In re Severson

• Decision Date: 13 February 2019
• Docket Number: A17-0895
• Citation: 923 N.W.2d 23
• Parties: IN RE Petition for REINSTATEMENT OF Larry SEVERSON, a Minnesota Attorney, Registration No. 0099363
• Court: Minnesota Supreme Court

923 N.W.2d 23

IN RE Petition for REINSTATEMENT OF Larry SEVERSON, a Minnesota Attorney, Registration No. 0099363

A17-0895

Supreme Court of Minnesota.

Filed: February 13, 2019

Eric T. Cooperstein, Minneapolis, Minnesota, for petitioner.

Susan M. Humiston, Director, Jennifer S. Bovitz, Senior Assistant Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for respondent.

OPINION

PER CURIAM.

Petitioner Larry S. Severson has filed a petition for reinstatement to the practice of law. In 2015, we indefinitely suspended Severson, with no right to petition for reinstatement for at least 1 year. After considering Severson’s petition, a panel of the Lawyers Professional Responsibility Board recommended reinstatement, concluding that Severson had "prove[n] by clear and convincing evidence that he has undergone the requisite moral change to render him fit to resume the practice of law and has demonstrated sufficient remorse for his misconduct." The Director of the Office of Lawyers Professional Responsibility challenges a number of the panel’s findings and disagrees with the panel’s recommendation. Based on our independent review of the record, we hold that the panel’s finding that Severson has undergone the necessary moral change was not clearly erroneous. Because Severson has shown by clear and convincing evidence that he has satisfied the requirements for reinstatement to the practice of law in Minnesota, we grant the petition and reinstate Severson, subject to a 2-year period of probation.

FACTS

Severson was admitted to practice law in Minnesota in 1975. On February 18, 2015, we indefinitely suspended Severson, with no right to petition for reinstatement for a minimum of 1 year, for improper business dealings with a client and misrepresentation. In re Severson , 860 N.W.2d 658, 662–63, 674–75 (Minn. 2015). The misconduct for which Severson was disciplined centered on his dealings with D.S., a young woman whose parents had died when she was an infant and who lived with Severson’s family as a teenager. Id. at 663. D.S. was the beneficiary of insurance proceeds following her parents’ deaths, and her inheritance was placed in a conservatorship. Id. After her eighteenth birthday in April 1996, D.S. received approximately $500,000, the funds that had been in the conservatorship. Id.

Severson offered to invest the $500,000 that D.S. had received from the conservatorship, and in June 1996, the two entered into an investment agreement.¹ Id. At that time, an attorney-client relationship existed between D.S. and Severson. Id. at 667. The investment agreement created a conflict of interest, and Severson’s failure to obtain the consent of D.S. was a violation of Minn. R. Prof. Conduct. 1.7(b) (1996). Severson , 860 N.W.2d at 668. Severson also violated Minn. R. Prof. Conduct. 1.8(a) (1996), when he entered into the investment agreement with D. S. Severson , 860 N.W.2d at 668. The terms of the investment agreement were unfair and unreasonable because they did not provide "security for D.S.’s investment, limit the types of investments Severson could make, or provide for a penalty, or the recovery of her funds if Severson did not comply with the agreement." Id. Severson also "did not adequately explain the transaction to D.S. or advise her to seek independent counsel." Id. at 672.

In 2007, D.S. asked Severson to return the $500,000. Id. at 664. Severson did not repay D.S., and by 2008, Severson "was in serious financial trouble." Id. In 2007, Severson acquired an equine facility that he later sold on a contract for deed. Id. The purchasers defaulted on the contract for deed and Severson then assigned his seller’s interest in the facility to D.S. as security for what he owed her "and had D.S. sign a $250,000 mortgage regarding their interest in the equine center." Id. Severson once again violated Minn. R. Prof. Conduct 1.7(a)(2), 1.7(b), and 1.8(a),² when he assigned his seller’s interest to D. S. Severson , 860 N.W.2d at 665, 666 n.5. He also acted dishonestly, in violation of Minn. R. Prof. Conduct 8.4(c) (2008), by having D.S. assign and mortgage her interest in the equine center to his creditors without telling D.S. that his financial insecurity necessitated the assignments and that her funds could be at risk. Severson , 860 N.W.2d at 669.

D.S. eventually hired an attorney to help her recover the $500,000 principal. Id. at 664. She sued Severson, and the parties reached a settlement in December 2010. Id. After paying her attorney fees, D.S. recovered just $300,000 of the original $500,000 that she had given to Severson to invest. Id.

