STATE EX REL. COUNSEL FOR DISC. v. Mills, S-02-1085.

• Decision Date: 05 December 2003
• Docket Number: No. S-02-1085.,S-02-1085.
• Citation: 671 N.W.2d 765,267 Neb. 57
• Parties: STATE of Nebraska ex rel. COUNSEL FOR DISCIPLINE OF the NEBRASKA SUPREME COURT, Relator, v. Stuart B. MILLS, Respondent.
• Court: Nebraska Supreme Court

671 N.W.2d 765

267 Neb. 57

STATE of Nebraska ex rel. COUNSEL FOR DISCIPLINE OF the NEBRASKA SUPREME COURT, Relator, v. Stuart B. MILLS, Respondent.

No. S-02-1085.

Supreme Court of Nebraska.

December 5, 2003.

Kent L. Frobish, Assistant Counsel for Discipline, for relator.

Robert F. Bartle, of Bartle & Geier Law Firm, Lincoln, for respondent.

HENDRY, C.J., WRIGHT, CONNOLLY, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

PER CURIAM.

INTRODUCTION

The office of the Counsel for Discipline of the Nebraska Supreme Court filed amended formal charges against respondent, Stuart B. Mills. After a formal hearing, the referee concluded that Mills had violated the Code of Professional Responsibility and recommended that Mills be suspended from the practice of law for a period of 5 months. Both the Counsel for Discipline and Mills filed exceptions to the referee's recommended sanction.

FACTUAL BACKGROUND

Mills was admitted to the practice of law in the State of Nebraska on January 22, 1973. The charges in this case arise from Mills' representation of Cheryl Borgelt, personal representative of the estate of David Borgelt. David died intestate in Cuming County, Nebraska, on July 28, 1998, and was survived by his wife, Cheryl, five adult children, and several grandchildren. Following David's death, Cheryl retained Mills to assist her in the estate proceedings. Mills testified that the Borgelt estate was the largest he had ever handled.

Due to David's intestacy, as well as the size of the estate, consideration was given as to the best method to minimize or defer estate taxes. The method chosen was renunciation, wherein the Borgelts' adult children would renounce any claim they had to the Borgelt estate so that the property could pass directly to Cheryl. It was further determined that when necessary, the Borgelts' adult children would renounce on behalf of their minor children. Mills testified that he had never handled an estate in which a renunciation or disclaimer was used. Although Mills states that he "did not necessarily agree that the renunciation process would necessarily be in the best interest of the client," brief for respondent at 3, Mills ultimately advised Cheryl to proceed with renunciation.

Prior to retaining Mills, the record discloses that Cheryl met with another attorney regarding the feasibility of a renunciation plan. That attorney informed Cheryl that the Borgelts' children could not unilaterally renounce on behalf of their minor children. The record further shows that Mills was aware of that attorney's opinion at the time he undertook his representation of Cheryl and the estate.

Before recommending that the adult children renounce not only their interests in the estate but also that of their minor children, Mills contacted an attorney employed in the estate tax division of the Internal Revenue Service (IRS) with whom Mills had "developed a working relationship, long-standing in nature." Brief for respondent at 3. Mills' purpose in contacting the attorney was to ascertain whether renunciation would be permissible in the circumstances of the Borgelt estate. The attorney told Mills that he believed renunciation would be permissible. This discussion was not confirmed in writing, and Mills did no further research on the issue. Mills acknowledged in his testimony before the referee that he should not have relied on the attorney's belief. It was later determined that under the circumstances presented, the Borgelts' adult children could not renounce their respective minor children's interest without court approval.

The renunciations prepared by Mills required that the signatures of those executing the renunciations be notarized. Since several of the Borgelt children lived outside the Cuming County area, their renunciations were sent by mail. Mills requested those children living outside the area to sign and return the renunciations to him, at which time he would notarize the signatures. Upon receipt, Mills notarized the renunciations despite the fact that he had not witnessed the children's signing the documents.

In addition to notarizing the documents in this manner, Mills directed his secretary to alter the dates on which the Borgelt children had actually signed the renunciations so that they were uniformly dated March 25, 1999, which the secretary accomplished by using "white out." Mills also notarized several warranty deeds signed by the Borgelt children, again without witnessing their signatures. To those deeds, Mills affixed a date of April 8, 1999, although that was not the date on which the deeds were signed.

Mills believed all of these steps were required to be completed within 9 months of David's death. The record indicates, however, that both the renunciations and the deeds were actually circulating amongst the Borgelt family in May 1999, which was beyond the 9-month postdeath time limitation of April 28, 1999.

