Office of Lawyer Regulation v. Shawn G. Rice

2017 WI 1
SUPREME COURT OF WISCONSIN
CASE NO.: 2014AP2307-D
COMPLETE TITLE: In the Matter of Disciplinary Proceedings
Against Shawn G. Rice, Attorney at Law:
Office of Lawyer Regulation,
Complainant,
v.
Shawn G. Rice,
Respondent.
DISCIPLINARY PROCEEDINGS AGAINST RICE
OPINION FILED: January 6, 2017
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:
SOURCE OF APPEAL:
COURT:
COUNTY:
JUDGE:
JUSTICES:
CONCURRED:
DISSENTED: ABRAHAMSON, S. J., joined by BRADLEY, A. W. J.,
dissent (Opinion filed).
NOT PARTICIPATING:
ATTORNEYS:
2017 WI 1
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2014AP2307-D
STATE OF WISCONSIN : IN SUPREME COURT
In the Matter of Disciplinary Proceedings
Against Shawn G. Rice, Attorney at Law:
Office of Lawyer Regulation, FILED
Complainant, JAN 6, 2017
v. Diane M. Fremgen
Clerk of Supreme Court
Shawn G. Rice,
Respondent.
ATTORNEY disciplinary proceeding. Attorney's license
suspended.
¶1 PER CURIAM. We review the report of Referee
Christine Harris Taylor, concluding that Attorney Shawn G. Rice
committed one count of professional misconduct as alleged in the
Office of Lawyer Regulation's (OLR) complaint. Referee Taylor
recommends the court suspend Attorney Rice's license for a
period of 60 days and that we order Attorney Rice to pay the
full costs of this disciplinary proceeding.
No. 2014AP2307-D
¶2 No appeal was filed from the referee's report so we
review this matter pursuant to SCR 22.17(2).1 After completing
our review, we agree that the stipulated facts and the record
are sufficient to establish that Attorney Rice violated SCR
20:8.4(c).2 We further agree that Attorney Rice's license should
be suspended for 60 days. We accede to the OLR's conclusion
that restitution is not warranted. We deny Attorney Rice's
objection to costs and direct him to pay the full costs of this
disciplinary proceeding which are $14,064.72 as of August 29,
2016.
¶3 Attorney Rice was admitted to practice law in
Wisconsin in 1993. He has been subject to professional
discipline on one prior occasion. In 2007, he received a public
reprimand for three counts of professional misconduct related to
his personal involvement in a commercial real estate transaction
in which he made false statements in a deposition and executed a
document falsely reflecting an individual as a member of an LLC.
1
SCR 22.17(2) provides:
If no appeal is filed timely, the supreme court shall
review the referee's report; adopt, reject or modify
the referee's findings and conclusions or remand the
matter to the referee for additional findings; and
determine and impose appropriate discipline. The
court, on its own motion, may order the parties to
file briefs in the matter.
2
SCR 20:8.4(c) provides: "It is professional misconduct
for a lawyer to: . . . engage in conduct involving dishonesty,
fraud, deceit or misrepresentation."
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No. 2014AP2307-D
In re Disciplinary Proceedings Against Rice, 2007 WI 68, 301
Wis. 2d 94, 732 N.W.2d 440.
¶4 This matter came to the OLR's attention during Rice's
acrimonious divorce proceeding. In 1996, Attorney Rice and Ms.
Liesl M. Testwuide (Ms. Testwuide) were married. In 1992, when
Ms. Testwuide was still unmarried and childless, Ms. Testwuide's
parents created a trust for the benefit of Ms. Testwuide and her
children. Ms. Testwuide was co-trustee of the trust along with
Kenneth Kazmierczak, a business associate of Ms. Testwuide's
father.
¶5 In 2010, Ms. Testwuide filed for divorce. In July
2011, while the divorce was pending, Ms. Testwuide filed a
grievance with the OLR alleging that Attorney Rice had removed
over $600,000 from the trust without proper authorization by
forging Ms. Testwuide's signature and the signature of her co-
trustee. Attorney Rice self-reported the same misconduct and,
in October 2011, Attorney Rice submitted a lengthy written
response to the grievance acknowledging that he signed documents
without proper authorization but asserting Ms. Testwuide knew
and tacitly approved his actions. Ms. Testwuide and Attorney
Rice's divorce judgment was entered in October 2011; they
continued to litigate custody, placement, and other issues.
¶6 On November 21, 2011, Ms. Testwuide filed a civil
action against Attorney Rice and his former law firm, alleging
fraud, conversion, and legal malpractice. Testwuide v. Rice,
2011CV1184, Sheboygan County. On December 18, 2012, the circuit
court granted Rice's motion for summary judgment, ruling that
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No. 2014AP2307-D
several claims were barred by the statute of limitations. In
May 2013, a stipulation and order dismissing the remaining
claims against Rice was entered.
