In re Discipline of Dorothy

• Decision Date: 09 February 2000
• Docket Number: No. 20479.,20479.
• Citation: 605 N.W.2d 493,2000 SD 23
• Parties: In the Matter of the DISCIPLINE OF Charles L. DOROTHY, as an Attorney at Law.
• Court: South Dakota Supreme Court

605 N.W.2d 493

2000 SD 23

In the Matter of the DISCIPLINE OF Charles L. DOROTHY, as an Attorney at Law.

No. 20479.

Supreme Court of South Dakota.

Argued September 15, 1999.

Decided February 9, 2000.

Robert B. Frieberg, Board Counsel, Disciplinary Board of State Bar, Beresford, for Disciplinary Board.

Laurence J. Zastrow, Deputy Board Counsel, Disciplinary Board of State Bar, Pierre, for Disciplinary Board.

Charles L. Dorothy, Sioux Falls, pro se.

GILBERTSON, Justice.

[¶ 1.] This is a disciplinary proceeding against Respondent Charles L. Dorothy (Dorothy), a member of the State Bar of South Dakota.

FACTS AND PROCEDURE

[¶ 2.] Dorothy graduated from the University of South Dakota School of Law in 1974 and was admitted to the practice of law in this state on May 16, 1974. Dorothy is also admitted to practice in the Federal District Court of South Dakota and the U.S. Eighth Circuit Court of Appeals. He has practiced pro hac vice in the Federal District Court of Iowa, and the state courts of Iowa and North Dakota. During his legal career Dorothy has practiced as an employee, sole practitioner, partner and shareholder in a professional corporation. He has also served as an assistant attorney general for the State of South Dakota and as a deputy state's attorney. Dorothy has practiced law in Rapid City and Pierre, South Dakota, and currently practices in Sioux Falls, South Dakota.

HOOVER COMPLAINT

[¶ 3.] Dorothy was contacted by Thayer Hoover on September 3, 1993, for information on child support guidelines regarding his wife Cindy's four children by a previous marriage to Mike Grages. Dorothy asked for and received a $500 retainer from Hoover to be drawn against at the rate of $100 per hour for services performed. No written fee agreement was ever prepared. Dorothy represented that any amount of the retainer not used would be refunded.

[¶ 4.] Although there was an order in the divorce file granting custody of the four Grages children to Mrs. Hoover, there had been a considerable history of the Grages children living with Grages or the parents of Cindy Hoover. Twenty-three depositions were taken during the course of the Grages-Hoover change of custody, support and grandparent visitation proceedings.

[¶ 5.] In December 1993, Dorothy represented to Cindy the case could cost as much as $10,000. However, as of August 1994, Hoovers had paid $47,300 to Dorothy in legal fees and costs. To partially pay Dorothy's fees, the Hoovers had to borrow $10,000 from a bank and took an $8,000 cash advance on their Visa card. In September of 1994, Hoovers paid Dorothy another $1,500 before a scheduled hearing. In October 1994, Hoovers still owed Dorothy $10,000 to $11,000. Ultimately Dorothy claimed he was entitled to $45,100.35 in attorney's fees and $17,550.37 for costs, for a total of $62,650.72.

[¶ 6.] Circuit Judge Glen Severson heard six days of testimony. Settlement was finally reached in August 1994, by mutual agreement of the parties who agreed to split custody of the children. The amount of child support was also settled by stipulation based upon the statutory child support guidelines.

[¶ 7.] Dorothy brought suit against Hoovers for the over $14,000 of claimed unpaid legal services and costs in connection with the custody proceedings. Judge Tim D. Tucker, granted judgment in favor of the Hoovers. Dorothy did not appeal this ruling. Subsequently, the Hoovers filed an ethical complaint against Dorothy with the State Bar of South Dakota. The Disciplinary Board found Dorothy violated South Dakota Rules of Professional Conduct 1.1, 1.2(e), 1.3, 1.4, 1.5, 1.16, 2.1 and 8.4.

FLUGGE COMPLAINT

[¶ 8.] In 1992, Richard C. Flugge (Flugge), a certified public accountant in Sioux Falls retained Dorothy to represent him in a legal dispute he had with Steven Wagner, a CPA whose employment Flugge terminated. Dorothy brought a lawsuit on behalf of Flugge in April of 1992 for the recovery of client files taken from Flugge by Wagner in violation of their employment contract. Wagner employed attorney Gale Fischer to defend him in the Flugge matter. On May 24, 1994, Fischer made an offer of judgment as to Flugge's breach of contract claim admitting Wagner had performed business for Flugge's clients, and advising Dorothy he could obtain a judgment based on the offer of judgment. On June 27, 1994, Judge William Srstka entered partial judgment for Flugge in the amount of $703.75 based on the offer of judgment.

