In re Disciplin. Proceeding against Cramer

• Decision Date: 11 February 2010
• Docket Number: No. 200,674-4.,200,674-4.
• Citation: 168 Wn.2d 220,225 P.3d 881
• Court: Washington Supreme Court
• Parties: In the Matter of the DISCIPLINARY PROCEEDING AGAINST Stephen D. CRAMER, an Attorney at Law (WSBA No. 9085).

225 P.3d 881

168 Wn.2d 220

In the Matter of the DISCIPLINARY PROCEEDING AGAINST Stephen D. CRAMER, an Attorney at Law (WSBA No. 9085).

No. 200,674-4.

Supreme Court of Washington, En Banc.

Argued September 15, 2009.

February 11, 2010.

Stephen Christopher Smith, Hawley Troxell Ennis & Hawley LLP, Boise, ID, for Petitioner.

Joanne S. Abelson, Washington State Bar Association, Seattle, WA, for Respondent.

C. JOHNSON, J.

¶ 1 This case involves an attorney who, when faced with revocation of his business license by the Department of Revenue (DOR), notified DOR he was ceasing his business but instead re-formed his practice from a "PLLC" to a "Inc., PS," and continued to operate. The attorney failed to notify DOR of his new status and removed the revocation order posted at his office. The hearing officer and the Washington State Bar Association's (WSBA) Disciplinary Board (Board) concluded that this conduct was dishonest, illegal, deceitful, and a misrepresentation of his intention to circumvent his tax liabilities and recommended we disbar Stephen D. Cramer. We adopt the Board's recommendation.

FACTS

¶ 2 Cramer was admitted to the Washington bar in 1979 and began practicing law as a solo practitioner in 1985. DOR issued Cramer a certificate of registration for Stephen D. Cramer, PLLC (PLLC), a limited liability company, in 1995. Cramer was the sole owner of the PLLC.

¶ 3 Cramer stopped filing his quarterly excise tax statements in 2003 and eventually stopped paying taxes altogether. By 2006, he owed nearly $10,000 in back taxes. In April 2006, DOR Agent Felicia Jones notified Cramer that she had scheduled a prehearing in May during which she would meet with him to discuss how he could arrange to pay his tax deficiencies and file delinquent tax statements. Cramer did not appear for the prehearing or return Jones's follow-up calls.

¶ 4 In August 2006, Jones sent Cramer notice of a September 13, 2006, hearing to determine whether to revoke his PLLC's certificate of registration based on his outstanding tax warrants¹ and his failure to demonstrate that he would be able to pay his past and future tax obligations. Cramer did not appear.

¶ 5 When Cramer failed to appear at the hearing, DOR issued and served a preliminary revocation order (PRO) revoking the certificate of registration for the PLLC based on Cramer's failure to pay taxes for tax years 2003 through 2005. The PRO advised Cramer that he had 21 days to request review. Cramer did not request review. Instead, on September 22, 2006, he sent Jones a letter stating: "NOTICE IS HEREBY GIVEN that Stephen D. Cramer, PLLC will cease doing business and terminate all further business operations on September 30, 2006. The limited liability company will then be dissolved through the Washington Secretary of State as soon as possible after that date." Ex. 8C.

¶ 6 Cramer executed a notice of dissolution of the PLLC effective September 30, 2006. Meanwhile, on September 20, 2006 (two days before sending notice to Jones of Cramer's intention to dissolve the PLLC), Cramer obtained a certificate of incorporation for a new professional services corporation, the Law Office of Stephen D. Cramer, Inc., PS (PS), from the secretary of state. He was the sole owner, shareholder, and officer of the PS. In operating the PS, Cramer kept the same law office space, phone number, office equipment, accounts receivable, and employee as when he operated his PLLC. Cramer transferred his PLLC's assets to his new PS, but not the liabilities. Cramer did not seek a certificate of registration for his PS with DOR and did not provide DOR with notice of its existence.

¶ 7 The PRO for the PLLC became final on October 6, 2006. The final revocation order provided that it "[b]e posted in a conspicuous place at the main entrance to the taxpayer's place of business and remain posted until the Tax Warrants are paid." The order further advised, "it shall be unlawful for any person to engage in business after revocation of a certificate of registration. Persons violating this provision shall be guilty of a Class C felony." The order was posted on the door to Cramer's law office on October 12, 2006, but was removed by Cramer several weeks later.

