Committee on Legal Ethics of West Virginia State Bar v. Hess, 20225

• Decision Date: 19 December 1991
• Docket Number: No. 20225,20225
• Citation: 413 S.E.2d 169,186 W.Va. 514
• Parties: The COMMITTEE ON LEGAL ETHICS OF the WEST VIRGINIA STATE BAR, Complainant, v. Richard HESS, a Member of the West Virginia State Bar, Respondent.
• Court: West Virginia Supreme Court

Page 169

413 S.E.2d 169

186 W.Va. 514

The COMMITTEE ON LEGAL ETHICS OF the WEST VIRGINIA STATE BAR, Complainant, v. Richard HESS, a Member of the West Virginia State Bar, Respondent.

No. 20225.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 17, 1991.

Decided Dec. 19, 1991.

Syllabus by the Court

1. " 'In a court proceeding prosecuted by the Committee on Legal Ethics of the West Virginia State Bar for the purpose of having suspended the license of an attorney to practice law for a designated period of time, the burden is on the Committee to prove by full, preponderating and clear evidence the charges contained in the complaint filed on behalf of the Committee.' Syllabus Point 1, Committee on Legal Ethics v. Lewis, 156 W.Va. 809, 197 S.E.2d 312 (1973)." Syllabus Point 1, Committee on Legal Ethics v. Smith, 184 W.Va. 6, 399 S.E.2d 36 (1990).

2. "The utmost good faith and fair dealing must be exercised toward each other by ... partners, not only after the partnership has been formed, but also during negotiations leading thereto." Syllabus Point 1, in part, Zogg v. Hedges, 126 W.Va. 523, 29 S.E.2d 871 (1944).

3. Standards of professional conduct are applicable to an attorney's relationship with his or her firm. If a lawyer converts firm monies to his or her own use without authorization, the attorney is subject to a disciplinary charge. Such conduct obviously reflects a dishonest and deceitful nature which violates the general precept that an attorney should avoid dishonesty or deceitful conduct.

4. The repayment of funds wrongfully held by an attorney does not negate a violation of a disciplinary rule. Any rule regarding mitigation of the disciplinary punishment because of restitution must be governed by the facts of the particular case.

Sherri D. Goodman, West Virginia State Bar, Charleston, for complainant.

Allan H. Masinter, Charleston, for respondent.

MILLER, Chief Justice:

In this disciplinary proceeding, the Committee on Legal Ethics of the West Virginia State Bar (Committee) asks us to suspend Richard Hess's license to practice law for a period of two years and charge him costs of $694.41 for the expense of conducting the disciplinary proceedings. For the reasons stated below, we accept this recommendation of the Committee.

In 1985, Mr. Hess was a partner in the law firm of Lewis, Ciccarello & Friedberg in Charleston, West Virginia. In August of that year, unknown to his firm, he opened a settlement account for his real estate transactions which was separate from the client trust account of the firm. This account was opened in the name of "Richard H. Hess, Settlement Agent." Mr. Hess had complete control of this account (hereinafter "the Hess Account"), making all deposits and disbursements as well as keeping the books for the account. In July of 1986, Mr. Hess converted this account to an interest-bearing account without notifying or getting permission from the firm.

In June, 1989, the firm decided to audit its client trust accounts, including the Hess Account. Mr. Hess objected to the audit of his account, but ultimately turned over the books and allowed the audit to proceed. The auditor determined that the Hess Account had earned $10,304.75 in interest, of which Mr. Hess had withdrawn $6,189.25 and deposited it into his personal account. Mr. Hess had also written checks to himself on the account in the amount of $16,759.97. These funds, which had been designated as legal fees, were deposited in Mr. Hess's personal account instead of the firm's business account. As a result of these revelations, Mr. Hess resigned from the law firm in September, 1989.

The Committee contends that Mr. Hess's conduct constitutes a violation of DR 1-102(A)(4) and (6) of the Code of Professional Responsibility, which prohibit conduct involving dishonesty or fraud and conduct adverse to the fitness to practice law. Its parallel is now found in Rule 8.4 of the Rules of Professional Conduct. ¹

Implicit in our consideration of disciplinary actions recommended by the Committee is our traditional rule regarding the Committee's burden of proof, which is expressed in Syllabus Point 1 of Committee on Legal Ethics v. Smith, 184 W.Va. 6, 399 S.E.2d 36 (1990):

" 'In a court proceeding prosecuted by the Committee on Legal Ethics of the West Virginia State Bar for the purpose of having suspended the license of an attorney to practice law for a designated period of time, the burden is on the Committee to prove by full, preponderating and clear evidence the charges contained in the complaint filed on behalf of the Committee.' Syllabus Point 1, Committee on Legal Ethics v. Lewis, 156 W.Va. 809, 197 S.E.2d 312 (1973)."

See also Syllabus Point 1, Committee on Legal Ethics v. Higinbotham, 176 W.Va. 186, 342 S.E.2d 152 (1986); Syllabus Point 1, Committee on Legal Ethics v. Tatterson, 173 W.Va. 613, 319 S.E.2d 381 (1984).

We find that the Committee has met its burden and that Mr. Hess's actions clearly constituted conduct involving dishonesty, fraud, deceit, and misrepresentation. He deceived and misrepresented to his partners, either directly or by his failure to disclose, the nature of the Hess Account. He also took money which clearly was not his and converted it to his own use.

Mr. Hess attempts to characterize his conversion of the funds as an internal business disagreement. There is nothing in the record to reflect this. It was not until the audit was made that his partners became aware of his conduct. This is not a situation where there is a bona fide dispute as to whether, under the firm's past practice, the funds converted were authorized.

Mr. Hess also maintains that his capital account in the firm was such that if the funds converted were credited to it, he would have had a positive balance compared to some of the partners who had a negative balance. The issue here is not the partnership capital account, but is the fact that monies were taken without the knowledge or authorization of the partnership.

The fact that Mr. Hess believed that he had been unfairly treated by his partners in the allocation of the firm's profits neither justifies nor mitigates his action. To hold otherwise would allow each person in a partnership to set his or her salary without regard to the partnership arrangement. Moreover, it would ignore the general rule recognizing that in a partnership, the partners occupy a fiduciary relationship with each other which requires them to deal with each other in the utmost good faith. See 59A Am.Jur.2d Partnership § 420 (1987). We recognized this rule in Syllabus Point 1, in part, of Zogg v. Hedges, 126 W.Va. 523, 29 S.E.2d 871 (1944):

"The utmost good faith and fair dealing must be exercised toward each other by ... partners, not only after the partnership has been formed, but also during negotiations leading thereto."

See also Barker v. Smith & Barker Oil & Gas Co., 170 W.Va. 502, 294 S.E.2d 919 (1982).

Throughout the respondent's argument is the implication that because no clients have suffered any particular loss, there is no disciplinary violation. Courts have held that standards of professional conduct are applicable to an attorney's relationship with his or her firm. If a lawyer converts firm monies to his or her own use without authorization, the attorney is subject to a disciplinary charge. Such conduct obviously reflects a dishonest and deceitful nature which violates the general precept that an attorney should avoid dishonesty or deceitful conduct.

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