In re Bailey

• Decision Date: 15 September 2005
• Docket Number: No. 03-BG-171.,Bar Registration No. 384974,03-BG-171.
• Citation: 883 A.2d 106
• Parties: In re Samuel BAILEY, Jr., Respondent. A Member of the Bar of the District of Columbia Court of Appeals .
• Court: D.C. Court of Appeals

883 A.2d 106

In re Samuel BAILEY, Jr., Respondent.

A Member of the Bar of the District of Columbia Court of Appeals (Bar Registration No. 384974).

No. 03-BG-171.

District of Columbia Court of Appeals.

Argued April 8, 2004.

Decided September 15, 2005.

Karl W. Carter, for respondent.

Elizabeth J. Branda, Executive Attorney, for the Board on Professional Responsibility.

Traci M. Tait, Assistant Bar Counsel, with whom Joyce E. Peters, Bar Counsel at the time the brief was filed, was on the brief, for the Office of Bar Counsel.

Before SCHWELB and REID, Associate Judges and FERREN, Senior Judge.

REID, Associate Judge:

A majority of the Board on Professional Responsibility ("the Board") has recommended that Samuel Bailey, Jr. be suspended from the practice of law for nine months and be required to complete a course in ethics and a course in trust accounting as a condition of reinstatement, due to his violation of the District of Columbia Rules of Professional Responsibility. The Board found that Mr. Bailey had commingled funds,¹ failed to maintain complete trust account records,² failed to notify a physician of a client's settlement,³ and entered into an impermissible business transaction with a client.⁴ The Board majority rejected the hearing committee's finding of misappropriation.⁵ Because the hearing committee automatically recommended disbarment⁶ I after having found that Mr. Bailey engaged in misappropriation, the Board conducted its own sanctions analysis and concluded that a nine-month suspension was appropriate. Bar Counsel and Mr. Bailey noted exceptions to the Board's report and recommendation.

Bar Counsel contends that the Board erred when it rejected the hearing committee's finding of misappropriation. Specifically, Bar Counsel asserts that the authorization gave Dr. Franklin Garmon an interest in the settlement funds thus obligating Mr. Bailey to "safeguard and promptly pay funds belonging to [Dr. Garmon]." Therefore, when Mr. Bailey "failed to honor Dr. Garmon's [a]uthorization, and instead spent the doctor's share on [his] personal and business expenses without Dr. Garmon's authority, he engaged in misappropriation in violation of Rule 1.15(a). His failure to notify or promptly pay Dr. Garmon, constituted a violation of Rule 1.15(b)." Bar Counsel notes exception to the recommended nine-month suspension, insisting that disbarment is warranted. Mr. Bailey contends that the authorization did not give Dr. Garmon a property interest in the settlement funds,⁷ and therefore the Board did not err when it found no misappropriation. Mr. Bailey, however, disagrees with the Board's recommended sanction and argues that because he made an "honest mistake" he should only be given a six-month suspension.

FACTUAL SUMMARY

The record before us, which includes the findings of the hearing committee, shows that Mr. Bailey⁸ represented Almaz Haile, an immigrant from Eritrea.⁹ Ms. Haile sustained an injury in 1989, at a Giant Food store, when she slipped and fell. She retained Mr. Bailey, then a member of Lee & Harvey, to represent her in a personal injury action.¹⁰

In the course of his representation, Mr. Bailey referred Ms. Haile to Dr. Garmon, who treated her injuries. On June 19, 1989, an "[a]uthorization" form provided by Dr. Garmon to Ms. Haile and Mr. Bailey was executed. The section of the "[a]uthorization" under which Ms. Haile's signature appears, provided in pertinent part:

I hereby authorize and direct you, my attorney, to pay directly to said doctor such sums as may be due and owed to him for medical services rendered to me, my son, or daughter, and any other bills that are due his office which shall include fees for his appearance in court on my behalf (including those accrued after he has been placed on alert for purposes of court appearance, whether or not he actually makes that appearance).

If required as an expert witness, whether he testifies or not for reports made or depositions given in this matter, I further authorize you my attorney, to withhold such sums from any settlements, judgments or verdicts as may be necessary to adequately protect said doctor and compensate him for his time and efforts on my behalf and also to institute a lien on this case to the said doctor against any and all proceeds for me, my son or daughter until the said doctor's medical bills for treatment of me, my son or daughter, fees for court appearance(s) (or time awaiting that appearance), deposition(s) are paid or he is compensated for his efforts on behalf of me, my son or daughter in connection herewith.

