Attorney Grievance v. Nussbaum

• Decision Date: 15 October 2007
• Docket Number: Misc. Docket AG No. 38 Sept. Term, 2006.
• Citation: 934 A.2d 1,401 Md. 612
• Parties: ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Jerold K. NUSSBAUM.
• Court: Court of Special Appeals of Maryland

934 A.2d 1

401 Md. 612

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Jerold K. NUSSBAUM.

Misc. Docket AG No. 38 Sept. Term, 2006.

Court of Appeals of Maryland.

October 15, 2007.

James P. Botluk, Asst. Bar Counsel (Melvin Hirshman, Bar Counsel, Atty. Grievance Commission), for petitioner.

Rignal W. Baldwin, Jr. (Brassel, Baldwin, Kagan & May, PA), Annapolis, for respondent.

Argued Before BELL, C.J., RAKER, HARRELL, BATTAGLIA, GREENE, ALAN M. WILNER, (retired, specially assigned), and DALE R. CATHELL, (retired, specially assigned), JJ.

BATTAGLIA, Judge.

The Attorney Grievance Commission of Maryland ("Petitioner"), acting through Bar Counsel and pursuant to Maryland Rule 16-751(a),¹ filed a petition for disciplinary or remedial action against Respondent, Jerold K. Nussbaum, on September 6, 2006. Bar Counsel alleged that Respondent violated Maryland Rules of Professional Conduct ("MRPC"), 1.15 (Safekeeping Property),² 8.1 (Bar Admission and Disciplinary Matters),³ and 8.4 (Misconduct),⁴ as well as Maryland Rule 16-607 (Commingling of Funds),⁵ Maryland Rule 16-609 (Prohibited Transactions),⁶ and Section 10-306 of the Business Occupations and Professions Article, Maryland Code (2000, 2004 Repl.Vol.) (Misuse of Trust Money).⁷

In accordance with Maryland Rules 16-752(a) and 16-757(c),⁸ we referred the petition to Judge Barry Hughes of the Circuit Court for Carroll County for an evidentiary hearing and to make findings of fact and recommend conclusions of law. Judge Hughes held a hearing on April 26, 2007, and issued Findings of Fact and Conclusions of Law on June 7, 2007, in which he found by clear and convincing evidence that Respondent had violated MRPC 1.15(a) and (b), 8.1(a), and 8.4(c) and (d), Maryland Rules 16-607 and 16-609, and Section 10-306 of the Business Occupations and Professions Article:

FINDINGS OF FACT

1. Testimony

"The Respondent graduated from the George Mason Law School in 1979, and began his legal career drafting legislation for the Maryland Legislature. He then became a tax lawyer for the Internal Revenue Service, and left that employment in 1984 after obtaining his Masters degree in Taxation from Georgetown University Law School. Respondent was admitted to practice before the Maryland Court of Appeals on December 1, 1983. Since 1984, the Respondent has been in private practice in Annapolis, Maryland. He is presently 55 years of age.

"From 1984 until the present, his practice has remained the same, with approximately 80% of his time being spent on tax work and the balance being spent in estates and trust, corporate and Chapter 11 bankruptcy. Since 1984, the Respondent estimates that he has represented over 2000 clients, with about 5% of those representing bankruptcy clients and 95% of those clients representing referrals from other attorneys.

"The events giving rise to this case took place between the years of 2003 and 2005. During that time, the Respondent testified that he maintained a single attorney escrow account at the Bank of America. He also maintained an operating account and a payroll account for his law practice, which are referred to herein as "operating account(s)." In 2003 the Respondent began experiencing severe cash flow difficulties with his practice, rendering him unable to pay the normal operating expenses of his law practice. Specifically, the Respondent testified that in 2003 over $150,000.00 in receivables became uncollectible by virtue of failed bankruptcy reorganization plans. Generally, such fees are contingent upon the success of the reorganization, and, when unsuccessful, the receivables earned in the reorganization effort become uncollectible. A second difficulty encountered by the Respondent was the delay in the Bankruptcy Court approving earned fees. Ordinarily, bankruptcy fees are placed in escrow, but can only be dispersed upon Bankruptcy Court approval. Those disbursements took up to 120 days to be approved. As a result of these difficulties, the Respondent sought and exhausted financing assistance, but was still unable to meet the operating expenses of his law firm or to repay his personal loans. It should be noted that in the year 2003, the Respondent earned approximately $106,000.00 from the practice of law and was paying college tuition for two of his children.

