Office of Lawyer Regulation v. Pamela J. Smoler , 365 Wis. 2d 109 ( 2015 )

2015 WI 97
SUPREME COURT OF WISCONSIN
CASE NO.: 2014AP804-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against
Pamela J. Smoler, f/k/a Pamela J. Smelzer,
Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Pamela J. Smoler f/k/a Pamela J. Smelzer,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST SMOLER
OPINION FILED: October 30, 2015
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING:
ATTORNEYS:
2015 WI 97
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2014AP804-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Pamela J. Smoler, f/k/a Pamela J.
Smelzer, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant, OCT 30, 2015
v. Diane M. Fremgen
Clerk of Supreme Court
Pamela J. Smoler f/k/a Pamela J. Smelzer,
Respondent.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. We review the report and recommendation
of Referee Lisa C. Goldman that the license of Attorney Pamela
J. Smoler, formerly known as Pamela J. Smelzer, be suspended for
a period of nine months for professional misconduct and that she
pay the full costs of this proceeding, which are $2,869.61 as of
March 18, 2015. The referee also recommended that Attorney
Smoler be required to make restitution of $45,059.35 to one
client.
No. 2014AP804-D
¶2 Attorney Smoler failed to file an answer to the OLR's
complaint, and she failed to appear or participate in the
proceedings in any way. Accordingly, we find it appropriate to
declare her to be in default. Upon careful review of the
matter, we agree with the referee that Attorney Smoler's
professional misconduct warrants a nine-month license
suspension. We further agree that she should be ordered to pay
the full costs of this proceeding. We also agree with the
referee that a restitution award in the amount of $45,059.35 is
appropriate. Although the Office of Lawyer Regulation (OLR) has
informed the court that there is no reasonably ascertainable
amount for which a restitution award would be appropriate, the
referee made findings of fact supporting a restitution award.
There is no indication that those findings of fact are clearly
erroneous.
¶3 Attorney Smoler was admitted to practice law in
Wisconsin in 1988. She currently resides in Florida. Her
license to practice law in Wisconsin was temporarily suspended
on July 11, 2011, as a result of her willful failure to
cooperate in an OLR investigation concerning her conduct.1
Attorney Smoler's law license is also administratively suspended
for failure to pay State Bar dues, failure to comply with
continuing legal education requirements, and failure to file a
1
The OLR investigation at issue concerns the first client
matter detailed in the complaint filed by the OLR in this case.
2
No. 2014AP804-D
trust account certification. Attorney Smoler has no prior
disciplinary history in Wisconsin.
¶4 On April 11, 2014, the OLR filed a complaint alleging
that Attorney Smoler had engaged in seven counts of misconduct
involving two client matters. As noted, Attorney Smoler failed
to file an answer to the complaint and failed to participate in
the matter in any way. On October 23, 2014, the OLR filed a
motion for default judgment. The referee's report and
recommendation was filed on February 27, 2015.
¶5 The first client matter detailed in the OLR's
complaint involved Attorney Smoler's representation of D.S. and
K.S. (collectively, the S.s). The S.s hired Attorney Smoler to
represent them in a medical malpractice claim for injuries K.S.
suffered following surgery and treatment at the University of
Wisconsin (UW) Hospital and Clinics. Attorney Smoler filed a
lawsuit on the S.s' behalf in October 2001, and in late 2003, a
jury returned a verdict in their favor.
¶6 In 2005, Attorney Smoler asked the S.s if they would
loan her $50,000 so that she could pursue a medical malpractice
lawsuit on behalf of another client, C.J., that would be brought
against one of the same doctors involved in the S.s' case. The
S.s agreed to loan the $50,000 to Attorney Smoler. To
memorialize the loan, Attorney Smoler drafted a document
entitled "Loan/Promissory Note" which set forth the terms of the
loan. The loan called for five and one-half percent interest
annually or statutory interest as awarded by the court. The
loan was for two years. Attorney Smoler did not put any
3
No. 2014AP804-D
language in the note providing the S.s with an opportunity to
speak with alternate counsel about the loan. The loan was
signed by the parties on August 31, 2005. Attorney Smoler was
paid $50,000 on September 13, 2005. She deposited the money
into her business checking account.
