State ex rel. Counsel for Discipline of the Nebraska Supreme Court v. Carter

• Decision Date: 21 October 2011
• Docket Number: No. S–10–811.,S–10–811.
• Citation: 282 Neb. 596,808 N.W.2d 342
• Parties: STATE of Nebraska ex rel. COUNSEL FOR DISCIPLINE OF the NEBRASKA SUPREME COURT, relator, v. John M. CARTER, respondent.
• Court: Nebraska Supreme Court

282 Neb. 596

808 N.W.2d 342

STATE of Nebraska ex rel. COUNSEL FOR DISCIPLINE OF the NEBRASKA SUPREME COURT, relator,

v.John M. CARTER, respondent.

No. S–10–811.

Supreme Court of Nebraska.

Oct. 21, 2011.

Syllabus by the Court

1. Disciplinary Proceedings: Appeal and Error. A proceeding to discipline an attorney is a trial de novo on the record, in which the Nebraska Supreme Court reaches a conclusion independent of the findings of the referee; provided, however, that where the credible evidence is in conflict on a material issue of fact, the Nebraska Supreme Court considers and may give weight to the fact that the referee heard and observed the witnesses and accepted one version of the facts rather than another.

2. Disciplinary Proceedings: Proof. Disciplinary charges against an attorney must be established by clear and convincing evidence.

3. Disciplinary Proceedings. The basic issues in a disciplinary proceeding against a lawyer are whether discipline should be imposed and, if so, the type of discipline appropriate under the circumstances.

4. Disciplinary Proceedings. The Nebraska Supreme Court has inherent authority to regulate the conduct of attorneys admitted to the practice of law in the State of Nebraska.

5. Disciplinary Proceedings. The purpose of a disciplinary proceeding against an attorney is not so much to punish the attorney as it is to determine whether in the public interest an attorney should be permitted to practice.

6. Disciplinary Proceedings. To determine whether and to what extent discipline should be imposed in a lawyer discipline proceeding, the Nebraska Supreme Court considers the following factors: (1) the nature of the offense, (2) the need for deterring others, (3) the maintenance of the reputation of the bar as a whole, (4) the protection of the public, (5) the attitude of the offender generally, and (6) the offender's present or future fitness to continue in the practice of law.

7. Disciplinary Proceedings. For purposes of determining the proper discipline of an attorney, the Nebraska Supreme Court will consider the attorney's acts both underlying the alleged misconduct and throughout the proceeding.

8. Disciplinary Proceedings. The determination of an appropriate penalty to be imposed on an attorney in a disciplinary proceeding requires the consideration of any aggravating or mitigating factors.

9. Disciplinary Proceedings. Each attorney discipline case must be evaluated individually in light of its particular facts and circumstances. In addition, the propriety of a sanction must be considered with reference to the sanctions imposed in prior similar cases.

10. Disciplinary Proceedings: Words and Phrases. In the context of attorney discipline proceedings, misappropriation is any unauthorized use of client funds entrusted to an attorney, including not only stealing, but also unauthorized temporary use for the attorney's own purpose, whether or not the attorney derives any personal gain or benefit therefrom.

11. Disciplinary Proceedings. Absent mitigating circumstances, the appropriate discipline in cases of misappropriation or commingling of client funds is typically disbarment.

12. Disciplinary Proceedings. The fact that the client did not suffer any financial loss does not excuse an attorney's misappropriation of client funds and does not provide a reason for imposing a less severe sanction.

13. Disciplinary Proceedings: Presumptions. Mitigating factors overcome the presumption of disbarment in misappropriation and commingling cases only if they are extraordinary.

John W. Steele, Assistant Counsel for Discipline, for relator.

James Walter Crampton, Omaha, for respondent.

HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER–LERMAN, JJ.

PER CURIAM.

On August 20, 2010, the Counsel for Discipline of the Nebraska Supreme Court filed formal charges against attorney John M. Carter, alleging Carter violated the following provisions of the Nebraska Rules of Professional Conduct: Neb. Ct. R. of Prof. Cond. §§ 3–501.15(a) and 3–508.4. Carter filed an answer admitting certain allegations in the formal charges but denying others. This court appointed a referee. After conducting an evidentiary hearing, the referee determined Carter violated §§ 3–501.15(a) and 3–508.4(a) and (c). Because the violations involved misappropriation of client funds and the referee found no extraordinary mitigating circumstances, he recommended disbarment. Carter filed exceptions to the referee's report. Upon our independent review of the record, we conclude that the violations occurred and that the proper sanction is disbarment.

