In re Moulton, A19-0444

• Decision Date: 01 July 2020
• Docket Number: A19-0444
• Citation: 945 N.W.2d 401
• Parties: IN RE Petition for DISCIPLINARY ACTION AGAINST Daniel J. MOULTON, a Minnesota Attorney, Registration No. 0136888.
• Court: Minnesota Supreme Court

945 N.W.2d 401

IN RE Petition for DISCIPLINARY ACTION AGAINST Daniel J. MOULTON, a Minnesota Attorney, Registration No. 0136888.

A19-0444

Supreme Court of Minnesota.

Filed: July 1, 2020

Susan M. Humiston, Director, Keshini M. Ratnayake, Senior Assistant Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for petitioner.

Daniel J. Moulton, Rochester, Minnesota, pro se.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against respondent Daniel J. Moulton, alleging that he had violated the Minnesota Rules of Professional Conduct by failing to file and pay his taxes and failing to affirmatively report his tax compliance to the Director as required by the terms of his probation. Following an evidentiary hearing, the referee concluded that Moulton had violated the Rules of Professional Conduct. The referee recommended that Moulton be suspended from the practice of law for 90 days and that he be required to petition for reinstatement. We conclude that the referee did not clearly err in her findings, Moulton was afforded a fair disciplinary hearing, and a 90-day suspension with the requirement that Moulton petition for reinstatement under Rule 18, Rules on Lawyers Professional Responsibility (RLPR), is the appropriate discipline.

FACTS

Moulton practices law at Moulton Law Office, a sole proprietorship. In addition to his law practice, until April 2016, Moulton owned, operated, and was the sole corporate officer of Moulton Trucking, Inc.

On September 28, 2006, Moulton was suspended from the practice of law for a minimum of 90 days for failing to file and timely pay state and federal employer withholding tax returns for the period of 1998 through 2005. In re Moulton , 721 N.W.2d 900 (Minn. 2006), as modified , 733 N.W.2d 777 (Minn. 2007) (order). Moulton was conditionally reinstated on June 10, 2010, and placed on unsupervised probation. In re Moulton , 783 N.W.2d 168 (Minn. 2010) (order). Moulton was required to remain on probation until he had fully paid all past-due employer withholding tax liabilities or for two years, whichever was longer. Id. at 169.

As a condition of his reinstatement, we ordered Moulton to "remain current on all tax obligations to federal and state taxing authorities arising in the future, and on any payment agreements with such federal and state taxing authorities." Id. We also required Moulton to "affirmatively report to the Director, on or before the due date of the required return, his compliance with tax filing and payment." Id. The conditional reinstatement order also required Moulton to "provide the Director with all of the documents and information required without specific reminder or request." Id.

Moulton's outstanding state and federal liabilities incurred from 1998 through 2005 totaled in the hundreds of thousands of dollars. He made efforts to reduce his federal and state tax debt over many years and negotiated with the IRS on settlement terms. In accordance with the terms of our reinstatement order, he remained on probation while negotiating settlement terms with the IRS. In February 2017 Moulton entered into a global agreement with the IRS to settle his outstanding tax liabilities. The agreement required Moulton to make 24 payments of $25.00 and a final lump sum payment of $202,209.17. Moulton made timely payments to the IRS, including his final lump sum payment, and satisfied his outstanding tax liabilities.

But during Moulton's time on probation, he failed to remain current on his tax obligations on numerous occasions. He failed to timely file state and federal income tax returns for Moulton Trucking, and on multiple occasions he failed to timely pay monthly state and federal employer withholding taxes for Moulton Trucking and Moulton Law Office. Additionally, during this time Moulton on multiple occasions failed to report and provide to the Director documentation about his tax filings and payments as required by his probation. He provided some information to his attorney who was in periodic communication with the Director. He provided the required information to the Director after receiving a June 9, 2015 letter from the Director.

As part of her supervisory responsibilities, the Director conducted a review of Moulton's compliance with the reinstatement order. Based on irregularities found during the investigation, the Director filed a petition for disciplinary action on March 18, 2019, alleging that Moulton failed to remain current on tax payment obligations in violation of Minn. R. Prof. Conduct 8.4(d) and failed to affirmatively report and provide documents to the Director in violation of Minn. R. Prof. Conduct 3.4(c) and 8.1(b), Rule 25, RLPR, and our June 2010 reinstatement order. Following a day-long hearing, the referee found that the Director had proven by clear and convincing evidence that Moulton's conduct violated the rules and our order as alleged. The referee recommended that Moulton be suspended for a minimum of 90 days and required to petition for reinstatement.