¶7 On October 2, 2014, the OLR filed a disciplinary
complaint alleging that Attorney Rice violated SCR 20:8.4(c) by
forging the signatures of the co-trustees of the Liesl M.
Testwuide 1992 Trust on various checks and documents.
Initially, the OLR sought a six month license suspension. In
July 2015, after pretrial discovery, the OLR and Attorney Rice
executed a "Stipulation Regarding Factual Allegations and
Disciplinary Charge." Attorney Rice admitted that he violated
SCR 20:8.4(c) by preparing and executing, without authorization,
numerous forms, checks and other Trust documents for a 12-year
period during the marriage and continuing until Ms. Testwuide
filed for divorce in 2010.
¶8 The referee accepted the stipulation. The parties
continued to dispute the appropriate discipline and conducted
additional discovery, including depositions.
¶9 Attorney Rice maintained that, under the
circumstances, a public reprimand was sufficient. On April 15,
2016, days before a scheduled evidentiary hearing, the OLR
reduced its recommendation from a six-month license suspension
to a 60-day license suspension. Attorney Rice continued to
assert that a public reprimand was sufficient, but the parties
agreed to waive the scheduled hearing and permit the referee to
resolve the question of appropriate discipline based on the
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No. 2014AP2307-D
stipulation, the existing record, and the parties' written
submissions.
¶10 The referee issued her report and recommendation dated
August 9, 2016. Neither party appealed.
¶11 When we review a referee's report and recommendation
in an attorney disciplinary case, we affirm the referee's
findings of fact unless they are found to be clearly erroneous,
but we review the referee's conclusions of law on a de novo
basis. In re Disciplinary Proceedings Against Inglimo, 2007 WI
126, ¶5, 305 Wis. 2d 71, 740 N.W.2d 125. We determine the
appropriate level of discipline to impose given the particular
facts of each case, independent of the referee's recommendation,
but benefiting from it. In re Disciplinary Proceedings Against
Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686.
¶12 There is no showing that the referee's factual
findings are clearly erroneous and we accept them. The
complaint alleges, Attorney Rice has stipulated, and the record
supports the finding that Attorney Rice arranged for numerous
checks and disbursals from the trust account, without
authorization, the aggregate amount of which was several hundred
thousand dollars.3
3
We do not know how much money Rice transferred from the
trust without proper authorization. The OLR states that its
"investigation did not and most probably could not have
calculated the total amount involved in the transactions at
issue." See OLR's Restitution Statement at 1-2.
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No. 2014AP2307-D
¶13 Supreme Court Rule 20:8.4(c) provides that it is
professional misconduct for a lawyer to engage in conduct
involving dishonesty, fraud, deceit, or misrepresentation. The
stipulation and the record before the court are sufficient to
support a legal conclusion that Attorney Rice violated SCR
20:8.4(c).
¶14 The primary question in this matter is the appropriate
discipline for Attorney Rice's misconduct. Factors relevant to
determining appropriate attorney discipline include the
seriousness, nature and extent of the misconduct; the level of
discipline needed to protect the public, the courts, and the
legal system from repetition of the attorney's misconduct; the
need to impress upon the attorney the seriousness of the
misconduct; and the need to deter other attorneys from
committing similar misconduct. See In re Disciplinary
Proceedings Against Hammis, 2011 WI 3, ¶39, 331 Wis. 2d 19, 793
N.W.2d 884; In re Disciplinary Proceedings Against Eisenberg,
2004 WI 14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747.
¶15 The referee identified as aggravating factors,
Attorney Rice's prior discipline, a dishonest or selfish motive,
and the fact that the misconduct spanned years. As mitigating
factors, the referee noted that Attorney Rice self-reported his
misconduct and that he was cooperative in these proceedings.
¶16 After itemizing a number of unauthorized trust
transactions, the referee stated that she was not persuaded by
Attorney Rice's claim that it was "impossible" to locate the co-
trustee after the co-trustee relocated to Minneapolis, and found
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No. 2014AP2307-D
further that the "overwhelming information in this record
supports the fact that [Rice's] misconduct in accessing Trust
funds, without authorization was well in excess of any dollar
amounts necessary to 'pay bills.'." However, the referee
acknowledged the "personal nature of the issues leading [Rice]
to engage in the misconduct that he admits to" and found
credible Attorney Rice's assertion that he sincerely believed
that he was acting as a "de facto" trustee.
