Iowa Supreme Court Bd. of Professional Ethics and Conduct v. Allen

• Decision Date: 25 November 1998
• Docket Number: No. 98-1326,98-1326
• Citation: 586 N.W.2d 383
• Parties: . Stephen W. ALLEN, Respondent. Supreme Court of Iowa
• Court: Iowa Supreme Court

Page 383

586 N.W.2d 383

IOWA SUPREME COURT BOARD OF PROFESSIONAL ETHICS AND CONDUCT, Complainant, v. Stephen W. ALLEN, Respondent.

No. 98-1326.

Supreme Court of Iowa.

Nov. 25, 1998.

Norman G. Bastemeyer and David J. Grace, Des Moines, for complainant.

Mark McCormick of Belin Lamson McCormick Zumbach & Flynn, P.C., Des Moines, for respondent.

Considered by CARTER, P.J., and LAVORATO, NEUMAN, SNELL, and CADY, JJ.

LAVORATO, Justice.

This case arises out of attorney Stephen W. Allen's actions while he was a guardian and a conservator for his aunt. The Iowa Supreme Court Board of Professional Ethics and Conduct alleged Allen took fees from the conservatorship without prior court approval, made unauthorized gifts to himself, and otherwise took conservatorship funds and converted them to his own use. The Grievance Commission found that the board had established the violations alleged but only recommended a public reprimand.

We determined from a preliminary review of the record that a greater sanction, up to and including license revocation, might be appropriate. We therefore concluded that Allen should be permitted to appear before this court and show cause why a more severe discipline should not be imposed. We limited arguments of the parties to the record made before the commission. After carefully reviewing the record and considering the arguments of counsel, we suspend Allen's license to practice law in this state for a period of one year from the date of this opinion.

We review the record de novo. Iowa Sup.Ct. R. 118.10. We give respectful consideration to the commission's recommendations; however, we ultimately decide what discipline is appropriate under the unique facts of each case. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Apland, 577 N.W.2d 50, 52 (Iowa 1998). The board must prove its allegations of lawyer misconduct by a convincing preponderance of the evidence. Id. This burden of proof is greater than in a civil case but less than in a criminal case. Id.

I. Background Facts.

Allen has practiced law in Onawa, Iowa since 1969. He has served as county attorney and assistant county attorney for Monona County. He is a part-time magistrate and has served in that position since 1993. Allen is a member of numerous professional organizations and is involved in many community activities. He has a private practice with emphasis on mediation, real estate transactions, probate, and tax.

On July 26, 1993, Allen was appointed as guardian and conservator for his aunt, Louise W. Gillespie, who at that time was eighty-seven years old. He was appointed on a voluntary petition filed by Louise. Allen was also designated as the attorney for the guardianship and the conservatorship. The petition for guardianship and conservatorship alleged that Louise had real property in the amount of $50,000, personal property in the amount of $500,000, and that she received annual income in the amount of $35,000.

On September 16, 1993, Allen paid himself $3530 in fees from conservatorship assets. The payment was without prior court approval. The following month Allen applied to the court for fees in the amount of $3530 to cover the fees he paid himself in September. Louise signed a waiver of notice of hearing on the application. In the waiver, Louise acknowledged receipt of the application, approved it, and consented to an order approving the application. The court approved Allen's fees in the amount of $2630 but disallowed $900 in fees for travel time.

In January 1994, Allen again paid himself fees from conservatorship assets without prior court approval. The payment this time was for $3829.66.

The following month, Allen applied to the court for fees in the amount of $3829.66 to cover the fees he paid himself in January. Louise again signed a waiver of notice of hearing. In the waiver, Louise consented to an order approving the fees. Concerned about the frequency of the claims for attorney fees and the substantial amounts requested, the court set this application for hearing. Following a hearing in March on the fee application, the court entered an order approving the fee requested. The order, however, stated:

Mr. Allen advised the court that the fees were somewhat high at this point in time because of the initial activities associated with setting up the guardianship and conservatorship. He does not anticipate fees of this level to continue.

Notwithstanding his assurance to the court, Allen paid himself attorney fees on April 14, 1994--again without court approval. The fee this time was $3520.