"What developed in 2003, and extended into 2005, was a practice whereby the Respondent would write checks from his escrow account, and deposit the same in his operating accounts as needed and without legal authority. When funds were due to be remitted to proper payees from his escrow account, he would cover shortfalls with short term borrowing, by the deposit of rents he received for office space in his law building in Annapolis and/or by using other clients' funds. The Respondent testified that all proper payments from his escrow accounts were made when due, and no client at any time suffered any financial loss as a result of this practice.

"This misuse of escrow funds continued through 2004 and into 2005. The Respondent earned income of approximately $106,000.00 in 2003, $110,000.00 in 2004 and $90,000.00 in 2005 from the practice of law, and had assumed full responsibility for payment of college expenses for two of his children. This misuse of escrow funds came to the attention of the Petitioner when a check drawn on the Respondent's escrow account was returned by his bank for insufficient funds.

"Once contacted by the Petitioner, Respondent submitted to the Petitioner ledgers which he told the Petitioner had been contemporaneously maintained by Respondent and which accurately documented his handling of client funds in the escrow account. Neither representation was true. Eight months later, Respondent voluntarily made known to Mr. Botluk that he had made several entries after the fact, that the ledgers contained "multiple inaccuracies" and did not accurately reflect his handling of the client funds.

"When the Court contacted the parties to set the Scheduling Order, the Respondent indicated that he would work with Mr. Botluk to prepare a stipulation of facts. Respondent further indicated that he would only present character witnesses at the judicial hearing. In addition to the Respondent, four individuals appeared at the hearing before this Court and testified on the Respondent's behalf. These individuals were Attorney John Newell, the Honorable James F. Schneider, Judge of the U.S. Bankruptcy Court for the District of Maryland, Attorney Stephen Krohn, and the Honorable Joseph P. Manck, former Administrative Judge of the Circuit Court for Anne Arundel County.

"Attorney John Newell testified that he has been an attorney since 1973, specializes in estates and has been a Court Auditor for the Circuit Court for Anne Arundel County since June of 1981. Mr. Newell testified that he has known the Respondent for approximately fourteen years; that he has referred work to the Respondent; that the Respondent's handling of those referred matters was "outstanding" and that Respondent's character and integrity were "without blemish"; that Mr. Newell recruited the Respondent as Counsel to the Anne Arundel County Library Board, that the Respondent gave generously of his time, attended every meeting, and also devoted much time as counsel to the Anne Arundel County Library Foundation. Notwithstanding having read the Stipulation (Petitioner's Exhibit 1), Mr. Newell's opinion of the Respondent has not changed. Mr. Newell was of the opinion that the Respondent has the capacity to do a lot of good for a lot of people in the future, even if he is not practicing law.

"The Honorable James F. Schneider, Judge of the U.S. Bankruptcy Court for the District of Maryland has been a judge for twenty-five years. Judge Schneider testified he knows the Respondent from his bankruptcy practice, and he evaluated the Respondent's competence as being within the top 25% of bankruptcy attorneys appearing before him. Based on numerous professional contacts with the Respondent, Judge Schneider opined that the Respondent's character and integrity were the "highest" and that his trustworthiness was "paramount." The Judge could not recall any complaint from anyone concerning Respondent's legal work. Notwithstanding having read the Stipulation, Judge Schneider stated that he still trusts the Respondent.

"Attorney Stephen Krohn testified that he has been an attorney for 29 years and is a fellow of the American Academy of Matrimonial Lawyers. Mr. Krohn has known the Respondent for 30 years, and developed a personal friendship with the Respondent approximately 20 years ago. Since knowing the Respondent, Mr. Krohn has referred tax and bankruptcy matters to him, and has never received any complaint concerning the Respondent's legal performance. Mr. Krohn testified that he has never had an occasion to be concerned about Respondent's character or integrity. Having read the Stipulation in this case, Mr. Krohn offered the opinion that while he still has trust in the character and integrity of the Respondent, he believes that some trust needs to be rebuilt. He characterized the Respondent as a good, caring and loving father.

"Also testifying was the Honorable Joseph P. Manck former Administrative Judge of the Circuit Court for Anne Arundel County. Judge Manck has been on the bench since 1989, and he personally knew the Respondent as a child, lost contact, but then became reacquainted with him while both practiced law. As a lawyer, Judge Manck referred clients to the Respondent, and opined that the Respondent's character and integrity were of the highest order. Having read the Stipulation, Judge Manck affirmed the same level of trust in the Respondent and offered the opinion that the Respondent can still be of benefit to the public as an attorney.

2. Stipulation (Exhibit 1)

"What follows are stipulated facts. For convenience in referencing individual transactions, each is abbreviated by the client or date designation in bold type.

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