Harper, Matter of

• Decision Date: 18 February 1997
• Docket Number: No. 24618,24618
• Citation: 326 S.C. 186,485 S.E.2d 376
• Parties: In the Matter of F. Mikell HARPER, Respondent. . Heard
• Court: South Carolina Supreme Court

Page 376

485 S.E.2d 376

326 S.C. 186

In the Matter of F. Mikell HARPER, Respondent.

No. 24618.

Supreme Court of South Carolina.

Heard Feb. 18, 1997.

Decided May 12, 1997.

Barry L. Johnson, of Hilton Head Island, and Desa Ballard, of Ness, Motley, Loadholt, Richardson & Poole, P.A., Charleston, for Respondent.

Charles Molony Condon, Attorney General, and J. Emory Smith, Jr., Assistant Deputy Attorney General, Columbia, for Complainant.

PER CURIAM.

In this attorney grievance matter, we impose on F. Mikell Harper ("Attorney") a definite suspension from the practice of law for a period of sixty days.

Daniel Frazier Matter

In December 1986, Daniel Frazier deeded certain real property to Attorney, who had previously represented him in several transactions. There is conflicting evidence in the record whether this was at the request of Frazier or Attorney. Frazier testified that he was asked by Attorney to deed the property because Attorney was short on cash and wanted to obtain a loan on the property. Frazier's expectations were that Attorney would use the property as collateral to obtain a loan, retain a portion of the proceeds for himself, and remit the balance of the loan proceeds to Frazier. He understood that Attorney was going to use the property as collateral until he paid off the loan, and then deed the property back to Frazier. Attorney obtained a $35,000 loan. According to Frazier, Attorney retained $25,000 of the loan proceeds and remitted $10,000 to him.

According to Attorney, Frazier was in need of money and deeded the property so that Attorney could obtain a loan for Frazier. Attorney testified that of the $35,000 loan, Frazier got $20,000, and Attorney got $15,000. Attorney characterizes his retention of $15,000 of the loan proceeds as an "innovative" fee arrangement. The $15,000 attorney retained was to serve as a "credit" for legal work he was going to perform for Frazier.

Certain facts are undisputed. No written document exists memorializing this transaction. Attorney did not advise Frazier to seek advice of independent counsel concerning the transaction. In conveying the property, Frazier signed a blank deed. Both Frazier and Attorney agree that the loan amount on the property was $35,000, but the consideration cited in the deed conveying the property to Attorney was $50,000, not $35,000. Attorney does not have copies of the checks evidencing the disbursement of the loan proceeds. The $15,000 that Attorney claims was to serve as a credit for future legal services did not appear on any pre-billing invoice. The property has not been reconveyed to Frazier. After Frazier conveyed the property to Attorney, Attorney conveyed the property for a consideration of $10, without Frazier's permission, to Atlantis Title, a corporation owned by Attorney. A one-half interest in the property was then conveyed by Attorney's title corporation to a third party for consideration of $10 and assumption of one-half of the existing mortgage balance.

In 1987-88, Attorney worked on closing a $500,000 loan for Frazier. As part of the proceeds from the loan, $35,000 was paid to Atlantis, $15,000 of which would, according to Attorney, serve as another credit for attorneys' fees, and $20,000 of which would be used toward the mortgage on the property Frazier conveyed to Attorney. An addendum to the HUD-1 Settlement Statement reflects, as part of the disbursement of the proceeds of the $500,000 loan, a payment of $65,823 to Farmco, which had foreclosed on a previous loan to Frazier. This dispute with Farmco was actually settled for $30,000. The difference of $35,823 was paid to Attorney. However, these attorneys' fees are not indicated on the HUD-1 Settlement Statement. Attorney testified that these were handled outside the loan transaction. At a later point, Attorney refunded Frazier $15,823 in attorneys' fees.

HUD Matter

Attorney had contracted with the United States Department of Housing and Urban Development to provide sales closing services. Attorney's contract was terminated by HUD after an audit by the Inspector General. The audit report concluded that Attorney did not fully meet contract objectives or adequately control the HUD escrow account.

A representative of the Inspector General's office found that work records were not kept in an appropriate manner, but that there was no substantial difference in the attorneys' fees that Attorney took out and those to which he was entitled. The amount which HUD contends Attorney owes it is $3,514. HUD is holding back the sum of $2,305 in attorneys' fees, so the difference allegedly owed to HUD is $1,209.

Disciplinary Proceedings

In April 1994, a complaint alleging misconduct with respect to the above matters was filed against Attorney. Attorney denied any wrongdoing as to the Frazier matter, contending that it was a fee dispute. Attorney similarly denied wrongdoing as to the HUD matter. After a hearing, the Panel Report was issued which concluded that Attorney had violated the following rules in relation to the Frazier matter: Disciplinary Rule 5-104(A) (not entering into a business transaction with a client if lawyer and client have differing interests and if client expects the lawyer to exercise his professional judgment therein for protection of the client, unless the client has consented after full disclosure); Rule 9-102(B)(3) (lawyer shall maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to his client regarding them); Rule 9-102(B)(4) (lawyer shall promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive); and Rule 7-101(A) (lawyer shall not intentionally fail to seek the lawful objectives of his client through reasonably available means permitted by law).

In relation to the HUD matter, the Panel concluded that Attorney had violated Rule 1.15(b) (lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property); and Rule 1.4(a) (lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information).

The Panel recommended a public reprimand as to both the Frazier and the HUD matters. The Executive Committee unanimously adopted the Panel's findings of fact and conclusions of law. By a vote of 6 to 1, the Committee recommended that Attorney receive a public reprimand; the dissenting member voted for a thirty-day suspension.

The parties have stipulated that the Daniel Frazier matter is governed by the S.C. Code of Professional Responsibility, and the HUD matter is governed by the S.C. Rules of Professional Conduct. See Rule 407, SCACR (S.C. Rules of Professional Conduct effective September 1, 1990). Before this Court, Attorney argues that the Panel and Executive Committee erred in finding misconduct with respect to the Frazier and HUD matters. In regard to the Frazier matter, Attorney argues that the transaction which occurred between Frazier and Attorney was simply an "innovative" fee arrangement, not a business transaction. He asserts that under Rule 32 of the Code of Professional Responsibility, he was not required to have a written fee agreement. He also argues he was not...