I. FACTS

Carter graduated from law school in December 2006 and was admitted to practice law in Nebraska and Iowa in 2007. He maintained law offices in Omaha, Nebraska, and Council Bluffs, Iowa. He maintained trust accounts at Wells Fargo Bank (Wells Fargo) in Omaha for his Nebraska practice and at TierOne Bank (TierOne) in Council Bluffs for his Iowa practice.

In September 2008, Carter was retained by sisters Norma Noland and Clifettia Rose, who resided in Omaha and were the daughters of Anna Charles. Charles resided in a nursing home, and her conservator proposed to sell her Omaha home in order to meet expenses. Noland and Rose retained Carter to oppose the sale. Carter was paid $200 by Noland and Rose at the time of his retention. A written agreement dated September 17, 2008, stated Carter would be paid a fee at an hourly rate of $165. The signatures of Carter, Noland, and Rose appear on the agreement, although Noland testified that she did not recall signing it.

The sale of the house did not occur. According to Noland, this was because the conservator received funds from the sale of property in Texas which made it unnecessary to sell the Omaha property. Carter testified that the sale of the house was prevented through his legal efforts on behalf of Noland and Rose.

Upon Charles' death, which apparently occurred sometime in late 2008 or early 2009, Carter assisted Noland in preparing documents in connection with her appointment as the personal representative of Charles' estate. That appointment occurred on February 11, 2009. Carter testified that he also performed various other legal acts on Noland's behalf between September 2008 and December 2009.

On February 20, 2009, Carter deposited a check from Charles' former conservator in the amount of $7,334.61 into the Wells Fargo trust account. Whether Carter received the check from the conservator or from Noland is disputed, but there is no dispute that the check represented funds belonging to the Charles estate which were to be distributed equally to Noland and Rose under Charles' will.

On March 17, 2009, Carter withdrew $1,800 from the Wells Fargo trust account, which he later characterized as a fee earned in his representation of Noland and Rose. On April 3, Carter withdrew an additional $4,500 from the trust account, which he later characterized as an additional fee earned in his representation of Noland and Rose. Noland and Rose denied that they authorized any fee payment from the funds held in Carter's trust account. Carter admits that aside from the original hourly fee agreement, there was no written authorization for the fee payments from Noland, Rose, or the probate court. But he testified that Noland and Rose verbally authorized the payment of fees from the trust account. As a result of the two withdrawals totaling $6,300, the balance in Carter's Wells Fargo trust account fell below $7,334.61 on 12 days between February 27 and June 22, 2009.

During the summer of 2009, Noland and Rose began demanding that Carter distribute the funds received from the conservatorship, and Noland contacted the Counsel for Discipline regarding his failure to do so. In a meeting with Noland and Rose, Carter agreed to distribute $3,300 to each of them. Carter knew that the funds in his trust account were insufficient and intended to make these distributions from his own funds, but he did not inform Noland or Rose of this fact. In a letter dated September 14, 2009, written in response to Noland's complaint, Carter advised the Counsel for Discipline that the Charles estate would be closed by the end of the month and that at that time, he would make separate distributions of $3,300 each to Noland and Rose.

In late September or early October 2009, Carter received a check payable to another client in the amount of $43,350. Carter testified that on October 12, 2009, he deposited this check plus $6,600 in cash in the trust account he maintained at TierOne in Council Bluffs. He testified that the cash was from his own funds and that he had intended to use it to make the agreed-upon distributions to Noland and Rose. According to Carter, he did not fill out a deposit slip or obtain a receipt for the cash, because the bank's computer was down at the time of his deposit. Records from TierOne reflect a deposit of $43,350 into Carter's trust account on that date. On October 22, Carter wrote separate checks to Noland and Rose in the amount of $3,300 each on the TierOne trust account. The checks were dishonored and returned because of insufficient funds on deposit. Carter initially thought he had made an accounting error, but he later realized that the cash deposit had not been recorded by the bank. Carter immediately reported the dishonored checks to the Counsel for Discipline. In December 2009, Carter's lawyer sent replacement checks drawn on certified funds remitted by Carter in the amount of $3,300 each to Noland and Rose, who acknowledged receipt.

Carter testified he had presented Noland and Rose with a statement showing the work he had done on their behalf. Noland and Rose testified that they never received any statement or accounting from Carter. During the investigation which preceded the filing of formal charges, Carter provided the Counsel for Discipline with two statements covering the period of September 17, 2008,...