¶ 8 Although registering a new business with DOR is required by law, Cramer operated his PS without registering from October 13, 2006, through January 8, 2007. Agent Jones received information that Cramer might be conducting business without being registered with DOR and notified Stephen Hiatt, a DOR agent charged with locating unregistered business entities. Hiatt discovered Cramer's filing with the secretary of state incorporating his PS. On November 22, 2006, Hiatt sent Cramer a letter asking whether he was conducting business in Washington as a PS and, if so, to provide his registration number or submit a completed master application for a certificate of registration for the PS. Cramer received, date-stamped, but did not respond to Hiatt's letter. Cramer attached a copy of Hiatt's letter in correspondence with the WSBA on December 1, 2006. But Cramer denied having ever received Hiatt's letter when confronted by Hiatt in January 2007; he claimed that he had not realized he had received Hiatt's letter. Cramer also claimed that he believed the secretary of state would "handle registration" of his PS with DOR, although Cramer had "handled registration" of his PLLC with DOR.

¶ 9 After meeting with Cramer, Hiatt sent him another letter with another master license application. On January 8, 2007, Cramer submitted his application to DOR for the PS. DOR subsequently determined that the PS was a successor to the PLLC and transferred the tax liabilities from the PLLC to the PS. Cramer did not pay his overdue taxes until DOR began garnishing the bank accounts of his PS in 2008.

PROCEDURAL HISTORY

¶ 10 In November 2007, WSBA filed a two-count formal complaint. Count I alleged Cramer violated the Rules of Professional Conduct (RPC) 8.4(b) (by violating RCW 82.32.290(1) and 82.32.290(2)), RPC 8.4(c), and RPC 8.4(i), by illegally removing the posted revocation order, by operating his law business without a valid business license, and by continuing to operate his law business after his business license had been revoked. Count II alleged Cramer violated RPC 8.4(c) by attempting to circumvent state tax law when he changed the name of the business under which he practiced law.

¶ 11 Cramer's hearing before a WSBA hearing officer was set for January 24, 2008. Cramer retained counsel, Leland Ripley, to represent him in WSBA proceedings. In December 2007, Ripley presented Cramer with confidentiality waivers that would permit DOR agents to testify about Cramer's tax matters at the hearing. Cramer signed and returned the waivers to Ripley on January 8, 2008. On January 23, 2008, Ripley called Cramer twice to remind him about the hearing the next morning. He left a voice message. Cramer did not appear at the hearing and claims he received no notice of it. Ripley advised the hearing officer that he had provided Cramer with adequate notice of the hearing date. The hearing proceeded without Cramer, and Ripley withdrew from representation shortly thereafter.

¶ 12 Although Cramer retained new counsel, Stephen Smith, he missed the deadline for setting a date to testify and the date to submit his proposed findings of fact and conclusions of law. The hearing officer entered findings of fact, conclusions of law, and hearing officer's recommendation (FFCLR) recommending that Cramer be disbarred, but agreed to reopen proceedings to allow Cramer to testify on August 28, 2008. Neither Cramer nor his counsel appeared. The hearing officer agreed to move the hearing date to September 11, 2008, both Cramer and his counsel appeared, and Cramer was allowed to testify.

¶ 13 The hearing officer entered amended FFCLR on October 10, 2008. He found, among other things, (1) Cramer's claim that he had not realized he had received Hiatt's November 22, 2006, letter was not credible; (2) Cramer's claim that he believed the secretary of state would handle registration of his PS with DOR was not credible; and (3) Cramer's intention in converting his law practice from a PLLC to a PS was to circumvent DOR and avoid paying his tax liabilities. The hearing officer concluded WSBA had proved Counts I and II as charged. He determined that the presumptive sanction for each count was disbarment. See the American Bar Association's Standards for Imposing Lawyer Sanctions std. 5.11(b) (1991 & Supp.1992) (disbarment is generally appropriate when "a lawyer engages in any . . . intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer's fitness to practice"). The hearing officer found no mitigating factors and four aggravating factors: prior disciplinary offenses, bad faith obstruction of the disciplinary process, substantial experience in the practice of law, and indifference to making restitution.

¶ 14 By a vote of nine to three, the Board affirmed the hearing officer's recommendation of disbarment. The dissenting members agreed that the presumptive sanction was disbarment but supported a three-year suspension.

ISSUES

A. Whether Cramer violated RPC 8.4(b) (by violating RCW 82.32.290(1) and 82.32.290(2)), RPC 8.4(c), and RPC 8.4(i), by illegally removing a posted revocation order, by operating his law business without a valid business license, and by continuing to operate his law business after his business license had been revoked (Count I).

B. Whether Cramer violated RPC 8.4(c) by attempting to circumvent state tax law and DOR when he changed the name of the business under which he practiced law (Count II).

C. Whether disbarment is the appropriate sanction.

ANALYSIS

¶ 15 Cramer presents three assignments of error, alleging that: (1) he did not violate the RPCs by practicing law as a PS after his PLLC license was revoked, (2) his conduct was not...