Severson made misrepresentations to D.S. during the course of their legal dispute and to the Director during the disciplinary investigation, in violation of Minn. R. Prof. Conduct 8.1(a)–(b), 8.4(c)–(d). Severson , 860 N.W.2d at 664–65, 669, 672. Severson gave the attorney for D.S. misleading invoices for purported past legal services he had provided to D.S., in an attempt to reduce the amount he owed her. Id. at 664–65, 672. Severson also made a number of misrepresentations to the Director regarding where the funds of D.S. were invested and the legitimacy of his invoices for legal services. Id.

For the misconduct described above, we indefinitely suspended Severson. Id. at 674–75. Severson filed his first petition for reinstatement in 2016. In re Severson , 889 N.W.2d 291, 291 (Minn. 2016) (order). After conducting a hearing, the panel found that Severson did not prove by clear and convincing evidence that he recognized the wrongfulness of his conduct or that he had undergone the requisite moral change. Id. Accordingly, the panel recommended that we deny Severson’s petition. Id. Neither party challenged that recommendation, and we denied the petition. Id.

On June 7, 2017, Severson filed the current petition for reinstatement. A panel considered his petition at a hearing. Severson’s evidence included a letter he wrote to D.S. and progress notes prepared by K.A., Severson’s therapist since February 2017. Severson, K.A., and two character witnesses, S.P. and D.D., testified. The panel issued its findings of fact and recommended that we grant Severson’s petition for reinstatement. The Director challenges several of the panel’s findings of fact and recommendation.

ANALYSIS

We have the sole responsibility for determining whether an attorney should be reinstated to the practice of law. In re Kadrie , 602 N.W.2d 868, 870 (Minn. 1999). To determine whether reinstatement is appropriate, "[w]e independently review the entire record." In re Singer , 735 N.W.2d 698, 703 (Minn. 2007). Although we consider the panel’s recommendations, we are not bound by them. Id. Where, as here, a transcript has been ordered, "we will defer to the panel’s credibility assessments and uphold the panel’s factual findings if those determinations have factual support in the record and are not clearly erroneous." In re Mose , 843 N.W.2d 570, 573 (Minn. 2014). To conclude that the findings are clearly erroneous, "we must be ‘left with the definite and firm conviction that a mistake has been made.’ " In re Lyons , 780 N.W.2d 629, 635 (Minn. 2010) (quoting Gjovik v. Strope , 401 N.W.2d 664, 667 (Minn. 1987) ).

A suspended attorney "bears the burden of establishing that reinstatement should be granted." In re Stockman , 896 N.W.2d 851, 856 (Minn. 2017). Reinstatement requirements include: "(1) compliance with the conditions of suspension, (2) compliance with the requirements of Rule 18, [Rules on Lawyers Professional Responsibility ] RLPR, and (3) demonstration of a moral change." Id. (citations omitted). Beyond these three requirements, we "weigh five other factors." Id. Those factors are: "(1) the petitioner’s recognition of the wrongfulness of his conduct; (2) the length of time since the original misconduct and the suspension; (3) the seriousness of the original misconduct; (4) the existence of physical or mental illness or pressures that are susceptible to correction; and (5) the petitioner’s intellectual competency to practice law." Singer , 735 N.W.2d at 703. Because the parties agree that Severson complied with the conditions of his suspension and has completed the requirements of Rule 18, RLPR, the only dispute before us is whether Severson has demonstrated the requisite moral change and whether the five factors weigh in favor of Severson’s reinstatement.

I.

Proof of moral change "is the most important factor" in determining whether an attorney should be reinstated. Stockman , 896 N.W.2d at 857. An attorney seeking reinstatement "must establish by clear and convincing evidence that she or he has undergone such a moral change as now to render him a fit person to enjoy the public confidence and trust once forfeited." In re Jellinger , 728 N.W.2d 917, 922 (Minn. 2007) (internal quotation marks omitted) (citation omitted). The requisite moral change "must be such that if the petitioner were reinstated, ‘clients could submit their most intimate and important affairs to him with complete confidence in both his competence and fidelity.’ " Kadrie , 602 N.W.2d at 870 (quoting In re Herman , 293 Minn. 472, 197 N.W.2d 241, 244 (1972) ). In general, "to prove moral change a lawyer must show remorse and acceptance of responsibility for the misconduct, a change in the lawyer’s conduct and state of mind that corrects the underlying misconduct that led to the suspension, and a renewed commitment to the ethical practice of law." Mose , 843 N.W.2d at 575. The evidence of this moral change " ‘must come not only from an observed record of appropriate conduct, but from the petitioner’s own state of mind and his values.’ " Id. (quoting In re Swanson , 405 N.W.2d 892, 893 (Minn. 1987) ).

Remorse and acceptance of responsibility for the misconduct

To establish the requisite moral change, Severson must first " ‘show remorse and acceptance of responsibility for the misconduct.’ " Stockman , 896 N.W.2d at 857 (quoting Mose , 843 N.W.2d at 575 )....