Iowa Supreme Court Attorney Disciplinary Board v. David L. Polsley v. Kathryn Sue Polsley

IN THE SUPREME COURT OF IOWA
No. 09–0847 & 09–0848
Filed April 1, 2011
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
DAVID L. POLSLEY,
Respondent.
---------------------------------
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
KATHRYN SUE POLSLEY,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
Grievance commission recommends suspensions of six months.
LICENSES REVOKED.
Charles L. Harrington and David J. Grace, Des Moines, for
complainant.
David L. Polsley and Kathryn Sue Polsley, Ottawa, Kansas, pro se.
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HECHT, Justice.
The Iowa Supreme Court Attorney Disciplinary Board filed a
complaint alleging the respondents, David L. Polsley and Kathryn S.
Polsley, violated the Iowa Code of Professional Responsibility for Lawyers
by converting government property to their own use. The Grievance
Commission of the Supreme Court of Iowa found the board had proved
the allegations of the complaint and recommended we suspend the
respondents’ licenses to practice law indefinitely with no possibility of
reinstatement for six months. We find the board proved the Polsleys’
conduct violated several ethical rules requiring revocation of their
licenses.
I. Factual Background and Prior Proceedings.
The Polsleys, husband and wife, reside in Ottawa, Kansas.
Kathryn graduated from the University of Kansas School of Law in 1979,
and David graduated from the same law school in 1981. After practicing
law in Kansas for a short time, the couple moved to Iowa, took the Iowa
bar examination, and were admitted to practice in this state. David
accepted a job offer from a Wisconsin corporation, and they moved there
in 1987. In 1991, they returned to Kansas and practiced law together
thereafter.
In December 1998, Kathryn’s mother, Lois Simpson, fell ill with
Creutzfeldt-Jakob’s syndrome, a terminal degenerative neurological
disorder. From February 4, 1999, until July 3, 2000, Mrs. Simpson was
bedridden in a persistent vegetative state. The Polsleys and their
children moved into Simpson’s home and served as her primary
caretakers during her illness.
Mrs. Simpson was the beneficiary of a trust which owned a bank
account. Farm income from Mrs. Simpson’s mother and Mrs. Simpson’s
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own social security survivor’s benefits were customarily deposited into
the account. 1 As her mother’s trustee, Kathryn drew checks on the
trust’s bank account to pay the ordinary and necessary bills of the
household. 2
Mrs. Simpson died in July 2000. Although the Social Security
Administration (SSA) was notified of Mrs. Simpson’s death, Mrs.
Simpson’s social security payments continued to be deposited into the
trust account. 3 During the months following her mother’s death,
Kathryn drew checks on the account totaling $15,150 to David for legal
services rendered to the trust. 4 Kathryn also wrote checks on the
account to herself in the amount of $1827.19 as reimbursement for
property taxes, furnace repairs, and other expenses she incurred to keep
Mrs. Simpson’s real estate habitable and marketable after her death.
After an employee of the depository bank and the attorney for
Mrs. Simpson’s estate notified the SSA of the mistaken deposits, the
Polsleys promptly reimbursed the overpayments to the SSA.
A. Criminal Prosecution. In November 2002, a fifteen-count
indictment was filed against the Polsleys in U.S. District Court for the
District of Kansas. Count one of the indictment charged the Polsleys
with felony fraud against the SSA, and the remaining counts charged
misdemeanor offenses of aiding and abetting the conversion of a social
1The Social Security Administration directly deposited Simpson’s benefits into
the trust’s bank account.
2The record indicates that, at Kathryn’s direction, David occasionally prepared
checks on the trust account for Kathryn’s signature.
3The total amount of the SSA checks mistakenly deposited into the account was
$10,709.74.
4Mrs. Simpson’s estate had a value of approximately $1,000,000 at the time of
her death.
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security benefit payment. The Polsleys each pled guilty to one
misdemeanor count in April 2003. 5
B. Professional Discipline. Professional disciplinary proceedings
were instituted against the Polsleys in Kansas following their criminal
convictions. After a hearing before a disciplinary panel of the Kansas
Board for the Discipline of Attorneys, the Polsleys were found to have
violated Kansas Rule of Professional Conduct (KRPC) 8.4(b) which
defined “professional misconduct” to include the commission of “a
criminal act that reflects adversely on the lawyer’s honesty,
trustworthiness or fitness as a lawyer in other respects.” Upon
consideration of the record made before the disciplinary panel, the
Supreme Court of Kansas found clear and convincing evidence that the
Polsleys violated KRPC 8.4(b). The court’s finding was based on the
Polsleys’ admissions in their plea agreements that they “knowingly and
willfully converted government property to [their] own use.” Accepting
the panel’s recommendation, the court suspended Kathryn’s license to
practice law in Kansas for two years 6 and indefinitely suspended David’s
license. 7
Upon receipt of notice of the criminal convictions in federal court,
this court entered an order on April 5, 2007, temporarily suspending the
Polsleys’ licenses to practice law in Iowa. Subsequently, the Iowa
5They
were subsequently sentenced to three months of home detention, one
hundred hours of community service, and three years of probation.
