In re Overboe

• Citation: 745 N.W.2d 852
• Decision Date: 13 March 2008
• Docket Number: No. A07-259.,A07-259.
• Parties: In re PETITION FOR DISCIPLINARY ACTION AGAINST David A. OVERBOE, a Minnesota Attorney.
• Court: Minnesota Supreme Court

745 N.W.2d 852

In re PETITION FOR DISCIPLINARY ACTION AGAINST David A. OVERBOE, a Minnesota Attorney.

No. A07-259.

Supreme Court of Minnesota.

March 13, 2008.

Heard, considered, and decided by the court en banc.

OPINION

PER CURIAM.

In September 2004, the Director of the Office of Lawyers Professional Responsibility initiated a formal disciplinary investigation of David A. Overboe that was triggered by an overdraft on Overboe's client trust account. Following numerous communications between the Director and Overboe, the Director filed a petition for disciplinary action against Overboe alleging that Overboe had 1) deceptively used a trust account to shield his personal funds from judgment creditors; 2) made misrepresentations and failed to cooperate with the Director during a disciplinary investigation; and 3) commingled client funds with personal funds. The referee assigned to hear the case found that Overboe's conduct violated the Minnesota Rules of Professional Conduct and the Minnesota Rules on Lawyers Professional Responsibility, and recommended that Overboe be suspended from the practice of law for a minimum of 1 year. Overboe appeals the referee's findings of fact, conclusions of law, and recommendation. We conclude that the referee's findings were not clearly erroneous and that the appropriate discipline under these facts is to suspend Overboe from the practice of law for a minimum of 1 year.

David A. Overboe was admitted to the practice of law in Minnesota on June 13, 1980. Overboe is also licensed to practice law in North Dakota. At all times relevant to this matter, Overboe's law practice was located in North Dakota. Overboe maintained two relevant bank accounts in North Dakota: 1) an account at Western State Bank entitled "Overboe Trust Account" (WSB trust account); and 2) an Interest on Lawyers Trust Accounts (IOLTA) account at Wells Fargo Bank, also entitled "Overboe Trust Account" (IOLTA account). In 2003, Overboe certified on his annual Minnesota attorney license application that his IOLTA account at Wells Fargo Bank was his client trust account. On March 16, 2004, Overboe had an overdraft on his IOLTA account. Overboe had written an $8,000 check on the account when the account balance was only $515.67.

Correspondence with the Director of the Office of Lawyers Professional Responsibility

Pursuant to Minn. R. Prof. Conduct 1.15(l), Wells Fargo Bank notified the Office of Lawyers Professional Responsibility of Overboe's IOLTA account overdraft. On March 19, 2004, the Director sent Overboe a notice of the overdraft, requesting an explanation and documents pertaining to the account, such as client ledgers. On March 29, 2004, Overboe responded that "[t]he check was written to transfer funds to [his] family farm account," which is in his wife's name. Overboe also stated that "[t]here were no client funds in the account at the time that check was issued" and there had not been client funds in the account since April 21, 2003. He did not include client ledgers with his response. Overboe further explained:

At the time the check was written I believed that there was [sic] sufficient funds in the account to cover the $8,000.00 check. I wrote the check without checking. The check was written on March 15th, 2004. On March 16th I checked to see if there were sufficient funds to cover the check and found that there was not. I promptly deposited two checks totaling $9,500.00 in the account on March 16th, 2004.

In this exchange of letters, Overboe made no mention of his WSB trust account.

On May 3, 2004, the Director requested additional information regarding the overdraft. The Director asked Overboe to explain the basis on which Overboe believed there were sufficient funds in his IOLTA account because at the time of the overdraft, the account balance was only $515.67. The Director also indicated that the IOLTA account had since been closed and that a check for the $9,985.67 balance in the account was made payable to "Overboe Trust Account." The Director asked for an explanation of why the IOLTA funds were placed in the "Overboe Trust Account" and requested the books and records for that account. In his response on May 14, Overboe stated:

The $8,000 check was supposed to be drawn on a different account. I was going to deposit the funds in that account to cover the check when I realized the check has been drawn on this account. * * *

The $515.57 balance in the trust account was my funds * * *.

Overboe did not mention or include any records of his WSB trust account with the May 14 letter. Overboe again stated that no client funds were involved in the overdraft.

