Iowa Supreme Court Attorney Disciplinary Bd. v. Carter

Decision Date23 May 2014
Docket NumberNo. 13–1333.,13–1333.
Citation847 N.W.2d 228
PartiesIOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Appellee, v. John Michael CARTER, Appellant.
CourtIowa Supreme Court

847 N.W.2d 228

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Appellee,
v.
John Michael CARTER, Appellant.

No. 13–1333.

Supreme Court of Iowa.

May 23, 2014.


[847 N.W.2d 229]


Christopher R. Kemp of Kemp & Sease, Des Moines, for appellant.

Charles L. Harrington and Elizabeth E. Quinlan, Des Moines, for appellee.


CADY, Chief Justice.

The Iowa Supreme Court Attorney Disciplinary Board charged John Michael Carter with several violations of the Iowa Rules of Professional Conduct. The gravamen of these charges is that Carter converted client funds for personal use without a colorable future claim to them. The Board also charged Carter with other violations flowing from the alleged conversions. The Grievance Commission of the Supreme Court of Iowa found Carter converted client funds and had no colorable future claim to them. It recommended Carter's license be revoked. On our review, we find Carter violated the rules of professional conduct by converting client funds and revoke his license.

I. Background Facts and Prior Proceedings.

John Carter was admitted to practice law in Iowa and Nebraska in 2007. Carter maintained offices in Council Bluffs, Iowa, and Omaha, Nebraska. He practiced as a sole practitioner. Prior to attending law school, he worked as a police officer for seventeen years.

The events that gave rise to this action relate to Carter's representation of clients in three separate cases. In late 2008, Carter was hired by Norma Noland and Clifettia Rose to assist them as the personal representatives of the estate of their mother, Anna Charles. Noland and Rose were also beneficiaries under the will. The decedent was under a conservatorship prior to her death, and Carter had briefly been employed by Noland and Rose to represent them in opposing an action taken by

[847 N.W.2d 230]

the conservator. However, Anna Charles died a short time after Carter began representing Noland and Rose, and he performed little legal work for them. Carter had entered into a fee arrangement for him to be paid $165 per hour.

On February 20, 2009, the conservator sent a check to Carter in the amount of $7334.61. These funds represented assets of the conservatorship that had become assets of the estate. Carter deposited the check into his office trust account the same day. However, he subsequently withdrew $6300 of the funds from the account. He withdrew $1800 on March 17, 2009, and $4500 on April 3, 2009. The withdrawal of these funds served as a basis for part of the disciplinary complaint brought against Carter by the Board.

In another case, Carter represented Rodney and Barbara Eastridge. He received a check from an insurance company in the amount of $52,766.46, which represented proceeds from an insurance claim by the Eastridges. Carter deposited the funds into his office trust account, but later withdrew $17,600 of the funds and placed them into his business account. He subsequently used a portion of these funds for his personal benefit.

In a third matter, Carter represented Shirley Suber in various legal problems encountered by Suber. Eventually, Carter sought and obtained a loan from Suber for $60,000. Suber acquired the loan proceeds by withdrawing the funds from her retirement account. She paid taxes and a penalty as a result of the transaction. Carter told Suber his law license was in jeopardy, and he desperately needed the money. The loan was not reduced to writing, and Carter did not advise Suber to seek independent counsel and did not obtain informed consent prior to the transaction. Once Carter obtained the loan proceeds, he promptly sent Noland and Rose checks for $3300.

Suber was later forced to file bankruptcy, which she did in Maryland. During the bankruptcy proceedings, Carter initially acknowledged the loan, but later claimed the funds were in payment of legal fees he had earned from representing Suber.

In 2011, the Nebraska Supreme Court revoked Carter's license to practice law in Nebraska. State ex rel. Counsel for Discipline of the Neb. Supreme Ct. v. Carter, 282 Neb. 596, 808 N.W.2d 342, 352 (2011) (per curiam). The proceedings were primarily confined to the Anna Charles estate matter. The Supreme Court agreed with the court-appointed referee, which concluded:

The conclusion is inescapable that [Carter] paid himself fees before they were earned, attempted to conceal the withdrawal by repaying the money and characterizing it as a “distribution” from the estate, and, when that ruse failed, created after-the-fact billing statements to make it appear he had fully earned the money before it was withdrawn. From April 2009 until December 2009, the $6,300.00 was in [Carter's] possession or converted to his personal use and unaccounted for.

Id. at 347, 349.


The Board eventually filed a multiple-count indictment against Carter, which it subsequently amended to include more counts. With respect to the Anna Charles estate, the Board charged Carter with violating Iowa Rules of Professional Conduct 32:1.15(a) and 32:8.4(c), as well as their Nebraska counterparts, Nebraska Court Rules of Professional Conduct 3–501.15(a) and 3–508.4(c). With respect to the Eastridge matter, the Board charged Carter with violating Iowa Rules of Professional Conduct 32:1.15(b), 32:8.4(b), 32:8.4(c),

[847 N.W.2d 231]

32:8.4(d), as well as their Nebraska counterparts, Nebraska Court Rules of Professional Conduct 3–501.15(b), 3–508.4(b), 3–508.4(c), and 3–508.4(d). With respect to Carter's financial transactions with Shirley Suber, the Board charged Carter with violating Iowa Rules of Professional Conduct 32:1.8(a) and 32:1.8(b), as well as their Maryland counterparts, Maryland Rules of Professional Conduct 1.8(a) and 1.8(b). With respect to Carter's interaction with Suber's bankruptcy attorney during her bankruptcy proceeding, the Board also charged Carter with violating Iowa Rules of Professional Conduct 32:4.1(a) and 32:8.4(d), as well as their Maryland counterparts, Maryland Rules of Professional Conduct 4.1(a) and 8.4(d). Finally, the Board alleged Carter made false statements in the 2012 reciprocal discipline proceeding and accordingly charged Carter with violating Iowa Rules of Professional Conduct 32:8.4(b) and 32:8.4(c).

At the hearing on the complaint, Carter claimed the funds he withdrew from his trust account in March and April of 2009 were to pay his fee for legal services performed in connection with the Anna Charles matter. He further claimed the supporting fee documentation was not available to verify the amount of his fee because it was lost when a computer program malfunctioned. Yet, Carter offered a different account in response to the Nebraska proceedings. When he first responded to the counsel for discipline in Nebraska, he did not assert any entitlement to the funds as payment for legal services. Instead, he said he intended to distribute the trust account funds to Noland and Rose in the near future. Carter told a third story to the Iowa trust account auditor to explain the withdrawal of the funds from the trust account. He told the auditor that the funds were taken from his trust account because Noland used them to pay him for his legal services in periodic increments of approximately $200.

Following the hearing, the commission found Carter violated Iowa Rules of Professional Conduct 32:1.8(a) (entering a...

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    ...employer funds by attorney working as an accountant for employer violated rules 32:8.4(b) and (c) ); Iowa Supreme Ct. Att'y Disciplinary Bd. v. Carter , 847 N.W.2d 228, 232–33 (Iowa 2014) (holding attorney misappropriation of estate funds violated rules 32:8.4(b) and (c) ) and stating "any ......
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