Attorney Grievance v. Cafferty, Misc. AG No. 82

CourtCourt of Appeals of Maryland
Citation831 A.2d 1042,376 Md. 700
Docket NumberMisc. AG No. 82
Decision Date08 September 2003

831 A.2d 1042
376 Md. 700


Misc. AG No. 82, Sept. Term, 2002.

Court of Appeals of Maryland.

September 8, 2003.

831 A.2d 1043
Melvin Hirshman, Bar Counsel and Dolores O. Ridgell, Assistant Bar Counsel for the Attorney Grievance Commission of Maryland, for petitioner

Tracy E. Mulligan, Jr., Esquire, Rockville, for respondent.





Diane E. Cafferty ("Respondent") was admitted to the Maryland Bar on 19 December 1985 and the District of Columbia Bar in October 1986. On 3 July 2002, Respondent was disbarred in the District of Columbia by Order of the District of Columbia Court of Appeals. In re Glenn H. Carlson & Diane E. Cafferty, 802 A.2d 341 (D.C.2002).

The Attorney Grievance Commission of Maryland, acting through Bar Counsel, filed with this Court a petition for reciprocal disciplinary action against Respondent. Bar Counsel attached to its petition a certified copy of the District of Columbia Court of Appeals's opinion in support of Bar Counsel's allegation that, because of Respondent's disbarment from the practice of law in the District of Columbia for engaging in conduct involving misappropriation and failure to render accountings promptly to clients upon request, Respondent should be disbarred also in Maryland. Based on the District of Columbia order disbarring Respondent, Bar Counsel alleges, under Maryland Rule 16-773,1 violations of the Maryland Rules of Professional

831 A.2d 1044
Conduct ("MRPC"), including MRPC 1.15(a),1.15(b), and 1.15(c),2 8.4(c) and 8.4(d),3 and Md. Rule 16-609.4 Bar Counsel asks this Court to impose corresponding discipline to that imposed by the District of Columbia. This Court ordered that Respondent show cause why she should not be disbarred in Maryland. Respondent filed a response, and we heard argument in this matter on 5 June 2003

As a preliminary matter, we observe that Md. Rule 16-773(g) addresses the conclusive effect of a prior disciplinary adjudication as follows:

Except as provided in subsections (e)(1) and (e)(2) of this Rule, a final adjudication in a disciplinary or remedial proceeding by another court, agency, or tribunal that an attorney has been guilty of professional misconduct or is incapacitated is conclusive evidence of that misconduct or incapacity in any proceeding under this Chapter. The introduction of such evidence does not preclude the Commission or Bar Counsel from introducing additional evidence or preclude the attorney from introducing evidence otherwise showing cause why no discipline
831 A.2d 1045
or lesser discipline should be imposed.

We therefore accept the District of Columbia Court of Appeals's conclusion that Respondent recklessly misappropriated client funds and failed to render accountings promptly to her condominium clients upon request.


On 30 December 1997, District of Columbia Bar Counsel filed a specification of charges against Respondent alleging that she violated D.C. Rules of Professional Conduct 1.15(a), 1.15(b), 8.4(b), and 8.4(c). D.C. Bar Counsel filed identical charges against Respondent's law partner, Glenn H. Carlson, and moved to consolidate both cases because they arose out of the Carlson & Cafferty law firm's representation of owners of condominium units located at 1927 17th Street, N.W., in the District of Columbia. Respondent objected to the proposed consolidation claiming that consolidation would "taint" her due to Mr. Carlson's individual conduct in these matters and his failure to cooperate with D.C. Bar Counsel. The D.C. Board on Professional Responsibility determined that Respondent would not be prejudiced by the consolidation and that consolidation was appropriate. Four days of testimony were received in 1998 and, approximately two years later, the D.C. Hearing Committee issued its Report, which the D.C. Board on Professional Responsibility reviewed and modified.

The District of Columbia Court of Appeals summarized the factual record as follows:

"Documents in the record and the Board's Report reveal that in February 1985, during the last year of her law school studies, Ms. Cafferty worked as a law clerk at the firm of Kenny, Carlson & Warren. After her graduation from law school and admission to the Maryland Bar, Ms. Cafferty joined the firm as an associate; she worked almost exclusively for Mr. Carlson. Around 1988, Mr. Carlson, Ms. Cafferty and Mr. Daniel Ferris left Kenny, Carlson & Warren and established their own firm, Carlson, Cafferty & Ferris. Mr. Ferris managed the firm's client trust fund. The firm became Carlson & Cafferty after Mr. Ferris's departure to practice law in another jurisdiction, and Mr. Carlson assumed the position of managing partner.

