Attorney Grievance Com'n of Maryland v. Owrutsky

• Decision Date: 27 March 1991
• Parties: ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Morton J. OWRUTSKY. Misc. (Subtitle BV) 25 Sept. Term 1988.
• Court: Maryland Court of Appeals

Page 334

322 Md. 334

587 A.2d 511

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Morton J. OWRUTSKY.

Misc. (Subtitle BV) 25 Sept. Term 1988.

Court of Appeals of Maryland.

March 27, 1991.

Kendall R. Calhoun, Asst. Bar Counsel, for the Attorney Grievance Com'n of Maryland.

Barry Helfand, Rockville, for respondent.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, ^* RODOWSKY, McAULIFFE, ADKINS ^** and CHARLES E. ORTH, JR. (Retired, Specially Assigned), JJ.

McAULIFFE, Judge.

The Attorney Grievance Commission seeks disciplinary action against Morton J. Owrutsky, alleging misconduct in the handling of a client's funds as attorney in fact, and misconduct during his service as personal representative and trustee in closely related estates. Bar Counsel recommends disbarment. Respondent denies any wrongdoing, and alternatively suggests that if the record demonstrates any misconduct it is of a character warranting no more than a reprimand.

I.

Respondent has been a member of the Maryland Bar for nearly 30 years, and maintains an office for the practice of law in Salisbury, Maryland. He met Joseph Peigert in 1964, and thereafter represented Mr. Peigert and his wife in various business and personal matters. Mr. Peigert and respondent appear to have been close personal friends. In August, 1975, respondent prepared a will for Mr. Peigert, in which respondent and Doris McMahon, Mr. Peigert's daughter, were named as co-personal representatives. The will after providing for a number of specific bequests totaling $33,000, established a marital and a nonmarital or "second" trust. Upon the death of Mrs. Peigert, the remainder of the marital trust was to become a part of the second trust, ¹ and the second trust was to be divided into three shares for the benefit of Mr. Peigert's daughter, his son, and a class consisting of his then living grandchildren.

In October, 1975, respondent, at the request of Mr. Peigert, opened a bank account at Second National Building and Loan, Inc. (Second National) in the name of "Morton J. Owrutsky, Attorney for Joseph Peigert," and deposited more than $78,000 received from the proceeds of sale of some of Mr. Peigert's property.

Mr. Peigert died on 2 February 1976, leaving an estate of about $778,000, consisting of $611,000 in cash, certificates of deposit, and bank accounts; $10,000 in stocks; $2,000 in tangible personal property; and $155,000 in real estate. Respondent immediately began to collect the liquid assets of the estate, and deposited them in the Second National account. At the same time, respondent opened a bank account at Truckers & Savings Bank, in the name of the estate. Through 1 February 1980, however, funds belonging to the estate and to the trusts created by Mr. Peigert's will were also maintained in and disbursed from the clients' fund account of respondent's law firm.

Meanwhile, on 5 March 1976, respondent supervised the execution by Mrs. Peigert of a codicil to her 1968 will, and a broad power of attorney in favor of respondent, both of which had been prepared by respondent. On 20 March 1976, respondent opened another account at Second National, entitled "Morton J. Owrutsky, Attorney for Ella Peigert."

On 17 June 1977, Mrs. Peigert died. Respondent, the surviving personal representative under her will, did not open her estate until 16 October 1978. The value of this estate was approximately $134,000, consisting of $51,000 in jewelry, $35,000 in real property, $46,000 in cash and receivables, and $2,000 in tangible personal property. Under the terms of Mrs. Peigert's will, all of her estate went into the second trust established by the will of her late husband. This estate was not closed until February, 1984. In May, 1978, respondent opened three accounts in Truckers & Savings Bank, one for each of the beneficiaries, or class of beneficiaries, of the second trust.

On 28 April 1984, Mrs. McMahon filed a complaint with the Attorney Grievance Commission, alleging multiple violations of the Code of Professional Responsibility ² by respondent. Upon receipt of the complaint, the Office of Bar Counsel conducted an investigation and on 21 October 1985 referred the matter to an Inquiry Panel pursuant to Maryland Rule BV6. Hearings were held in December, 1985, and the report of the Inquiry Panel was forwarded to the Review Board in May, 1986. The Review Board remanded the case to the Inquiry Panel for further information concerning 12 specified subjects. After some delay, additional hearings were held in March, 1987, after which the record was held open until July to permit the parties to file memoranda in support of their respective positions. The Inquiry Panel forwarded its supplemental report to the Review Board in July, 1988. The Review Board directed Bar Counsel to file a complaint for disciplinary action with this Court, and that complaint was filed on 16 December 1988.

