Neely v. Commission for Lawyer Discipline

• Citation: 302 S.W.3d 331
• Decision Date: 10 September 2009
• Docket Number: No. 14-08-00526-CV.,14-08-00526-CV.
• Parties: George R. NEELY, Appellant, v. COMMISSION FOR LAWYER DISCIPLINE, Appellee.
• Court: Texas Court of Appeals

302 S.W.3d 331

George R. NEELY, Appellant, v. COMMISSION FOR LAWYER DISCIPLINE, Appellee.

No. 14-08-00526-CV.

Court of Appeals of Texas, Houston (14th Dist.).

September 10, 2009.

Rehearing Overruled December 3, 2009.

George R. Neely, Rosenberg, TX, pro se.

Jerald Grimes Molleston, Timothy R. Bersch, Houston, TX, Linda A. Acevedo, Austin, TX, for appellees.

Panel consists of Chief Justice HEDGES, and Justices YATES and FROST.

OPINION

KEM THOMPSON FROST, Justice.

This appeal arises from an attorney disciplinary proceeding in which the trial court granted summary judgment on claims that the attorney violated Texas Disciplinary Rule of Professional Conduct 1.14(a), governing the safekeeping of others' property. The trial court entered a final judgment of disbarment. In nine appellate issues, the disbarred attorney challenges the trial court's jurisdiction as well as the trial court's granting of summary judgment, the admission of certain evidence, and various other aspects of the judgment. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Appellant George R. Neely was licensed to practice law in Texas. He maintained a trust account under the Interest on Lawyers Trust Account (IOLTA) program. Appellee the Commission for Lawyer Discipline (the "Commission") initiated a disciplinary action against Neely for violation of the Texas Disciplinary Rules of Professional Conduct. In its live petition, the Commission alleged that Neely violated the trust account provisions set forth in Rule 1.14(a) by commingling his own funds with clients' funds in his IOLTA trust account ("Trust Account"), by paying employee wages and other business and personal expenses from the same account, and by failing to preserve five years of records on the Trust Account.

The action stemmed from a grievance filed with the State Bar of Texas by Neely's former employee, Virginia Ploch. In her grievance, Ploch accused Neely of paying her wages and bonuses, Neely's office expenses, and Neely's household expenses from the Trust Account, which Ploch claimed was the same account in which Neely deposited clients' money. Ploch attached to the grievance copies of payroll checks and other checks written to Ploch and signed by Neely from the Trust Account (hereinafter the "Ploch Checks"), which Neely asserts Ploch stole from his office.

In the course of discovery, on January 12, 2004, the Commission requested production of all records of any trust accounts maintained by Neely for the period beginning December 1, 1998, and running through January 12, 2004, including statements and cancelled checks, among other things. Neely objected to the Commission's request, asserting attorney-client privilege and a number of other objections; Neely did not produce the requested documents. The Commission indicated that it would file a motion to compel production of the records if Neely did not comply with the request for production.

Shortly thereafter, on February 20, 2004, the Commission served a subpoena on Frost National Bank for records associated with the Trust Account. Neither party disputes that Neely did not receive notice of the Frost National Bank subpoena.¹ Frost National Bank complied and provided 1,462 pages of records pertaining to the Trust Account (hereinafter "Trust Account Records").² The Commission filed the Trust Account Records with the trial court on May 28, 2004, along with an affidavit of a Frost National Bank officer and custodian of records, Lisa Gonzales, under the business-records exception of Texas Rule of Evidence 902(10). The notice of filing associated with these records, in pertinent part, is provided below:

You are hereby notified that Petitioner, Commission for Lawyer Discipline has filed in the above-styled and numbered case certain business records of Frost National Bank, with an affidavit by Lisa Gonzales, Custodian of Records. These records will be offered in evidence during the trial of this case.

Pursuant to Rule 902(10)(a) of the Texas Rules of Evidence, these records will be made available to counsel for parties to the litigation for inspection and copying at the expense of the person desiring the copies.

A certificate of service to Neely accompanied the notice.

In June 2004 and July 2004, the Commission filed two other motions to compel Neely's production of records associated with the Trust Account. In an order dated April 19, 2007, the trial court granted the Commission's motions to compel, ordering Neely to provide a "full and complete response" to the Commission's request for production and interrogatories. Neely produced some records associated with the Trust Account. The record reflects that he admitted producing to the Commission "IOLTA account records" for the period of April 2001 to July 2002.³ Neely provided no other documents pertaining to the Trust Account for the requested time-period (December 1, 1998, to January 12, 2004).

