In re Simmerly

• Decision Date: 02 August 2012
• Docket Number: No. 200,983–2.,200,983–2.
• Citation: 174 Wash.2d 963,285 P.3d 838
• Parties: In the Matter of the DISCIPLINARY PROCEEDING AGAINST Paul E. SIMMERLY, an Attorney at Law.
• Court: Washington Supreme Court

174 Wash.2d 963

285 P.3d 838

In the Matter of the DISCIPLINARY PROCEEDING AGAINST Paul E. SIMMERLY, an Attorney at Law.

No. 200,983–2.

Supreme Court of Washington,

En Banc.

Argued May 3, 2012.

Decided Aug. 2, 2012.

Kurt M. Bulmer, Attorney at Law, Seattle, WA, for Petitioner.

Joanne S. Abelson, Washington State Bar Association, Seattle, WA, for Respondent.

OWENS, J.

¶ 1 The Washington State Bar Association (WSBA) charged Paul E. Simmerly with 36 counts of attorney misconduct stemming from his mishandling of client funds. The most egregious count involves making false representations and fabricating evidence during the disciplinary process. The hearing officer ultimately recommended suspension after finding that the WSBA had proved 26 of the 36 counts. On review, the WSBA Disciplinary Board (Board) affirmed the hearing officer's findings but modified his decision in a few ways. First, it reinstated five counts involving the misuse of client funds based solely on the hearing officer's findings. More importantly, the Board recommended disbarment in lieu of suspension for Simmerly's intentional misrepresentations during the disciplinary investigation.

¶ 2 Simmerly asks this court to reject the Board's recommendation as well as many other factual findings made by the hearing officer. We affirm Simmerly's disbarment because the findings are supported by substantial evidence and Simmerly is unable to identify any clear reason to depart from the Board's unanimous recommendation.

I. FACTS

¶ 3 The WSBA began investigating Simmerly in 2007 after it was notified of overdrafts in his trust account. These overdrafts caused the WSBA to audit Simmerly's trust account for the period from January 1, 2006, through March 31, 2008. The WSBA's investigation uncovered numerous violations of the Rules of Professional Conduct (RPC), including errant trust account practices and a pattern of misusing client funds. During the course of its investigation into these practices, the WSBA opened a second grievance against Simmerly for similar conduct but with different clients. The WSBA eventually charged Simmerly with 36 counts of ethical violations for these practices: 34 related to his misuse of client funds, one related to his failure to cooperate, and one related to his misrepresentation and fabrication of evidence during the investigation.

A. Trust Account Practices (Counts 1–10)

¶ 4 The first 10 counts ¹ all revolve around Simmerly's poor trust account practices. As stated above, the WSBA's auditor, Rita Swanson, audited Simmerly's account for the period of January 1, 2006, through March 31, 2008. On February 15, 2007, Simmerly withdrew $4,500 from his trust account even though he was not entitled to all of that money. Similarly, he withdrew $200 on February 21, 2007, even though he was not entitled to those funds. These withdrawals were due, in part, to his self-described “seat of the pants” accounting. Decision Papers (DP) at 5 (Findings of Fact, Conclusions of Law and Hr'g Officer's Recommendation (FFCL) ¶ 2). Had he maintained proper accounting measures, he would have been aware that these funds were not his to withdraw.

¶ 5 Simmerly's negligent bookkeeping took various forms. He maintained an inaccurate handwritten check register and client ledgers that were inaccurate and incomplete. The ledgers were incomplete, completely missing some client transactions, inaccurately recording others, and actually including some transactions that never even occurred. Often, he would leave off, among other things, the date or purpose of the transaction and the check number of the disbursement. Further, rather than properly balance his check register, Simmerly would simply replace the check register balance with the bank statement balance. Such actions rendered the check register ineffective at guarding against shortages. Simmerly also did not identify the client matter next to several transactions. The hearing officer found that Simmerly's practices combined to result in potential injury for some clients and actual injury for others.

¶ 6 Throughout the audit period, Simmerly was also receiving earned fees from ARAG, a prepaid insurance company, which he deposited into his trust account. ARAG made these payments for telephone consultations Simmerly had with ARAG clients. Specifically, on December 28, 2005, he deposited $6,977.50 of ARAG payments into his trust account. A few days later, he had disbursed only $714.00 of those funds to his law partner. Later, in January 2006, Simmerly deposited an additional $4,789.50 from ARAG into his trust account. The hearing officer found that these actions resulted in Simmerly commingling his funds with client funds in the trust account.

¶ 7 Altogether, for counts 1 through 10, the hearing officer found that Simmerly's actions violated former RPC 1.14 (2002), RPC 1.15A, and RPC 1.15B.