6Kathryn’s license to practice law in Kansas was reinstated on December 13,
2006.
7The Kansas court concluded mitigating circumstances justified a sanction of
suspension rather than disbarment. In re David L. Polsley, 85 P.3d 693, 696–97 (Kan.
2004); In re Kathryn S. Polsley, 86 P.3d 531, 534–35 (Kan. 2004). The sanction imposed
against David in the Kansas proceedings was more severe because he had previously
been reprimanded on two occasions, including one private admonition and one public
censure.
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Supreme Court Attorney Disciplinary Board filed a complaint against the
Polsleys asserting issue preclusion and alleging their criminal acts
constituted violations of DR 1–102(A)(3) (engaging in illegal conduct
involving moral turpitude), (4) (engaging in conduct involving dishonesty,
fraud, deceit or misrepresentation), (5) (engaging in conduct prejudicial
to the administration of justice), and (6) (engaging in any other conduct
that adversely reflects on the fitness to practice law). Following a
hearing, the grievance commission found the Polsleys had been convicted
“of a misdemeanor involving moral turpitude as well as a dishonest
intent.” The commission concluded the Polsleys violated DR 1–102(A)(3),
(4), (5), and (6) “by knowingly and willingly converting government
property to their own use, in violation of federal law.” As a sanction for
the criminal conduct, the commission recommended the Polsleys’
licenses to practice law in Iowa be suspended for an additional six
months beyond the pending temporary suspensions.
II. Standard of Review.
Our review of attorney disciplinary proceedings is de novo. Iowa
Ct. R. 35.10(1) (2008); Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Gottschalk, 729 N.W.2d 812, 815 (Iowa 2007). The commission’s
findings and recommendations are given respectful consideration, but we
are not bound by them. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Isaacson, 750 N.W.2d 104, 106 (Iowa 2008). The board has the burden
of proving attorney misconduct by a convincing preponderance of the
evidence. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Conrad, 723 N.W.2d
791, 792 (Iowa 2006).
“This burden is less than proof beyond a reasonable doubt,
but more than the preponderance standard required in the
usual civil case. Once misconduct is proven, we ‘may
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impose a lesser or greater sanction than the discipline
recommended by the grievance commission.’ ”
Id. (quoting Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Lett, 674
N.W.2d 139, 142 (Iowa 2004) (citations omitted)). As neither party has
appealed the commission’s recommendation, our review is pursuant to
Iowa Court Rule 35.10(1). See Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Templeton, 784 N.W.2d 761, 766 (Iowa 2010).
III. Ethical Violations.
The board invoked issue preclusion in this case under Iowa
Supreme Court Rule 35.7(3). Under this rule, relitigation of an issue is
precluded if
a. The issue has been resolved in a civil proceeding
that resulted in a final judgment, or in a criminal proceeding
that resulted in a finding of guilt, even if the Iowa Supreme
Court Attorney Disciplinary Board was not a party to the
prior proceeding.
b. The burden of proof in the prior proceeding was
greater than a mere preponderance of the evidence.
c. The party seeking preclusive effect has given written
notice to the opposing party, not less than ten days prior to
the hearing, of the party’s intention to invoke issue
preclusion.
Iowa Ct. R. 35.7(3). In the Kansas disciplinary proceedings, the Supreme
Court of Kansas found clear and convincing evidence that the Polsleys
knowingly and willfully converted government property to their own use
and that their criminal conduct involved dishonesty. In re David L.
Polsley, 85 P.3d 693, 696–97 (Kan. 2004) (Polsley I); In re Kathryn S.
Polsley, 86 P.3d 531, 533–35 (Kan. 2004) (Polsley II). This finding has
preclusive effect under rule 35.7(3). With these principles in mind, we
next consider whether the board has proved violations of disciplinary
rules prescribing ethical conduct for Iowa lawyers.
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A. DR 1–102(A)(3) (Illegal Conduct Involving Moral Turpitude).
