Committee on Legal Ethics of West Virginia State Bar v. White

• Decision Date: 29 October 1986
• Docket Number: No. 17065,17065
• Citation: 349 S.E.2d 919,176 W.Va. 753
• Court: West Virginia Supreme Court
• Parties: COMMITTEE ON LEGAL ETHICS OF the WEST VIRGINIA STATE BAR v. E. Dennis WHITE, Jr., A Member of the West Virginia State Bar. .

Page 919

349 S.E.2d 919

176 W.Va. 753

COMMITTEE ON LEGAL ETHICS OF the WEST VIRGINIA STATE BAR v. E. Dennis WHITE, Jr., A Member of the West Virginia State Bar.

No. 17065.

Supreme Court of Appeals of

West Virginia.

.

Decided Oct. 29, 1986.

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).

2. "Absent a showing of some mistake of law or arbitrary assessment of the facts, recommendations made by the State Bar Legal Ethics Committee ... are to be given substantial consideration." Syllabus Point 3, in part, In Re Brown, 166 W.Va. 226, 273 S.E.2d 567 (1980).

3. "Detaining money collected in a professional or fiduciary capacity without bona fide claim coupled with acts of dishonesty, fraud, deceit or misrepresentation justify annulment of an attorney's license to practice law." Syllabus Point 5, Committee on Legal Ethics v. Pence, 161 W.Va. 240, 240 S.E.2d 668, 93 A.L.R.3d 1046 (1977).

West Virginia State Bar, Disciplinary Counsel, Charleston, for appellant.

Frederick D. Fahrenz, Preiser & Wilson, Charleston, for appellee.

PER CURIAM:

This action is a disciplinary proceeding instituted by the Committee on Legal Ethics of the West Virginia State Bar (hereinafter the Committee) against E. Dennis White, Jr., a member of the Bar. The Committee has recommended that this Court disbar Mr. White (hereinafter respondent) from the practice of law.

The Committee has charged the respondent with violating DR 1-102(A)(4) and (6) of the Code of Professional Responsibility which state, "A lawyer shall not: ... (4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation ... (6) Engage in any other conduct that adversely reflects on his fitness to practice law." He has also been charged with violating DR 5-104(A) and DR 5-105(B) of the Code of Professional Responsibility, ¹ which limit entering into business relationships with a client and accepting conflicting employment. The Committee has alleged that the respondent entered into business transactions with a client with differing interests and continued employment with a client when the competing interests of the other client would have impaired the independent professional judgment of the respondent.

By separate count, the Committee charged the respondent with violating DR 9-102 of the Code of Professional Responsibility by allegedly failing to preserve the identity of the funds and property of a client. ² A third count in the "Statement of Charges" brought against the respondent was dismissed by the Committee when the complainant failed to prosecute the allegations contained therein.

A panel of the Committee conducted hearings upon the charges brought against the respondent. Thereafter, the Committee issued its findings of fact and conclusions of law and recommended to this Court that the respondent be disbarred from the practice of law. After the filing of briefs and the presentation of oral argument on behalf of both parties, the case was submitted to this Court for a decision.

We note initially that we have historically placed the burden on the Committee to prove its charges against an attorney by full, preponderating, and clear evidence, as we stated in Syllabus Point 1 of Committee on Legal Ethics v. Lewis, 156 W.Va. 809, 197 S.E.2d 312 (1973):

"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."

See also Syllabus Point 1, Committee on Legal Ethics v. Tatterson, 173 W.Va. 613, 319 S.E.2d 381 (1984); Syllabus Point 1, Committee on Legal Ethics v. Pence, W.Va. , 216 S.E.2d 236 (1975).

From a review of the record and exhibits, we find that the Committee has met this burden. There were some conflicts in the testimony, but as we said in Syllabus Point 3, in part, of In Re Brown, 166 W.Va. 226, 273 S.E.2d 567 (1980):

"Absent a showing of some mistake of law or arbitrary assessment of the facts, recommendations made by the State Bar Legal Ethics Committee ... are to be given substantial consideration."

I.

