In re Micheel
| Decision Date | 19 May 1992 |
| Docket Number | No. 90-SP-1363.,90-SP-1363. |
| Citation | 610 A.2d 231 |
| Parties | In re Richard A. MICHEEL, Respondent. A Member of the Bar of the District of Columbia Court of Appeals. |
| Court | D.C. Court of Appeals |
Elizabeth A. Herman, Asst. Bar Counsel, Washington, D.C., for petitioner, the Office of Bar Counsel. Frederick B. Abramson, Bar Counsel at the time the brief was filed, and Samuel McClendon, Asst. Bar Counsel, Washington, D.C., at the time the brief was filed, were on the brief, for petitioner.
R. Kenneth Mundy, Washington, D.C., for respondent.
Before FERREN, TERRY and SCHWELB, Associate Judges.
Bar Counsel charged respondent Richard A. Micheel with commingling funds,1 misappropriating client funds,2 and dishonesty.3 A hearing committee found, after a hearing, that Micheel was guilty of commingling and misappropriation, but not dishonesty. Concluding that the misappropriation was the result of "simple negligence but no more," the hearing committee recommended that Micheel be suspended for two months.
The Board on Professional Responsibility accepted the hearing committee's conclusion that Micheel had commingled and misappropriated funds,4 but did not engage in dishonest conduct. The Board concluded, however, that Micheel's misappropriation in this case was the result of recklessness rather than simple negligence. Relying on this court's holding that disbarment is the appropriate sanction in "virtually all" cases of misappropriation involving more than simple negligence, In re Addams, 579 A.2d 190, 191 (D.C.1990) (en banc), the Board recommended that Micheel be disbarred. We adopt the Board's recommendation.
The pertinent facts are undisputed. Mr. Micheel was retained by Roger Gregory, an acquaintance and fellow attorney, to represent him in connection with the purchase of a house in Silver Spring, Maryland. Micheel collected a total of $144,200.00 from various sources for disbursal at the settlement. These funds included checks for $127,700.00 from the mortgage lender, $9,000.00 from Mr. Gregory, and $7,500.00 from the seller as an adjustment in the price. Because he did not have a client trust account at that time, Micheel deposited all of these checks in his regular office checking account.5
From the funds entrusted to him, Mr. Micheel paid out $141,560.85 to the seller and the mortgage holder, leaving a balance of $2,639.15 still in his possession. That sum was intended to be paid to state and county authorities for taxes and other fees due as a result of the sale. Accordingly, Mr. Micheel wrote two separate checks on his office account. The first, in the amount of $1,317.44, was written on August 27, 1987, but was dishonored for insufficient funds on September 8, 1987.6 The second check, in the amount of $1,345.00, was written on October 5, 1987, but was dishonored for insufficient funds on October 20, 1987.7 Micheel's account was overdrawn by $59.71 at the time this check was presented for payment. The evidence also showed that between October 5 and October 20 Mr. Micheel bounced thirteen other checks drawn on this account and wrote numerous additional checks for business and personal expenses that did not bounce.8 Eventually Mr. Micheel became aware of the shortage in his account and satisfied his obligations with two cashier's checks on December 29, 1987.
Micheel candidly admitted before the hearing committee that he was guilty of commingling and technically guilty of misappropriation, and the hearing committee and the Board found that he had committed these violations. He testified, however, that the shortages in his bank account were merely the result of his own poor accounting practices, not of any intent on his part to misappropriate client funds. The hearing committee credited this testimony and concluded that Micheel did not intentionally misappropriate the funds. Because the charge of dishonesty, in violation of DR 1-102(A)(4), was based on Bar Counsel's allegation that the misappropriation had been intentional, the hearing committee also found that Micheel was not guilty of conduct involving dishonesty.9
The hearing committee and the Board found that Micheel had engaged in commingling and misappropriation, both violations of DR 9-103(A). Micheel does not challenge these findings, nor could he, for it is clear that his conduct constituted both commingling and misappropriation. Depositing client funds into an attorney's operating account constitutes commingling; misappropriation occurs when the balance in that account falls below the amount due to the client. See, e.g., In re Hessler, 549 A.2d 700 (D.C.1988). Misappropriation in such situations is essentially a per se offense; proof of improper intent is not required. In re Harrison, 461 A.2d 1034, 1036 (D.C.1983).
