Ia Supreme Court Atty. Disc. Bd. v. Powell

• Decision Date: 19 January 2007
• Docket Number: No. 06-1394.,06-1394.
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Rodney H. POWELL, Respondent.
• Court: Iowa Supreme Court

726 N.W.2d 397

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Rodney H. POWELL, Respondent.

No. 06-1394.

Supreme Court of Iowa.

January 19, 2007.

COPYRIGHT MATERIAL OMITTED

Charles L. Harrington and David J. Grace, Des Moines, for complainant.

Mark McCormick of Belin Lamson McCormick Zumbach Flynn, A Professional Corporation, Des Moines, for respondent.

WIGGINS, Justice.

On July 28, 2005, the Iowa Supreme Court Attorney Disciplinary Board filed a complaint against Rodney H. Powell with the Grievance Commission of the Iowa Supreme Court alleging Powell committed various violations of the Iowa Code of Professional Responsibility for Lawyers. The complaint contained three counts arising out of Powell's representation of three different clients. The Board amended the complaint to include a fourth count involving an additional client. The Commission found Powell's conduct violated numerous provisions of the Iowa Code of Professional Responsibility for Lawyers and recommended we suspend Powell's license to practice law with no possibility of reinstatement for a period of six months. The Commission also recommended as a condition of reinstatement that Powell release the liens he acquired in properties owned by one of his clients.

Because we agree with the Commission's finding that Powell's conduct violated numerous provisions of the Iowa Code of Professional Responsibility for Lawyers and its recommendations regarding Powell's sanction, we suspend Powell's license to practice law indefinitely with no possibility of reinstatement for a period of six months.

I. Scope of Review.

We review attorney disciplinary proceedings of the Commission de novo. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Walker, 712 N.W.2d 683, 684 (Iowa 2006). The Board must prove ethical violations by a convincing preponderance of the evidence. Id. "Although we consider the Commission's factual findings and discipline recommendations, they do not bind us." Id.

II. Findings of Fact.

On our de novo review of the record, we make the following findings of fact. We admitted Powell to the Iowa bar in 1973. After graduation from law school, he entered the Air Force as a JAG officer. There he primarily prosecuted and defended courts-martial. Powell served as a JAG officer until 1977. During that period, Powell was admitted to practice in front of the Air Force courts, as well as the United States Court for Military Appeals.

In 1977 Powell separated from active duty and moved to St. Louis, Missouri. Powell began working for Missouri Legal Services and was admitted to the Missouri bar in 1978. Powell was a managing attorney for the St. Louis County Office for Legal Aid from 1980 to 1988. Powell held a supervisory position, overseeing the clinical program between legal services and Washington University in St. Louis School of Law, the family law department, and the volunteer lawyer program. In addition, Powell created an ecumenical legal assistance ministry that reached out to impoverished areas of St. Louis.

Powell left legal services in 1988 to return to Iowa. He entered the private practice of law as an associate with a Des Moines law firm. He eventually became a partner in the firm. The firm practiced primarily as a labor and employment law firm. Powell was hired to handle the firm's other caseload. For example, if a client had a family law problem, Powell would handle the case.

When the firm dissolved in 1996, Powell opened a solo practice in Norwalk. As his practice grew, Powell hired two additional attorneys to join his firm. The firm's practice is a general one; however, Powell has centered his practice on wills, probate, and real estate matters.

A. Walton Matter. In November 1991 Malissa Walton hired Powell to represent her in a dissolution of marriage. Walton's parents suggested she retain Powell. Powell and Walton's parents, the Hinshaws, knew each other from community activities. Mrs. Hinshaw called Powell and arranged for a meeting. She and her daughter saw Powell at the Des Moines law firm.

Although a fee arrangement was discussed, nothing was put in writing. It was understood by both Walton and Powell that Walton's mother, Mrs. Hinshaw, would pay for Powell's services. However, Powell sent every bill to Walton's address. Walton claims she only sometimes saw the billing statements. Mrs. Hinshaw paid Powell approximately $300 from 1991 until 1993. However, both Walton and Powell agree after Walton's father passed away in 1996, Mrs. Hinshaw no longer agreed to be responsible for Powell's fees.

The court finalized Walton's marriage dissolution in August 1992. Powell obtained a favorable outcome for Walton. The total legal fees generated for the dissolution amounted to $2850. Walton or her mother made small payments toward the bill, totaling a little over $350. Walton did not pay the balance of her bill. Powell knew from the dissolution, Walton had three young children, had over $10,000 in debt, and was living on a limited income.