ANALYSIS

I.

In a disciplinary proceeding, the Director must prove by clear and convincing evidence that an attorney violated the Rules of Professional Conduct. In re Grigsby , 764 N.W.2d 54, 60 (Minn. 2009). Because Moulton ordered a transcript of the hearing before the referee, he can challenge the referee's factual findings. See Rule 14(e), RLPR. We give "great deference to the referee's findings of fact" and will not reverse the referee's findings when the findings "have evidentiary support in the record and are not clearly erroneous." In re Coleman , 793 N.W.2d 296, 303 (Minn. 2011) (citations omitted) (internal quotation marks omitted). A finding of fact is clearly erroneous when, upon review, we are "left with the definite and firm conviction that a mistake has been made." In re Ulanowski , 800 N.W.2d 785, 793 (Minn. 2011) (citations omitted) (internal quotation marks omitted).

Moulton challenges the referee's findings that he failed to report to the Director his compliance with state and federal tax filing and payment requirements during his probation and failed to provide copies of the proper tax documents to the Director. We conclude that the referee's finding is supported by the record and, therefore, is not clearly erroneous.

Moulton does not dispute that he failed on numerous occasions to directly report to the Director about his taxes and provide the Director with copies of the required tax returns. He acknowledges that on many occasions the Director did not receive the reports and copies of the tax returns as required by the reinstatement order. But Moulton argues that he complied with his obligations under the reinstatement order by providing the information and documents to his attorney with the expectation that his attorney would forward the information and documents to the Director.

We disagree. Our reinstatement order directed Moulton to report and provide the documents to the Director without a request or reminder by the Director. His obligation was clear. Nothing in our order states or suggests that submitting the information to his attorney fulfilled Moulton's duty to report information to the Director. Further, the record does not disclose that Moulton supplied the documents to his attorney every time that he was obligated to file a return and make a tax payment. The referee did not clearly err by finding that Moulton knowingly failed in his duties under the reinstatement order to affirmatively report and provide documents to the Director, in violation of Minn. R. Prof. Conduct 3.4(c) and 8.1(b), and Rule 25, RLPR.

II.

Before turning to the question of discipline, we consider Moulton's argument that he did not receive a fair disciplinary hearing. Moulton asserts that his due process rights were violated when the referee failed to admit certain exhibits offered by Moulton, allowed a paralegal from the Director's office to sit at counsel table, limited his opening statement, and fell asleep during his hearing. An attorney receives due process in a disciplinary proceeding if the charges against the attorney are "sufficiently clear and specific" and the attorney was "afforded an opportunity to anticipate, prepare and present a defense." In re Murrin , 821 N.W.2d 195, 206 (Minn. 2012) (citation omitted) (internal quotation marks omitted). We also consider whether the attorney had an opportunity at the hearing to present evidence of good character and mitigating circumstances. Id. Here, during a day-long hearing, Moulton presented an extensive defense. Moulton offered several exhibits that were admitted into the record, testified on his own behalf, and called several witnesses. He was allowed to testify about factors that he believed mitigated the severity of his misconduct.

The Minnesota Rules of Evidence apply to disciplinary hearings. In re Dedefo , 752 N.W.2d 523, 528 (Minn. 2008). "We will not reverse a referee's evidentiary rulings absent an abuse of discretion." Id.

Moulton first contends that the referee improperly denied the admission of voluminous medical records that predated the misconduct as well as financial documents such as Moulton's individual and corporate tax returns, credit scores, information on his child support obligations, and information of past clients who had not paid his legal fees. Under the Rules of Evidence, only relevant evidence is admissible, Minn. R. Evid. 402, and even relevant evidence may be excluded if its probative value is substantially outweighed by considerations of undue delay, waste of time, or needless presentation of cumulative evidence, Minn. R. Evid. 403. The medical and financial records were relevant, if at all, only to Moulton's claim that his financial and other stresses should be considered as mitigating factors. The probative value of many of those documents is diminished, however, because the records relate to time periods well before the...