In re Blomquist, A19-1461

CourtSupreme Court of Minnesota (US)
Writing for the CourtPER CURIAM.
Citation958 N.W.2d 904
Parties IN RE Petition for DISCIPLINARY ACTION AGAINST Barry L. BLOMQUIST, Jr., a Minnesota Attorney, Registration No. 12090X
Decision Date05 May 2021
Docket NumberA19-1461

958 N.W.2d 904

IN RE Petition for DISCIPLINARY ACTION AGAINST Barry L. BLOMQUIST, Jr., a Minnesota Attorney, Registration No. 12090X

A19-1461

Supreme Court of Minnesota.

Filed: May 5, 2021


Susan M. Humiston, Director, Binh T. Tuong, Managing Attorney, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for petitioner.

Barry L. Blomquist, Jr., Paynesville, Minnesota, pro se.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against respondent Barry L. Blomquist, Jr. The petition alleged Blomquist misappropriated trust assets by investing in five start-up companies he owned, in breach of his fiduciary duty as trustee; refused to comply with court orders from three different judges; and failed to cooperate with the Director's investigation into his misconduct. After an evidentiary hearing, a referee found the Director had proven Blomquist committed the alleged misconduct and recommended Blomquist be disbarred. Based on Blomquist's misconduct, we agree with the referee and, therefore, we disbar Blomquist from the practice of law.

958 N.W.2d 908

FACTS

Blomquist was admitted to practice law in Minnesota on October 24, 1980. His only history of prior discipline is an admonition in 2012 for falsely notarizing a mortgage deed conveying property from a seller to an entity he co-owned, in violation of Minn. R. Prof. Conduct 8.4(c)–(d). Blomquist has also been administratively suspended for failing to pay his annual registration dues since 2009. See Rule 14(A), Sup. Ct. R. Lawyer Registration; see also In re Knutson , 405 N.W.2d 234, 236 (Minn. 1987) (explaining that a lawyer's "[f]ailure to pay attorney registration fees results in automatic suspension").

The present proceeding arises from Blomquist's actions as trustee of a trust created by a then-client with whom he had developed a close personal relationship, R.N. In May 2003, R.N. executed a will creating a trust for the benefit of his daughter, D.H., and his two sons. R.N. insisted on naming Blomquist in the will as personal representative of R.N.’s estate and trustee, despite Blomquist's personal objection to serving in these roles.1

In October 2003, R.N. passed away. Blomquist accordingly became the personal representative of the estate and trustee of the corresponding trust. After R.N.’s estate was settled, the estate was valued at approximately $2,000,000 which was divided into three trusts; one for each of his children.

Under the provisions of the will and trust, D.H. was entitled to receive portions of the trust at pre-determined intervals. She was to receive one-third of the principal in her trust in 2006, one-half in 2010, and the remainder in 2013.

In 2006, Blomquist, in his role as trustee, gave D.H. only $100,000, which was less than one-third of the principal in the trust to which she was entitled by the express language of the trust document. D.H. requested the remainder of her 2006 disbursement. Her request went unanswered and Blomquist never provided the additional money to which she was entitled.

In 2007, D.H. received an estate summary, which included a description of the remaining trust assets, her share of those assets, and how the assets were to be distributed. After this, Blomquist did not provide D.H. with any information or accounting related to the trust until 2011.

In 2010, D.H. was entitled to another distribution from the trust. She did not receive that distribution, however, until March 2011, and she believed the amount she received was less than the amount to which she was entitled.

In 2011, D.H. received "a Trustee Summary Report" from Blomquist. This report indicated Blomquist had invested significant sums of money from the trust principal in five recently created, start-up, green-energy companies, which were all partially owned by Blomquist. Throughout 2009 and 2010, unbeknownst to D.H., Blomquist signed seven promissory notes on behalf of these companies to obtain loans from R.N.’s trust totaling $799,000.00. In these notes, he held himself out as the "chief manager," "Chief Executive Officer," and "trustee" of the companies. The companies made no payments to the trust on any of the promissory notes and Blomquist failed to provide any information about these companies to D.H. despite his personal interest in them. Further, these companies were neither in existence

958 N.W.2d 909

when R.N. created his trust nor were they active at the date of his death.

In February 2011, D.H. filed a petition in Hennepin County Probate Court seeking an accounting of the trust assets and court supervision of the trustee. In May of the same year, the district court ordered Blomquist to appear at a June hearing. Blomquist knowingly failed to appear. The probate court subsequently ordered Blomquist to appear at a hearing in July 2011 to show cause as to why he failed to appear at the June hearing and to explain why he had not provided required trust documentation. The show cause order also required Blomquist to appear at the July hearing with documents related to the trust and the five companies in which he had invested trust assets.

Blomquist appeared in court as directed, but failed to bring all the court-ordered documents and information. The probate court subsequently removed Blomquist as trustee, finding Blomquist failed to act as a prudent investor2 and violated Minnesota's prohibition against trustee self-dealing.3 The court found "especially troubling" Blomquist's "cavalier attitude ... about the obvious self-dealing he engaged in by using trust assets to fund his own businesses." The court observed that "[Blomquist] believes that since he sees his business ventures as promising significant returns upon (what he believes is) their inevitable success, he has satisfied his fiduciary duties to the Trust and to [D.H.]. Unfortunately, nothing could be further from the truth in the eyes of the law."

