740 N.E.2d 855 (Ind. 2001), 20S00-9904-DI-238, In re Davis
| Docket Nº | 20S00-9904-DI-238. |
| Citation | 740 N.E.2d 855 |
| Party Name | In the Matter of Charles A. DAVIS, Jr. |
| Case Date | January 10, 2001 |
| Court | Supreme Court of Indiana |
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James F. Groves, South Bend, IN, for the Respondent.
Donald R. Lundberg, Executive Secretary, Seth Pruden, Staff Attorney, Indianapolis,
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IN, for the Indiana Supreme Court Disciplinary Commission.
DISCIPLINARY ACTION
PER CURIAM
The respondent, Charles A. Davis, Jr., improperly partnered with his client in a variety of business dealings funded primarily by an earlier $200,000 personal injury settlement he negotiated on the client's behalf. The business ventures ultimately proved unsuccessful, as did the partnership between the respondent and his injured client. The client lost much of her settlement money. We suspend the respondent from the practice of law for 18 months as a result of his misconduct.
Having been admitted to the bar of this state in 1978, the respondent is subject to this Court's disciplinary jurisdiction. The Disciplinary Commission charged the respondent with violating Rule 1.8(a) of the Rules of Professional Conduct by entering into several business transactions with his client, who was not given the opportunity to seek the advice of independent legal counsel. The Commission also charged the respondent with violating Prof.Cond.R. 1.15(a) by failing to keep his own funds separate from his client's funds and Prof.Cond.R. 1.15(b) by failing to deliver promptly to his client the funds she was entitled to receive from the settlement. 1
A hearing officer was appointed to this case, and, after a hearing, tendered his report to this Court. The hearing officer determined the respondent committed the charged misconduct. Neither the respondent nor the Commission has sought review of the hearing officer's report, but both have submitted briefs on the question of sanction. Where, as here, the hearing officer's report is unchallenged, we accept and adopt the findings contained therein with the understanding that final determination as to disciplinary violations and sanction rests with this Court. Matter of Campbell, 702 N.E.2d 692 (Ind.1998).
Accordingly, we now find that the respondent represented the client regarding a claim for injuries the client sustained in an automobile accident. She was disabled as a result of the accident and could not return to the factory position she held before the accident. Their fee agreement provided that the respondent would receive 33-1/3% of any amounts recovered. The respondent negotiated for his client a $200,000 settlement with the insurer.
After that settlement was reached but before the check was issued, the respondent opened a personal bank account. The respondent, who referred to the account as a "conduit account", claimed he intended to use the account to pay certain costs and expenses of the client, while keeping the bulk of her funds in another account. At
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the time of the settlement and hearing of this matter, the respondent did not have a designated trust account as required by the Rules of Professional Conduct.
The initial deposit in that personal account was forty-five dollars ($45.00). However, on June 14, 1991, the respondent deposited $9,000 into the account. The respondent claimed at the hearing that he personally borrowed the $9,000 to make an advance of the settlement to the client to pay her living expenses or other obligations, in anticipation of settlement. By the time the insurer issued the settlement check on June 22, 1991, all but forty-five dollars ($45.00) in the personal account had been spent.
The $200,000 settlement check was payable to the client and to the respondent as her attorney. Three days after the check's issuance, the respondent and the client went to the bank where he had opened the personal account. The respondent opened a second account, in his name and that of his client. He deposited $150,000 of the settlement proceeds into the joint account and deposited the remaining $50,000 into the personal account. The respondent did not designate which portions of the deposits in the joint account belonged to the client and which belonged to him. Under the terms of the fee agreement, the respondent was entitled to one-third of the settlement proceeds or $66,666.66. The client was entitled to the remainder, less expenses.
The respondent testified that the client requested, and he agreed, that he hold the settlement money on the client's behalf because the client had a drinking and drug problem and had a difficult time with money. The respondent further testified that he believed their attorney/client relationship ended when the settlement was received and that from that time forward, he served only as her friend, advisor and business partner.
After depositing the settlement proceeds into the two accounts, the respondent issued a check to the client from the personal account for $3,000. One day later, he wrote a check payable from the personal account for $9,031.50 to the bank to pay off the $9,000 loan he had made to the client to provide for her living expenses.
Between June 27 and July 1, 1991, the respondent wrote checks on the personal account totaling $26,506.50, of which $12,031.50 was for the client and the remainder was to pay his personal expenses. On July 2, 1991, the respondent transferred $30,000 from the joint account into the personal account and used part of that money to pay his client's medical expenses and part to pay more of his personal expenses.
The respondent advised the client that investing in Coca-Cola antiques or collectibles would be a sound investment opportunity for her. On the basis of that representation, the client agreed to enter into an equal partnership with the respondent to buy and sell such items for profit. On July 9, 1991, the respondent made two separate wire transfers of funds from the joint account, each in the amount of $20,010, to a collectibles dealer to purchase Coca-Cola art. One of the $20,010 payments was from the respondent's share of the settlement funds, and the other payment was from the client's recovery. On July 16, 1991, the respondent wired another $16,010 to the dealer for additional Coca-Cola art. As of that date, the total remaining to the respondent of his $66,666.66 fee was $8,976.66.
The respondent discussed with the client her purchase or creation of a business to provide her with a steady income, inasmuch as her injuries necessitated a career change. The respondent and the client purchased a "rent to own"...
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