Case Title: Office of Lawyer Regulation v. Shawn G. Rice

Citation: 2007 WI 68

Docket Number: 2005AP001181-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2007-06-07T00:00:00Z

Document:
2007 WI 68 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
CASE NO.: 
2005AP1181-D 
 
 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Shawn G. Rice, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant, 
     v. 
Shawn G. Rice, 
          Respondent.   
 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST RICE 
 
 
OPINION FILED: 
June 7, 2007   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
      
 
 
2007 WI 68
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2005AP1181-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Shawn G. Rice, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant, 
 
     v. 
 
Shawn G. Rice, 
 
          Respondent. 
 
FILED 
 
JUN 7, 2007 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney 
publicly 
reprimanded.   
 
¶1 
PER CURIAM.   We review the referee's recommendation 
that 
we 
publicly 
reprimand 
Attorney 
Shawn 
G. 
Rice 
for 
professional 
misconduct 
committed 
in 
connection 
with 
his 
personal involvement in a commercial real estate transaction.  
Neither the Office of Lawyer Regulation (OLR) nor Attorney Rice 
has appealed the recommendation filed by the referee, James J. 
Winiarski.  Therefore, the matter is submitted to the court for 
No. 
2005AP1181-D   
 
2 
 
review pursuant to SCR 22.17(2).1  In conducting our review we 
will affirm the referee's findings of fact unless they are 
clearly erroneous.  See In re Disciplinary Proceedings Against 
Sosnay, 209 Wis. 2d 241, 243, 562 N.W.2d 137 (1997).  We review 
the 
referee's 
conclusions 
of 
law 
de novo. 
 
See 
In 
re 
Disciplinary Proceedings Against Carroll, 2001 WI 130, ¶29, 248 
Wis. 2d 662, 636 N.W.2d 718.  In accordance with our authority 
to supervise the practice of law in this state, we determine the 
level of discipline that is appropriate under the particular 
circumstances, independent of the referee's recommendation, but 
benefiting from it.  See In re Disciplinary Proceedings Against 
Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d 686. 
¶2 
Attorney Rice was admitted to practice in Wisconsin in 
1993.  He has no prior disciplinary history.  On May 5, 2005, 
the OLR filed a complaint against him, alleging four counts of 
conduct involving dishonesty, fraud, deceit or misrepresentation 
in violation of SCR 20:8.4(c).2  Attorney Rice filed an answer 
and the matter was submitted to a referee.  The parties executed 
                                                 
1 SCR 22.17(2) provides: Review; appeal. 
(2) If no appeal is filed timely, the supreme 
court shall review the referee's report; adopt, reject 
or modify the referee's findings and conclusions or 
remand the matter to the referee for additional 
findings; 
and 
determine 
and 
impose 
appropriate 
discipline. The court, on its own motion, may order 
the parties to file briefs in the matter. 
2 SCR 20:8.4(c) provides that it is professional misconduct 
for a lawyer to "engage in conduct involving dishonesty, fraud, 
deceit or misrepresentation." 
No. 
2005AP1181-D   
 
3 
 
a joint stipulation as to facts and a hearing was conducted on 
March 7 and 8, 2006.  Post-hearing briefs were submitted and the 
referee filed his report on September 25, 2006.  No appeal was 
filed.  
¶3 
The situation that gave rise to the OLR complaint is 
explained thoroughly in the referee's report and recommendation.  
We draw heavily from that excellent report and recommendation in 
our decision here.  As noted, the alleged misconduct occurred in 
connection with a commercial real estate transaction that went 
awry, resulting in civil litigation.  A stipulation was 
submitted to the referee, but as the referee notes, it includes 
numerous "contentions" of the various parties and was of limited 
assistance in helping the referee resolve factual issues in this 
disciplinary matter.  Our discussion does not describe every 
detail or nuance of the underlying commercial real estate 
transaction, only those findings we find relevant to the 
disciplinary matter before us today. 
¶4 
On June 17, 2002, Jetmir Ameti ("Ameti") through his 
real estate agent, Paul Gottsacker ("Gottsacker"), submitted an 
offer to purchase a parcel of commercial property in Sheboygan, 
Wisconsin ("the property") for $370,000.  The offer was not 
accepted.   
¶5 
Gottsacker and Ameti then approached Attorney Rice 
because Gottsacker knew that Attorney Rice had previously 
expressed interest in purchasing commercial real estate for 
personal investment purposes.  On or about June 25, 2002, 
Attorney 
Rice, 
Gottsacker 
and 
Ameti 
verbally 
reached 
an 
No. 
2005AP1181-D   
 