This Court referred the matter to Judge Arthur M. Ahalt for further proceedings, pursuant to Md. Rule BV9. On 3 February 1989, respondent filed a motion to dismiss the complaint, contending he had been prejudiced by what he considered to be an inordinate delay in the filing of charges against him. Judge Ahalt heard arguments and received memoranda of the parties with respect to the motion to dismiss, and that motion is now before us for decision. Judge Ahalt also conducted a hearing on the underlying charges, and filed findings of fact and conclusions of law, determining that respondent is guilty of multiple violations of the Code of Professional Responsibility.

Respondent filed exceptions, contending the evidence is insufficient to prove any violation. Petitioner filed exceptions to two findings of fact made by Judge Ahalt, and recommends disbarment as the appropriate sanction for the violations found. We first consider respondent's motion to dismiss.

II.

Respondent concedes that disciplinary proceedings are not barred by a general statute of limitations. Anne Arundel Co. Bar Ass'n v. Collins, 272 Md. 578, 582, 325 A.2d 724 (1974). He argues, however, that this action is barred by laches. In rejecting a similar contention in Collins, we quoted with approval the following statement of the Supreme Court of Oregon in In re Weinstein, 254 Or. 392, 459 P.2d 548, 549 (1969), cert. denied, 398 U.S. 903, 90 S.Ct. 1689, 26 L.Ed.2d 61 (1970):

It is unnecessary to define in this case the proper remedy for vexatious and unreasonable delay on the part of the Bar. None has been shown in this case. It ought to be made clear, however, that the primary purpose of professional disciplinary proceedings is to protect the public. The punishment of an offending member of the profession is indeed a serious matter, but it is incidental to the protection of the public. If the conduct of a member of the Bar disqualifies him from the practice of law, it would not be in the public interest to dismiss the disciplinary proceedings for no reason other than the Bar's failure to prosecute them with the proper dispatch. 459 P.2d at 549 (emphasis added).

Similarly, in Attorney Griev. Comm'n v. Kahn, 290 Md. 654, 684, 431 A.2d 1336 (1981), this Court said that "[b]ecause the purpose of disciplinary action against an attorney is to protect the public, dismissal of the disciplinary petition for the sole reason that the Attorney Grievance Commission failed to proceed with the proper dispatch is manifestly unwarranted."

Respondent argues that in both Kahn and Collins we relied upon the absence of prejudice in finding the defense of laches inapplicable. He suggests that he has been prejudiced because his bookkeeper, Bette Jane Patt, who handled much of the accounting and transfers of funds in connection with the estates and the trust, died in 1988. Bar Counsel responds by pointing out that the bookkeeper testified before the Inquiry Panel on two separate occasions, while under oath and subject to cross-examination, and that her testimony was recorded on both occasions. Thus, Bar Counsel suggests, her testimony was admissible as a "prior testimony" exception to the hearsay rule. See 6 L. McLain, Maryland Evidence § 804.1 (1987). Respondent did not seek to introduce any of the bookkeeper's testimony in the hearing before Judge Ahalt. Judge Ahalt found that respondent had not been prejudiced by the delay in filing charges. We agree, and we deny the motion to dismiss. Turning to the substantive issues, we consider the violations found by Judge Ahalt, and respondent's exceptions to those findings.

III.

Judge Ahalt found that respondent violated Disciplinary Rule (DR) 9-102(A) and Art. 10, § 44, Maryland Code (1957, 1981 Repl.Vol.) ³ by keeping estate funds in his firm's escrow account from 1976 until 1980. Respondent argues that neither the disciplinary rule nor the statute prohibited the deposit of the funds of several clients in a common escrow account, and that he did not understand that the funds of a decedent's estate must be maintained in a separate account until this Court said so in Attorney Griev. Comm'n v. Boehm, 293 Md. 476, 479 n. 2, 446 A.2d 52 (1982). ⁴

Respondent is correct in his assertion that DR 9-102(A) and Art. 10, § 44 focused on the prohibition against commingling of personal or business funds with funds belonging to others. Although what we said in Boehm continues to be the law of this State, ⁵ we recognize that respondent did not maintain estate funds in his clients' fund account after Boehm was decided, and we do not believe that a violation of DR 9-102(A) or Art. 10, § 44 has been shown in this instance. Accordingly, respondent's exception is sustained as to this finding.

IV.

Judge Ahalt found that respondent violated Disciplinary Rules 1-102(A)(4), (5), and (6) by taking fees from both estates before they were earned and before approval of the Orphans' Court had been sought or obtained, and in taking fees from both decedent's estates without any approval of the Orphans' Court. He found that:

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