In re Trombley, A17-0493

• Decision Date: 08 August 2018
• Docket Number: A17-0493
• Citation: 916 N.W.2d 362
• Parties: IN RE Petition for DISCIPLINARY ACTION AGAINST Carol Townsend TROMBLEY, a Minnesota Attorney, Registration No. 0300597.
• Court: Minnesota Supreme Court

916 N.W.2d 362

IN RE Petition for DISCIPLINARY ACTION AGAINST Carol Townsend TROMBLEY, a Minnesota Attorney, Registration No. 0300597.

A17-0493

Supreme Court of Minnesota.

Filed: August 8, 2018

Susan Humiston, Director, Timothy M. Burke, Deputy Director, Office of Lawyers Professional Responsibility, Saint Paul, Minnesota, for petitioner.

Eric Todd Cooperstein, Minneapolis, Minnesota, for respondent.

OPINION

PER CURIAM.

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against respondent Carol Townsend Trombley, alleging professional misconduct for engaging in "conduct involving dishonesty, fraud, deceit, or misrepresentation." Minn. R. Prof. Conduct 8.4(c). We appointed a referee who, following a hearing, found that Trombley dishonestly converted funds belonging to her stepfather for her own use, in violation of Minn. R. Prof. Conduct Rule 8.4(c). The referee recommended that we impose an admonition. Although we conclude that some of the referee’s findings of fact are clearly erroneous, the record supports the referee’s other findings of fact and the conclusion of law that respondent dishonestly converted funds belonging to her stepfather for her own use, in violation of Minn. R. Prof. Conduct 8.4(c). We conclude that the appropriate discipline for Trombley’s misconduct is a 6-month indefinite suspension.

FACTS

Trombley was admitted to practice law in Minnesota in 2000 and has worked as both a software-licensing attorney and as an assistant general counsel.

Trombley’s mother, L.S., was diagnosed with cancer in August 2013. After the diagnosis, L.S. executed a short-form power of attorney, naming Trombley attorney-in-fact and granting Trombley all available powers, including the power to transfer property from L.S. to Trombley.

Trombley did not exercise the power of attorney until her mother fell seriously ill in early April 2014. Until that time, L.S. had handled the finances for herself and her elderly husband, Trombley’s stepfather C.S., who was unable to manage his finances because of his own illness. Trombley then became more involved in the lives of her mother and stepfather. By June 9, 2014, she had added her name to their joint checking and savings accounts, changed the address for these accounts to her address, and taken the couple’s checkbook. On that date, she also began transferring funds from the joint savings account into the joint checking account.

Trombley made nine transfers from the joint savings to the joint checking account, totaling $114,495.09, during a 7-week period that spanned the time before and after her mother’s death. As these transfers were made, and in the week before her mother’s death, Trombley wrote three checks to herself, totaling $95,000, from the joint checking account and deposited the funds into her personal accounts. She signed these checks using her mother’s name and did not indicate that she was doing so as attorney-in-fact. The day after she wrote the last check to herself, her mother died.

After L.S. died, Trombley retained in her personal accounts the $95,000 that she had withdrawn from the joint checking account. She used $1,023.65¹ to pay for funeral and other expenses related to C.S. and L.S. She also transferred the remaining money from the joint savings account to the joint checking account and then closed the joint savings account.

Around the same time, Trombley found a copy of a will that L.S. had executed in 2003. The will bequeathed to Trombley (1) half the proceeds from the sale of the house owned by C.S. and L.S. and (2) the funds in L.S.’s retirement account. But L.S. and C.S. had sold the home after the will was executed and had deposited the sale proceeds into the same joint savings account that Trombley had closed after transferring its contents into the joint checking account. As to the retirement account, L.S. had listed C.S., not Trombley, as the account beneficiary. The will also bequeathed to C.S. "the entire residue of [L.S.’s] estate." Trombley did not seek legal advice at that time regarding the will. She claimed that she believed her mother intended for her to inherit approximately $95,000, and thus, she ignored C.S.’s rights and interests in the funds previously contained in L.S. and C.S.’s joint accounts.

After L.S. died, Trombley spent some of the funds that she had transferred to herself for her own benefit. The referee found that, approximately 2 weeks after her mother died, the balance in Trombley’s bank accounts "was less than the aggregate balance of funds that [Trombley] had transferred from the two joint accounts," that this "shortage remained until June 2015," and that the "shortage reached a maximum of over $58,000 in January 2015." Trombley used some of this money to buy a car and some jewelry and to pay her "substantial financial obligations."

