In re Storey
| Decision Date | 04 October 2022 |
| Docket Number | Supreme Court Case No. 21SA220 |
| Citation | 517 P.3d 1243 |
| Parties | In the MATTER OF Brenda STOREY |
| Court | Colorado Supreme Court |
517 P.3d 1243
In the MATTER OF Brenda STOREY
Supreme Court Case No. 21SA220
Supreme Court of Colorado.
October 4, 2022
Attorneys for Respondent-Appellant: McConnell Van Pelt, LLC, Michael T. McConnell, Jonathan J. Corrigan, Denver, Colorado, Burns Figa & Will, P.C., Alexander R. Rothrock, Greenwood Village, Colorado
Attorneys for Complainant-Appellee: Jessica E. Yates, Attorney Regulation Counsel, Justin P. Moore, Assistant Regulation Counsel, Denver, Colorado
En Banc
JUSTICE HART delivered the Opinion of the Court, in which CHIEF JUSTICE BOATRIGHT, JUSTICE MÁRQUEZ, JUSTICE HOOD, JUSTICE GABRIEL, JUSTICE SAMOUR, and JUSTICE BERKENKOTTER joined.
JUSTICE HART delivered the Opinion of the Court.
¶1 This is an attorney disciplinary proceeding that arises out of a domestic relations case. Though the Colorado Rules of Professional Conduct at issue apply to all Colorado attorneys, the domestic relations context is essential to understanding why the Disciplinary Hearing Board reached the conclusions it did and why we affirm those conclusions in large part. Two legal provisions particular to domestic relations are directly relevant. First, under section 14-10-107(4)(b)(I)(A), C.R.S. (2022), parties to a divorce proceeding are restrained from "transferring, encumbering, concealing, or in any way disposing of" marital property, except "in the usual course of business" or for "the necessities of life." And second, Colorado Rule of Civil Procedure 16.2(e)(1) recognizes that the parties to domestic relations cases owe to each other and the court "a duty of full and honest disclosure of all facts that materially affect their rights and interests," and a special obligation of candor.
¶2 In this case, respondent Brenda Storey pressed her client to find cash to pay her
legal bills by selling furniture and other valuable marital property, accepted as payment what appeared to be a refund check from the Internal Revenue Service ("IRS") made payable to both parties without advising her client that the check should be disclosed, and failed to comply with a court order for return of the funds distributed from the IRS check. She did not advise her client of the risks associated with selling marital property or of using the undisclosed check to pay her fees.
¶3 The Disciplinary Hearing Board (the "Board") found that Storey violated Colorado Rules of Professional Conduct 1.7(a)(2) (representing a client despite a significant risk that the attorney's personal interests materially limit the attorney's representation of the client); 1.15A(a) (failing to safeguard property of others and appropriately maintain trust accounts); 1.15A(c) (failing to keep contested property separate); 3.4(c) (knowingly disobeying an obligation set by the court); and 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation). For these violations, the Board suspended Storey's license to practice law in Colorado for one year and one day.
¶4 Storey now appeals, arguing that she did not violate any Rules. She also challenges the Board's decision to exclude as hearsay contemporaneous notes she took during a meeting with her client. We affirm the Board on all but the Rule 3.4(c) claim. Given the reversal of this one claim, we remand to the Board for reconsideration of the sanction.
I. Facts and Procedural History
¶5 Storey is a family law attorney. She was admitted to practice law in Colorado in 1995, and she has operated the Law Offices of Brenda L. Storey, P.C. since 2013. In June 2018, Cynthia Sullivan retained Storey in connection with Cynthia's separation from her husband, Caldwell Sullivan, and the Sullivans' anticipated marital dissolution.1 Caldwell petitioned for dissolution of marriage in late November 2018 (the "Petition"). At the time of the Petition, and for much of the marriage, Caldwell was the family's sole income earner. Cynthia did not have an independent income or any significant separate assets.
¶6 At the start of their attorney-client relationship, Storey and Cynthia entered into a client services agreement that provided, inter alia, that Storey would bill Cynthia monthly, that bills must be paid in full by the 20th day of each month, and that Cynthia's failure to pay could lead Storey to cease work or move to withdraw from the representation.
¶7 In accordance with this agreement, from June 2018 (when the Sullivans were separated) through May 2019, Cynthia paid each bill in full and on time. She paid primarily with an American Express credit card that she held jointly with her husband and whose balance he paid each month. The attorney conduct at issue in this matter began in early June 2019, when Cynthia recognized that she would be unable to pay her bill for that month in full.
