In re Dailey
| Decision Date | 09 July 2020 |
| Docket Number | No. 18-BG-811,18-BG-811 |
| Citation | 230 A.3d 902 |
| Parties | IN RE Jonathan C. DAILEY, Respondent. A Member of the Bar of the District of Columbia Court of Appeals (Bar Registration No. 448141) |
| Court | D.C. Court of Appeals |
Jonathan C. Dailey, pro se.
Hamilton P. Fox, III, Disciplinary Counsel, with whom Jennifer P. Lyman, Senior Assistant Disciplinary Counsel, was on the brief, for the Office of Disciplinary Counsel.
Before Blackburne-Rigsby, Chief Judge, Thompson, Associate Judge, and Greene, Senior Judge of the Superior Court of the District of Columbia.*
Respondent Jonathan C. Dailey appeals the decision of the Board on Professional Responsibility (the "Board"), which recommended that he be disbarred based on its conclusion that he recklessly misappropriated client funds in violation of Rule 1.15(a) of the District of Columbia Rules of Professional Conduct, in addition to finding that his conduct violated Rules 1.15(c) and (d) and Rule 1.7(b)(4). On appeal, we conclude that respondent committed only negligent misappropriation and, therefore, that the automatic application of disbarment is not warranted. See, e.g. , In re Abbey , 169 A.3d 865, 876 (D.C. 2017) . Therefore, we remand to the Board for it to determine the appropriate sanction in light of our conclusion that respondent violated Rules 1.15(a), (c), and (d) and Rule 1.7(b)(4) and that his conduct amounted to negligent misappropriation.
The Board found that respondent violated paragraphs (a), (c), and (d) of Rule 1.15 ("Safekeeping Property") related to his representation of John Mack and misuse of his trust account, and paragraph (b)(4) of Rule 1.7 ("Conflict of Interest") related to his representation of Tabitha Fitzgerald. In large part, respondent did not take exception to the facts found by the Board, but rather argued that these facts – for the most part – did not evidence Rules violations.1
Respondent became a member of the District of Columbia Bar in 1995 and, prior to the underlying charges, had no disciplinary record. The relevant facts underlying respondent's representation of Mr. Mack and Ms. Fitzgerald are as follows.
Respondent represented Mr. Mack as successor counsel in a personal injury matter, in which Kaiser Permanente ("Kaiser") informed respondent that it had a claim of $554 for medical services it provided to Mr. Mack. When the matter settled, respondent put the settlement funds in his trust account. On June 8, 2010, respondent disbursed payment to Mr. Mack and withheld $1,000, which he deposited in his trust account, to repay Kaiser. More than nine months later, on March 15, 2011, respondent sought Mr. Mack's permission to repay Kaiser. However, respondent did not write a check to Kaiser until May 6, 2011, and the check did not clear his account until May 23, 2011. During the intervening time, in April and May 2011, the balance of respondent's trust account fell below $554. On May 11, 2011, respondent wrote a check for $2,737.23 from his trust account to pay his office rent. The bank rejected the check due to insufficient funds, causing his balance to go negative on May 12, before returning to $490.12.2 On May 12, respondent transferred $500 in personal funds to his trust account so that it would have sufficient funds for the check he had made to Kaiser to clear, which occurred on May 23, 2011.
Respondent admits that he mismanaged his trust account and that he did not keep a ledger, accounting records, or similar documentation. Instead, respondent recorded funds in each of his client files with a "disbursement authorization, the settlement agreement, and any other related documents," such as a settlement sheet. Respondent acknowledged that it would be "difficult" to trace client funds from his trust account. The "best way" to do so would be to find the settlement sheet in each client file, determine when the matter settled and disbursements had been made, and then track those transactions in the trust account's bank records. In most instances, it was not possible to determine the amount of client funds in his trust account or to compare that amount to the bank records. Respondent admitted that properly maintaining his trust account would have enabled him to maintain sufficient funds to pay Kaiser. Furthermore, respondent kept client records for only three years and not five; he was unaware that the ethics rules required five-year record keeping.
From May 21, 2010 through May 22, 2015, an investigator hired by the Office of Disciplinary Counsel determined that respondent commingled approximately $40,000 in non-client funds with client funds in his trust account. Respondent admitted that he put personal and third-party checks into his trust account. During that period, respondent conducted at least forty-three personal and non-client transactions totaling approximately $100,000 using his trust account.
In 1996, respondent purchased a condo unit in Georgetown, which he later sold to a third party with an option to repurchase. In 2007, respondent opted to repurchase the unit but could not qualify for a mortgage. During this time, he was in a romantic relationship with Tabitha Fitzgerald.