B. Misuse of Client Funds (Counts 12–34)

¶ 8 Simmerly was also charged with misusing client funds belonging to eight different clients.

Theron Jaquez (Counts 12–17)

¶ 9 Simmerly represented Jaquez in 2005 for a parenting plan and orally agreed to a $200 per hour fee. Jaquez had prepaid legal insurance through ARAG, a legal insurer, but was uncertain if it would cover the full cost of representation so he paid $2,500 in advance. Simmerly argued this payment was a retainer and not an advance fee deposit. The hearing officer found Simmerly's testimony not credible and found this payment was an advance fee deposit. The distinction is an important one.

¶ 10 A retainer “is a fee that a client pays to a lawyer to be available to the client during a specified period,” and the fee belongs to the lawyer upon receipt (i.e., the fee is not placed in trust). RPC 1.5(f)(1). It “must be agreed to in a writing signed by the client.” Id. In contrast, an advanced fee deposit must be placed into trust and typically exists absent a signed writing to the contrary. Id. cmt. 12, at 81. The fee was not a retainer here because Jaquez believed the funds would not be used unless ARAG refused to pay. Simmerly deposited the $2,500 directly into his general account in October 2005 despite not billing Jaquez for any work or working enough hours for it. Regardless, Simmerly used $1,000 of those funds by the end of the day.

¶ 11 After some additional work, Simmerly eventually sent a $6,700 bill to Jaquez on November 1, 2005, but the bill did not justify Simmerly's handling of the $2,500. Moreover, ARAG paid Jaquez's bill in full, thereby precluding any reason to use the $2,500. ARAG paid with two checks, a $2,680 check dated November 9, 2005, and a $4,020 check dated November 10, 2005. Simmerly properly deposited the first check into his general account and the second check into his trust account. In February 2006, he removed the $4,020 from the trust account. He was entitled to only $1,520 of the $4,020 because of the previously deposited $2,500 check from Jaquez.

¶ 12 It was not until 2007, when Simmerly billed Jaquez for $6,750 in additional work from 2007 that the $2,500 advance fee deposit became an issue. In response to the bill, Jaquez claimed a $2,500 credit from the advance payment. Simmerly disputed Jaquez's credit, claiming he had record of only two payments: one from Jaquez ($2,500) and one from ARAG ($2,680). However, Simmerly did in fact have records of all three payments. Regardless, Simmerly continued to deny that ARAG had made the $4,020 payment.

¶ 13 Eventually, in January 2008, Simmerly filed a lawsuit against Jaquez alleging $10,141.71 in unpaid legal fees and costs and some prejudgment interest. Simmerly continued to deny that ARAG had made two payments, and even after Jaquez provided proof in May 2008 of the payment, Simmerly still did not amend his complaint. On the first day of that trial in June 2008, Simmerly finally acknowledged the ARAG payment after receiving Jaquez's proposed exhibits. After acknowledging the payments, Simmerly sought only $4,260, the principal amount from the 2007 services with the $2,500 credit applied. The hearing officer found that Simmerly had violated former RPC 1.14(b), RPC 1.15A(f), former RPC 1.4 (1985), RPC 8.4(c), and RPC 1.5(a).

Debra Dahl (Counts 18–21)

¶ 14 Dahl was being sued by her former fiancé in February 2007 and hired Simmerly to represent her. They orally agreed to a $200 hourly fee that required a $2,500 payment up front. On the subject line of the check, Dahl stated the payment was for “attorney retainer.” Ex. A–200. However, Dahl understood that the payment was to function as an advance as it was not to be used until earned. The hearing officer found that Simmerly's testimony to the contrary was not credible and found that the payment was indeed an advance.

¶ 15 Simmerly improperly deposited the advance payment directly into his general account even though he had yet to bill any work. The hearing officer noted that Simmerlyhad only $10 in his general account at the time of the deposit and that Simmerly used half of the payment by the next day. The hearing officer further found that Simmerly knew or should have known that he was acting improperly.

¶ 16 On May 26, 2007, Dahl sent a cost advance of $300, which Simmerly deposited into his general account even though he had not spent $300 of his own funds on behalf of Dahl. Simmerly then sent his first bill in August 2007 for $3,339. No charges in the bill justified Simmerly depositing the initial $2,500 into his general account. Dahl paid $5,000 to cover the bill and provide a $1,661 advance. Simmerly deposited the entire check into his general account.

¶ 17 Then, in December 2007, Dahl fired Simmerly by e-mail after the judge ruled against her on a partial summary judgment motion. Simmerly acknowledged being fired but did not cease working on the matter because a motion for sanctions against both Dahl and Simmerly under CR 11 was pending. However, Simmerly's response to the sanctions was for himself only. He told Dahl via...