Iowa Supreme Court Attorney Disciplinary Bd. v. Morse

Decision Date10 November 2016
Docket NumberNo. 15–1502.,15–1502.
Citation887 N.W.2d 131
CourtIowa Supreme Court

Michael J. Carroll of Coppola, McConville, Coppola, Carroll, Hockenberg & Scalise, P.C., West Des Moines, for appellant.

Tara van Brederode and Elizabeth Quinlan, Des Moines, for appellee.

WATERMAN, Justice.

This attorney disciplinary case arises from a lawyer's missteps that resulted in the dismissal of an appeal. His clients disputed the amounts their business owed to the plaintiffs in a mechanic's lien action and went to trial against his advice. The clients were disappointed in the trial outcome and chose to appeal but fell behind in paying his legal fees. The court reporter insisted on an advance payment of $1400 to prepare the trial transcript required for the appeal, and the clients tendered that amount to the lawyer. The lawyer failed to pay the court reporter. Seven weeks later, our court granted the appellees' motion to dismiss the appeal after extended deadlines to file the transcript were missed. The lawyer applied the $1400 against the fees his clients owed him, prompting the ethics complaint prosecuted by the Iowa Supreme Court Attorney Disciplinary Board. The Grievance Commission of the Supreme Court of Iowa found the attorney violated several disciplinary rules and recommended a public reprimand. On our de novo review, we conclude the attorney violated several rules and suspend his license to practice law for thirty days.

I. Background Facts and Proceedings.

David Morse has practiced law since 1989. He works in Des Moines, primarily on debtor/creditor matters, bankruptcies, mechanic's liens, commercial litigation, family law, and criminal law. Morse also handles appeals. In early 2012, Morse took over cases of attorney Jerrold Wanek, who had died unexpectedly. This disciplinary complaint arises from Morse's representation of one of Wanek's former clients.

A. The Stephenson Representation. Dennis and Patricia (Patty) Stephenson own Stephenson Construction, LLC, which builds spec homes in central Iowa. The Stephensons retained Wanek to attempt to settle debts with several subcontractors: Stenberg Concrete Construction; Ames Plumbing Services, Inc.; and Ames Heating & Cooling, Inc. Wanek obtained a settlement with Stenberg, but Wanek died before resolving the remaining disputes. Ames Plumbing filed a lien for $5937, and Ames Heating filed a lien for $7733. The Stephensons retained Morse in March 2012 to represent them when those creditors sought to foreclose these mechanic's liens on a spec home. Patty was Morse's primary contact because she kept the books.

The Stephensons paid Morse a $2500 retainer. Morse emailed the Stephensons a fee agreement that stated in part,

Attorney may off-set any outstanding balance owed to Attorney under the terms of this contract. In addition, pursuant to Iowa Code § 602.10116, Attorney has certain lien rights for a general balance of compensation upon: ... Money in the attorney's hands belonging to a client....

Patty acknowledged receiving this fee agreement, but no signed copy is in the record.

Morse explored settlement with the creditors, but the Stephensons limited his settlement authority. The Stephensons argued they owed Ames Plumbing nothing but recognized they owed money to Ames Heating. Morse obtained an offer to settle with Ames Heating for $6150, but the Stephensons refused to pay more than $5000. Morse advised the Stephensons to settle with the lienholders because if they lost at trial they could be liable for the lienholders' attorney fees. The Stephensons chose to go to trial against his advice. Morse represented the Stephensons during the two-day bench trial in May. The Stephensons contested whether either lienholder had substantially performed its subcontract and presented evidence of their payments.

On July 6, the district court entered judgment against the Stephensons on both liens. The district court expressly found some of the Stephensons' testimony not credible. In its findings of fact, the district court found the Stephensons had not paid for any work done by Ames Plumbing and owed it $3192 plus $1500 for attorney fees, totaling $4692. Yet in an apparent math error or discrepancy, the court entered judgment in favor of Ames Plumbing for $6400 ($4900 for payment due on the contract and $1500 in attorney fees)—$1708 more than stated in the court's factual findings. The district court also found that Ames Heating had substantially performed its contract and that the Stephensons owed that entity the full amount of its mechanic's lien—$7733.63. The district court found Ames Heating's reasonable attorney fees were $5580 and entered judgment for $13,313.63.