D.H. later filed a motion to enter judgment against Blomquist for trust money owed to her in both his personal capacity and in his role as trustee. The probate court granted summary judgment for D.H. in March 2012, finding Blomquist had breached his fiduciary duties and engaged in self-dealing by investing a substantial amount of trust assets in the five start-up companies. The court further determined D.H. would have been entitled to receive $400,000 under the trust if Blomquist had not breached his fiduciary duties. It ordered Blomquist to pay $400,000 directly to D.H. and produce documents about what was done with the trust assets. Blomquist did not move for amended findings of fact or appeal this ruling.

D.H. docketed the judgment. She sought information about the trust's assets from Blomquist through post-judgment discovery. Blomquist still did not produce the necessary documentation. This forced D.H. to pursue additional judicial enforcement actions. In November 2012, the probate court ordered Blomquist to appear at a hearing later that month to answer questions concerning his personal property and transactions related to the trust property. Blomquist, however, engaged in a series of delay tactics including a claimed illness, which resulted in repeated continuation motions and a general lack of responsiveness. In June 2013, after over 6 months of delays, D.H. filed a motion for an order to show cause why Blomquist should not be held in contempt.

In July 2013, the probate court held a hearing on the show cause motion. Blomquist appeared at the hearing and provided inconsistent testimony regarding how much of the trust was invested into his five companies. Based on this proceeding and Blomquist's failure to produce documentation, the probate court issued an order taking under advisement whether Blomquist

958 N.W.2d 910

was in civil contempt of court and requiring Blomquist to surrender his passport or else he would be deemed to have committed constructive civil contempt. A week later, the probate court issued a subsequent order requiring Blomquist to produce numerous documents within 30 days, most of which he had been previously ordered to produce. The court also scheduled a review hearing in August 2013, after the deadline. If Blomquist failed to produce the documents by that date, he would be held in contempt.

Blomquist did not appear at the August review hearing. Blomquist never produced his passport to the probate court and he falsely represented to D.H.’s attorney he had done so at the July hearing. Blomquist also provided D.H.’s counsel a photocopy of his alleged passport that misspelled his last name as "Blomguist." The court accordingly found Blomquist in civil contempt and issued a bench warrant for his arrest. At the hearing before the referee, Blomquist insisted he did not know about these probate court hearings, but the referee found this claim to be without merit and unsupported by the evidence.

In October 2013, to avoid arrest, Blomquist submitted his actual passport and presented a box of documents to the probate court. These documents were also incomplete. In the end, D.H. was unable to trace the assets Blomquist took from the trust and invested in his companies. Blomquist was unable to account for trust assets he supposedly invested in...

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3 practice notes
  • In re Colosi, A21-0152
    • United States
    • Supreme Court of Minnesota (US)
    • 20 July 2022
    ...162, 166, 168 (Minn. 2017) (disbarring an attorney for misappropriation as trustee); Moe , 851 N.W.2d at 872–73 (same); In re Blomquist , 958 N.W.2d 904, 916–17 (Minn. 2021) (disbarring attorney for self-dealing as trustee); In re Olson , 358 N.W.2d 662, 663–64 (Minn. 1984) (disbarring an a......
  • In re Majors, A21-0242
    • United States
    • Supreme Court of Minnesota (US)
    • 4 May 2022
    ...six months an attorney who used misappropriated funds to purchase a car and jewelry and to pay off credit card debt); In re Blomquist, 958 N.W.2d 904, 907 (Minn. 2021) (disbarring an attorney who used misappropriated trust assets to invest in five start-up companies that he owned). [8] When......
  • In re Majors, A21-0242
    • United States
    • Minnesota Supreme Court
    • 4 May 2022
    ...six months an attorney who used misappropriated funds to purchase a car and jewelry and to pay off credit card debt); In re Blomquist , 958 N.W.2d 904, 907 (Minn. 2021) (disbarring an attorney who used misappropriated trust assets to invest in five start-up companies that he owned).8 When t......
3 cases
  • In re Colosi, A21-0152
    • United States
    • Supreme Court of Minnesota (US)
    • 20 July 2022
    ...162, 166, 168 (Minn. 2017) (disbarring an attorney for misappropriation as trustee); Moe , 851 N.W.2d at 872–73 (same); In re Blomquist , 958 N.W.2d 904, 916–17 (Minn. 2021) (disbarring attorney for self-dealing as trustee); In re Olson , 358 N.W.2d 662, 663–64 (Minn. 1984) (disbarring an a......
  • In re Majors, A21-0242
    • United States
    • Supreme Court of Minnesota (US)
    • 4 May 2022
    ...six months an attorney who used misappropriated funds to purchase a car and jewelry and to pay off credit card debt); In re Blomquist, 958 N.W.2d 904, 907 (Minn. 2021) (disbarring an attorney who used misappropriated trust assets to invest in five start-up companies that he owned). [8] When......
  • In re Majors, A21-0242
    • United States
    • Minnesota Supreme Court
    • 4 May 2022
    ...six months an attorney who used misappropriated funds to purchase a car and jewelry and to pay off credit card debt); In re Blomquist , 958 N.W.2d 904, 907 (Minn. 2021) (disbarring an attorney who used misappropriated trust assets to invest in five start-up companies that he owned).8 When t......

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