Iowa Supreme Court Attorney Disciplinary Bd. v. Dunahoo

• Decision Date: 24 June 2011
• Docket Number: No. 11–0249.,11–0249.
• Citation: 799 N.W.2d 524
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,v.Kermit L. DUNAHOO, Respondent.
• Court: Iowa Supreme Court

799 N.W.2d 524

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Kermit L. DUNAHOO, Respondent.

No. 11–0249.

Supreme Court of Iowa.

June 24, 2011.

Charles L. Harrington and Wendell J. Harms, Des Moines, for complainant.Kermit L. Dunahoo, Dexter, pro se.WATERMAN, Justice.

The Iowa Supreme Court Attorney Disciplinary Board brought a complaint against Kermit L. Dunahoo alleging he violated seventeen Iowa Rules of Professional Conduct while working on six foreclosure and bankruptcy matters. The Grievance Commission of the Supreme Court of Iowa determined Dunahoo's conduct violated seven rules and recommended we suspend his license to practice law for two to three years. On our review, we find Dunahoo violated ten rules, and we suspend him from the practice of law for one year.

I. Scope of Review.

“We review attorney disciplinary proceedings de novo.” Iowa Supreme Ct. Att'y Disciplinary Bd. v. Netti, 797 N.W.2d 591, 595 (Iowa 2011). We give respectful consideration to the commission's findings, but we are not bound by them. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Schmidt, 796 N.W.2d 33, 36 (Iowa 2011). The board must establish attorney misconduct by a convincing preponderance of the evidence. Id. If the board establishes attorney misconduct, we can order a sanction more or less severe than the commission's recommended sanction. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Wagner, 768 N.W.2d 279, 282 (Iowa 2009).

II. Findings of Fact.

The parties waived a hearing in this matter, and the commission decided the case based upon a joint stipulation filed by the board and Dunahoo. The parties stipulated to the facts for each of the board's six counts. A stipulation of facts is binding on the parties. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Gailey, 790 N.W.2d 801, 803 (Iowa 2010). Based upon our review of the stipulation, we find the following facts.

Dunahoo has been a licensed attorney in Iowa since 1971. On July 8, 2009, Dunahoo retired and placed his license on inactive status. Previously, on March 20, 2008, the United States Bankruptcy Court for the Southern District of Iowa, pursuant to a matter unrelated to this proceeding, entered an order requiring Dunahoo to cease his bankruptcy practice in the southern district by May 31, 2008. The order also required Dunahoo to advise all clients affected by this order. He repeatedly violated this order.

A. Darrell Scott and Jan Utecht–Scott (Count I). On January 9, 2008, the Scotts hired Dunahoo to represent them in a pending foreclosure action filed against them, to analyze their debt situation, and advise them on bankruptcy alternatives if the foreclosure could not be averted. The Scotts paid Dunahoo a $500 advance fee, without any written fee agreement. Dunahoo decided Chapter 13 bankruptcy was the best course of action. He never talked with the foreclosing bank nor took any other step to delay or avoid the foreclosure action. The bank obtained a default judgment and decree of foreclosure on February 18.

Jan called Dunahoo on April 1, after the sheriff served the Scotts with a notice of sale. Dunahoo returned her call and informed her he would send her a packet of information to fill out and return, so he could file a bankruptcy petition to halt the imminent sheriff's sale. Two weeks later, Jan called again to schedule an appointment because the Scotts had not received the bankruptcy documents. The meeting was scheduled for May 5, but it never occurred. Jan instead spoke with Dunahoo's assistant, who mistakenly told Jan she needed to pay $1200 to file the bankruptcy petition that day. Dunahoo did not intend to charge the Scotts for this fee, as he had agreed his total fee would be $1000 with $500 paid in advance. Dunahoo never informed the Scotts about the bankruptcy court's order to terminate his bankruptcy practice in the southern district.

The Scotts hired another attorney on May 5, who filed a bankruptcy petition for them the same day. Dunahoo refunded the $500 fee advance on May 9 from a check drawn on his “operating account.”

B. Jerrold Lanphier (Count II). On May 7, 2007, Jerrold hired Dunahoo to represent him in a foreclosure proceeding and to file bankruptcy if necessary. Jerrold paid $700 in advance fees, without any written fee agreement. Dunahoo concluded bankruptcy was not in Jerrold's interest and took no steps to prevent the foreclosure. The bank obtained a default judgment and decree of foreclosure in August 2007. Dunahoo withdrew Jerrold's advance fee from his trust account, but provided no accounting.