¶7 Two years passed without Attorney Smoler making a
payment to the S.s on the loan. The S.s agreed to extend the
terms of the note one more year at Attorney Smoler's request.
By October 2009, no payments had been made on the loan. The S.s
hired an attorney who demanded payment. Attorney Smoler failed
to pay the loan in response to a demand letter from the S.s'
counsel.
¶8 The S.s filed a grievance with the OLR. Attorney
Smoler apologized for her inability to repay the loan, saying
that her representation of the plaintiffs on a contingent fee
basis had resulted in financial disaster for both her clients
and herself.
¶9 On October 29, 2010, Attorney Smoler filed a voluntary
petition for Chapter 7 bankruptcy in the United States
Bankruptcy Court for the Western District of Wisconsin. She
listed the S.s as creditors. Attorney Smoler was granted a
bankruptcy discharge on March 28, 2012. The discharge included
the debt she owed to the S.s.
¶10 As part of its investigation into the S.s' grievance,
the OLR wrote to Attorney Smoler on December 15, 2010, and
requested that she provide copies of her state and federal
income tax returns for the years 2005 through 2009. Attorney
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No. 2014AP804-D
Smoler failed to respond. On April 1, 2011, the OLR filed a
notice of motion and motion requesting an order to show cause
why Attorney Smoler's license should not be suspended for her
willful failure to cooperate with the OLR's investigation of the
S.s' grievance. Attorney Smoler's license was temporarily
suspended on July 11, 2011.
¶11 The OLR's complaint alleged the following counts of
misconduct with respect to Attorney Smoler's representation of
the S.s:
[Count One] By entering into the Loan
transaction with the [S.s] without providing the [S.s]
a reasonable opportunity to seek the advice of counsel
in the transaction and without the [S.s] consenting in
writing to the Loan, Smoler violated former [Supreme
Court Rule (SCR)] 20:1.8(a),2 effective prior to
July 1, 2007.
2
Former SCR 20:1.8(a) (in effect prior to July 1, 2007)
provides:
A lawyer shall not enter into a business
transaction with a client or knowingly acquire an
ownership, possessory, security or other pecuniary
interest adverse to a client unless:
(1) the transaction and terms on which the lawyer
acquires the interest are fair and reasonable to the
client and are fully disclosed and transmitted in
writing to the client in a manner which can be
reasonably understood by the client;
(2) the client is given a reasonable opportunity
to seek the advice of independent counsel in the
transaction; and
(3) the client consents in writing thereto.
5
No. 2014AP804-D
[Count Two] By failing to fully cooperate in
OLR's investigation in the [S.] grievance matter,
Smoler violated SCR 22.03(6).3
¶12 The other client matter detailed in the OLR's
complaint involved Attorney Smoler's representation of C.J. and
her sister, C.H. During the spring of 2005, C.J. and C.H.
contacted Attorney Smoler regarding potential representation of
C.J. in a medical malpractice claim against UW Hospital and
Clinics. Attorney Smoler requested an upfront fee concerning
the initial risks of the suit, including to determine whether a
notice of claim was timely filed and to find an expert witness
willing to testify. Attorney Smoler asked for $50,000, to be
paid over six months. She indicated that the money would be
placed into her trust account. The fee agreement provided that
the client would be billed a flat fee of $50,000, which would
cover, in part, attorneys fees and costs, to be paid in the
following manner: $10,000 prior to the start of the
investigation, and the remainder $40,000 no later than
December 15, 2005. C.J.'s father paid the $50,000 fee in two
installments. Both checks were deposited into Attorney Smoler's
business account rather than her trust account.
¶13 On October 25, 2005, C.J. gave her sister, C.H., power
of attorney to act as her guardian and the authority to
3
SCR 22.03(6) provides that "[i]n the course of the
investigation, the respondent's wilful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."
