In re Non-Member of State Bar, Van Dox

• Decision Date: 21 February 2007
• Docket Number: No. SB-06-0121-D.,SB-06-0121-D.
• Parties: In the Matter of a NON-MEMBER OF the STATE BAR OF ARIZONA, Carly VAN DOX, Respondent.
• Court: Arizona Supreme Court

152 P.3d 1183

In the Matter of a NON-MEMBER OF the STATE BAR OF ARIZONA, Carly VAN DOX, Respondent.

No. SB-06-0121-D.

Supreme Court of Arizona, En Banc.

February 21, 2007.

Osborn Maledon, P.A. by Mark I. Harrison and Sara S. Greene, and Clint Bolick by Clint Bolick, Phoenix, Attorneys for Carly Van Dox.

State Bar of Arizona by Robert B. Van Wyck, Chief Bar Counsel and Denise K. Tomaiko, Staff Bar Counsel, Phoenix, Attorneys for State Bar of Arizona.

OPINION

BERCH, Vice Chief Justice.

¶1 We granted review in this disciplinary case to clarify the standard the Disciplinary Commission must apply when reviewing a hearing officer's findings of fact and the definition of "knowledge," as that term is used in the American Bar Association Standards for Imposing Lawyer Sanctions. Because the Commission failed to properly defer to the Hearing Officer's factual findings and misinterpreted the term "knowledge" in determining the appropriate sanction, we decline to impose the Commission's recommended sanction of censure and instead impose a sanction of informal reprimand.

I. FACTS AND PROCEDURAL BACKGROUND

¶2 Respondent Carly Van Dox is a lawyer who has been admitted to practice law in both Virginia and Florida. She is also certified in Florida as a mediator. Since moving to Arizona in 1997, she has worked as a licensed realtor, but has not applied for admission to the Arizona Bar.

¶3 In 2004, a co-worker asked Van Dox to represent the sellers in a real estate transaction in a private mediation. Van Dox explained to the sellers that she was not licensed to practice law in Arizona and so could not represent them if the dispute did not settle during the mediation. Following the disclosure, the sellers signed a retainer form that Van Dox had used in her Florida law practice and agreed to pay her $1,000 for her services in the mediation.

¶4 During the mediation, the buyers' attorney discovered that Van Dox was not licensed to practice law in Arizona and informed the mediator of this fact. When the mediator questioned Van Dox, she readily acknowledged that she was licensed in Florida, but not Arizona.

¶5 The mediator then called an Arizona attorney who was versed in unauthorized practice of law issues. After talking to that attorney and conducting independent research, the mediator concluded that Van Dox could ethically proceed with the mediation. The buyers' attorney also agreed to proceed. The mediation ended without resolving the dispute.

¶6 Van Dox believed that her participation in the mediation was proper because the mediation was not court ordered and, in Florida, a certified mediator need not be an attorney. After the mediation, she discussed the issue with a retired superior court commissioner who advised Van Dox that she could rely on the mediator's determination.

¶7 Although the mediation did not resolve the dispute, the sellers were satisfied with Van Dox's work and neither requested return of the $1,000 fee nor filed a complaint against her. The buyers, however, filed a complaint with the Arizona State Bar. After Van Dox failed to respond to two inquiries from the State Bar regarding the matter, the Bar filed a formal complaint charging her with engaging in the unauthorized practice of law, in violation of Arizona Supreme Court Rule 31 and Ethical Rule ("ER") 5.5 of the Arizona Rules of Professional Conduct; conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of ER 8.4(c); and conduct prejudicial to the administration of justice, in violation of ER 8.4(d). She was also charged with violating Supreme Court Rule 53 by failing to cooperate with the Bar and respond promptly to the Bar's inquiries. See Ariz. R. Sup.Ct. 53(d) (refusal to cooperate); id. 53(f) (failure to respond promptly).

¶8 A hearing on the charges was held before a State Bar Hearing Officer who concluded that Van Dox violated ER 5.5 and Supreme Court Rule 31 by engaging in the unauthorized practice of law, and Supreme Court Rule 53(f) by failing to promptly respond to the Bar's inquiries.¹ He recommended diversion as a sanction because he found that Van Dox's actions were negligent, caused little or no injury, and were not motivated by dishonesty or selfishness. The State Bar appealed to the Disciplinary Commission, which reversed several of the Hearing Officer's findings and conclusions. First, the Commission determined that Van Dox had knowingly rather than negligently engaged in the unauthorized practice of law. Second, the Commission found that Van Dox's conduct was motivated by dishonesty or selfishness because she accepted compensation for her work. Finally, the Commission found that her conduct caused actual or potential injury. The Commission recommended censure, rather than diversion, as the appropriate sanction.

¶9 Van Dox petitioned this Court for review of the Commission's recommended sanction, which we granted.² We have jurisdiction pursuant to Article 6, Section 5(3) of the Arizona Constitution and Arizona Supreme Court Rule 59(a).