4 
 
understanding.  Attorney Rice would purchase the property and 
Ameti would lease the property from Attorney Rice, with an 
option to eventually purchase the property. 
¶6 
On July 8, 2002, Attorney Rice drafted an offer to 
purchase the property for $430,000, listing the buyer as Trinity 
Partners, LLC ("Trinity").  Trinity consisted of Attorney Rice 
and a trust created for the benefit of his wife and children.  
Ameti was not a member of Trinity.  He had no authority to sign 
documents on behalf of Trinity. 
¶7 
On or about July 9, 2002, Gottsacker met with Ameti to 
review the offer to purchase.  Ameti approved the terms and 
Gottsacker signed Ameti's name to the offer on behalf of Trinity 
Partners, LLC, without indicating the signature was not made by 
Ameti.  Gottsacker then faxed the offer to the seller.  The 
signature on the offer read:  "Jetmir Ameti" under which was 
typed:  "Buyer's Signature; Print Name Here:  Trinity Partners, 
LLC." 
¶8 
Gottsacker 
apparently 
proposed 
that 
Ameti's 
name 
appear on the offer, as opposed to that of Attorney Rice, so 
that the seller would not know there was a "new player" 
interested in the property. 
¶9 
On July 11, 2002, several things happened.  The seller 
submitted a counteroffer that amended the closing date, but made 
no other substantial changes to the offer.  Attorney Rice signed 
Ameti's name to the counteroffer, with a signature block that 
falsely represented that Ameti was a member of Trinity.   
No. 
2005AP1181-D   
 
5 
 
¶10 This action comprises the first count of misconduct 
alleged in the OLR complaint. 
¶11 Ameti and Attorney Rice then signed a letter of intent 
entitled "Intent to Lease Proposal" that set forth the basic 
terms of their agreement with respect to the property.  The 
letter identified the tenant as Jetmir Ameti and the landlord as 
"Trinity Partners, LLC or its assigns."  One provision of the 
letter of intent read:  "It is understood and agreed that this 
letter of intent shall not be binding upon either party until a 
Lease document is drafted and fully executed by both Landlord 
and Tenant and until the board of directors for both Landlord 
and Tenant have fully approved the Lease." 
¶12 On July 24, 2002, Attorney Rice sent a proposed lease 
to the attorney with the law firm of von Briesen & Roper, S.C., 
which initially represented Ameti in the negotiations. 
¶13 On July 26, 2002, Attorney Rice formed a new limited 
liability company entitled 2327, LLC.  Attorney Rice was the 
sole member of 2327, LLC.  On July 31, 2002, a Unanimous Consent 
of the Members of Trinity Partners, LLC, was executed, assigning 
its rights and obligations under the offer for the property to 
2327, LLC.  On the same date, an Assignment and Assumption of 
Offer to Purchase was executed between Trinity and 2327, LLC.  
Attorney Rice signed the Assignment on behalf of both entities. 
¶14 Attorney Rice then hired Alpha Terra Science to 
perform a Phase I Environmental Site Assessment ("Phase I") on 
the property.  After reviewing the results of the Phase I, Alpha 
No. 
2005AP1181-D   
 
6 
 
Terra suggested further testing as there was an indication there 
might be a problem.  At this point, the "deal" began to go awry. 
¶15 On July 31, 2002, Attorney Rice submitted copies of 
the Phase I to the seller's attorney.  He then contracted with 
Alpha Terra Science to conduct a Phase II Environmental Site 
Assessment ("Phase II") on the property. 
¶16 In mid-August 2002, Gottsacker, Ameti, and Attorney 
Rice held a three-way telephone conference to discuss the 
results of the Phase II.  During this conversation, Ameti 
indicated he was no longer interested in leasing or buying the 
property because the Phase II results showed the property ". . . 
wasn't completely 100 percent clean."  Attorney Rice and Ameti 
had yet to agree upon the terms of the lease and, thus, there 
was no binding agreement between them—only the initial letter of 
intent.   
¶17 On the afternoon of August 14, 2002, Attorney Rice, 
who was anxious about Ameti's apparent decision to pull out of 
the deal, met with Thomas Schafer ("Schafer") to discuss 
Schafer's possible purchase of the property.   
¶18 Attorney Rice verbally agreed to sell the property to 
Schafer.  Gottsacker attended that meeting.  After the meeting, 
Attorney Rice typed an "Outline of Agreement" in which he 
proposed to sell his entire ownership interest in 2327, LLC, to 
Schafer for $440,000, plus all costs incurred in acquiring the 
property.  The Outline of Agreement also stated:  "Other terms 
and conditions to be agreed by the parties and set forth in a 
definitive agreement."  Schafer accepted the terms of the 
No. 
2005AP1181-D   
 
