In Re Charges Of Unprofessional Conduct, A18-0277

• Decision Date: 06 March 2019
• Docket Number: A18-0277
• Parties: IN RE CHARGES OF UNPROFESSIONAL CONDUCT in Panel File No. 42735
• Court: Minnesota Supreme Court

924 N.W.2d 266

IN RE CHARGES OF UNPROFESSIONAL CONDUCT in Panel File No. 42735

A18-0277

Supreme Court of Minnesota.

Filed: March 6, 2019

Eric T. Cooperstein, Minneapolis, Minnesota, for appellant.

Susan M. Humiston, Director, Nicole S. Frank, Assistant Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for respondent.

OPINION

PER CURIAM.

This case involves Minn. R. Prof. Conduct 3.4(c), which prohibits "knowingly disobey[ing] an obligation under the rules of a tribunal." The Director of the Office of Lawyers Professional Responsibility (Director) issued an attorney (Attorney) an admonition for failing to file a summary judgment motion response by the deadlines set forth in Minn. Gen. R. Prac. 115.03(b). Following an evidentiary hearing, a panel of the Lawyers Professional Responsibility Board (panel) affirmed the admonition, concluding that Attorney’s conduct violated Minn. R. Prof. Conduct 3.4(c). Attorney appealed to our court. Because the panel’s decision was clearly erroneous, we reverse the panel’s decision and vacate the admonition.

FACTS

Complainant, C.G., runs a real estate rental business catering to college students in Duluth. He also operates a business that buys and sells liens and judgments at a discount and then satisfies those liens and judgments.

In 2013, C.G. entered into a contract for deed to purchase real estate from R.F. In early 2015, R.F. (who was represented by a lawyer) attempted to cancel the contract. C.G., who was not represented at the time, brought a motion on April 28, 2015, seeking various remedies, including a temporary restraining order, to prevent R.F. from cancelling the contract for deed. The district court dismissed the motion without prejudice.

R.F. moved ahead with the cancellation process. On July 29, 2015, C.G., still self-represented, filed another motion seeking to restrain R.F. from cancelling the contract. R.F. responded on July 31, 2015 with a motion to dismiss and for summary judgment. The notice stated that the motion would be heard on August 5, 2015.

On August 4, 2015, C.G. and Attorney entered into a written Attorney Fee Agreement (Fee Agreement). The Fee Agreement provided that Attorney would represent C.G. in the real estate contract matter against R.F. The Fee Agreement required C.G. to pay a retainer of $8,500 for the representation: $1,000 at the execution of the agreement and another $7,500 within 10 days (by August 14, 2015). It also stated that "IT IS EXPRESSLY UNDERSTOOD that unless [payment of] the required fees and expenses are made when due, Attorney may refuse to proceed further with the legal services until such payments are made." The Fee Agreement further provided that C.G. "agrees to promptly respond to any requests for information or other inquiries" by Attorney.

Attorney succeeded in postponing the August 5 hearing to October 26, 2015. C.G. paid the first $1,000 by August 10, 2015. He did not, however, make the final $7,500 retainer payment by August 14, as required by the Fee Agreement.

On August 15, 2015, Attorney sent an e-mail to C.G., which read:

Checking in on a couple of things.

1. Are you willing and able to pay R.F. the amount owed to pay off the contract for deed in full to settle your case? In speaking with his attorney, it sounds likely he would accept that.

2. Your second payment toward your retainer was due Friday. I did not see that you paid that. Please be certain to bring that in Monday. We cannot continue our representation of you if that is not paid.

On September 21, 2015, Attorney and C.G. exchanged several messages. Attorney left C.G. a voicemail message and sent a follow-up e-mail, which read: "Just left you a message. Give me a call when you have the chance. Note that we have a deadline coming up to file some things in your case. We will need some time to prepare them. We cannot proceed unless we get the remainder of your retainer." Less than an hour later, C.G. replied, "I thought we were going to reach a settlement agreement. If the case can settle I would rather spend my money on a settlement agreement." Attorney followed up 13 minutes later with the following e-mail: "We still have to follow the court deadlines. If it’s not settled by the filing date we need to file the documents. We can make the settlement offer but we’re better off if you actually have the money [to pay the settlement] in hand." C.G. simply replied: "Make the settlement offer please."

At the evidentiary hearing before the panel, C.G. explained what he thought had been decided in the September 21 e-mail exchange. He testified that, "It was my understanding we weren’t going to spend any money on any litigation and that [Attorney] was going to present a settlement offer at this point. If we didn’t have to spend any money, we weren’t going to spend it."

