directly from a trust account, even if it was an earned fee. Respondent agreed to
replace the trust account check with a personal check. Respondent asked the
settlement lawyer if he could wire the payment directly into his account. The
settlement lawyer agreed, and Respondent completed the wire transaction. When
the settlement lawyer later received confirmation from his bank, he noticed that the
payment again drew on Respondent's trust account. Therefore, the settlement
lawyer filed a complaint with ODC.
B. Financial Recordkeeping Investigation
As a result of the complaint, ODC initiated an investigation and uncovered
further financial misconduct. From 1988 until 2003, Respondent was a partner in a
law firm practicing general litigation and real estate. From the Fall of 2003 until
April 2004, Respondent had a solo practice, but kept open various trust accounts
from his prior partnership. In 2004, Respondent entered into a new partnership in
which he held a majority interest, Davidson & Bradshaw. Respondent continued
to practice in the area of real estate law, while his new law partner handled tax,
business, and estate matters at the firm. Davidson & Bradshaw opened several
trust accounts for use by the firm, but Respondent kept open various trust accounts
from his prior law firms.
In June 2009, Respondent moved to Maryland.2 In February 2010, he began
to perform legal work for a nonprofit agency; however, Davidson & Bradshaw
continued to operate until September 2010.
Until 2004, Respondent's title insurance company reconciled some of his
trust accounts; other trust accounts were not reconciled. From 2004 until 2007,
Respondent did not reconcile any of his trust accounts. In 2007, Respondent hired
a bookkeeper to reconcile the Davidson & Bradshaw's trust accounts; however,
Respondent did not supervise the reconciliation process and did not review any
reports from the bookkeeper. Moreover, Respondent did not make arrangements
for the bookkeeper to reconcile several of the trust accounts he kept open from his
former law practices, some of which still contained client funds.
In addition, paralegals employed by Davidson & Bradshaw prepared
settlement statements for Respondent's real estate closings, entered the data into
bookkeeping software, and prepared disbursement checks from an account
designated as the real estate trust account. Respondent's paralegals were given
signatory authority on this real estate trust account. Respondent did not verify that
checks matched settlement statements prior to closing or disbursement and failed
to ensure that all earned fees were withdrawn from the trust account in a timely
fashion.
Furthermore, Respondent did not maintain an accounting journal, accurate
client ledgers, bank statements, images of canceled checks, or deposit records as
required by Rule 417, SCACR. Likewise, Respondent failed to identify and
correct numerous discrepancies in various client transactions because the accounts
were not being properly reconciled.
When Respondent moved to Maryland in 2009, he took no steps to disburse
the funds in the old trust accounts or make any steps to close the accounts. One of
those trust accounts contained positive ledger balances, or undispersed client
2
At oral arguments before the Court, Respondent stated that, even at the time of
the formation of the partnership, it had always been his intention to "phase out" his
work at Davidson & Bradshaw and move into the non-profit sector.
funds, dating to 2004 and totaling approximately $1,000. That account also had
thirteen outstanding checks totaling approximately $3,600 dating to November
2005.
Another old trust account contained a balance of approximately $41,000.
The limited records provided by Respondent indicate that, with respect to that trust
account, there were (1) 95 outstanding checks totaling approximately $21,000 and
dating to 2003; (2) approximately $25,000 in positive ledger balances, or
undispersed client funds, some as old as ten years; (3) seven negative ledger
balances totaling approximately $1,900; and (4) approximately $5,600 in
unidentified transactions. Respondent did not produce any bank statements for this
account. Since the initiation of these proceedings, Respondent has neither
produced an accounting of these funds, nor personally attempted to reconcile this
account.
A final trust account has had a balance of over $10,000 since at least
2008. Respondent did not produce any reconciliations of this account or an
accounting of these funds.3
Based on these facts, ODC alleged that Respondent engaged in misconduct
as defined in Rule 7(a), RLDE, Rule 413, SCACR, in that he violated the Rules of
Professional Conduct, Rule 407, SCACR: Rules 1.15, 8.4(d), and 8.4(e); and Rules
7(a)(1) and 7(a)(5), RLDE, Rule 413, SCACR.
Panel's Recommendation
Respondent did not appear before the Panel, and therefore the Panel deemed
him to have admitted the factual allegations and conceded the merits of the
allegations of misconduct.4 Therefore, the Panel found Respondent violated the
3
During ODC's investigation, Respondent provided limited financial records to
ODC. Rather, his former law partner provided the requisite information to the best
of his ability, as he was unaware of the existence of all of the former trust
accounts. He further participated in the investigation as to all of the accounts
owned by Davidson & Bradshaw. ODC did not uncover any wrongdoing by
Respondent's former law partner.
4
See Rule 24(b), RLDE, Rule 413, SCACR ("If the respondent should fail to
appear when specifically so ordered by the hearing panel . . . , the respondent shall
be deemed to have admitted the factual allegations which were to be the subject of
following Rules of Professional Conduct, Rule 407, SCACR: Rule 1.15
(Safekeeping Property), Rule 8.4(d) (Conduct involving Dishonesty, Fraud, Deceit
or Misrepresentation), and Rule 8.4(e) (Conduct Prejudicial to the Administration
of Justice). The Panel also determined the Respondent violated Rule 417, SCACR
(Financial Recordkeeping).
The Panel considered two aggravating circumstances: Respondent's prior
disciplinary offenses5 and Respondent's failure to answer the formal charges or
appear at the hearing.
Based on these findings, the Panel recommended that this Court: (1) disbar
Respondent from the practice of law; (2) order Respondent, within 120 days of this
order, to file a report of outstanding client obligations and unidentified funds in all
trust accounts, including documentation demonstrating that Respondent has fully
disbursed any remaining client funds from all accounts and will close those
accounts; (3) order Respondent to pay restitution to any clients who were
underpaid; (4) order Respondent to pay any unidentified funds to the Lawyers'
Fund for Client Protection; and (5) pay the costs of these proceedings.