7 
 
Outline of Agreement, but changed the closing date to September 
26, 2002, and returned a signed copy of the Outline of Agreement 
to Attorney Rice. 
¶19 The third count of the OLR complaint alleged that 
Attorney Rice failed to disclose a binding agreement to sell 
real estate to one individual while negotiating to sell the same 
property to a second individual. 
¶20 On August 15, 2002, Attorney Rice received an e-mail 
from Ameti's counsel, an attorney at Von Briesen & Roper, S.C., 
inquiring about the closing date.  In response to that e-mail, 
Attorney Rice sent a letter via facsimile confirming that the 
closing was scheduled for the following date but did not include 
the time or location of the closing.  Attorney Rice contends 
that he felt he had no need or obligation to provide this 
information because he understood that the inquiry was in 
connection to efforts by Ameti to lease the building, not to 
purchase the real estate.  
¶21 Attorney Rice also did not disclose to Ameti's counsel 
that on July 31, 2002, that he had formed a new entity, called 
2327, LLC, for purposes of taking title to the property, and 
that Attorney Rice had assigned to 2327, LLC, Trinity's entire 
interest in the property. 
¶22 On August 15, 2002, Attorney Rice sent an e-mail to 
Ameti's lawyer in which he stated:  "I understand your client 
did not want to close if the property was not 100% clean.  Phase 
II was faxed to you this a.m.  Please call me after reviewing 
it."  The responsive e-mail stated:  ". . . [Ameti] just told me 
No. 
2005AP1181-D   
 
8 
 
he talked with Steven [from Alpha Terra Science] regarding Phase 
II and he was comfortable with the risk and wanted to proceed."   
¶23 Attorney Rice then sent an e-mail stating:  "My client 
is not as confident as Jetmir is.  Have you spoken to alpha 
terra directly?"   
¶24 Alpha Terra faxed the Phase II test results to Ameti's 
lawyer on August 15, 2002. 
¶25 Sometime on August 15, 2002, Attorney Rice had a 
conversation with Ameti during which Ameti indicated he was 
interested in leasing and ultimately purchasing the property.   
¶26 Attorney Rice did not disclose to Ameti or Ameti's 
lawyer that he had signed an Outline of Agreement with Schafer.  
Attorney Rice claimed that he was not obligated to do so since 
neither party was bound by the agreement at that time. 
¶27 On August 15, 2002, Attorney Rice faxed a proposed 
purchase agreement to Schafer's lawyer. 
¶28 On August 20, 2002, Attorney Rice sent Ameti's lawyer 
an e-mail stating:  "Your client's indication on Thursday, 
August 15th that he would not lease the property if it was not 
100% 
clean 
caused 
Trinity 
Partners 
to 
pursue 
other 
alternatives." 
¶29 At some point after the August 16, 2002 closing, 
Attorney Rice resumed discussions with Ameti and his lawyer 
regarding leasing the property with an obligation to buy the 
property at the conclusion of the lease.  During these 
negotiations Attorney Rice did not disclose that he had already 
No. 
2005AP1181-D   
 
9 
 
signed an Outline of Agreement with Schafer and had received a 
$5000 payment. 
¶30 Attorney Rice continued negotiating the terms of the 
agreement 
with 
Schafer's 
attorney. 
 
He 
contends 
that 
negotiations stalled when Schafer attempted to change the terms 
of the agreement.  On September 5, 2002, Attorney Rice sent a 
letter to Schafer and enclosed a $5000 check as reimbursement 
for the payment previously made to him. 
¶31 On September 6, 2002, Ameti executed an "Agreement to 
Purchase Limited Liability Company Interest" in which Attorney 
Rice agreed to sell his entire interest in 2327, LLC, to Ameti 
for $450,000, with a closing date of September 30, 2002.  
Attorney Rice did not disclose to Ameti the August 14, 2002, 
Outline of Agreement with Schafer.  He contended that he had no 
obligation to disclose that document because it was non-binding. 
¶32 Attorney 
Rice 
had 
subsequent 
discussions 
with 
Schafer's attorneys in which he did not disclose the September 
6, 2002, agreement with Ameti.  Again, Attorney Rice contends 
that he regarded the agreement with Ameti as non-binding and 
that, therefore, he had no obligation to disclose it to Schafer 
or his attorneys.  However, in a letter Attorney Rice later 
wrote to the OLR investigator, Jessica Long, dated March 15, 
2004, Attorney Rice stated: 
Since no formal agreement was signed with Schafer, and 
since Rice believed the Outline of Agreement was not a 
binding contract, Rice entertained further discussions 
with Ameti, who by that time had obtained subsequent 
financing capable of purchasing the property from 
2327, LLC.  2327 LLC and Ameti entered into a valid 
No. 
2005AP1181-D   
 
