Iowa Supreme Court Attorney Disciplinary Bd. v. Barnhill

• Citation: 847 N.W.2d 466
• Decision Date: 30 May 2014
• Docket Number: No. 13–1966.,13–1966.
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Kathryn S. BARNHILL, Respondent.
• Court: United States State Supreme Court of Iowa

847 N.W.2d 466

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Kathryn S. BARNHILL, Respondent.

No. 13–1966.

Supreme Court of Iowa.

May 30, 2014.

Charles L. Harrington, Wendell J. Harms, and David J. Grace, Des Moines, for complainant.

Sharon L. Soorholtz Greer and Thomas L. Hillers of Cartwright, Druker & Ryden, Marshalltown, for respondent.

WIGGINS, Justice.

This matter comes before us on a report of a division of the Grievance Commission of the Supreme Court of Iowa. The Iowa Supreme Court Attorney Disciplinary Board brought a complaint against the respondent, Kathryn Barnhill, alleging multiple violations of our ethics rules based on her actions in four separate legal matters. The commission found multiple violations occurred and recommended a six-month suspension of Barnhill's license to practice law. We are required to review the commission's report. SeeIowa Ct. R. 35.11(1). Based on our de novo review, we agree with the commission that the Board established by a convincing preponderance of the evidence Barnhill violated our rules. However, we disagree with the recommended suspension and find a sixty-day suspension is the appropriate sanction.

I. Scope of Review.

We review attorney disciplinary proceedings de novo. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Stowe, 830 N.W.2d 737, 739 (Iowa 2013). The Board must prove the attorney's ethical misconduct by a convincing preponderance of the evidence. Id. “A convincing preponderance of the evidence is more than a preponderance of the evidence, but less than proof beyond a reasonable doubt.” Iowa Supreme Ct. Att'y Disciplinary Bd. v. McCarthy, 814 N.W.2d 596, 601 (Iowa 2012). This places a burden on the Board that is higher than the burden in civil cases but lower than the burden in criminal matters. Stowe, 830 N.W.2d at 739. We respectfully consider the commission's recommendations; however, they are not binding upon us. Id.

When the parties enter into a stipulation in a disciplinary case, we rely on the stipulation to determine facts. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Gailey, 790 N.W.2d 801, 804 (Iowa 2010). “Nowhere in our rules have we given the parties the authority to determine what conduct constitutes a violation of our ethical rules or what sanction an attorney should receive for such a violation.” Id. Thus, we use the stipulation to determine the facts and then we determine whether the facts establish a violation of our rules. Id.

II. Findings of Fact.

Using the stipulation of the parties with our review of the record, we make the following findings of fact. We admitted Barnhill to practice law in Iowa in 1989. The ethical complaints against her arise out of four separate factual matters.

A. The Jerry's Homes Matter. The Jerry's Homes matter involves claims Barnhill violated conflict of interest rules, made misrepresentations, and improperly included a defendant in the action to harass the defendant, among other allegations. In March 2001, Barnhill filed a class action lawsuit against a roofing company that manufactured shingles and an individual who served as the company's president and chief executive officer. The lawsuit class included a construction company, Jerry's Homes, as well as homeowners who lived in houses built by Jerry's Homes, among other plaintiffs. Barnhill had represented Jerry's Homes in prior small claims cases brought by other homeowners. Barnhill alleged she met with the homeowners in the class action lawsuit, explained the potential conflict of interest, and the homeowners signed written waivers of the potential conflict. The district court certified the class but certified a subclass of members, stating Barnhill could only represent class members who did not have shingles installed by Jerry's Homes.

Barnhill made statements to the district court and in her appeal brief that all members of the class actually reviewed the roofing company's promotional materials and acted in reliance on these materials when purchasing shingles. These statements were subsequently determined to be false.

Barnhill included the corporate officer as a defendant in the action. Barnhill pleaded causes of action sounding in breach of express warranty, breach of implied warranty, fraudulent misrepresentation, negligent misrepresentation, and rescission. The court of appeals ultimately granted summary judgment to the corporate officer on all claims. The corporate officer filed a motion for sanctions against Barnhill and the named plaintiffs. The district court awarded sanctions against Barnhill. See Barnhill v. Iowa Dist. Ct., 765 N.W.2d 267, 279–80 (Iowa 2009) (affirming the award of sanctions against Barnhill for $25,000).