II. DISCUSSION

¶10 Attorney discipline is designed to protect the public, the legal profession, and the legal system and to deter other attorneys from engaging in unprofessional conduct. In re Scholl, 200 Ariz. 222, 227, ¶ 29, 25 P.3d 710, 715 (2001) (citing In re Neville, 147 Ariz. 106, 116, 708 P.2d 1297, 1307 (1985), and In re Swartz, 141 Ariz. 266, 277, 686 P.2d 1236, 1247 (1984)). Attorney discipline is not intended to punish the offending attorney, although the sanctions imposed may have that incidental effect. Id. at 224, ¶ 8, 686 P.2d 1236, 25 P.3d at 712 (citing In re Pappas, 159 Ariz. 516, 526, 768 P.2d 1161, 1171 (1988)).

A. ABA Standards

¶11 Van Dox does not challenge the conclusion that she engaged in the unauthorized practice of law and failed to respond to State Bar inquiries. Thus, the only issue before us is the appropriate sanction. In determining the sanctions for ethical violations, we are guided by the American Bar Association Standards for Imposing Lawyer Discipline (1992) ("ABA Standards"). In re Peasley, 208 Ariz. 27, 33, ¶ 23, 90 P.3d 764, 770 (2004). We consider the following factors relevant in determining appropriate discipline: (1) the duty violated, (2) the lawyer's mental state, (3) the potential or actual injury caused by the lawyer's conduct, and (4) the existence of aggravating or mitigating factors. Standard 3.0; Peasley, 208 Ariz. at 32, ¶ 19, 90 P.3d at 769. We address each factor in turn.

1. Duty violated

¶12 The Hearing Officer and the Commission both found that Van Dox engaged in the unauthorized practice of law, in violation of ER 5.5 and Supreme Court Rule 31, and that she failed to respond promptly to State Bar inquiries, in violation of Supreme Court Rule 53(f). Standard 7.0 provides that such conduct violates a duty owed to the profession, although it may violate duties owed to clients, the public, or the legal system as well.

2. Mental state

¶13 A lawyer's mental state affects the sanction for ethical violations. Intentional or knowing conduct threatens more harm to the public, the legal system, and the profession than does negligent conduct, and is accordingly sanctioned more severely. See ABA Standards at 9-10. Compare Peasley, 208 Ariz. at 41-42, ¶ 65, 90 P.3d at 778-79 (holding that any sanction less than disbarment would be inappropriate based on respondent's intentional ethical violations), with In re Bemis, 189 Ariz. 119, 122-23, 938 P.2d 1120, 1123-24 (1997) (censuring respondent for negligent professional misconduct); compare also Standard 7.2 (stating that suspension is the presumed sanction for knowing violations of ethical rules), with Standard 7.4 (stating that an admonition is the presumed sanction for isolated instance of negligent violation of ethical rules). The Hearing Officer found that Van Dox's conduct in engaging in the unauthorized practice of law was merely negligent. The Commission disagreed, concluding that Van Dox's conduct was knowing rather than negligent. In so concluding, the Commission relied on two facts: Van Dox had the sellers sign the standard retainer agreement she had used in her Florida law practice, which contained the designation "Law Offices of Carly R. Van Dox, P.A.," and she signed the "Mediation Agreement Rules and Procedures" form provided by the mediator as "Carly Van Dox, Atty." These acts, the Commission found, showed Van Dox's awareness that she was engaging in the unauthorized practice of law.

¶14 State of mind is a fact question. In re Clark, 207 Ariz. 414, 417, ¶ 14, 87 P.3d 827, 830 (2004). The Hearing Officer, after observing Van Dox and hearing her testimony, found that she acted negligently. In disciplinary proceedings, the Commission must defer to a hearing officer's factual findings and "may not reject the hearing officer's findings of fact related to discipline unless it determines that the factual findings are clearly erroneous." Id. at 418, ¶ 18, 87 P.3d at 831; see Ariz. R. Sup.Ct. 58(b).

¶15 The "clear error" standard requires that the Commission give "great deference" to a hearing officer's factual findings. See Scholl, 200 Ariz. at 226, ¶ 25, 25 P.3d at 714. This means that, in resolving factual questions, the Commission may not simply substitute its judgment for that of a hearing officer. See United Cal. Bank v. Prudential Ins. Co., 140 Ariz. 238, 286, 681 P.2d 390, 438 (App.1983) (reviewing court "will not substitute its judgment as to credibility of witnesses or weight of evidence for that of the [factfinder]"). To be clearly erroneous, a finding must be unsupported by any reasonable evidence. Moreno v. Jones, 213 Ariz. 94, 98, ¶ 20, 139 P.3d 612, 616 (2006) (citing O'Hern v. Bowling, 109 Ariz. 90, 92-93, 505 P.2d 550, 552-53 (1973)).³ Deference to a hearing officer's factual findings is appropriate because, having had the opportunity to observe and hear the witnesses, the hearing officer is in a superior position to assess them and judge...