The board first asserts the Polsleys engaged in illegal conduct involving
moral turpitude. “Moral turpitude” in the context of attorney disciplinary
proceedings means illegal conduct done with a fraudulent or dishonest
intent. Comm. on Prof’l Ethics & Conduct v. Cody, 412 N.W.2d 637, 639
(Iowa 1987). The Polsleys were both convicted of a crime based on their
admission that they knowingly and willfully converted government
property to their own use. According preclusive effect to the Kansas
Supreme Court’s finding that the Polsleys engaged in dishonesty, we
conclude the board proved by a clear preponderance of the evidence that
the Polsleys violated DR 1–102(A)(3) when they converted the trust’s
funds.
B. DR 1–102(A)(4) (Engaging in Conduct Involving Dishonesty,
Fraud, Deceit or Misrepresentation). For the reasons stated in support
of our finding that the Polsleys committed acts involving moral turpitude,
we find the board also proved the Polsleys’ acts of conversion were
characterized by dishonesty. Accordingly, we find the board proved the
Polsleys violated DR 1–102(A)(4) in this case.
C. DR 1–102(A)(5) (Engaging in Conduct Prejudicial to the
Administration of Justice). The commission of a crime does not
necessarily constitute a violation of the ethical rule prohibiting conduct
prejudicial to the administration of justice. Templeton, 784 N.W.2d at
768. Our recent decisions have made clear that “the mere act of
committing a crime does not constitute a violation of this rule because
the rule does not simply prohibit the doing of an act.” Id. Rather, an act
is prejudicial to the administration of justice and sanctionable only if it
violates the well-understood norms and conventions of the practice of
law. Id. These norms include the fundamental proposition that
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attorneys must not convert property of others. See Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Carroll, 721 N.W.2d 788, 791–92 (Iowa 2006).
Accordingly, we conclude the board proved by a convincing
preponderance of the evidence that the Polsleys violated DR 1–102(A)(5).
D. DR 1–102(A)(6) (Engaging in Conduct Adversely Reflecting on
Fitness to Practice). We now turn to the question of whether the board
has established the Polsleys violated our disciplinary rule prohibiting
conduct reflecting adversely on the Polsleys’ fitness to practice law. In
Templeton, we noted that “the mere commission of a criminal act does
not necessarily reflect adversely on the fitness of an attorney to practice
law.” Templeton, 784 N.W.2d at 767. Ordinarily, our determination of
whether an attorney’s conduct reflects adversely upon his or her fitness
to practice law turns not on whether the conduct is illegal, but rather
upon whether there is some rational connection between the specific
conduct and the actor’s fitness to practice law. Id.
As we have noted, the Supreme Court of Kansas found by clear
and convincing evidence that the Polsleys were “convicted of theft of
government property, a crime that reflects adversely on [their] honesty
and trustworthiness.” Polsley I, 85 P.3d at 695, 697; see also Polsley II,
86 P.3d at 533, 535. The Kansas court’s finding was made in civil
proceedings imposing a burden of proof greater than a preponderance of
the evidence. Polsley I, 85 P.3d at 697; Polsley II, 86 P.3d at 535. Upon
our review, we conclude the principles of issue preclusion also control
our determination of this issue. See Iowa Ct. R. 35.7(3). Accordingly, we
conclude the Polsleys’ conduct reflected adversely on their fitness to
practice, and therefore violated DR 1–102(A)(6).
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IV. Sanction.
“ ‘[I]t is almost axiomatic that the licenses of lawyers who convert
funds entrusted to them should be revoked.’ ” Iowa Supreme Ct. Bd. of
Prof’l Ethics & Conduct v. Anderson, 687 N.W.2d 587, 590 (Iowa 2004)
(quoting Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Irwin, 679
N.W.2d 641, 644 (Iowa 2004)) (cataloguing cases in which we have
revoked an attorney’s license for theft of entrusted funds). When a
sanction less severe than revocation has been imposed against attorneys
who misappropriated a client’s money or fiduciary funds, we have found
the attorneys “had a colorable future claim to the funds or did not take
the funds for [their] own use.” Id. We find no factual basis in the record
supporting a finding that the Polsleys had a colorable future claim to the
government funds in the trust’s bank account or that the funds were not
taken for their own use. Accordingly, we conclude the proper sanction in
this case is revocation.
V. Conclusion.
We conclude the board proved by a convincing preponderance of
the evidence that the Polsleys violated several disciplinary rules requiring
revocation of their licenses to practice law in Iowa.
LICENSES REVOKED.
All justices concur except Waterman, Mansfield, and Zager, JJ.,
who take no part.