In re Eskola, A16-0269

• Decision Date: 15 March 2017
• Docket Number: A16-0269
• Citation: 891 N.W.2d 294
• Parties: IN RE Petition for DISCIPLINARY ACTION AGAINST Richard S. ESKOLA, a Minnesota Attorney, Registration No. 0123699.
• Court: Minnesota Supreme Court

891 N.W.2d 294

IN RE Petition for DISCIPLINARY ACTION AGAINST Richard S. ESKOLA, a Minnesota Attorney, Registration No. 0123699.

A16-0269

Supreme Court of Minnesota.

Filed: March 15, 2017

Susan M. Humiston, Director, Cassie Hanson, Assistant Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for petitioner.

Richard J. Harden, Richard J. Harden, P.A., Woodbury, Minnesota, for respondent.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility (Director) filed a petition for disciplinary action against respondent Richard S. Eskola. The Director alleged that Eskola failed to maintain trust account books and records, made false statements to the Director, and mishandled and misappropriated client funds. We appointed a referee, who concluded that Eskola committed the alleged misconduct and recommended an indefinite suspension of at least 18 months. The sole issue before us is the appropriate discipline. We conclude that the appropriate sanction for Eskola's misconduct is an indefinite suspension with no right to petition for reinstatement for 18 months, a 2-year probationary period upon reinstatement, and a permanent prohibition on being an authorized signatory on a client trust account.

FACTS

The facts of the case are not in dispute.¹ Eskola was admitted to practice law in the State of Minnesota on October 24, 1980. In 2003, we suspended him for a minimum of 30 days for misappropriating funds from his law firm. In re Eskola , 668 N.W.2d 424, 424 (Minn. 2003) (order).

At all times relevant to the current petition, Eskola, a solo practitioner, kept two bank accounts with Wells Fargo, a trust account and a business account. On June 27, 2014, Eskola's trust account became overdrawn. Wells Fargo notified the Director, who investigated the overdraft and audited Eskola's trust and business accounts. The Director sent a letter to Eskola on July 9, 2014, asking for information about the overdrawn trust account.

In his July 15, 2014, response, Eskola explained the circumstances surrounding the overdraft. He said that he received a $2,500 retainer from a client in accordance with an oral fee agreement. The retainer consisted of a $1,500 check as an advance on his attorney fees and a $1,000 check as an advance on the costs of the client's appeal. He deposited the $1,500 check into his trust account and the $1,000 check into his business account. Eskola then wrote a check for $630 to the court reporter in the case. Eskola stated that it was his "intention to write that check out of [his business] account with the $1,000 deposit [he] had put in for costs." Eskola, however, wrote the check on his trust account. Eskola did not realize his mistake until months later when the court reporter cashed the check, causing Eskola's trust account to become overdrawn.

Eskola admitted that he failed to realize the mistake that caused the overdraft because he was not preparing the required trial balance and reconciliation reports for his trust account and was not maintaining the required contemporaneous check register or general ledger for his business account. Eskola's failure to maintain the required trust account books and records violated Minn. R. Prof. Conduct 1.15(c)(3) and 1.15(h), as further interpreted by Appendix 1 thereto.²

After receiving Eskola's letter explaining the overdraft, the Director wrote to him on October 1, 2014, and stated that his deposit of client funds into his business account violated Minn. R. Prof. Conduct 1.15(a).³ The Director told Eskola to immediately discontinue depositing unearned client cost advances and fees into his business account. The Director also asked whether it was Eskola's routine practice to deposit client funds into his business account. In an October 20, 2014 reply, Eskola stated "[i]t was not [his] intention to deposit [the client's] cost advance into [his business] account and it is not [his] routine practice to deposit client cost advances into that account." This statement, however, is directly contradicted by Eskola's previous letter, which said that he intentionally deposited unearned client cost advances into his business account.

Additionally, the Director's investigation revealed that Eskola failed to safeguard client property by routinely depositing client funds, including unearned fees and cost advances, into his business account, in violation of Minn. R. Prof. Conduct 1.15(a) and 1.15(c)(2).⁴ From July 18, 2013, to April 1, 2015, Eskola deposited at least $18,217 in cost advances and unearned attorney fees from 26 clients into his business account without a written fee agreement authorizing him to do so. Eskola made seven deposits of client funds, totaling $3,878, into his business account after the Director instructed him to stop this activity.