The Commission moved for partial summary judgment on the Rule 1.14(a) claims.⁴ In support of its motion, the Commission submitted the following exhibits:

• excerpts from the transcript of Neely's June 2007 deposition,

• copies of the front and back of cancelled checks signed by Neely and written to Ploch from the Trust Account for payroll, expenses, and bonuses,⁵

• two monthly financial statements from Neely's Trust Account Records, dated January 10, 2002, and February 11, 2002, and copies of the front and back of cancelled checks that are listed within the two statements,

• an affidavit and spreadsheet (prepared by accountant Tom Prude on behalf of Neely) pertaining to the Trust Account, and

• several documents filed with the trial court associated with discovery, including the Commission's request for production dated January 12, 2004, the trial court's April 19, 2007 order on the Commission's motion to compel, and Neely's supplemental response to the Commission's first request for interrogatories in which he listed "IOLTA account records" from April 2001 to July 2002, as items he produced to the Commission in response to the Commission's request for production.

According to the Commission's motion for partial summary judgment, Neely's deposition testimony and the other evidence established the following: (1) Neely did not separate his clients' funds from his personal funds within the Trust Account, his only trust account, during 2001 and 2002; (2) Neely acknowledged paying for numerous personal- and business-related expenses from this same trust account at Frost National Bank; and (3) Neely failed to preserve five years of records pertaining to the Trust Account as required by Rule 1.14(a).

In response, Neely objected to the Commission's evidence, claiming it was incompetent summary judgment evidence. Neely asserted that the Commission presented no evidence to support the allegations that he violated Rule 1.14(a). Neely submitted an affidavit and referred to excerpts from his deposition in an effort to establish the existence of material fact issues in order to preclude summary judgment. Neely argued for the exclusion of the Trust Account Records from the Commission's summary-judgment evidence on the grounds that the Commission failed to comply with the procedural rules in obtaining the Trust Account Records by subpoena without notice to him. Neely also argued that the exclusionary rule applied in this case, referring to the matter as "quasi-criminal" in nature, such that the improperly obtained Trust Account Records and "the documents and information contained in the documents stolen" by Ploch from Neely's office could not be used by the Commission for any purpose.

At a September 2007 hearing, the trial court considered the Commission's motion, but determined that the trial court first must resolve whether the Trust Account Records or the Ploch Checks should be excluded from evidence. The trial court took the Commission's motion under advisement and requested additional briefing from the parties regarding whether the Ploch Checks or the Trust Account Records should be excluded.

Neely filed a motion to suppress the Trust Account Records. Neely also sought to suppress and exclude all other evidence obtained by the Commission, alleging that the evidence was the "fruit of the poisonous tree" stemming from either the Ploch Checks or from the Trust Account Records. In addition, Neely moved for sanctions for discovery abuse on this basis.

The parties reconvened in October 2007, for the trial court's consideration of Neely's motion to suppress and the Commission's motion for partial summary judgment. The trial court ruled that the exclusionary rule did not apply to a civil disciplinary proceeding. The trial court determined that the Texas Finance Code, upon which the Commission relied in serving the subpoena on Frost National Bank, was not applicable to the matter. The trial court opined that the Commission did not necessarily follow the "right statute" in obtaining the Trust Account Records by subpoena, but that the Commission would have been able to obtain the records sooner or later in discovery. In denying Neely's motion to suppress and motion for sanctions, the trial court ruled that the Trust Account Records would not be excluded, concluding that exclusion would not be a fair sanction. The trial court granted the Commission's motion for summary judgment, finding that the Commission had proved as a matter of law that Neely violated Rule 1.14(a).

The Commission submitted evidence for the trial court's consideration. In an effort to give Neely additional time to gather evidence, the trial court continued the hearing. After the continuance, Neely presented evidence and witnesses. The trial court ultimately entered a final judgment of disbarment against Neely.

II. ISSUES AND ANALYSIS

A. Is the trial court's judgment void because the trial court lacked jurisdiction over the disciplinary proceeding?

In his first issue, Neely challenges the trial court's jurisdiction to hear...