10 
 
and binding contract for the purchase of the LLC which 
controlled the property on September 6, 2002. 
¶33 Attorney 
Rice 
received 
a 
letter 
from 
Schafer's 
attorney dated September 9, 2002, in which he indicated that 
Schafer intended to "go forward with the closing on September 
12th or September 26th."  On September 12, 2002, Attorney Rice 
replied, stating that he had earlier explained to Schafer that 
if Schafer wanted to proceed, he would be getting the property 
"as is," with the buyer assuming the risk for any potential 
claims by third persons. 
¶34 On September 20, 2002, Schafer filed an affidavit of 
interest with the Sheboygan County Register of Deeds. 
¶35 On 
September 
26, 
2002, 
Michael 
Mnichowicz 
("Mnichowicz"), a lawyer at Attorney Rice's firm, sent an e-mail 
to Schafer's lawyer and Attorney Rice in which he stated:  "If 
you [Seibel, on behalf of Schafer] are ready, willing and able 
to close, I must assume your client is willing to accept the 
property and the LLC subject to the interests of Mr. Ameti since 
that was one of the assumptions in which the outline of 
agreement was based." 
¶36 Amati subsequently filed a civil lawsuit against 
several of the participants to this real estate transaction, 
including Attorney Rice. See Ameti v. Rice, et al., No. 01-CV-
679, Sheboygan County Circuit Court.  
¶37 During his deposition in connection with this lawsuit, 
Attorney 
Rice 
testified 
that 
he 
had 
consulted 
with 
an 
environmental attorney in his firm after he received the 
No. 
2005AP1181-D   
 
11 
 
preliminary results of the Phase II and before he spoke with 
Ameti and Gottsacker.  Attorney Rice stated that his firm's 
environmental attorneys told him ". . . that there was no action 
that was required by the property owner or anyone else in 
receipt of the report."  Attorney Rice testified that he was 
still concerned about the contamination, but stated:  "I 
deferred to counsel in that it wasn't a clear violation that 
required any action at that point."   
¶38 It was later determined that Attorney Rice, in fact, 
did not consult with an environmental attorney after he received 
the preliminary results of Phase II.  Attorney Rice only 
consulted with an environmental attorney at his law firm after 
receiving the Phase I results.  In April 2003, as part of the 
then-pending civil litigation, Attorney Rice's counsel and 
Ameti's counsel signed a stipulation that stated in relevant 
part as follows: 
At no time prior to August 17, 2002, did defendant, 
Shawn Rice, or any person acting on his behalf, 
discuss or confer with any attorney competent in 
environmental law at Davis & Kuelthau, S.C., regarding 
either the results or the significance of the Phase II 
environmental assessment that was performed by Alpha 
Terra Science, Inc., and/or Test America Incorporated 
on or about August 9, 2002 to August 14, 2002. 
In the stipulated facts executed in connection with this matter, 
Attorney 
Rice 
acknowledges 
that 
his 
deposition 
testimony 
included a misrepresentation regarding the "Phase II" report.  
The second count of the OLR complaint alleges that Attorney Rice 
No. 
2005AP1181-D   
 