6
No. 2014AP804-D
negotiate, manage, and make decisions related to the claims of
C.J. against UW Hospital and Clinics and the treating physician.
In January 2006, C.H. requested an update on the case from
Attorney Smoler. She again requested an update during a
February 9, 2006 telephone conversation.
¶14 On March 2, 2006, Attorney Smoler sent an invoice
indicating that $4,940.65 had been spent in time and expenses.
She failed to provide any other invoices regarding the case.
Attorney Smoler filed a medical malpractice action on behalf of
C.J. on March 8, 2007, in Dane County Circuit Court. In early
September 2007, C.H. tried to communicate with Attorney Smoler
about the case. Attorney Smoler updated C.H. by email and
included a copy of an amended complaint.
¶15 In September 2008, the case was dismissed on summary
judgment against all defendants except one physician, who was
ordered to pay $226.34. The decision was later corrected and
that doctor was also dismissed on summary judgment. Attorney
Smoler apparently did not immediately notify C.H. about the
dismissal of her sister's lawsuit. The trial court's decision
was appealed, and the court of appeals affirmed the dismissal.
Attorney Smoler failed to provide copies of filed documents when
requested to do so. She also failed to produce any statement of
expenses or time billed on the file after the first and only
bill was produced. She failed to refund any of the $50,000 that
C.J.'s family had paid as an advanced fee toward expenses and
hourly billing.
7
No. 2014AP804-D
¶16 C.J. filed a grievance with the OLR, and Attorney
Smoler was asked to respond but failed to do so.
¶17 The OLR's complaint set forth the following counts
with respect to Attorney Smoler's representation of C.J. and
C.H.:
[Count Three] By failing to provide copies of
relevant documentation to [C.J.] or [C.H.], and by
failing to respond to various requests for information
received from [C.J.] or [C.H.] concerning the status
of her case, Smoler violated [former] SCR 20:1.4(a),4
effective prior to July 1, 2007, and current
SCR 20:1.4(a)(3) and (4).5
[Count Four] By failing to respond to [C.J.'s]
or [C.H.'s] requests for information concerning fees
and expenses and by failing to provide periodic
written statements or accountings concerning fees and
expenses to [C.J.] or [C.H.], Smoler violated
6
SCR 20:1.5(b)(3), [former] SCR 20:1.15(d)(1),7
4
Former SCR 20:1.4(a) (in effect prior to July 1, 2007)
provides that "[a] lawyer shall keep a client reasonably
informed about the status of a matter and promptly comply with
reasonable requests for information."
5
SCR 20:1.4(a)(3) and (4) provide that a lawyer shall "keep
the client reasonably informed about the status of the matter"
and "promptly comply with reasonable requests by the client for
information."
6
SCR 20:1.5(b)(3) provides that "[a] lawyer shall promptly
respond to a client's request for information concerning fees
and expenses."
7
Former SCR 20:1.15(d)(1) (in effect prior to July 1, 2007)
provides:
Upon receiving funds or other property in which a
client has an interest, or in which the lawyer has
received notice that a 3rd party has an interest
identified by a lien, court order, judgment, or
contract, the lawyer shall promptly notify the client
(continued)
8
No. 2014AP804-D
effective prior to July 1, 2007, and
SCR 20:1.15(d)(2).8
[Count Five] By failing upon termination of
representation, to surrender papers and property to
which [C.J.] was entitled and by failing to refund any
advanced payment of fee or expense that had not been
earned or incurred, Smoler violated SCR 20:1.16(d).9
[Count Six] By failing to deposit a portion of
the $50,000 received for [C.J.'s] malpractice claim to
cover costs associated with the representation into a
client trust account, Smoler violated [former]
SCR 20:1.15(b)(4),10 effective prior to July 1, 2007.
or 3rd party in writing. Except as stated in this
rule or otherwise permitted by law or by agreement
with the client, the lawyer shall promptly deliver to
the client or 3rd party any funds or other property
that the client or 3rd party is entitled to receive.