On almost every billing cycle, Powell charged Walton a finance charge. From December 13, 1991, until February 17, 1995, Powell charged Walton an interest rate of 18 percent or 1.5 percent per month on any unpaid balance. Powell never informed Walton that he would charge her compound interest. The interest rate then increased to 22 percent or 1.83 percent per month. He never informed Walton that he had the right to raise the interest rate. By March 31, 2003, Walton owed Powell $21,920.50. Of this, $18,691.27 was attributable to the finance charges.

Powell made several attempts to collect fees from Walton. From 1993 to 1996 Powell sent Walton several letters asking for any payment. In his first letter, Powell acknowledged Walton was on a very limited income, but still requested she make regular payments on her bill. He also stated if Walton made regular payments, he was willing to waive the finance charges for each month he received a payment.

In 1995 Powell notified Walton he would send her account to a collection agency if she did not start making payments on the bill. In 1996 Powell sent a letter to Walton encouraging her to work with him to "negotiate an arrangement which is acceptable to both [Walton] and [Powell]." After receiving phone calls from Powell's office, Walton did pay $10 toward her bill.

By May 1997 now some six years after Powell first represented Walton, the account remained open and Powell was still sending monthly bills, but no other exchanges occurred between Powell and Walton. In 2000 Powell once again attempted to collect payment from Walton. This time his efforts were more aggressive.

On February 28, 2001, Powell sent a letter stating, unless Walton paid $3250 he would report the discharged debt to the Internal Revenue Service (IRS) as income and she would be responsible for more than $5000 in taxes because of this discharge. Walton did not pay Powell the $3250. From February 2000 to February 2002 Powell's office made over 120 phone calls in an attempt to collect the debt from Walton.

On June 13, 2002, Powell sent Walton a right to cure notice stating $21,474.34 would be reported as a discharged debt to the IRS if some acceptable payment was not received in twenty days. Walton did not pay Powell. On November 13, 2002, Powell wrote to Walton and informed her the debt was discharged and indicated he would be reporting the discharge as income to the IRS. The letter also included an IRS 1099-MISC form showing Walton had other income of $21,920.50.

Powell filed the 1099-MISC form with the IRS. Considering this discharge as other income, the IRS proposed Walton pay $2991 in taxes. However, after Walton provided further information to the IRS demonstrating she did not work for Powell, but rather that he discharged a debt, the IRS no longer required Walton to pay the taxes.

B. Hutchins-Carroll Matter. Sandra Hutchins and Marvin Carroll hired Powell in May 2000 for help in retrieving personal property Hutchins left at a home she just sold. Hutchins did not sign a written fee agreement when she retained Powell. Powell never advised Hutchins or Carroll that he would charge them finance charges. While Powell was investigating the property dispute, Hutchins hired him for another matter involving Hutchins' daughter.

Hutchins generally received Powell's bills on a monthly basis detailing her fees. In each bill, it stated, "the monthly finance charge will be at an ANNUAL PERCENTAGE RATE of 22% (1.83% per month)." Powell charged Hutchins a total of $2974 for the property matter and $4249 for the matter involving her daughter. The bill also reflected $1,655.66 in finance charges. These charges were offset by $858.50 in write-downs and payments of $1030. By March 2002 Hutchins owed Powell $8,028.29.

On two separate occasions, Hutchins wrote to Powell and complained about the finance charges. In her first letter, received by Powell on May 21, 2001, she stated, "you are charging a $100 a month finance charge. Now if I'm making payments of $40 how could I possibly ever get this paid." In her second letter received by Powell on December 1, Hutchins again expressed her frustration at the finance charges.

Hutchins also met with Powell's staff to discuss the growing bill. Powell gave her various payment options. However, Hutchins did not enter into any payment agreement at that time. Because no payment agreement could be reached, Hutchins filed a complaint with the Board.

C. Perkins Matter. Robert Perkins operated Perkins Electric, an electrical contracting business. Powell represented Perkins primarily for matters relating to Perkins Electric from 1998 to 2003. During Powell's representation of Perkins, they never entered into a written fee agreement. Instead, Powell simply sent Perkins invoices detailing his charges. Perkins did not always pay his bill on time. Powell described Perkins as generally slow in paying his bills, but Powell attempted to be accommodating...