C. Christina Lanphier (Count III). Christina hired Dunahoo to file a bankruptcy petition in early 2008. She agreed in advance to pay him $500 in two installments. Dunahoo never informed Christina of the bankruptcy court's March 20, 2008 order to cease his bankruptcy practice by May 31 in that district. Christina made her first installment payment of $300 on March 21, which was deposited in Dunahoo's trust account. Christina paid Dunahoo the remaining $200 on May 30. Dunahoo did not deposit the $200 payment into his trust account. He subsequently withdrew the other $300 from his trust account. No accounting was provided. Dunahoo never advised Christina she would be referred to another attorney on June 1. Christina filed her appearance for a small claims action, and on September 9, the court entered judgment against her. Christina hired another attorney to file a bankruptcy petition for her in December.

D. Matthew Guerra (Count IV). On November 9, 2007, Guerra agreed to pay Dunahoo $1500 plus court costs to represent him in a bankruptcy case. Guerra paid Dunahoo $1799 through four installments, with the last installment paid on December 31. Dunahoo withdrew $250 in fees on November 24, another $250 on January 30, 2008, and yet another $250 on February 12. He next withdrew $650 on March 18 and $100 on April 16. Dunahoo provided Guerra with no contemporaneous accounting or notice of withdrawal. Guerra asked for an accounting and a refund; Dunahoo provided neither.

On March 12, 2008, Dunahoo filed Guerra's bankruptcy petition in the United States District Court for the Southern District of Iowa. However, Guerra was domiciled in the Northern District for the United States District Court of Iowa. The next day the United States Trustee moved to change venue. On March 20, the southern district issued its order barring Dunahoo from practicing in that court as of June 1, 2008. Dunahoo never told Guerra about this order. Dunahoo filed Guerra's consent to change venue on April 8, and a first meeting of creditors was scheduled for May 19. Guerra believed Dunahoo would attend the meeting; instead, Dunahoo hired another attorney to attend the meeting. At the creditors meeting, the trustee expected Dunahoo to provide Guerra's 2006 and 2007 tax returns, as required by bankruptcy rules. Dunahoo neither sent the trustee the tax returns nor gave them to the new attorney. The trustee then moved to dismiss Guerra's petition for failure to provide income tax documents. The motion was granted on May 21.

Dunahoo and Guerra discussed refiling the petition, but Dunahoo advised Guerra to wait until his medical bills were finalized before refiling. Guerra filed a bankruptcy petition with another attorney on March 25. Guerra paid that attorney $976.

E. Jeffery Paxton (Count V). Paxton received a notice of a bank foreclosure in early 2008, and he filed his demand for delay of sale in April. In May, Paxton hired Dunahoo to represent him in his foreclosure matter and to file a bankruptcy petition if necessary. Paxton paid $1000 in advance fees to Dunahoo on May 7. Dunahoo provided no written fee agreement, and he withdrew fees from his trust account without any notice or accounting. Dunahoo gave Paxton a target date for filing a bankruptcy petition that fell after his deadline to terminate his bankruptcy practice in that district. Dunahoo never informed Paxton of the bankruptcy court's order to cease his bankruptcy practice in the southern district before June 1.

On May 22, Dunahoo filed an answer and demand to delay sale in Paxton's foreclosure case. Dunahoo did not respond to the bank's subsequent motion for summary judgment in the foreclosure action. On October 9, the district court entered a foreclosure judgment and decree in favor of the bank. Dunahoo also failed to respond to the board's discovery request concerning his fee agreement, scope of representation, and fees and expenses in Paxton's representation.

F. Terry Stogdill, Sr. (Count VI). Stogdill hired Dunahoo in January 2008 to represent him in an anticipated collections case with the intent to delay collection several months until Stogdill retired and became judgment proof. Stogdill agreed to pay Dunahoo $1000 and paid Dunahoo $500 upfront, without any written fee agreement. On February 11, a creditor filed a collection action against Stogdill. Stogdill paid Dunahoo the remaining $500 later that month. Dunahoo never filed an appearance or an answer on Stogdill's behalf. On May 27, the district court entered a default judgment against Stogdill. Dunahoo withdrew Stogdill's advance fee from his trust account and never provided Stogdill with an accounting or notice of withdrawal.

III. Ethical Violations.

A. Violation of Bankruptcy Court Order. The board alleged Dunahoo's failure to comply with the bankruptcy court order violated rules 32:1.4(a), 32:1.16(a), and 32:8(4)(c). The commission found Dunahoo did not violate rule 32:1.4(a), but did violate rules 32:1.16(a) and 32:8.4(c).

Rule 32:1.4(a)(5) states “[a] lawyer shall ... consult with the client about any relevant limitation on the lawyer's conduct when the lawyer knows the client expects assistance not permitted by ... law.” Dunahoo represented the Scotts, C. Lanphier, Paxton, and Guerra in bankruptcy-related matters through May 2008, without informing the clients of the bankruptcy court's March 20 order instructing him to cease his...