DISCUSSION
The sole authority to discipline attorneys and decide appropriate sanctions
rests with this Court. In re Welch, 355 S.C. 93, 96, 584 S.E.2d 369, 370 (2003); In
re Thompson, 343 S.C. 1, 10–11, 539 S.E.2d 396, 401 (2000). We are not bound
by the Panel's recommendation and may make our own findings of fact and
conclusions of law. In re Hazzard, 377 S.C. 482, 488, 661 S.E.2d 102, 106 (2008).
Nonetheless, the findings and conclusions of the Panel are entitled much respect
and consideration. Thompson, 343 S.C. at 11, 539 S.E.2d at 401.
such appearance and to have conceded the merits of any motion or
recommendations to be considered at such appearance.").
5
Respondent's disciplinary history includes an admonition in 2001 citing Rules 1.7
(Conflict of Interest: Current Clients) and 1.9 (Duties to Former Clients) of the
Rules of Professional Conduct, Rule 407, SCACR; and an admonition in 2006
citing Rules 1.5 (Fees), 4.1 (Truthfulness in Statements to Others), 8.4(a)
(Violating the Rules of Professional Conduct), 8.4(b) (Criminal Act Reflecting
Adversely on Lawyer's Honesty), and 8.4(e) (Conduct Prejudicial to the
Administration of Justice) of the Rules of Professional Conduct, Rule 407,
SCACR.
We agree with the Panel that Respondent committed misconduct with
respect to the matters discussed above. While Respondent appeared and
represented himself at the hearing before this Court, he took no exception to the
Panel's findings. Accordingly, he is "deemed to have accepted the Panel's findings
of fact, conclusions of law, and recommendations" as to these matters. In re
Prendergast, 390 S.C. 395, 396 n.2, 702 S.E.2d 364, 365 n.2 (2010) (citing Rule
27(a), RLDE, Rule 413, SCACR, which states, "The failure of a party to file a brief
taking exceptions to the report constitutes acceptance of the findings of fact,
conclusions of law, and recommendations.").
Thus, we find Respondent violated the following Rules of Professional
Conduct, Rule 407, SCACR: Rule 1.15 (Safekeeping Property); Rule 8.4(d)
(Conduct involving Dishonesty, Fraud, Deceit or Misrepresentation), and Rule
8.4(e) (Conduct Prejudicial to the Administration of Justice); and Rule
417,SCACR (Financial Recordkeeping).
Respondent's misconduct, coupled with his failure to cooperate with or
answer the ODC investigation, failure to appear before the Panel, and failure to
provide any explanation for his lack of diligence in resolving this disciplinary
matter, warrant disbarment from the practice of law.6
This Court has recognized that "the primary purpose of disbarment . . . is the
removal of an unfit person from the profession for the protection of the courts and
the public, not punishment of the offending attorney." In re Pennington, 393 S.C.
300, 304, 713 S.E.2d 261, 263 (2011) (citing In re Burr, 267 S.C. 419, 423, 228
S.E.2d 678, 680 (1976)). Moreover, a central purpose of the disciplinary process is
to protect the public from unscrupulous and indifferent lawyers. In re Hall, 333
S.C. 247, 251, 509 S.E.2d 266, 268 (1998). In Hall, this Court said:
An attorney usually does not abandon a license to practice law
without a fight. Those who do must understand that "neglecting to
participate in a disciplinary proceeding is entitled to substantial
6
Currently, Respondent is administratively suspended from the practice of law for
failing to pay his bar dues and comply with Continuing Legal Education
requirements.
weight in determining the sanction." An attorney's failure to answer
charges or appear to defend or explain alleged misconduct indicates
an obvious disinterest in the practice of law. Such an attorney is likely
to face the most severe sanctions . . . .
333 S.C. at 251, 509 S.E.2d at 268 (quoting Matter of Sifly, 279 S.C. 113, 115, 302
S.E.2d 858, 859 (1983)) (alterations in original).
Not only did Respondent abandon his practice without proper closure, but he
then failed to engage in these disciplinary proceedings, despite asking for
numerous extensions of time. During oral arguments before this Court, he could
not explain his indifference toward resolving this matter. Therefore, at that time,
ODC took exception to the Panel's recommendation that Respondent be given 120
days to reconcile his trust accounts, and instead requested that the Court appoint a
receiver to handle the reconciliation of his trust accounts and proper disbursement
of the funds therein. We agree with ODC that Respondent has been given
numerous opportunities to reconcile his accounts, and even though it is in his best
interests to do so, he has not.7 We find that the appointment of a receiver would
best facilitate the closure of these accounts.
CONCLUSION
Therefore, Respondent is disbarred. Respondent is further ordered to pay
the costs of these proceedings within 60 days. Furthermore, a receiver shall be
appointed by separate order to reconcile Respondent's files and accounts, pay
restitution to any clients who were underpaid, or otherwise disperse funds from the
accounts according their ownership. In the event that unidentified funds remain in
the accounts, at the end of his appointment, the receiver will relinquish those funds
to the Lawyers' Fund for Client Protection, until the claims period expires.
Within fifteen (15) days of the date of this opinion, respondent shall file an
affidavit with the Clerk of Court showing that he has complied with Rule 30 of
Rule 413, SCACR, and shall also surrender his Certificate of Admission to the
Practice of Law to the Clerk of Court.
7
Based on the limited records in the possession of ODC, most of the funds in these
accounts appear to belong to Respondent.
DISBARRED.
TOAL, C.J., PLEICONES, BEATTY, KITTREDGE and HEARN, JJ.,
concur.