A. Initial Status Conference and Request for Temporary Orders
¶8 On January 7, 2019, the Sullivans participated in an initial status conference. Storey raised the issue of Cynthia's legal fees and costs, pointing out that Caldwell had been paying for these expenses prior to the filing of the Petition, and asked the court to enter temporary orders directing him to continue to pay those fees and costs. The court declined to enter any temporary orders, noting that:
In the Court's eyes there's already a temporary order in this case, so at least as to finances .... [The section] 14-10-107 restraining order in the Court's eyes is a temporary order that is requiring in the Court's opinion the party who is—whichever party is paying for the bills. Any bill, all the bills prior to the date of the petition should be continuing to be responsible for that.
The court then entered a minute order stating, "status quo should continue as it was
prior to the filing of this case." The court also advised that counsel must "exhaustively confer" on any dispute, and stated that it would only set a hearing for temporary orders if a "crisis" was developing—" eviction, bankruptcy, credit suits, repossession"—that would result in irreparable harm.
B. Growing Tension over Nonpayment of Storey's Fees
¶9 By May 2019, Caldwell stopped paying the full balance on the couple's American Express card, which resulted in a credit limit being placed on the card. Cynthia had been using that card not only to pay Storey's bills, but also to pay for her and her children's necessities, including groceries, household maintenance, school supplies, and gasoline. Without the unrestricted American Express limit, Cynthia was unable to pay Storey's bill of $12,511.21 that was due June 20, 2019.
¶10 Cynthia promptly notified Storey of the cap on the American Express card and her lack of access to cash. By June 13, Storey, through Caldwell's counsel, began to demand that Caldwell pay her bill directly. At least once, Caldwell's counsel responded with information about his client's cash flow challenges and various proposals for how to fund the couple's expenses using equity in marital assets. Storey's responses indicated that she did not find these proposals satisfactory and did not perceive any reason to discuss solutions to the family's cash-flow needs. As she explained to Caldwell's counsel, she believed such discussions were unnecessary because prior to the Petition there was "an unlimited budget," so there should remain an unlimited budget until the permanent orders hearing.
¶11 On June 21, Storey, on her client's behalf, filed a motion to hold Caldwell in remedial and punitive contempt for violating the court's May 24, 2019 order to maintain the status quo. She asserted that, because Caldwell had previously paid all of Cynthia's bills, including her attorney's fees, the cap on the American Express card and his statement that he could no longer pay the bills with cash on hand violated the status quo order because they were a change from prior practice.
¶12 The following week, Storey filed a motion for a telephone status conference to address Caldwell's "nonpayment for [Cynthia] to pay her fees and costs." The motion claimed that Caldwell was "purposely" not funding Cynthia's legal bill "either to negatively impact [Storey's] firm financially or to force its withdrawal as [Cynthia's] counsel for non-payment." It further averred that the unpaid June legal bill "has caused a financial burden on the firm."
¶13 During these weeks in June, Storey sent Cynthia multiple communications regarding the legal bill. Storey repeatedly urged her client to liquidate marital property in order to pay this—and future—legal bills. On June 18, she sent an email to Cynthia, instructing:
If [Caldwell] does not pay my bill by the 20th, please start selling furniture and furnishings (that you do not want in the division [of property]). It is not a violation of the Automatic Temporary Injunction to pay your lawyer from marital funds/assets.
On June 20, Storey sent another email to Cynthia, instructing:
Tomorrow, please list for sale on Facebook and/or Craigslist and/or anywhere else you would like to use any marital furniture you do not wish to keep. Please send us the listings.
On June 21, Storey sent another email to Cynthia, stating:
While I am sorry for your financial concerns, I do want to highlight that per our fee agreement, you must pay our bill in full each month. If you do not, we have the right to cease work. While I am breaking this rule for this month, I must tell you that I will not do it for any future months. As such, you may need to ask family and friends to assist you until I can get the Court's assistance and/or Caldwell's compliance.
On June 28, Storey followed up with Cynthia, asking her to forward "ASAP, please" the "copies of your for sale listings." On July 2, Storey sent another email to Cynthia, advising:
You will owe me $40,000 by July 20th, and if it is not paid by someone, I am withdrawing.
I highly suggest you start selling marital furniture you do not want, in addition to the whiskey, watch and bikes you reference. If you lose me for non-payment, any other lawyer will expect...
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