Respondent and Ms. Fitzgerald agreed that Ms. Fitzgerald would take title to the condo; respondent would live in it; respondent would not pay any rent; and respondent would pay the mortgage payments, condo fees and assessments, and real estate taxes. In 2010 or early 2011, respondent's relationship with Ms. Fitzgerald ended, and respondent stopped paying the mortgage and condo fees. Ms. Fitzgerald learned about respondent's default when the condo association served her with a foreclosure notice.
In May 2011, the association sued Ms. Fitzgerald in Superior Court to recover unpaid condo assessments and to foreclose on the condo. In that action, respondent agreed to represent Ms. Fitzgerald, and he filed an answer on her behalf. Respondent never informed Ms. Fitzgerald that she had a third-party claim against him based on his prior representations to her that he would make the payments for which she was being sued. Respondent did not inform her of his conflict of interest, did not obtain her informed consent to represent her despite the conflict, and did not make any written disclosures to her about any conflicts.3 Rather, he advised her, without explaining the consequences, to execute a confessed judgment in favor of the condo association for $17,000 (the original principal amount of the unpaid fees).4
While respondent represented Ms. Fitzgerald in the association's lawsuit, he separately filed a lawsuit against her, the condo association, and others in August 2013 seeking a declaratory judgment that he was the owner of the condo. Ms. Fitzgerald hired separate counsel, who filed an answer in respondent's litigation denying his allegations and asserting a counterclaim for breach of his agreement to pay the mortgage and condo fees. Later in August 2013, and after consulting with his own attorney, respondent filed a motion to withdraw as counsel for Ms. Fitzgerald in the association's litigation, citing "recent events" as causing a conflict of interest. In November 2013, the court denied without prejudice respondent's motion to withdraw because he had not followed the proper procedure. Despite his acknowledgment of the conflict, respondent appeared as counsel for Ms. Fitzgerald in the association's lawsuit at a status conference in January 2014 to discuss settlement of the case. Respondent did not refile a motion to withdraw until April 2014 (this time following the proper procedure), which the court granted in May 2014. In October 2014, the trial court granted the association leave to pursue a cross-claim against Ms. Fitzgerald in respondent's litigation and dismissed the association's suit against her.5
On November 13, 2016, Disciplinary Counsel served respondent with a Petition Instituting Formal Disciplinary Proceedings and the Specification of Charges, identifying violations of Rules 1.15(a), (c), and (d) and Rule 1.7(b)(4) in connection with the above facts. The Hearing Committee held an evidentiary hearing on August 21 and 22, 2017. On January 29, 2018, the Hearing Committee issued its Report and Recommendation, in which it found by clear and convincing evidence that respondent violated Rules 1.15(a), (c), and (d) in his representation of Mr. Mack; Rule 1.15(a) by commingling personal and entrusted funds in his client trust account and by failing to keep and preserve complete records; and Rule 1.7(b)(4) in his representation of Ms. Fitzgerald. The Hearing Committee recommended disbarment because it found, in part, that respondent recklessly misappropriated funds in his representation of Mr. Mack.
On July 30, 2018, the Board issued its Report and Recommendation, concurring with the Hearing Committee's factual findings, and agreeing that respondent recklessly misappropriated funds in violation of Rule 1.15(a) in the Mack matter and violated Rule 1.7(b)(4) in the Fitzgerald matter. The Board only briefly addressed respondent's violations of Rule 1.15(c) and (d) in relation to his representation of Mr. Mack, sustaining violations of both, and also noted that respondent did not take exception to the Hearing Committee's findings of commingling and incomplete record-keeping. As a result of its finding that respondent recklessly misappropriated funds in violation of Rule 1.15(a) in representing Mr. Mack, the Board recommended disbarment.6
In cases involving attorney discipline, this court "shall accept the findings of fact made by the Board unless they are unsupported by substantial evidence of record,"...
To continue reading
Request your trial
-
In re Schuman
...is unsubstantiated by documentary evidence is insufficient to satisfy Rule 1.15(a) ’s record keeping requirements. See In re Dailey , 230 A.3d 902, 913 (D.C. 2020) (stating that "[t]he purpose of Rule 1.15(a) is to ensure that the documentary record itself tells the full story of how the at......
-
In re Edwards
...instead she was merely careless. We review de novo the Board's determination that Ms. Edwards acted recklessly. E.g. , In re Dailey , 230 A.3d 902, 909 (D.C. 2020). We agree with the Board's reasoning and its conclusion. The question on the D.D.C. form was very clear, and it is difficult to......