¶17 Throughout these proceedings Attorney Rice has
maintained that he engaged in the trust transactions, albeit
unauthorized, but with the knowledge and consent of his wife,
who was both a co-trustee and a beneficiary of the trust. He
claims that she did not want to be involved in the marital
finances. He maintains that the trust funds were used to
support a marital lifestyle that exceeded their employment
income, and paid for, among other things, property taxes,
vacations, and the remodeling of a vacation home. He claims
that Ms. Testwuide's grievance was both selective and incomplete
in terms of the trust transactions it identified. The referee
did not make specific findings in this regard, however, merely
noting the "conflicting" evidence provided. There is no finding
that Attorney Rice misused the trust funds.
¶18 In terms of the appropriate discipline, the referee
described Attorney Rice's misconduct as serious, but ultimately
accepted the OLR's recommendation for a 60-day suspension. She
deemed analogous In re Disciplinary Proceedings Against
Riegleman, 2003 WI 3, 259 Wis. 2d 1, 657 N.W.2d 339, in which
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No. 2014AP2307-D
this court imposed a 60-day suspension upon a lawyer who
endorsed a settlement check without the insurance company's
consent, failed to inform the insurance company the lawyer was
in possession of the funds, and distributed settlement funds
despite knowing there was a dispute regarding the funds. See
also In re Disciplinary Proceedings Against Glesner, 2000 WI 18,
233 Wis. 2d 35, 606 N.W.2d 173 (imposing 60-day suspension for
adding unearned charges to a client's billing and creating an
invoice with fabricated time entries); In re Disciplinary
Proceedings Against Krueger, 2006 WI 17, 288 Wis. 2d 586, 709
N.W.2d 857 (imposing 60-day suspension for preparing and filing
inaccurate bankruptcy schedules and failing to disclose a pre-
bankruptcy debt owed to him by the debtor of over $7,000). The
referee thus recommends the court suspend Attorney Rice's
license for 60 days and further recommends that we impose the
full costs of this proceeding on Attorney Rice.
¶19 Attorney Rice filed an objection to the OLR's
statement of costs. He contends that he conceded all along that
he committed the alleged misconduct but felt compelled to
litigate the case because the OLR "overreached with respect to
the punishment" it initially sought, namely, a six-month
suspension. He contends that he was effectively left with "no
viable course of action other than fully litigating the case" as
occurred in In re Disciplinary Proceedings Against Frisch, 2010
WI 60, 326 Wis. 2d 128, 784 N.W.2d 670. He points out that the
OLR reduced its requested discipline to a 60-day suspension a
mere two days before a scheduled hearing, whereupon he agreed to
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No. 2014AP2307-D
have the referee consider the matter on written submissions. He
asks the court to impose only half the costs upon him.
¶20 The OLR maintains that full costs are appropriate.
The OLR reminds the court that Attorney Rice continued to seek a
public reprimand; that is, he did not "acquiesce" when the OLR
reduced the recommended sanction, nor did he stipulate to
discipline. The OLR maintains that its costs were incurred in
the normal course of litigating this case.
¶21 We agree. We find no reason to depart from our
general practice of imposing full costs on attorneys found to
have committed misconduct. See SCR 22.25. While Attorney Rice
did admit his misconduct and ultimately stipulated to certain
facts, disagreement regarding the appropriate sanction resulted
in the parties litigating this matter for some time and required
the preparation of a referee's report.
¶22 Finally, we impose no restitution obligation on
Attorney Rice. The OLR has not sought restitution and we accede
to its determination that restitution is not appropriate in this
case. See SCR 21.16(1m)(em) and (2m)(a)1.
¶23 IT IS ORDERED that the license of Shawn G. Rice to
practice law in Wisconsin is suspended for a period of 60 days,
effective February 17, 2017.
¶24 IT IS FURTHER ORDERED that Shawn G. Rice shall comply
with the provisions of SCR 22.26 concerning the duties of a
person whose license to practice law in Wisconsin has been
suspended.
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No. 2014AP2307-D
¶25 IT IS FURTHER ORDERED that within 60 days of the date
of this order, Shawn G. Rice shall pay to the Office of Lawyer
Regulation the costs of this proceeding, which are $14,064.72 as
of August 29, 2016.
¶26 IT IS FURTHER ORDERED that compliance with all
conditions of this order is required for reinstatement. See SCR
22.29(4)(c).
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No. 2014AP2307-D.ssa
¶27 SHIRLEY S. ABRAHAMSON, J. (dissenting). I cannot
join this per curiam because the stipulation, the referee's
report, and this per curiam do not make clear the nature and
extent of Attorney Rice's conduct that is charged as a violation
of SCR 20:8.4(c). Without knowing the nature and extent of the
conduct I cannot determine whether a violation of the Code
occurred and, if there was a violation, the appropriate
discipline. Accordingly, I dissent.
¶28 I am authorized to state that Justice ANN WALSH
BRADLEY joins this dissent.
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No. 2014AP2307-D.ssa
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