While L.S.’s health was failing, Trombley and her husband were dissolving their marriage. As part of the dissolution proceedings, the district court determined that Trombley and her former husband owed more than $300,000 in joint business debts and an additional $130,000 in joint personal obligations. Trombley and her former husband agreed that he would assume and "hold [her] harmless" from the business debts, and in a later proceeding, the district court concluded that Trombley would assume approximately $70,000 of the personal debts. Trombley’s former husband refused to pay the business debts or otherwise indemnify Trombley as agreed, resulting in financial distress and substantial marriage dissolution litigation for Trombley.

After the death of L.S., Trombley paid some of her credit card debt that was part of the joint personal debts of Trombley and her former husband. A creditor brought an action against her to collect an additional $24,386 in credit card debt. A district court ultimately concluded that both of these obligations were the responsibility of her former husband.

Meanwhile, C.S. had growing concerns about his finances because he did not know what had happened to his money. He was worried about how he would pay his monthly rent and medical expenses. He also was unable to access funds in the one remaining account with his name, the joint checking account, because Trombley kept the checkbook for this account.

On November 1, 2014, a licensed social worker reported the financial situation of C.S. to the Minnesota Department of Human Services as possible maltreatment of a vulnerable adult. The next month, a Ramsey County investigator contacted Trombley regarding her handling of C.S.’s finances. Following the investigation, the Ramsey County Community Human Services Department determined that Trombley had financially exploited a vulnerable adult, in violation of Minn. Stat. §§ 609.2335, subd. 1, 626.5572, subd. 9 (2016). Trombley requested a hearing with the state appeals office. An evidentiary hearing was held, and the Commissioner of Human Services affirmed the original determination of the Ramsey County Community Human Services Department. Trombley did not seek judicial review of this determination.

After the investigation began, but before the Ramsey County Community Human Services Department made its determination, Trombley returned $93,976.35 to C.S. This amount represented the funds Trombley had transferred into her personal accounts, minus a few uncontested expenses related to L.S.’s death. She made a partial payment in March 2015 and refunded the full amount by June 2015, a month before C.S. died.

The Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against Trombley, alleging professional misconduct for engaging in "conduct involving dishonesty, fraud, deceit, or misrepresentation." Minn. R. Prof. Conduct 8.4(c). Following a hearing, the referee concluded that Trombley had dishonestly converted funds belonging to C.S. for her own use, in violation of Rule 8.4(c), and recommended an admonition.² The Director requests that we affirm all but one of the referee’s findings and conclusions and impose an indefinite suspension of at least 18 months. Trombley contends that she has not violated Minn. R. Prof. Conduct 8.4(c) and challenges several of the referee’s findings and conclusions.

ANALYSIS

I.

Trombley ordered a transcript of the hearing before the referee, so "none of the [referee’s] findings of fact or conclusions" of law are conclusive. Rule 14(e), Rules on Lawyers Professional Responsibility (RLPR). We give the referee’s findings of fact "great deference" and will not reverse them "if they have evidentiary support in the record and are not clearly erroneous." In re MacDonald , 906 N.W.2d 238, 243–44 (Minn. 2018), cert. denied , ––– U.S. ––––, 138 S.Ct. 2681, ––– L.Ed.2d –––– (2018). When we are "left with the definite and firm conviction that a mistake has been made," we may conclude that a referee’s findings are clearly erroneous. In re Albrecht , 779 N.W.2d 530, 535 (Minn. 2010) (citation omitted). We review "the application of the [Minnesota Rules of Professional Conduct] to the facts of the case for clear error," but we review an interpretation of a rule de novo. In re Aitken , 787 N.W.2d 152, 158 (Minn. 2010).

A.

We begin with the findings that Trombley challenges.³ First, she disputes the findings of fact that describe the funds that she transferred and her actions with the funds after she transferred them. Having carefully reviewed the record, we conclude that the referee did not clearly err by finding that Trombley transferred "virtually all of the funds in [C.S.] and [L.S.]’s checking account" into her personal accounts; "had no basis to claim ... that she was personally entitled to these funds as a gift to her;" "used substantial portions of the funds to pay her own expenses;" and "had substantial financial obligations and used [L.S.] and [C.S.]’s funds to help pay those obligations."⁴

Next, Trombley challenges the finding of fact that states that she exceeded the...