Gilbert v. Utah State Bar (In re Gilbert)

• Decision Date: 20 July 2016
• Docket Number: No. 20150628,20150628
• Citation: 2016 UT 32,379 P.3d 1247
• Parties: In the matter of the Discipline of Donald D. Gilbert, Jr. Donald D. Gilbert, Jr., Appellant, v. Utah State Bar, Appellee.
• Court: Utah Supreme Court

379 P.3d 1247

2016 UT 32

In the matter of the Discipline of Donald D. Gilbert, Jr.Donald D. Gilbert, Jr., Appellant,

v.Utah State Bar, Appellee.

No. 20150628

Supreme Court of Utah.

Filed July 20, 2016

Lynn O. Poulson, Lehi, for appellant

Adam C. Bevis, Salt Lake City, for appellee

Justice Pearce authored the opinion of the Court in which Chief Justice Durrant, Associate Chief Justice Lee, Justice Durham, and Justice Himonas joined.

Justice Pearce, opinion of the Court:

¶1 Donald D. Gilbert, Jr. appeals the district court's order concluding that he violated the Utah Rules of Professional Conduct and disbarring him from the practice of law. We affirm the district court's order and conclude that disbarment is an appropriate sanction.

BACKGROUND

¶2 Donald D. Gilbert, Jr. represented the Utah Down Syndrome Association (the Association) and a number of its founders in a dispute with the Utah Down Syndrome Foundation (the Foundation). The Foundation is a Utah nonprofit corporation that operates, in part, through fourteen county chapters. The chapters are run mainly by volunteers who help the Foundation achieve its goals of advocating for and providing support to members of the community with Down syndrome.

¶3 In 2006, a number of the board members of the Salt Lake and Utah County chapters (the Chapters) became concerned with the Foundation's operations. These board members questioned whether the Foundation was complying with its governing documents and Utah law. They hired Gilbert to consult with them on their corporate governance questions. Eventually, a number of the Chapters' officers, while still serving in their representative capacities for the Chapters, formed the Association as a purportedly separate entity with charitable purposes similar to the Foundation's.

¶4 The Foundation responded by sending letters to six of the Chapters' officers, removing them from their positions within the Chapters. The dispute between the Foundation and the officers eventually boiled over into litigation. Gilbert represented the Association, the Chapters, and certain members of the Chapters' boards of directors in two lawsuits.

¶5 In the first suit, two of the Chapters' board members, Eric Holman and Melanie Taylor, retained Gilbert to file derivative claims against the Foundation's board of directors and officers on behalf of the Foundation and the Chapters. Gilbert's clients sought a declaratory judgment that the president of the Foundation and other officers lacked the legal authority to act on behalf of the Foundation. The district court granted summary judgment to the Foundation's officers, determining that Holman and Taylor did not have standing to file suit on the Foundation's behalf.

¶6 In the second action, the Foundation sought an accounting and the return of funds that the Foundation claimed the Association's founders had taken. The Foundation named Holman, Taylor, and five additional board members of the Chapters (the Individual Defendants) in the suit. The Foundation also named the Association as a defendant. The Foundation alleged that the Individual Defendants had acted unlawfully by continuing to access the Chapters' bank accounts, which the Foundation claimed were in actuality the Foundation's bank accounts, after the Individual Defendants had been removed from their Chapter positions.

¶7 The Foundation moved for partial summary judgment, which the Individual Defendants did not oppose. The district court granted the Foundation's motion and issued an order requiring the Individual Defendants to return all funds taken from the bank accounts and enjoined the Individual Defendants from further accessing funds in those accounts (the Injunction). Although Gilbert did not represent the Individual Defendants in the second action at the time the court entered the Injunction, Gilbert received a copy of that order approximately five days after it issued.

¶8 After receiving the Injunction, Gilbert accepted four checks for payment of $30,000 in attorney fees that were drawn on the bank accounts the Injunction identified as belonging to the Foundation. Holman, who was expressly enjoined from accessing those bank accounts and who had been ordered to return the Chapter funds to the Foundation by the Injunction, signed the first check for $6,000.¹ All four checks were signed, delivered, and negotiated after entry of the Injunction.

¶9 At the time he accepted the checks, Gilbert knew, or should have known, that the funds he received were the subject of litigation and that the bank accounts from which the funds were taken were subject to the Injunction. Nevertheless, Gilbert did not deposit the monies into a trust account or otherwise hold the funds pending the resolution of the dispute between his clients and the Foundation. Nor, as the district court found, did Gilbert “notify the court ... of his intention to accept the ... checks based on his position that [the Injunction] was invalid, void, had expired, [and] did not apply to the [funds] he received.” Rather, Gilbert simply cashed the checks and kept the funds.