At the hearing before the referee, Mills testified that he mistakenly believed it was sufficient that the renunciations simply be signed within 9 months of David's death, and that filing within that time period was not required. See, generally, Neb.Rev. Stat. § 30-2352(b) (Reissue 1995). Federal estate tax return form 706 (Form 706) was completed and filed on March 25, 1999. The renunciations were filed with the county court for Cuming County on June 30, 1999, and the deeds were filed with the register of deeds of Cuming County on that same date.

In reviewing copies of the renunciations, Michele Moser, the IRS attorney assigned to examine the tax return, "noted that the renunciations were not timely filed." In addition, Moser believed there were indications suggesting the renunciations were not properly dated. Moser then traveled to Cuming County to examine the original renunciations. Upon examination, Moser observed that most of the renunciations contained two dates, a typewritten date over the "white out" and a handwritten date under the "white out."

When Moser contacted Mills concerning these discrepancies, Mills was not truthful about the date the renunciations were signed or in whose presence the renunciations were acknowledged. Mills also told Moser he did not know why "white out" had been used on the renunciations, claiming it must have been done by his secretary for appearance purposes. Mills further told Moser that the renunciations were received by the personal representative prior to March 25, 1999, the date Form 706 was filed.

After Mills had been contacted by Moser, Mills wrote a letter to Cheryl dated June 2, 2000, which stated in part, "I left a message on your answering machine this morning. It is critical that in the event [Moser] calls any of your children that they tell her they were in Wisner on March 25, 1999 and signed the renunciation (disclaimer) in my presence."

Eventually, Mills admitted his wrongdoing and a new attorney was retained by Cheryl to represent the Borgelt estate. The record indicates that during the IRS investigation of the circumstances surrounding the filing of Form 706, neither Cheryl nor her children provided any false or inaccurate information to the IRS and, further, that no family member was the focus of any criminal investigation. The record further indicates that Cheryl and the estate suffered a financial loss due to Mills' actions. Also, at the time of Mills' hearing, the potential existed for additional IRS penalties resulting from these events.

Amended formal charges were filed against Mills in this court, alleging he violated the following provisions of the Code of Professional Responsibility:

DR 1-102 Misconduct.

(A) A lawyer shall not:

(1) Violate a Disciplinary Rule.

....

(3) Engage in illegal conduct involving moral turpitude.

(4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.

(5) Engage in conduct that is prejudicial to the administration of justice....

(6) Engage in any other conduct that adversely reflects on his or her fitness to practice law.

....

DR 6-101 Failing to Act Competently.

(A) A lawyer shall not:

(1) Handle a legal matter which the lawyer knows or should know that he or she is not competent to handle, without associating with a lawyer who is competent to handle it.

(2) Handle a legal matter without preparation adequate in the circumstances.

(3) Neglect a legal matter entrusted to him or her.

....

DR 7-102 Representing a Client Within the Bounds of the Law.

(A) In his or her representation of a client, a lawyer shall not:

....

(4) Knowingly use perjured testimony or false evidence.

(5) Knowingly make a false statement of law or fact.

(6) Participate in the creation or preservation of evidence when the lawyer knows or it is obvious that the evidence is false.

(7) Counsel or assist a client in conduct that the lawyer knows to be illegal or fraudulent.

(8) Knowingly engage in other illegal conduct or conduct contrary to a Disciplinary Rule.

It was further alleged that Mills' conduct violated Neb.Rev.Stat. § 76-218 (Reissue 1996) (violation of notary's duty).

REFEREE'S FINDINGS

A referee was appointed to conduct a hearing in this matter. In a report filed February 21, 2003, the referee found there was clear and convincing evidence that Mills had violated Canon 1, DR 1-102(A)(1) and (3) through (6); Canon 6, DR 6-101(A)(1) and (2); and Canon 7, DR 7-102(A)(4) through (8); as well as § 76-218. The referee found there was not clear and convincing evidence as to any violation of DR 6-101(A)(3). The referee recommended a suspension of 5 months, noting that

[t]he nature of the offense is extremely serious; the need for deterring others is evident; the maintenance of the Bar's reputation and protection of the public militates in favor of some substantial punishment; the attitude of the Respondent was cooperative and remorseful and is taken into account; and, finally, the behavior of the Respondent does bring into question his fitness to continue to practice law.

ASSIGNMENTS OF ERROR...