Shannon, Matter of

Decision Date21 June 1994
Docket Number89-0710,Nos. 88-1932,No. SB-92-0001-D,SB-92-0001-D,s. 88-1932
Citation876 P.2d 548,179 Ariz. 52
PartiesIn the Matter of a Member of the State Bar of Arizona, John Adair SHANNON, Jr., Respondent. Disc. Comm.
CourtArizona Supreme Court

CORCORAN, Justice.

On February 5, 1990, the State Bar of Arizona filed a formal complaint with a Hearing Committee (Committee) charging Respondent John Adair Shannon, Jr. with two counts of unethical conduct in which Respondent allegedly violated numerous ethical rules enumerated in rule 42, Arizona Rules of the Supreme Court. By a 2-1 vote, the Committee recommended that Respondent be suspended from the practice of law for a period of one year. The 8-member Disciplinary Commission (Commission) unanimously adopted the Committee's recommendation and further recommended that Respondent make restitution in the amount of $2,258.60. 1

This is an appeal and a cross-appeal from the Disciplinary Commission's order filed October 28, 1991. The State Bar urges the court to find additional violations and argues that disbarment, rather than the recommended one-year suspension, is the appropriate sanction for Respondent's violations. Respondent challenges the Commission's findings, the recommended sanctions, and the imposition of costs and expenses. Respondent basically argues that: (1) the evidence presented is not sufficient to sustain a finding that he violated any ethical rule; (2) a one-year suspension is both an inappropriate and disproportionate sanction; (3) some of the charges assessed against him are duplicative; and (4) this court lacks the power to assess certain types of expenditures. We have jurisdiction pursuant to rule 53(e), Arizona Rules of the Supreme Court.


Count One, the more serious of the two counts, arose out of Respondent's joint representation of co-defendants, Fairfield Sunrise Village (Fairfield) and Client A. 2 Count One alleged that: (1) Fairfield's interests were adverse to Client A's interests, and alternatively that Respondent's representation of Client A may have been materially limited by responsibilities to Fairfield, third parties, or Respondent's own interests; (2) Respondent materially altered certain of Client A's handwritten answers to interrogatories without consulting Client A and without providing Client A with a copy of the altered interrogatories; (3) Respondent submitted the altered interrogatories, along with the verification that Client A signed for their original handwritten answers to the court in support of a motion for summary judgment; and (4) Respondent failed to adequately communicate with Client A or to respond to reasonable requests for information during his representation of Client A. Based on these allegations, Respondent was charged with violating Ethical Rules (ER) 1.2(a) and (d), 1.4, 1.7, 3.1, 3.3(a)(1) and (4), 3.4(a) and (b), 4.1(a), and 8.4(c) and (d) of rule 42, Arizona Rules of the Supreme Court. After a hearing, the Committee concluded that Respondent violated ERs 1.4(a), 1.4(b), 1.7(a), and 3.3. Despite having adopted the Committee's factual findings, the Commission concluded that Respondent violated ERs 1.4(a), 1.4(b), 1.7(b), 3.3, 8.4(c), and 8.4(d).

Count Two arose out of Respondent's representation of Client B in a personal injury matter in which Respondent obtained a judgment. The complaint alleged that Respondent: (1) failed to follow specific instructions from opposing counsel by cashing the check that opposing counsel sent to him in satisfaction of a judgment without first executing a satisfaction of judgment; (2) ignored opposing counsel's subsequent requests to sign the satisfaction forcing opposing counsel to file a motion to compel; and (3) waited another full week after the court granted the motion to compel before signing the satisfaction of judgment. Based on these allegations, Respondent was charged with violating ERs 1.15, 1.2(d), 3.2, and 8.4(d). After a hearing before the Committee and a review by the Commission, the Commission concluded that Respondent violated ER 1.15 and 3.2.

A. Respondent's Violations

Respondent challenges both the Commission's findings and its recommended sanctions. He argues that there was insufficient evidence to support a finding that he violated any ethical rule. Respondent further argues that, even assuming he violated an ethical rule, the recommended sanctions are inappropriate because the Committee and Commission inappropriately considered his failure to "directly acknowledge the wrongful nature of his conduct" as an aggravating factor. Moreover, Respondent argues that the recommended sanction does not take into account his voluntary cessation of the practice of law and is disproportionate to the sanctions imposed in similar cases.