B. The Williams Matter. The Williams matter involves a claim of fraudulent misrepresentation and assorted trust account violation claims. Barnhill's law office manager worked for Barnhill for more than sixteen years. This employee had authority to sign Barnhill's name to the trust account checks and the business account checks. Prior to the Williams matter, the employee charged approximately $55,000 of personal expenses to the law firm's American Express account without authorization. Barnhill discovered the embezzlement in 2005 and agreed to settle the embezzlement debt. Barnhill was aware the employee continued to sign trust account checks, but believed the employee would never take client funds.

In the fall of 2005, the employee began a new embezzlement scheme. At around the same time, Barnhill took on a new client, Denise Williams. Barnhill began using the trust account to collect Williams's income and to pay Williams's bills. Williams delivered her financial records, unpaid business and personal bills, business income, and some child support payments to Barnhill. Barnhill authorized the employee to pay Williams's business and personal bills from the money deposited in the trust account. Barnhill did not provide written receipts for these transactions prior to February 2007 and did not provide contemporaneous written notice or an account of disbursements.

The employee wrote at least one check payable to herself from the trust account during this time. Throughout the time Williams was Barnhill's client, there were discrepancies in the trust account regarding Williams's funds. Barnhill determined the employee had stolen money from Barnhill by forging checks and making unauthorized online transfers. Barnhill eventually informed Williams the employee had been stealing money, and Barnhill gave Williams the trust account records so that Williams could determine whether the employee took any of Williams's money from the trust account. Barnhill refunded $1363.50 to Williams when Williams terminated Barnhill as her attorney.

Williams filed a lawsuit against Barnhill, Barnhill's law firm, and the employee. Following trial, the jury determined Williams proved by a preponderance of clear, convincing, and satisfactory evidence that Williams proved her claim of fraud against Barnhill. The district court awarded a monetary loss to Williams against Barnhill for $53,895 in actual damages and $10,000 in punitive damages.

C. The Public Safety Group, Inc. Matter. The Public Safety Group, Inc. (PSG) matter involves claims of knowingly disobeying the order of a tribunal and professional misconduct, among other allegations. In August 2005, Barnhill represented PSG as a defendant in a lawsuit. PSG filed a counterclaim in the action. PSG was successful in defending the suit and recovered a substantial sum on its counterclaim. The district court entered judgment in favor of PSG. PSG assigned its interest in the judgment to another person.

The plaintiffs in the original action alleged the IRS filed an action to levy upon the judgment, and the IRS levy motivated PSG to assign its interest in the judgment. The plaintiffs alleged Barnhill did not notify the district court of the IRS levy or the assignment of interest, and that neither the IRS nor the assignee had the opportunity to intervene in the appeal.

We issued an order on May 2, 2007, requiring Barnhill, counsel for PSG, to serve a copy of the order containing notification of the assignment on the assignee and the IRS and to provide proof of service to our clerk and opposing counsel. Barnhill did not comply with this order. Subsequently, Barnhill filed a motion to intervene in the appeal on behalf of another entity and claimed opposing counsel had not complied with the May 2, 2007 order to serve the assignee or the IRS. Opposing counsel filed a response, pointing out Barnhill's failure to comply with our court order.

We issued a second order in January 2008, ordering Barnhill to serve both the second order and the previous order on the assignee and the IRS. Barnhill did not comply with the second order. On June 30, we then authorized opposing counsel to serve the orders on the assignee and the IRS because Barnhill failed to do so. Barnhill served the orders on the assignee on July 2 and on the IRS on July 8.

D. The Everly Matter. The Everly matter involves claims of failure to provide competent representation and alleges Barnhill brought a frivolous claim, among other allegations. On May 26, 2006, Barnhill filed a petition and application for writ of certiorari on behalf of Steve Everly, a resident and taxpayer of a school district, against Musco Sports Lighting, Inc. (Musco), a school district, and the superintendent of the school district. Musco was a product supplier for the successful bidder in a construction project involving the school district. After numerous filings, Barnhill filed an amended petition. She did not name the school district or the superintendent of the school district as defendants in the amended petition, leaving Musco as the only defendant. The district court ultimately dismissed the petition, finding the taxpayer could not maintain suit against Musco alone and imposed sanctions against Barnhill. Barnhill appealed the ruling. Barnhill...