Iowa Supreme Court Atty. Dis. Bd. v. Wagner

• Decision Date: 26 June 2009
• Docket Number: No. 09-0504.,09-0504.
• Citation: 768 N.W.2d 279
• Parties: IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. James L. WAGNER, Respondent.
• Court: Iowa Supreme Court

768 N.W.2d 279

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. James L. WAGNER, Respondent.

No. 09-0504.

Supreme Court of Iowa.

June 26, 2009.

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

James L. Wagner, Waterloo, pro se.

PER CURIAM.

This matter comes before the court on the report of a division of the Grievance Commission of the Supreme Court of Iowa. See Iowa Ct. R. 35.10. The Iowa Supreme Court Disciplinary Board alleged the respondent, James L. Wagner, violated ethical rules by neglecting client matters, prematurely taking probate fees, misrepresenting the status of an estate to the court, failing to deposit unearned fees in his trust account, failing to promptly return unearned fees, and failing to cooperate with the Board. A division of the Grievance Commission of the Supreme Court of Iowa found Wagner violated the Iowa Code of Professional Responsibility for Lawyers and the Iowa Rules of Professional Conduct and recommended that we suspend Wagner's license to practice law for a period of ninety days.¹ Upon our respectful consideration of the findings of fact, conclusions of law, and recommendation of the Commission, we find the respondent committed the alleged ethical violations and suspend his license to practice law indefinitely with no possibility of reinstatement for six months.

I. Standard of Review.

We review attorney disciplinary proceedings de novo. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Gottschalk, 729 N.W.2d 812, 815 (Iowa 2007). The Board has the burden to prove attorney misconduct by a convincing preponderance of the evidence. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Conrad, 723 N.W.2d 791, 792 (Iowa 2006).

This burden is less than proof beyond a reasonable doubt, but more than the preponderance standard required in the usual civil case. Once misconduct is proven, we "may impose a lesser or greater sanction than the discipline recommended by the grievance commission."

Id. (quoting Iowa Supreme Ct. Bd. of Profl Ethics & Conduct v. Lett, 674 N.W.2d 139, 142 (Iowa 2004)). The Commission's findings and recommendations are given respectful consideration, but we are not bound by them. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Isaacson, 750 N.W.2d 104, 106 (Iowa 2008).

II. Factual Findings.

The respondent has been an attorney for thirty-five years and is currently practicing law in Waterloo, Iowa. The charges in this disciplinary action stem from the respondent's representation of four separate clients. A hearing was held before a division of the Grievance Commission on February 24, 2009. The factual findings and conclusions reached in each case will be addressed separately.

A. Bornong Estate. In January 2004, Wagner was retained to assist in the probate of the estate of Margaret Bornong. The executor of the estate was the decedent's sister, Helen McClain.

Shortly after opening the estate, Wagner obtained a fee authorization order in the amount of $22,642. Although he had not prepared or filed the appropriate tax returns, on March 3, 2004, Wagner took $11,321 or one-half of the authorized fee. He took the second half of his fees on October 1, 2005, before any final report was prepared or filed or the court costs paid. The respondent did not place these moneys in the client's trust account.

Pursuant to Bornong's will, the residuary of her estate was to be placed in trust with the income to be distributed to her nephew, Michael McClain, while he completed his Ph.D., but for no longer than two years after Bornong's death. Thereafter, the principal and accumulated income was to be distributed equally to her sister's children. Two years after her death, the decedent's estate remained open. On October 31, 2005, Wagner filed an interim report informing the court that the final report and accounting was being prepared and that all assets had been distributed. He requested that the court allow the estate to be held open until February 28, 2006, "to allow one of the beneficiaries to finish school to avoid the expense of opening and administering a Trust."

The executor, Helen McClain, died on March 2, 2006. On May 4, 2006, Michael McClain wrote to the respondent requesting the respondent's assistance in locating his mother's will and voicing concerns that his aunt's estate had not been settled and that the tax obligations had not been addressed. Wagner failed to respond to this inquiry. On May 31, 2006, the respondent had filed another interim report and request to keep Bornong's estate open. This request was signed by the respondent without the named alternate executor's knowledge or consent.