¶10 The Foundation eventually learned that Gilbert had received payments from the bank accounts subject to the Injunction. The Foundation filed a motion to disgorge and requested an order requiring Gilbert to return the funds he had received from the Chapters' bank accounts. After a hearing on the Foundation's motion, the district court ordered Gilbert to return the attorney fees to the Foundation.

¶11 Despite the district court's order, Gilbert did not return the legal fees he had received. The Foundation eventually filed a second motion for disgorgement of funds. The court granted the Foundation's second motion and entered judgment against Gilbert for $30,000, interest, and associated attorney fees. To date, Gilbert has not returned the funds to the Foundation.

¶12 Two years after the district court issued the second disgorgement order, a Foundation officer filed an informal complaint against Gilbert with the Utah State Bar's Office of Professional Conduct (the OPC). After a screening panel recommended formal action, the OPC initiated disciplinary proceedings against Gilbert. The OPC's complaint alleged that Gilbert had violated five of the Utah Rules of Professional Conduct. Gilbert's defense centered on the validity of the Injunction and the disgorgement order. He argued that the Injunction was void for a variety of reasons, that he had no obligation to comply with a void order, and that he was excused from complying with the disgorgement order because the court lacked jurisdiction over him as a nonparty to the actions.

¶13 Gilbert filed a third-party complaint pursuant to rule 14 of the Utah Rules of Civil Procedure, impleading the Foundation into his disciplinary proceeding. The district court granted Gilbert's motion, but this court reversed that decision. We held that third-party complaints are inappropriate in attorney discipline proceedings. In re Discipline of Gilbert v. Utah Down Syndrome Found., Inc. , 2012 UT 81, ¶ 28, 301 P.3d 979. We concluded that “[n]either the historical nor current framework for adjudicating attorney discipline cases allows litigation of collateral matters in an attorney disciplinary action.” Id. ¶ 29. We then remanded the case and directed that “by denying impleader in this case, we do not dismiss [Gilbert's] third-party complaint on its merits.” Id. ¶ 28. We also suggested that Gilbert “may pursue his third-party complaint in an independent action.” Id.

¶14 On remand, the district court dismissed Gilbert's third-party complaint against the Foundation without prejudice. Gilbert objected and moved for a new trial or new judgment. Gilbert contended, inter alia , that Utah Rule of Civil Procedure 21 required the district court to sever, and not dismiss, his third-party complaint. The district court denied that motion.

¶15 Gilbert also moved to stay or continue the disciplinary proceedings until his third-party complaint against the Foundation could be resolved. The district court determined that Gilbert had not shown good cause to stay the disciplinary action. The court concluded that the facts underlying the disciplinary proceeding have “little to do with [Gilbert's] appeal against [the Foundation],” and that even if Gilbert were to succeed against the Foundation, the resolution of that dispute “would not affect the issues in the disciplinary case.”

¶16 The district court held a five-day bench trial. At the end of the trial, the district court concluded that Gilbert had violated four of the Utah Rules of Professional Conduct: rule 1.7(a) (Conflict of Interest: Current Clients), rule 1.15(e) (Safekeeping Property), rule 3.4(c) (Fairness to Opposing Party and Counsel), and rule 8.4(d) (Misconduct).

¶17 The district court then determined that disbarment was the presumptive discipline under rule 14-605 of the Supreme Court Rules of Professional Practice and reviewed aggravating and mitigating circumstances. It found the following aggravating circumstances: that Gilbert's conduct evidenced a selfish motive; that Gilbert had committed multiple violations of the Utah Rules of Professional Conduct; that Gilbert continually refused to acknowledge the wrongful nature of his actions and had demonstrated a lack of remorse; that Gilbert had substantial experience in the practice of law; and that Gilbert had “made no effort to rectify the consequences of the misconduct,” including his failure to repay any of the $30,000 owed to the Foundation. The court determined that the absence of a prior disciplinary record and the testimony of family and friends relating to his good character were mitigating circumstances. Based on the many aggravating circumstances and the relative lack of mitigating circumstances, the court determined that the presumptive sanction of disbarment was appropriate and entered an order disbarring Gilbert from the practice of law. Gilbert appeals.

ISSUES AND STANDARDS OF REVIEW

¶18 Gilbert first...