[¶ 9.] On August 17, 1994, Fischer wrote a letter to Dorothy, stating Flugge was entitled to recover $455.72 after deduction of costs which had been awarded to Wagner concerning another portion of the litigation. On August 25, 1994, Dorothy received a letter dated August 24, 1994 from Fischer enclosing a trust account check for $455.72 and a satisfaction of judgment to be signed by Dorothy on behalf of Flugge. On January 22, 1997, Flugge called Dorothy regarding the judgment against Wagner for which he had never been paid. Upon Flugge's request, an associate of Dorothy's commenced execution and garnishment proceedings against Wagner to recover the $455.72. Wagner was subsequently levied upon and the constable delivered a check to Dorothy payable to Flugge and Dorothy. On March 13, 1997, Flugge was informed a check had already been tendered by Wagner. On March 14, 1997, Wagner's attorney filed a motion for modification of judgment asserting he had mailed a trust account check for $455.72 to Dorothy on August 24, 1994. On March 17, 1997, Dorothy advised Flugge he had never received a check from Fischer for $455.72, and discussed possible ethics violations by Fischer and possible Rule 11 sanctions for misconduct. Dorothy prepared an affidavit which denied his receipt of Wagner's trust account check. Flugge also prepared an affidavit denying the receipt of the trust account check.

[¶ 10.] Prior to the hearing on Fischer's motion for modification of judgment, Dorothy discovered the trust account check from Fischer in the amount of $455.72 dated August 24, 1994 in his "appellate file." Dorothy provided Flugge with copies of the trust account check but failed to explain it was in satisfaction of the judgment. As a result, Flugge believed the copies were of Fischer's pleadings, and thus on April 4, 1997 he signed the affidavits and pleadings requesting Rule 11 sanctions against Fischer. Flugge believed the Rule 11 motion was to recover attorney's fees because he thought Fischer's affidavit was false.

[¶ 11.] On April 16, 1997 a hearing on the motions was held. Wagner's attorney represented to the court that either Flugge or Dorothy had received the trust account check. At this time Dorothy revealed to the court he had in fact received the check. The trial court ordered Flugge to return or destroy the trust account check and return the funds obtained by the execution on Wagner's bank account. On April 17, 1997, Flugge sent Dorothy a detailed letter expressing his concerns regarding the manner in which Dorothy had represented him involving the trust account check, including the fact Dorothy had withheld information regarding the receipt of such check. Flugge requested Dorothy dismiss the motion for Rule 11 sanctions against Fischer. On April 24, 1997, Dorothy replied by letter "I believe that you saw the letter, check and satisfaction on August 30, 1994."

[¶ 12.] On April 21, 1997, pursuant to the trial court's order, Fischer sent to Dorothy a cashier's check for $455.72 payable to Flugge and Dorothy. Dorothy wrote to Flugge informing him, "I will not immediately endorse Constable Harris' check over to Fischer and Wagner or send or deliver the check to them immediately, but I will endorse it and give it to you to do with it as you deem appropriate." Dorothy then sent the check along with a letter to Flugge on April 28, 1997, stating, "I will endorse it [constable's check] and the cashier's check [$455.72] I sent you last week when our billing dispute is resolved." Dorothy claims he had a possessory attorney's lien on the two checks, although he never attempted to perfect the "attorney's lien" in the required manner. On May 5, 1997, Flugge sent Fischer his personal check for the costs assessed in accordance with the trial court's April 16, 1997 order. Flugge was ultimately able to secure a reissued constable's check payable only to himself.

[¶ 13.] In his April 18, 1997 letter to Flugge, Dorothy advised, "I am terminating any professional relationship we have." Because Dorothy was concerned Wagner or Flugge might pursue a claim against him for malpractice, he sought the mutual release of all attorneys involved in this matter. Dorothy did not advise Flugge in writing that he should obtain independent legal representation concerning this release. Dorothy filed a motion to withdraw as Flugge's counsel on May 20, 1997. It was granted by the trial court. Flugge subsequently filed an ethical complaint against Dorothy with the State Bar.

[¶ 14.] The Board found Dorothy violated Rules 1.1, 1.2(a), 1.5, 1.8(h), 2.1 and 8.4 in regards to this matter. The Board recommended Dorothy be publicly censured.

[¶ 15.] On May 8, 1998, Circuit Judge Jack Von Wald was appointed referee by this Court to take evidence and make findings concerning this case. The referee agreed with the Board that Dorothy had violated the above cited Rules of Professional Conduct; however, the referee did not agree that Dorothy should be publicly censured for his conduct. The referee noted that (1) Dorothy had no previous complaints made against him to the Board which were found to have been meritorious; and (2) Dorothy no longer does legal work involving domestic relations. The referee recommended a private reprimand would be appropriate discipline for Dorothy.

STANDARD OF REVIEW

[¶ 16.] The Board and the referee conducted hearings and made findings, conclusions, and recommendations that Dorothy should be disciplined. We give careful consideration to their findings...