In October, Allen filed the first annual report in the conservatorship, covering the period from August 1, 1993 through July 31, 1994. An exhibit to the report listing deposits and withdrawals reveals the three fees previously mentioned. Louise signed a waiver of notice of hearing on the report in which she acknowledged receiving a copy of the report, waived accounting, and consented to the court entering an order approving the report. The district court thereafter approved the report and continued the guardianship and the conservatorship.

On August 18, 1995, Allen filed the second annual report, covering the period from August 1, 1994 to July 31, 1995. The exhibit listing deposits and withdrawals shows a $3000 fee paid to Allen. The exhibit also shows a payment of $5000 to Allen with no explanation as to what this amount covered. Allen withdrew both amounts without prior court approval. Louise signed a waiver of notice of hearing in which she acknowledged receipt of the report, waived accounting, and consented to the court entering an order approving the report. On September 18, the district court approved the report and again continued the guardianship and the conservatorship.

Several months after the court approved the second annual report, Louise had a stroke and from that point on she was somewhat confused. A month after Louise suffered the stroke, Allen wrote to Louise's bank directing it to discontinue sending her duplicate statements of the guardianship and the conservatorship checking account. In the letter, Allen informed the bank that Louise "is no longer able to read or understand them. She is nearly ninety years old and is in the Health Care Center at Northcrest." Allen also directed the bank to send all statements and correspondence to him as her court-appointed guardian and conservator.

Louise died on September 28, 1996. In October, Allen prepared a final report of the conservatorship and the guardianship. The report showed that Allen paid himself $46,359. He described some of the disbursements in the report variously as "fees," "advance fees," and "gifts." The bulk of these expenditures--$32,800--had no designation at all. All of the expenditures were without prior court approval.

When Allen presented the report to the district court, the court noted these expenditures and the lack of authority for withdrawing them. This prompted the court to set the matter for hearing. The court ordered Allen to appear and explain the basis for the expenditures.

Allen, his sister and her husband, and the guardian ad litem appeared at the hearing on the final report. Allen admitted making the questioned expenditures without prior court approval. He explained the close relationship between Louise and him, and that except for some specific bequests, she had left the bulk of her estate to his sister and him. Allen contended that he had discussed the questioned expenditures with Louise. He described Louise as "mentally alert up until the day of her death." According to Allen, Louise's comment was "do whatever you need to do for yourself as long as I have enough to live on." Allen further explained: "We were doing this not only for my benefit --and I will admit I needed the money at various times--but also for the estate's benefit to keep the estate under $600,000 and to minimize estate and inheritance taxes and income taxes, and mainly for the--just follow her wishes in her will and during her lifetime."

The guardian ad litem explained it was his "conclusion that the distributions were not in any way affecting [Louise's] health or well-being or her care and, in fact, were basically in order or were following her wishes expressed by her will and codicil; so on that ground alone, I have no objection to what has been done."

Allen's sister told the court that she and Allen had "discussed everything thoroughly. I have no objection to anything that he's done." Allen acknowledged he had received no advance authorization for the fees itemized in the report, but he claimed the fees should have been considered as gifts.

Following this hearing, the court entered an order in which it found that Allen had disregarded Iowa Code section 633.197 (1995) and Rule 2 of the Iowa Rules of Probate Procedure by paying himself fees without prior court approval. The court also found that Allen had ignored Iowa Code section 633.668 by making gifts to himself and others without prior court approval. The court ordered Allen to repay the $46,359 of unauthorized expenditures into the conservatorship. In addition, the court directed that a copy of the order and the conservators final report be sent to the board to be treated as a complaint. The court set a show-cause hearing on why Allen should not be removed as conservator in this matter and as executor in Louise's estate. (Allen had earlier opened Louise's estate and had been appointed executor.)

Eventually, Allen repaid the conservatorship the $46,359. Another attorney was able to close the conservatorship, and Allen's sister replaced Allen as executor in Louise's estate.

II. Proceedings.

A. The complaint. The district court forwarded to the board copies of the final report together with two court orders regarding the report. In its forwarding letter, the court briefly described the unauthorized expenditures. The court's action prompted the board to file the present complaint against...