8
SCR 20:1.15(d)(2) provides that "[u]pon final distribution
of any trust property or upon request by the client or a 3rd
party having an ownership interest in the property, the lawyer
shall promptly render a full written accounting regarding the
property."
9
SCR 20:1.16(d) provides:
Upon termination of representation, a lawyer
shall take steps to the extent reasonably practicable
to protect a client's interests, such as giving
reasonable notice to the client, allowing time for
employment of other counsel, surrendering papers and
property to which the client is entitled and refunding
any advance payment of fee or expense that has not
been earned or incurred. The lawyer may retain papers
relating to the client to the extent permitted by
other law.
10
Former SCR 20:1.15(b)(4) (in effect prior to July 1,
2007) provides, "Unearned fees and advanced payments of fees
shall be held in trust until earned by the lawyer, and withdrawn
pursuant to SCR 20:1.15 (g). Funds advanced by a client or 3rd
party for payment of costs shall be held in trust until the
costs are incurred."
9
No. 2014AP804-D
[Count Seven] By failing to respond to OLR's
requests for a written response to the investigation,
Smoler violated SCR 22.03(2).11
¶18 Referee Goldman was appointed on July 28, 2014. In
her report and recommendation, the referee concluded that the
OLR proved all seven counts in its complaint by clear and
convincing evidence. In discussing the appropriate sanction,
the referee noted that Attorney Smoler apparently practiced at a
very competent and accomplished level for many years. The
referee said, "No facts of record explain her sad story. It is
as though she imploded all at once, without warning, and without
reason." The referee went on to comment, "For an attorney with
an otherwise unblemished record, Smoler's slide into the dark
side seems incredibly unfortunate. . . . . Smoler's failure in
general to supply information to OLR in the course of the
investigation into both client matters does not help the
situation and only further indicates her inability to function
at a very basic level."
11
SCR 22.03(2) provides:
Upon commencing an investigation, the director
shall notify the respondent of the matter being
investigated unless in the opinion of the director the
investigation of the matter requires otherwise. The
respondent shall fully and fairly disclose all facts
and circumstances pertaining to the alleged misconduct
within 20 days after being served by ordinary mail a
request for a written response. The director may
allow additional time to respond. Following receipt
of the response, the director may conduct further
investigation and may compel the respondent to answer
questions, furnish documents, and present any
information deemed relevant to the investigation.
10
No. 2014AP804-D
¶19 The referee concluded that Attorney Smoler's
combination of multiple violations involving a failure to return
client money and her unwillingness to participate in the
investigation into her misconduct warranted a suspension longer
than six months. The referee concluded that a nine-month
suspension would impress upon Attorney Smoler the seriousness of
her misconduct and would deter other attorneys from committing
similar misconduct. The referee further recommended that
Attorney Smoler be required to pay the full costs of the
proceeding.
¶20 With respect to restitution, the referee noted that
the S.s' loan was discharged by the Western District of
Wisconsin bankruptcy court, so no restitution would be
appropriate regarding the loan that the S.s made to Attorney
Smoler. With respect to the $50,000 paid to Attorney Smoler by
C.J.'s family, the referee said that requiring Attorney Smoler
to pay restitution would further safeguard the public and would
further impress upon Attorney Smoler the seriousness of her
misconduct. The referee noted that Attorney Smoler failed to
account for any of the funds paid by C.J.'s family except the
$4,940.65 indicated in the March 2, 2006 invoice. Accordingly,
the referee recommended that Attorney Smoler be required to pay
$45,059.35 in restitution to C.J. The referee said it was
unclear whether the OLR intended to seek restitution for C.J.
and the referee said that the OLR should be afforded discretion
to reduce the amount of restitution based on information it may
have.
11
No. 2014AP804-D
¶21 On March 18, 2015, the OLR submitted a restitution
statement saying it was not seeking restitution in either the S.
matter or the C.J. matter. With respect to the S. matter, the
OLR noted that the S.s' loan to Attorney Smoler was fully
discharged by a bankruptcy court. With respect to the C.J.
matter, the OLR said its director determined that there was no
reasonably ascertainable amount for which a restitution award
would be appropriate.