Morse emailed a copy of the court's decision to the Stephensons within three days and asked them to contact him to “discuss what next steps can/should/ought to be taken.” Patty promptly replied that she was upset with the ruling because she felt the judge had disregarded evidence that the Stephensons had paid $1900 to Ames Plumbing. She also noted that [t]he pages don't say what the conclusion says.” Morse reviewed the ruling with the Stephensons and discussed their options. He mentioned that they could file a motion to reconsider or appeal. The Stephensons decided to appeal. Morse explained that his retainer for the appeal would be $1750 and the Stephensons would be required to pay for the transcript. The Stephensons agreed to pay both. The Stephensons also still owed Morse $2851 in fees for the trial. On July 23, Morse asked the Stephensons to get current with their overdue payments to him. Patty promised to pay half the outstanding bill the next week and the balance the week of August 11.

On August 3, Morse informed the Stephensons that he had filed the notice of appeal. His email indicated that he had received a partial payment and expected to be paid in full by August 11. On August 8, Morse filed the combined certificate and paid the $150 filing fee. The combined certificate incorrectly stated that [f]inancial arrangements have been made with the reporter.” Morse had not spoken with the court reporter, Pamela Hayes, who did not receive a copy of the combined certificate.

On August 30, Patty emailed Morse and explained the Stephensons had some unexpected expenses from equipment breakdowns, so they were unable to pay him. Patty promised to pay Morse the week of September 10. That did not happen. On December 5, the supreme court clerk issued a notice of failure to timely file transcript. The next day, Hayes filed an application for an extension of time, stating that she never received a copy of the combined certificate. Hayes wrote Morse and requested a $1400 deposit before beginning work on the transcript. Hayes stated she believed it would take up to forty days to complete the transcript. Morse emailed the Stephensons on December 6 to inform them that they owed the court reporter $1400 for the transcript. We granted Hayes's requested extension on December 11 and ordered the Stephensons to pay the court reporter within ten days.1 On December 12, Morse sent the Stephensons a letter to inform them that he would not advance the cost of the transcript and asked them to send a check for $1400 payable to Pamela J. Hayes. On December 26, five days after our court-imposed payment deadline, Morse sent a follow-up letter with the same instructions. Patty responded by letter that day stating,

I have tried to get to our bank to get a cashier check but we are working out of town & I never get there before they close. I am sending the $1,400 in check form[. I]t actually might be faster for the money for [the] clerk. Also a check for $500.00 to you and in 2 weeks I will send a large amount for you.

Patty emailed Morse on December 30 that she had sent a “1,400 dollar check for the court and 500 for you.” She said she had been injured in a fall, they were working out of town, and she was unable to go to the bank when it was open. She hoped to catch up on the billing by the end of January or early February “if [her husband and she] stay[ed] healthy.” She thanked Morse for working with them.

Morse received the checks on January 4, 2013. Both were payable to Morse. The memo line for the $500 check stated it was for “our bill and the $1400 check was “for copies.” Morse emailed Hayes accurately indicating that he had received the $1400 check from his clients and inaccurately stating that it was in the mail to her. The same day, Morse emailed Patty noting the $1400 check was made out to him rather than to the court reporter and was deposited into his trust account instead of sent on to Hayes.

On January 8, Hayes filed a notice informing our court that she had not received the deposit Morse had promised to send. Hayes indicated that she would start working on the transcript as soon as she received the deposit and would keep the court informed of the status of the transcript. The next day, Morse's firm submitted a check request form to its bank for $1400 to be made out to Pamela Hayes for the transcript. That check inexplicably was not cut until January 31 and never was forwarded to Hayes.

Meanwhile, on January 10, Ames Heating moved to dismiss the appeal for failure to file a transcript. On January 14, the bank notified Morse that the Stephenson's $500 check had been returned for insufficient funds. Morse received no such notice as to the $1400 check and made no inquiry to determine whether it had cleared his bank. On January 18, Morse filed a resistance to motion to dismiss and motion to withdraw. In that filing, Morse explained that the Stephensons were required to pay for the costs of the appeal. Morse stated that the Stephensons had failed to pay the costs, despite their assurances that their payment obligations would be met. Morse acknowledged that he had received a check “intended to pay the $1400 transcript deposit.” However, he stated that the $1400 check was payable to him,...

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