On September 23, 2015, Attorney attempted to contact C.G. by phone and sent him an e-mail asking for clarity about the settlement offer: "How much will you pay? When will you pay it? What exactly do you want in return?" C.G. did not reply. Attorney again attempted to contact C.G. by phone and sent an e-mail the following day, explaining: "I need to have a discussion with you prior to making the settlement offer." Again, C.G. did not respond.

On October 9, 2015, Attorney attempted to contact C.G. by phone once again and sent a follow-up e-mail: "I just left you another voicemail. I never heard from you on this. Also, note that we did not receive your third retainer payment. We’re going to go ahead and close your file. Please contact me immediately if you would like to discuss."

C.G. responded later that day, stating: "We already had a discussion on the settlement offer and I provided you with the documents." The record indicates, however, that C.G. had not provided a definitive settlement offer amount, and he acknowledged that the documents he provided left an open question on the amount he would have to pay in settlement to cover the outstanding taxes owed on the property.

At the evidentiary hearing before the panel, C.G. explained that on October 9, his position on the course of the dispute was the same as it had been in September:

It was my understanding we were trying to reach a settlement agreement. We weren’t going to spend any money until we made the settlement offer. We wanted to see where that was going to go. It was my understanding that [Attorney] was in agreement with that. I know he kept talking about the retainer. Every time we brought up about the settlement and we didn’t want to spend money on litigation, he always consented to that agreement.

On October 12, 2015, the following e-mails were exchanged by Attorney and C.G.:

[ATTORNEY:] As I told you before, I need to get some clarification on exactly what you want to offer. I need to tell him the exact figure you offer and the date you will pay it. Please provide this to me.

Also, I never received the last retainer payment from you. At this point I am willing to continue to represent you in negotiations only, but will not file anything or appear in court. Please confirm you agree to this.

....

[C.G.:] $36,000 on October 30, 2015.

....

[ATTORNEY:] I will convey this to R.F.’s attorney.

Also I will assume you understand and agree that I will not be filing anything in court or appearing because you have not paid the final installment on the retainer. Let me know today if that is not your understanding.

....

[C.G.:] I understand.

At the evidentiary hearing, C.G. testified that when he replied "I understand," he meant that he understood "[t]hat [Attorney] wasn’t going to file anything or do anything. He was just going to pursue the settlement agreement, which is what I wanted." Attorney similarly concluded from the October 12 e-mail exchange that "I had no reason to think that [C.G.] believed that we would do anything other than continue negotiations. And he had no reason to think we would file anything."

After finally receiving the settlement offer details on October 12, Attorney passed on C.G.’s offer to R.F. R.F. rejected the settlement offer shortly thereafter.

The hearing on the postponed motions—C.G.’s July 29 motion for injunctive relief and R.F.’s motion for summary judgment—remained scheduled for October 26. Under Minn. Gen. R. Prac. 115.03(b), C.G.’s response to the summary judgment motion was due by October 17.¹

In the days following the rejection of the settlement offer, C.G. authorized Attorney to respond to the summary judgment motion and paid an additional retainer in the total amount of $4,000. Specifically, on October 16, the day before the response was due, C.G. paid Attorney’s firm $1,800. On October 22, after the response was due, C.G. paid $2,200. Attorney’s firm filed a response memorandum on October 23—6 days after the Rule 115.03 deadline and 3 days before the hearing. The court clerk accepted the filing.

The October 26 hearing took place as scheduled. The district court denied C.G.’s motion for an injunction blocking the termination of the contract for deed but also struck R.F.’s motion for summary judgment without prejudice after opposing counsel verbally withdrew the motion at the hearing. The court described C.G.’s response as "untimely" but made no other comment on the filing. Attorney’s representation of C.G. terminated in November 2015.

C.G. filed a complaint with the Office of Lawyers Professional Responsibility.² Following an investigation,³ the Director determined that Attorney violated Minn. R. Prof. Conduct 3.4(c) and 8.4(d) when he failed to file the summary judgment response on October 17. She issued an admonition.

Attorney requested that the Director present the charges to a panel of the Lawyers Professional Responsibility Board to consider de novo. See Rule 8(d)(2)(iii), Rules on Lawyers Professional Responsibility (RLPR). After holding an evidentiary hearing, the panel affirmed the admonition. It concluded that Attorney violated Minn. R. Prof. Conduct 3.4(c) because he "did not serve or file anything on...