The evidence presented as to Count I against the respondent was that Earl and Lucille Scarberry had engaged the respondent to handle some legal matters. The respondent assisted them in the sale of real estate, from which they received certain funds. The respondent advised the Scarberrys that he was aware of an arrangement whereby if they loaned $5,000 they could receive interest at the rate of 20 percent with the repayment of principal at $1,000 per month.

The Scarberrys testified that they agreed to make the loan, but stated it was their understanding that the respondent would be responsible for the repayment of the money. They admitted that the respondent had indicated the money would go to a third person. The name of the third person was not disclosed to them at the time they gave the money to the respondent. Subsequently, it appears that the respondent entered into some arrangement with a Paul Enyart, who was president of Empire Financial Services. The respondent was the general counsel to this company and a friend of Mr. Enyart.

On July 28, 1981, the respondent wrote a letter to the Scarberrys which included a check in the amount of $1,000. This letter referred to the check as a "loan" to them. On August 28, 1981, the respondent sent to the Scarberrys a check in the amount of $500 which the respondent again referred to as an "additional loan" to them. On November 2, 1982, the Scarberrys wrote to the respondent notifying him that they were discharging him from further representation. They demanded that he return to them the money owed and provide to them a "complete accounting of the loan transaction and the funds now held in excrow (sic) by you."

At this point, the respondent had made $3,500 in payments. Shortly after this demand, the Scarberrys filed a formal complaint with the State Bar because of the respondent's failure to account. Subsequently, on January 18, 1982, Mr. Enyart delivered a cashier's check in the amount of $1,500 to the Scarberrys. No interest on the principal was ever paid to the Scarberrys by the respondent, or by any other person on his behalf.

We find that the evidence supports a violation of DR 1-102(A)(4) and (6). The respondent's defense that he was acting as a trustee or broker in dealing with the Scarberrys' money, which would be loaned to a third party, Mr. Enyart, is not credible. The Scarberrys did not know Mr. Enyart at the time they gave their money to the respondent. Their testimony was that they expected the respondent to be responsible for repayment and this is supported by the respondent's initial payments to the Scarberrys. The respondent's letters to the Scarberrys accompanying his checks, in which he characterized the money sent to them as a "loan to you," was a misrepresentation of the transaction.

It bears some relationship to the misrepresentation we found to exist in Committee on Legal Ethics v. Tatterson, 173 W.Va. 613, 319 S.E.2d 381 (1984). There the attorney withheld funds from the settlement of a fire loss. He represented to the client that the funds were needed to discharge a deed of trust on the property. However, the deed of trust had already been discharged by the fire insurance company. We found this to be a violation of the misrepresentation bar of DR 1-102(A)(4). Furthermore, some courts have held that where an attorney borrows money from his client without making a full disclosure of all the pertinent circumstances of the loan, he has committed a disciplinary offense. E.g., Matter of Kali, 124 Ariz. 592, 606 P.2d 808 (1980); In Re Staples, 259 Or. 406, 486 P.2d 1281 (1971). These cases proceed on the theory that a fiduciary relationship exists between an attorney and his client.

There is ordinarily an inequality in the relationship between an attorney and client. The client comes to the attorney trusting in his expertise and honesty. He often accepts the attorney's representations without making any independent evaluation. For this reason, there is a higher obligation on an attorney to deal with his client in financial matters in a forthright and honest manner. We find that the respondent also violated DR 5-104(A) in the procurement of the loan by not disclosing all of the relevant facts.

II.

The second count against the respondent relates to his dealings with the Estate of Charles Arnold of which he was a cotrustee along with a Mr. Pearman. At the respondent's suggestion, a matured certificate of deposit in the amount of $160,000 drawing interest at 5.72 percent per annum was converted to a certified check payable to both trustees. This check was deposited in the respondent's fiduciary fund kept by his law office at the Guaranty National Bank in Huntington on August 3, 1978. Mr. Pearman testified that the respondent had advised him that the purpose of this transaction was to enable the respondent to invest the proceeds in certificates of deposit in a New York financial institution.

The record shows that this entire amount was disbursed out of the respondent's trust account in approximately two weeks. The respondent admits that the money was sent to certain banks and individuals at the direction of a Joseph LaMonica who informed the respondent that he was investing the money in Scotch Whiskey certificates. No certificates were ever...