I fully understand that I am directly responsible to said doctor for all medical bills submitted by him for services rendered and that this agreement is made solely for said doctor's additional protection. I fully understand that such payments are not contingent on any settlement, judgment or verdict form which I eventually recover damages, compensation or said fee.

The section signed by Mr. Bailey read as follows: "The undersigned, being attorney of record for the above patient/client does hereby agree to observe all the terms of the above and agrees to withhold such sums from any settlement(s), judgment(s) or verdicts due said patient/client as may be necessary to adequately protect said doctor."

On September 27, 1991, Mr. Bailey deposited a $25,000 settlement check from Giant Foods' insurance company into an account with City National Bank under the name "Samuel Bailey Jr Atty at Law Client Trust Account" ("Trust Account"). Prior to the deposit of that check, the account had a balance of $931.38.

A settlement disbursement sheet, dated September 26, 1991, was signed by Ms. Haile and Mr. Bailey. It stated, "[p]ursuant to your instruction, [w]e have settled your personal injury claim of March 28, 1989, and the following constitutes all fees and charges. Further, your authorization has been given for my office to borrow the funds awarded to use as deemed appropriate." The disbursement sheet showed that Ms. Haile was owed $9,122.13.¹¹ The disbursement sheet also revealed that the total cost of Ms. Haile's medical expenses was $5,425.86, which included $2,420.30 owed to Dr. Garmon. The final paragraph of the settlement disbursement sheet specified: "I, Almaz Haile, have read the above disbursement and agree with all payments."

In addition, a promissory note was executed by Mr. Bailey on September 26, 1991. It provided as follows:

For value received, the undersigned [Mr. Bailey] promises to pay to Almas Haile, the sum of $5,425.86, the amount of medical expenses in her case, with interest at a rate of 5% per annum, or to pay outstanding medical expenses directly to medical providers listed on the settlement sheet after satisfactory negotiations.

If [Mr. Bailey] is able to negotiate a discounted payment to any of the listed medical expenses, such discount will be paid to Almas Haile. All monies owed to Ms. Haile under this agreement must be paid within a four year period from the date of this note.

Ms. Haile testified that "she reviewed the note with Mr. Bailey, but she nevertheless expected that the doctors were `going to be paid' and that Mr. Bailey `was going to take care of it.' Though she did not have a specific notion of when he would do so." Mr. Bailey did not inform Dr. Garmon or any of the other medical providers about this agreement.

Mr. Bailey testified that he prepared and executed the promissory note and reviewed the terms with Ms. Haile. Although English was not Ms. Haile's first language, Mr. Bailey testified that they "were able to communicate," and that he thought "she understood."¹² Mr. Bailey did not advise Ms. Haile to consult legal counsel regarding the loan, nor did he provide Ms. Haile with the prevailing interest rate. An expert for Bar Counsel testified that if Mr. Bailey had received a loan from a bank, the interest rate would have been higher than what was provided in the promissory note. However, the expert "did not establish that Ms. Haile could have earned more by investing or lending her money elsewhere."

Mr. Bailey never notified Dr. Garmon of the settlement. Instead, Dr. Garmon learned of the settlement when he encountered Ms. Haile months later. Thereafter, Dr. Garmon made several phone calls to Mr. Bailey's office inquiring about his payment. After Mr. Bailey failed to respond, Dr. Garmon wrote him a letter on August 19, 1992, in which he demanded payment and threatened legal action if payment was not received. On September 2, 1992, Dr. Garmon filed a complaint with Bar Counsel. Mr. Bailey eventually paid Dr. Garmon $2,420.30 on October 23, 1992, more than one year after the case had been settled.¹³

During the period between September 1991 and November 1992, Mr. Bailey made several telephone transfers and cash withdrawals from his client Trust Account; however, he lacked the records to explain them. He also deposited several checks into the Trust Account reflecting payments for "legal fee[s]" or "attorney fees," $10,000 borrowed from his mother, fee advances, and entrusted client funds. By August 18, 1992, the Trust Account had a balance of 0.11 cents according to account analysis.

Bar Counsel filed the specification of charges against Mr. Bailey on November 2, 1998. The specification alleged that:

[Mr. Bailey's] conduct violated the following provisions of the Rules of Professional Conduct:

(A) Rule 1.15(a), in that [he] (i) intentionally and/or recklessly misappropriated funds belonging to his client and/or one or more third person; and/or failed to hold property of a client and/or third persons in his possession in connection with a representation separate from his own property (commingling);

(B) Rule 1.15(a), in that [he] failed to maintain complete trust account records;

(C) Rule 1.15(b), in that [he] failed to notify and/or pay promptly one or more third persons having an interest in funds entrusted to [him] in the course of a legal representation;

(D) Rule 1.8

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