1. Standard of Review

In disciplinary matters, this court acts as an independent arbiter of both the facts and the law. In re Neville, 147 Ariz. 106, 108, 708 P.2d 1297, 1299 (1985). In acting as an arbiter of the facts, we give deference and serious consideration to the findings of both the Committee and Commission. In re Pappas, 159 Ariz. 516, 518, 768 P.2d 1161, 1163 (1988), citing Neville, 147 Ariz. at 108, 708 P.2d at 1299. Before we impose discipline, however, we must be persuaded by clear and convincing evidence that Respondent committed the alleged violations. E.g., In re Kersting, 151 Ariz. 171, 172, 726 P.2d 587, 588 (1986); see also rule 54(c), Arizona Rules of the Supreme Court. Similarly, in acting as an arbiter of the law, we give great weight to the recommendations of the Committee and the Commission. In re Lincoln, 165 Ariz. 233, 235-36, 798 P.2d 371 373-74 (1990), citing Neville, 147 Ariz. at 115, 708 P.2d at 1306. Yet, this court is ultimately responsible for determining the appropriate sanction. Lincoln, 165 Ariz. at 236, 798 P.2d at 374.

2. Count One

The Committee heard testimony concerning Count One and made its Findings of Fact in its report filed June 4, 1991. The Commission, after hearing arguments on this count, adopted the Committee's Findings of Fact. After reviewing the record, this court likewise adopts the Committee's Findings of Fact, which are summarized below.

In December 1986, attorney Gerald W. Nabours sued Fairfield and Client A on behalf of multiple plaintiffs who had purchased condominiums from Fairfield. The complaint alleged that Fairfield breached its contract with plaintiffs and had committed fraud. On these two counts, the complaint sought rescission, compensatory damages, and punitive damages. The complaint also alleged that both Fairfield and Client A (defendants) violated Arizona's RICO statutes. For this count, the complaint sought treble damages, costs, and attorneys' fees.

The essence of the complaint was that defendants used a priority-rent-back program to induce plaintiffs to purchase the condominiums and then arbitrarily discontinued the program. Plaintiffs claimed that defendants represented that plaintiffs' condominiums would be included in a priority-rent-back program. Under this program, Fairfield would rent plaintiffs' condominiums to house prospective purchasers of Fairfield property, guests or visitors. According to the complaint, defendants represented that the units were to be rented with a priority based upon the date of their purchase, and that the priority-rent-back program was to continue as long as the rental program was in effect. Plaintiffs alleged that Fairfield arbitrarily discontinued the program without notice to or consent of plaintiffs.

Under a 1975 Consent Decree with the United States Securities and Exchange Commission (SEC), Fairfield was prohibited from marketing condominiums in conjunction with any priority-rent-back program, and its employees or sales representatives could neither discuss any such priority-rent-back program with prospective purchasers nor directly operate any such program. Fairfield believed, however, that it would not violate the Consent Decree if a separate entity such as Client A made representations about the priority-rent-back program. This belief led to the contract between Fairfield and Client A in which Client A contracted to provide rental management services to parties who purchased condominiums from Fairfield. Client A's contract with Fairfield was effective from November 1, 1982 to October 31, 1983. Because of the Consent Decree against Fairfield, it was important to Fairfield that Client A's operations be viewed as a separate entity with Client A acting on their own without Fairfield's knowledge or consent.

Fairfield's position on this matter was consistent from the very beginning. Nabours testified that he had been in contact with representatives of Fairfield before filing the complaint. He testified that Fairfield seemed to be taking the position that it had made no representations to prospective purchasers concerning a priority-rent-back program, and that any representations were made by others, specifically Client A or their representatives.

In January 1987, Fairfield retained Respondent's brother to defend it in the lawsuit. Shortly thereafter, Respondent assumed primary responsibility for the litigation. Respondent filed Fairfield's answer. Fairfield's answer was consistent with Nabours's initial impression that Fairfield was denying any knowledge of the priority-rent-back program. Fairfield denied allegations that it had a contract with Client A to handle the program, that Client A's office was in the Fairfield sales office building, that Client A was in continuous contact with the Fairfield sales agent, and that Fairfield sales agents and/or Client A made representations about the priority-rent-back program to induce plaintiffs to purchase their...

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