¶22 A referee's findings of fact are affirmed unless
clearly erroneous. See In re Disciplinary Proceedings Against
Eisenberg, 2004 WI 14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747. We
review the referee's conclusions of law de novo. Id. We
determine the appropriate level of discipline independent of the
referee's recommendation. See In re Disciplinary Proceedings
Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686.
¶23 We conclude that Attorney Smoler should be declared in
default. Although she was personally served with the complaint
and was given notice of all other proceedings, she failed to
appear or present a defense. Accordingly, we deem it
appropriate to declare her in default.
¶24 We agree with the referee that the allegations in the
OLR's complaint have been established and that Attorney Smoler
engaged in the seven counts of misconduct alleged in the
complaint. We further agree with the referee that a nine-month
suspension of Attorney Smoler's license to practice law is an
appropriate sanction for her misconduct. Although no two fact
situations are identical, a nine-month suspension is generally
12
No. 2014AP804-D
consistent with the sanctions imposed in somewhat analogous
cases. For example, in In re Disciplinary Proceedings Against
Pitts, 2007 WI 112, 304 Wis. 2d 556, 735 N.W.2d 917, an
attorney's license was suspended for six months for ten counts
of misconduct including entering into a business transaction
with a client without giving her a reasonable opportunity to
seek the advice of independent counsel, reducing the loan to
writing, or obtaining the client's written consent to the loan.
The attorney in Pitts loaned $1,000 to his client. By contrast,
Attorney Smoler borrowed large sums of money from her clients.
In In re Disciplinary Proceedings Against Phillips, 2006 WI 43,
290 Wis. 2d 87, 713 N.W.2d 629, an attorney's license was
suspended for one year for seven counts of misconduct including
borrowing $145,000 from a client without giving the client a
reasonable opportunity to seek the advice of independent
counsel, failing to provide the terms of the loan to the client
in an understandable writing, and failing to obtain the client's
written consent to the transaction. The conduct at issue in the
instant case seems to fall somewhere between the Pitts and
Phillips cases. Accordingly, we find it appropriate to suspend
Attorney Smoler's license for nine months.
¶25 We also agree with the referee that Attorney Smoler
should be required to pay the full costs of the proceeding.
With respect to restitution, we agree with the referee that
Attorney Smoler should be required to pay $45,059.35 to C.J.
Although the OLR said that there was not presently a reasonably
ascertainable amount of restitution owed to C.J., the referee
13
No. 2014AP804-D
made explicit factual findings showing that Attorney Smoler owes
C.J. $45,059.35. Those findings of fact have not been shown to
be clearly erroneous and, accordingly, we adopt them. Since
Attorney Smoler's debt to the S.s was discharged in bankruptcy,
we make no restitution award in that matter.
¶26 IT IS ORDERED that the license of Pamela J. Smoler to
practice law in Wisconsin is suspended for a period of nine
months, effective the date of this order.
¶27 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Pamela J. Smoler shall pay restitution to C.J. in
the amount of $45,059.35.
¶28 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Pamela J. Smoler shall pay to the Office of
Lawyer Regulation the costs of this proceeding, which are
$2,869.61.
¶29 IT IS FURTHER ORDERED that the restitution specified
above is to be completed prior to paying costs to the Office of
Lawyer Regulation.
¶30 IT IS FURTHER ORDERED that, to the extent she has not
already done so, Pamela J. Smoler shall comply with the
provisions of SCR 22.26 concerning the duties of an attorney
whose license to practice law has been suspended.
¶31 IT IS FURTHER ORDERED that compliance with all
conditions of this order is required for reinstatement. See
SCR 22.29(4)(c).
14
No. 2014AP804-D
¶32 IT IS FURTHER ORDERED that the temporary suspension of
Pamela J. Smoler's license to practice law in Wisconsin issued
on July 11, 2011, is hereby lifted.
All work on this opinion was completed prior to Justice
Rebecca G. Bradley joining the court.
15
No. 2014AP804-D
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