Eskola's statements to the Director that it was not his intention to deposit the client's cost advance into his business account, that he did not make a regular practice of depositing unearned client cost and fee advances into his business account, and that he would cease this practice were false. Eskola made these false statements to conceal from the Director his failure to safeguard client property. Eskola's false statements violated Minn. R. Prof. Conduct 8.1(a) and 8.4(c).⁵

In addition to failing to safeguard client funds, Eskola knowingly and intentionally misappropriated client funds from his business and trust accounts, in violation of Minn. R. Prof. Conduct 1.15(a), 1.15(c)(2), and 8.4(c). From July 2013 to May 2015, the balance in Eskola's business account was repeatedly less than the total amount of client funds that Eskola should have been holding in that account. Eskola caused or increased these shortages⁶ by making dozens of payments for his personal and business expenses that exceeded the amount of his own funds in his business account.⁷ There were numerous instances in which a shortage was created or increased by withdrawals from the account or by checks made directly payable to Eskola. The shortages ranged from as little as $0.28 on September 18, 2013, to as much as $2,154.12 on April 8, 2014.⁸ The shortages fluctuated because Eskola would intermittently deposit his own funds into the account to cover a shortage.⁹ Eskola repaid all client funds that he took from his business account.

Eskola also misappropriated funds from two clients from his trust account. Between March 28, 2014, and July 28, 2014, Eskola misappropriated funds belonging to one client by disbursing fees to himself that were greater than the fees that he had actually earned. At its height, this misappropriation reached $1,345. Eskola eventually earned all the fees that he had disbursed to himself.

Eskola similarly misappropriated funds during his representation of another client in a marriage dissolution proceeding. Eskola received a $1,500 retainer from this client, who had agreed to pay Eskola at a rate of $210 per hour. From December 3, 2013, to December 18, 2013, Eskola disbursed $1,400 of the retainer to himself, even though he had only provided 1.5 hours ($315 worth) of services to the client. Eskola ultimately refunded the retainer, less the $315 that he was owed, after the client reconciled with his spouse.

The referee found that Eskola's disciplinary history, his cumulative acts of present misconduct, and his continued deposit of client funds into his business account after the Director told him to stop this practice were aggravating factors. The referee also found four mitigating factors: (1) Eskola was remorseful; (2) he made full restitution of the misappropriated funds; (3) the nature of his misappropriation—temporarily borrowing small amounts of client funds until he could replace them—showed that he was not motivated to permanently deprive clients of their funds; and (4) he had a history of pro bono and other volunteer work and had an otherwise good character.

Based on these findings, the referee recommended that Eskola be indefinitely suspended from the practice of law for a minimum of 18 months. In addition, the referee recommended that, if reinstated, Eskola should not be permitted to handle client fund without supervision for at least 2 years.

ANALYSIS

The parties disagree as to the appropriate discipline that we should impose. The Director agrees with the referee's recommendation to indefinitely suspend Eskola for a minimum of 18 months, with a 2-year supervised probationary period if he is reinstated. Eskola, on the other hand, argues that the appropriate discipline is a 90-day suspension, with 2 years of supervised probation upon reinstatement.

"Although we place great weight on the referee's recommended discipline, we retain ultimate responsibility for determining the appropriate sanction." In re Rebeau , 787 N.W.2d 168, 173 (Minn. 2010) (citing In re Grigsby , 764 N.W.2d 54, 62 (Minn. 2009) ). "The purpose of disciplinary sanctions is ‘not to punish the attorney but rather to protect the public, to protect the judicial system, and to deter future misconduct by the disciplined attorney as well as by other attorneys.’ " In re Schulte , 869 N.W.2d 674, 677 (Minn. 2015) (quoting Rebeau , 787 N.W.2d at 173 ). In determining the appropriate sanction in an attorney discipline matter, we "consider four factors: (1) the nature of the misconduct; (2) the cumulative weight of the disciplinary violations; (3) the harm to the public; and (4) the harm to the legal profession." In re Nelson , 733 N.W.2d 458, 463 (Minn. 2007). Additionally, although we look to similar cases to ensure that the discipline imposed is consistent, we "impose discipline on a case-by-case basis after considering both aggravating and mitigating circumstances." In re Plummer , 725 N.W.2d 96, 99 (Minn. 2006). We address each of the four factors in turn, then analyze the aggravating and mitigating factors in this case, and finally examine similar cases to determine the appropriate sanction for the misconduct committed in this case.

I.

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