Douglas, Matter of, SB-87-0037-D
| Decision Date | 04 October 1988 |
| Docket Number | No. SB-87-0037-D,SB-87-0037-D |
| Citation | 158 Ariz. 516,764 P.2d 1 |
| Parties | In the Matter of a Member of the State Bar of Arizona, Randall Ray DOUGLAS, Respondent. |
| Court | Arizona Supreme Court |
Crowe & Scott, P.A. by Michael B. Scott, Phoenix, for respondent.
Gallagher & Kennedy by E. Calvin Fuchs, Phoenix, for State Bar.
The Bar Disciplinary Commission recommends that the Respondent, Randall R. Douglas, be suspended from the practice of the law for six months. Because the conduct in question occurred prior to the adoption of the Rules of Professional Conduct, Rule 42, Rules of the Supreme Court, 17A A.R.S. effective 7 September 1984, the matter was considered under the Code of Professional Responsibility. See former Rule 29(a), Rules of the Supreme Court 1987 Supplemental Pamphlet to Vol. 17A A.R.S., page 438, et seq. We have jurisdiction pursuant to Ariz.R.S.Ct. 46 and 53(e), 17A A.R.S.
Respondent raises two questions.
1. Did respondent violate the Code of Professional Responsibility?
2. If so, was the sanction excessive?
In addition the Bar Counsel raises two questions.
3. Was the Committee correct in dismissing count four?
4. Could the Respondent have been required to make restitution to the Client Security Fund?
Respondent was accused of ten counts of professional misconduct. After five days of hearings over a six month period, the Hearing Committee dismissed four counts and found Respondent in violation of six counts of the Code of Professional Responsibility. The Hearing Committee recommended that the Respondent be suspended for seven months.
The Bar Disciplinary Commission adopted the Committee's findings and conclusion of law but rejected the Committee's recommendations for a seven month suspension and reduced the suspension to six months. The Commission also rejected the recommendation of the Committee that Respondent make restitution to the Client Security Fund. Both Respondent and Bar Counsel objected to the Commission's report.
We note that in reviewing the records of Bar disciplinary actions we are both a trier of law and ultimate fact, In re Mercer, 133 Ariz. 391, 393, 652 P.2d 130, 132-33 (1982). Also in order to find misconduct the evidence must be clear and convincing. In re Rogers, 100 Ariz. 214, 221, 412 P.2d 710, 715 (1966).
Respondent was appointed personal representative of the Estate of Judith E. Weil on 30 January 1981. As part of his duties as personal representative, he was required to file tax returns on behalf of the estate. The returns were due in September, 1981.
Respondent testified before the Hearing Committee that he prepared a request for extension of time to file the federal estate tax return in September, 1981. He stated that he did not know whether the extension was lost in his office or in the mail.
Respondent's secretary, stated that she had no recollection of either typing or mailing the request for extension.
Respondent's testimony is contrary to a letter to the Internal Revenue Service. In the letter, Respondent claimed the returns were not filed because of difficulties in dissolving two personal holding companies, the complexity of the estate, and "unavoidable personal problems suffered by the personal representative," including litigation in Grand Rapids, Michigan, bacterial dysentery, and knee and hip surgery in September, 1981.
Respondent also wrote Attorney Edwin V. Matney a letter in which Respondent recognized that the estate tax return was due on 20 September 1981. Mr. Douglas explained that he was hospitalized for surgery on that date. He also stated: "Because I could not be sure when the estate could be closed, and what the final values would be, no extension was filed."
As a result of Respondent's inaction, the Estate of Judith E. Weil was subjected to substantial interest and penalties by federal and state taxing authorities, as follows:
Federal State
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Interest $18,391.45 $1,163.21
Penalties 20,325.38 1,457.25
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TOTAL $38,716.83 $2,620.46
The Committee found that Respondent's conduct violated DR 6-101(A)(2), handling a matter without adequate preparation and DR 6-101(A)(3), neglect of client's legal matter.
We believe the allegations contained in count one are supported by clear and convincing evidence and that the Respondent violated the cited sections of the Code of Professional Responsibility. We note that Respondent's malpractice carrier reimbursed Respondent's clients so they suffered no loss. Had it not been for this insurance, the client could have suffered considerable loss. Respondent's negligence is inexcusable and his lack of candor unacceptable for an attorney. See People v. Stewart, 752 P.2d 528 (Colo.1987).
Respondent was charged with several instances of double billings regarding the sale of a home from the Estate of Judith E. Weil.
According to Respondent, he had an agreement with the heirs of the Estate of Judith E. Weil that in lieu of charging the Estate hourly fees for his efforts in selling the deceased's patio home, he would simply charge a commission of five percent of the sales price.
The evidence indicated that Respondent did collect a "commission" of $5,650 on the sale of the house. He also charged and collected hourly fees from the Estate relating to the sale of the patio home. Respondent testified:
Rick Weil, one of the heirs, testified there was no agreement for a commission on the sale of the house.
Respondent claims the double billing was the result of a "clerical error." This allegation was rejected by the Hearing Committee and the Commission. Both found Respondent violated DR 1-102(A)(4), fraud, deceit or misrepresentation, DR 2-106(A), excessive fees, DR 5-101(A), conflict of interest, and DR 6-101(A)(2), handling a matter without adequate preparation.
There is no prohibition against an attorney charging a commission for the sale of a client's property as long as there is a clear agreement for such with the client. Our statute provides that an attorney at law is exempt from the requirement that a person must be a licensed real estate broker or salesperson before a commission may be received for the sale of real property. A.R.S. § 32-2121(A)(3). In construing a similar statute the Maryland Court of Appeals has stated:
Thus, § 212(f)(6) establishes that an attorney who is not regularly engaged in the real estate business and who does not offer to provide real estate services to the general public, may, for a commission, perform certain acts associated with the sale and use of real estate without being licensed as a real estate broker.
Atlantic Richfield Co. v. Sybert, 295 Md. 347, 363, 456 A.2d 20, 28 (1983). Clearly an attorney may not, however, obtain a commission and charge hourly legal fees for the same sale.
We agree with the Committee and the Commission that the Respondent violated the stated disciplinary rules.
Respondent testified that he reached an agreement with Mrs. Weil prior to her death where he would charge her $125 an hour for the work he did on her estate. This fee agreement was never put into writing.
Respondent testified that he charged the estate approximately $35,000. In the Amended Accounting filed in the probate matter, verified by the Respondent, he represented that he received a personal representative fee of $30,235 plus a real estate commission in the sum of $5,650. The client ledger for the estate shows Respondent logged 197.4 hours on the matter. Even without subtracting the double billed hours relating to the sale of the patio home, it appears Respondent charged a fee in excess of that allegedly agreed to by Mrs. Weil. ($30,235 divided by 197.4 hours = $153.17 per hour.)
Before the committee, Mr. Crehore, a partner in the law firm of Lewis and Roca who had handled over one thousand estates, testified that the fees charged the estate by Respondent were "grossly excessive."
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