"The firm maintained a client trust fund at the Riggs Bank ("the Riggs Escrow Account"), an operating account at the First Liberty National Bank between March 1992 and September 1995, and an account for Commercial Quest, Inc. at Riggs Bank, which was used as an operating account beginning around September 1995. Ms. Cafferty served as President of Commercial Quest, `a separate business venture.' Both Mr. Carlson and Ms. Cafferty had signatory authority on all of the firm's accounts. Ms. Hammond handled day-to-day management of the Riggs Escrow Account until she left the firm in 1993. The Board found that Ms. Cafferty `regularly transferred moneys between the Riggs Escrow Account and the various accounts maintained by the law firm, generally at the direction of [Mr.] Carlson.'

"Around May 1989, Thomas Fritz, owner of a condominium unit at the 17th Street condominium, contacted Ms. Cafferty and asked her to represent him in his dispute with his condominium association over services and repairs at the condominium complex. She agreed, and Mr. Fritz decided to send his monthly condominium fee payments of $148.33 to Carlson & Cafferty. These payments were made from around May 1989, through March 1996, and were sent with

831 A.2d 1046
a letter addressed either to Ms. Cafferty, or to Mr. Carlson and Ms. Cafferty. Each transmittal specified that the check should be put into the law firm's escrow account. Commencing in early 1990, at least two other residents of the 17th Street condominium sent monies to the law firm; these funds also were earmarked for the firm's escrow account. Other persons connected to the 17th Street condominium transmitted funds to the firm for the escrow account
"In addition to making payments for the law firm's escrow account, Mr. Fritz and two other owners of condominium units in the 17th Street condominium retained Carlson & Cafferty under a contingency fee arrangement, in March 1991, to take legal action against the principal officer of the 17th Street condominium's management company. Approximately ten months after the lawsuit was filed, the parties entered into a settlement agreement, and the settlement funds were placed in the Riggs Escrow Account.
"After settlement, Carlson & Cafferty continued to represent Mr. Fritz and other residents of the 17th Street condominium. In May 1992, Mr. Fritz and others retained the firm, at the hourly billing rate of $225, to `prepare and update all condominium documents and to take steps necessary to have the [condominium association] in full compliance with the law and all governing documents.' Furthermore, when one of the persons whom the firm represented assumed responsibility for the management of the 17th Street condominium, bills of the condominium were sent to the firm for payment from escrow funds; some monthly condominium fees also were transmitted for deposit in the firm's escrow account.
"After retaining the firm in May 1992, the 17th Street condominium clients began to request billing statements, bylaws, and information about services that the firm had rendered. Responses to oral and written requests made between May 1992 and December 1994 were delayed. One accounting was received in October 1993, and at a February 1994 condominium association meeting, attended by Ms. Cafferty and Mr. Carlson, amended bylaws were submitted, as well as an accounting for funds received and paid on behalf of the association since 1989. The accounting showed that `[Carlson & Cafferty] had received over $60,000[,] ... had expended approximately $40,000, including $11,948.86 paid to the firm in fees and expenses' and $21,000 remained in escrow. Following the February 1994 meeting, Mr. Fritz repeatedly asked the firm for additional accountings. An accounting was submitted in June 1995, and thereafter, no requested accounting was forthcoming until July 1997. By that time, two of the condominium clients had filed an ethical complaint against Mr. Carlson and Ms. Cafferty.

"Around February and April of 1994, the Washington Federal Savings Bank, which had foreclosed on three of the 17th Street condominium units, began paying monthly condominium fees on these units to Carlson & Cafferty for deposit into the firm's escrow account. When the 17th Street condominium was sold around March 1996, Washington Federal Savings Bank asked Mr. Carlson to disburse the funds held in the Riggs Escrow Account. Mr. Carlson sent a letter to Washington Federal Savings Bank on March 25, 1996, agreeing to disburse funds, except for $3,000 to be retained for potential liabilities. After the sale closed, Mr. Fritz and others repeatedly requested disbursement of the Riggs Escrow Account funds. Mr.

831 A.2d 1047
Carlson did not honor these requests in a timely manner, undoubtedly because there were insufficient funds in the escrow account. In fact, the Board found that:
By the Summer of 1996, when Carlson & Cafferty were required to disburse to the condominium owners the more than $40,000 that they had received to hold in trust, only approximately $2,000 of the funds remained in the Riggs Escrow Account. The missing funds of the [condominium association]

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