The Director then requested further explanation, specifically concerning the "different account" Overboe referred to in his previous response. Overboe responded that the other account that he meant to draw the check from was a personal account — the "Overboe Trust Account" at Western State Bank. This was the first time Overboe identified the WSB trust account to the Director. Overboe suggested that because both the IOLTA account and WSB trust account bore the same name and the checks for each account looked "similar," he mistakenly wrote a check from the IOLTA account when he actually meant to write it from his personal WSB trust account.¹ According to Overboe, the WSB trust account was opened for the purpose of "transactions between [his] wife and [him]," and not for client funds. Overboe also stated:

Approximately 15 years ago a judgment was taken against me for 1 and 1/2 million dollars as a result of my investing $6,000.00 in a farmer cooperative. It is necessary for me to be careful about transferring funds between by [sic] wife and me. It is also important that I not keep a great deal of money in my own account, because the law firm that obtained the Judgment is right next door to me.

This judgment was entered against Overboe in North Dakota federal court on May 22, 1990.

On September 9, 2004, the Director sent a letter notifying Overboe that the Office of Lawyers Professional Responsibility had initiated a formal investigation into his conduct. The Director made a request under Rule 25 of the Rules on Lawyers Professional Responsibility (RLPR) that Overboe provide further information regarding his trust accounts within 14 days. On September 28, 2004, Overboe responded with a letter stating that the purpose of his WSB trust account was to "handle funds between [his] wife and [him]. [He] handle[s] her business affairs. [He] did not want her funds levied on and tied up in court for months because of a Judgment against [him]. A joint account would not have worked." Concerning the IOLTA account, Overboe explained that on December 31, 2003, all the funds in his IOLTA account — $1,515.67 — were his and on February 16, 2004, he wrote a $1000 check on the account to himself, leaving the $515.67 balance in the account at the time of the overdraft.

On December 29, 2004, in a response to another letter from the Director, Overboe agreed that he had designated his IOLTA account as his client trust account on his Minnesota annual attorney license application. In response to the Director's September 2005 request for further information regarding the clients whose funds were kept in the IOLTA account at various times, Overboe stated that he believed providing this information would violate N.D. R. Prof. Conduct 1.6. Overboe and the Director continued to exchange letters concerning this issue. Eventually, Overboe requested that the North Dakota Ethics Committee issue an advisory opinion on the matter. After the North Dakota Ethics Committee issued its advisory opinion, Overboe provided information about one client. After another request, Overboe eventually provided the Director with the remainder of the requested client information.

The Director filed a petition for disciplinary action on February 5, 2007. In the petition, the Director alleged that Overboe: 1) violated Minn. R. Prof. Conduct 8.4(c) by deceptively using a trust account; 2) violated Minn. R. Prof. Conduct 8.1(a) and 8.4(c), as well as Rule 25, RLPR, through his misrepresentations to and noncooperation with the Director during the disciplinary investigation; and 3) violated Minn. R. Prof. Conduct 1.15(a) by commingling client funds and his personal funds in his IOLTA account.

Referee Hearing

On March 27, 2007, we appointed a referee to hear this matter. In preparation for the hearing, Overboe served the Director with Interrogatories and a Request for Production of Documents. The Director filed a response approximately one month later. Overboe requested that the Director respond more adequately to the interrogatories and document requests. Overboe then filed a Motion to Compel Discovery and for a Continuance of the hearing. The referee denied Overboe's motions.

At the hearing, Overboe testified that the WSB trust account was a personal account opened to handle funds between himself and his wife. Overboe acknowledged that the purpose of the WSB trust account was to protect his wife's funds from attachment by Overboe's judgment creditors because if he had a joint account with his wife the funds could be seized due to the outstanding judgment against him. But Overboe stated that the purpose of the WSB trust account was not to protect his own funds, because even if in the account, his funds are subject to levy. Overboe later stated that his funds in the WSB trust account are not subject to levy because they are exempt under North Dakota Law due to an exemption in lieu of homestead. Nevertheless, Overboe admitted and provided no explanation for the fact that in his responses to the Director's letters he stated that the purpose of the WSB trust account was to protect his own funds as well as his wife's.

The Director submitted to the referee a spreadsheet of activity for Overboe's WSB trust account from March 13, 2003, to January 27, 2004. According to the information on the...