The new executor obtained new legal representation. Upon investigation, it was discovered the respondent had failed to file some of the required federal and state estate tax returns. Moreover, the returns that had been prepared and/or filed were incorrect, resulting in significant penalties and interest. It was also determined Wagner had failed to appropriately file the required fiduciary tax forms, resulting in additional penalties and fees. Together, these errors resulted in penalties and interest in excess of $55,000. In addition, counsel determined Wagner had misrepresented to the court the status of beneficiary Michael McClain, who had completed his education five months prior to the respondent's initial request to hold the estate open and, further, had misrepresented in the second interim report that he—Wagner—was awaiting tax clearances. The tax returns, in fact, had not been filed.

As a result of the respondent's dilatory handling, the estate was not closed until June 2007, over three and one-half years after Bornong's death. Moreover, despite requests from the estate, Wagner failed to refund any portion of his fees or recompense the estate for his errors. On May 29, 2007, the executor of the estate filed a lawsuit against Wagner, seeking damages due to Wagner's negligence in administering Bornong's estate. On January 10, 2008, Wagner confessed judgment to the executor in the sum of $66,058. On February 5, 2009, the respondent paid the judgment plus interest and costs.

The Board asserted Wagner violated our ethical rules by (1) failing to handle the estate with reasonable diligence and promptness; (2) failing to adequately communicate with his client; (3) collecting probate fees before they were earned, contrary to Iowa Rule of Probate Procedure 7.2(4)²; (4) failing to deposit unearned fees into his trust account; (5) misrepresenting the status of a matter to the court; and (6) failing to promptly refund unearned fees. See Iowa Rs. Prof'l Conduct 32:1.1 (requiring lawyer to provide competent representation); 32:1.3 (requiring lawyer to act with reasonable diligence and promptness in representing a client); 32:1.4 (requiring lawyer to keep client reasonably informed and promptly comply with requests for information); 32:1.5(a) (providing lawyer shall not violate any restrictions imposed by law relating to a fee); 32:1.15 (requiring lawyer to place unearned fees in client trust account); 32:1.16(d) (requiring lawyer, upon termination, to promptly refund any unearned fee); 32:3.3(a)(1) (prohibiting lawyer from knowingly making false statement of material fact to the court); and 32:8.4(a), (c), and (d) (holding it is misconduct for lawyer to violate an ethical rule, engage in conduct involving misrepresentation, and engage in conduct that is prejudicial to the administration of justice); Iowa Ct. Rs. 45.1 (requiring attorney to deposit funds belonging to client in client trust account); 45.2(2) (requiring attorney to promptly deliver to the client funds that client is entitled to receive).

In response, the respondent admitted the factual allegations contained in this count of the Board's complaint. He also admitted the alleged violations. Upon our de novo review of the record, we, like the Commission, conclude the facts support a finding by a convincing preponderance of the evidence the respondent committed the ethical violations alleged by the Board in his representation of the Bornong estate.

B. Ronald Bearbower Asbestos Claim. Between 1963 and 1966, Ronald Bearbower was a seaman in the Navy where he was exposed to asbestos on a regular basis. In 1997, Bearbower was diagnosed with lung cancer for which he underwent treatment. Although currently in remission, he lives each day with the risk of his cancer returning.

In 2003, Bearbower learned of a Texas law firm that was prosecuting asbestos cases resulting from exposure during military service. Upon his request for information, Bearbower received a questionnaire and an attorney employment agreement form from the Texas firm. In May 2003, Bearbower brought the information to Wagner for his review. A week later, Wagner agreed to represent Bearbower in his asbestos claim, and the parties entered into a written contract.

On July 11, 2003, the Texas law firm contacted Bearbower in writing, inquiring whether he intended to proceed with his asbestos claim. The letter indicated a need to act expediently because more stringent filing criteria were expected after August 1. Bearbower presented Wagner with this information. Wagner, however, advised him not to worry because under Iowa law the statute of limitations would not run for two years.

From August 2003 to August 2004, Bearbower called the respondent's office every other month to see how things were progressing. The respondent never returned Bearbower's calls. Between January 2005 and December 2006, Bearbower called Wagner approximately twice a week to inquire as to whether a lawsuit had been filed. Wagner never returned any of these calls either. Finally, in December 2006, Bearbower obtained a new attorney. An investigation revealed that Wagner had failed to file any lawsuit on Bearbower's behalf. Moreover, subsequent inquires led to the conclusion the statute of limitations had run on Bearbower's asbestos claim.

The Board alleged the...