We held in In re Addams that "in virtually all cases of misappropriation, disbarment will be the only appropriate sanction unless it appears that the misconduct resulted from nothing more than simple negligence." 579 A.2d at 191; see also In re Hines, 482 A.2d 378, 386 (D.C.1984). In later decisions we have made quite clear that there is a presumption of disbarment in all cases involving misappropriation resulting from more than simple negligence. See, e.g., In re Cooper, supra note 9, 591 A.2d at 1297; In re Godfrey, 583 A.2d 692, 693 (D.C.1990); In re Robinson, 583 A.2d 691, 692 (D.C.1990); In re Thompson, 583 A.2d 1006, 1008 (D.C.1990). The principal issue in this case is whether Micheel's inadvertent misappropriation of his client's funds was the result of simple negligence or of reckless disregard of his duty to safeguard the funds.
The hearing committee specifically rejected Bar Counsel's contention that Micheel "had a disregard for the security of the settlement funds giving rise to an inference that he intended to use the funds for his own benefit." The committee credited Micheel's testimony that any misappropriation was the result of "sloppy bookkeeping" and "bad accounting," rather than any intent to steal the client's funds. "This is not a case," the committee said, "where lassitude in record-keeping sank to the level of a reckless disregard for the state of the account." Rather, in the words of the hearing committee, Micheel "negligently allowed his office account to become overdrawn on one or two occasions (within weeks of each other), and immediately made restitution as soon as it was called to his attention." The committee, citing In re Hessler, supra, 549 A.2d at 701, concluded that Micheel's conduct involved "commingling and misappropriation through simple negligence, but no more...."
The Board adopted the hearing committee's conclusion that Micheel had commingled and misappropriated funds. It deferred to the committee's finding that Micheel did not intentionally misappropriate funds, noting that the committee had credited Micheel's testimony to that effect and that it could not overturn the committee's credibility determinations. The Board nevertheless disagreed with the hearing committee's conclusion that Micheel's conduct was the result of simple negligence. The Board held that on the undisputed facts, as found by the hearing committee, Micheel's misappropriation "was the consequence at least of reckless handling of client funds, not mere negligence or inadvertence." Relying on In re Addams, the Board therefore recommended disbarment.
We must first decide what deference the Board owed to the hearing committee's conclusion that Micheel's conduct was the result of simple negligence. The Board is obliged to accept the hearing committee's factual findings if those findings are supported by substantial evidence in the record, viewed as a whole. In re Thompson, supra, 583 A.2d at 1008; Board on Professional Responsibility Rule 13.6. Micheel argues that the Board erred in rejecting the hearing committee's conclusion that his conduct was the result of simple negligence.
Whether there has been negligence is ordinarily a question of fact for the fact-finder to resolve. See, e.g., Montague v. Henderson, 409 A.2d 627, 628 (D.C.1979). Thus it would appear at first glance that the Board owed deference to the hearing committee's finding of simple negligence, since a determination of negligence is a finding of fact. This court, however, at least in the administrative arena,10 has drawn a distinction between "subsidiary findings of basic facts" and findings of "ultimate facts," which we have equated with conclusions of law. Washington Chapter of the American Institute of Architects v. District of Columbia Department of Employment Services, 594 A.2d 83, 87 (D.C.1991) (hereafter "AIA"), citing Citizens Ass'n of Georgetown v. District of Columbia Zoning Commission, 402 A.2d 36, 42 (D.C.1979). The administrative agency's reviewing body (in this case, the Board) must defer to the "subsidiary findings of basic facts," which include such things as credibility determinations, made by the agency's fact-finding body (the hearing committee). However, the Board owes no deference to the hearing committee's determination of "ultimate facts," which are really conclusions of law. AIA, supra, 594 A.2d at 87.
This court was called upon in AIA to decide whether an agency's determination that an employee's resignation from her job was "voluntary" involved a question of "ultimate fact." The employee had signed a letter of resignation but later claimed that she had done so under duress. She later sought unemployment benefits from the Department of Employment Services, which an appeals examiner denied on the ground that she had voluntarily resigned. The Office of Appeals and Review (OAR) reversed the appeals examiner's decision, ruling that the employee's resignation was "involuntary." The employer contended in this court that the OAR had erred in failing to defer to the appeals examiner's finding that the resignation was voluntary. We noted that although the applicable regulations...
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