12 
 
gave false testimony during a deposition in violation of SCR 
20:8.4. 
¶39 In addition, at his February 11, 2003 deposition in 
the civil suit, Attorney Rice was asked whether he told 
Mnichowicz about the purchase agreement he had signed with Mr. 
Ameti on September 6, 2002.  Attorney Rice answered:  "Mr. 
Mnichowicz was aware of the agreement with Mr. Ameti that was 
signed on September 6th."  Attorney Rice was then asked:  "Was 
he [Mnichowicz] was [sic] aware that you weren't willing to sell 
the property to Mr. Schafer subject to Mr. Ameti's interests 
before September 30th?"  Attorney Rice replied:  "You could read 
this several ways."  He then stated:  "Mr. Mnichowicz understood 
the entire situation here." 
¶40 However, during his March 20, 2003 deposition in the 
civil suit, Mnichowicz testified that he had not previously been 
made aware by Attorney Rice of the September 6, 2002 agreement 
with Ameti.  He testified that he saw that agreement for the 
first time at his deposition.  The fourth count of the complaint 
also alleges that Attorney Rice gave false testimony during a 
civil deposition. 
¶41 The 
civil 
lawsuit 
was 
settled 
prior 
to 
trial.  
Pursuant 
to 
the 
terms 
of 
the 
settlement, 
Attorney 
Rice 
subdivided the property and conveyed a portion of the property 
to Ameti for a purchase price of $170,000.  Attorney Rice 
conveyed the remaining portion of the property to Schafer and 
paid Schafer $55,000 in exchange for a full release of all 
claims against the property.   
No. 
2005AP1181-D   
 
13 
 
¶42 The OLR complaint against Attorney Rice was filed on 
May 5, 2005. 
¶43 The referee reviewed all these matters and reached the 
following conclusions of law.  The referee concluded that the 
OLR had met its burden of proof with respect to Counts I, II and 
IV, pertaining to the allegations that Attorney Rice violated 
SCR 20:8.4 twice by making false statements in a deposition and 
in executing a document falsely reflecting Ameti as a member of 
Trinity.  
¶44 However, the referee concluded that the OLR failed to 
prove Count III, stating that the OLR "failed to prove by clear, 
satisfactory, and convincing evidence that by failing to 
disclose to Schafer that Rice had entered into a binding 
agreement with Ameti and, after having entered into the binding 
agreement with Ameti, continuing to negotiate a sale of the 
property to Schafer without disclosing such negotiations to 
Ameti, Rice engaged in conduct . . . contrary to SCR 8.4(c)."   
¶45 The referee thus concluded that based on the record 
evidence presented, Attorney "Rice did not have a binding 
contract to sell or lease the subject real estate to either 
Amati or Schaefer until the September 6, 2002, contract."  The 
referee noted that "[t]he actions of Ameti also show that he 
thought he could walk away from the initial transaction."  The 
referee concluded that there was "insufficient evidence" to show 
that Attorney Rice was being dishonest or deceitful when he 
continued negotiations with Schafer after he entered into the 
September 2002, binding contract.   
No. 
2005AP1181-D   
 
14 
 
¶46 We accept the referee's factual findings and the legal 
conclusions drawn from those findings.    
¶47 Accordingly, we turn to the appropriate discipline for 
the three violations of SCR 20:8.4.  We note that the OLR argued 
for 
a 
60-day 
suspension. 
 
The 
referee 
rejected 
that 
recommendation, explaining that he did not perceive a "pattern 
of misconduct" in this case.  The referee recommended a public 
reprimand, explaining: 
I have carefully reviewed all the evidence cited by 
OLR in support of their argument of a pattern of 
misconduct.  I do not find such a pattern of 
misconduct. 
 
Instead, 
I 
find 
that 
Rice 
lacked 
experience 
in 
making 
personal 
investments 
in 
commercial real estate. . . .  
Rice's judgment was clouded by the fact that he 
had personally invested funds in the transaction.  His 
deposition testimony, while untruthful and clearly a 
misrepresentation, was an improper attempt to try to 
protect himself from civil liability in a transaction 
that had gotten out of hand.  Also, the evidence does 
not show that Rice had any original intention to 
misrepresent any facts to anyone.   
I do not excuse any of Rice's misrepresentations, 
but I also do not find that they constitute a pattern 
of misconduct. . . . 
The referee continued: 
It 
is 
of 
particular 
importance 
to 
me 
in 
recommending appropriate discipline that Rice did not 
enter into this transaction with the intent to deceive 
anyone.  He found himself getting deeper and deeper 
into a quagmire as a result of a poor decision to 
involve himself personally in a real estate investment 
opportunity.  I also place considerable weight on the 
fact that Ameti and Schafer were not Rice's clients, 
but rather astute businessmen who had no reluctance to 
use all leverage available to them to get their way. 
No. 
2005AP1181-D   
 
15 
 
The referee recommended further that the court require Attorney 
Rice to pay the costs of this proceeding.   
¶48 Ultimately, we agree that a public reprimand is 
adequate discipline for Attorney Rice's misconduct in connection 
with the handling of this commercial real estate transaction.  
Attorney Rice is further ordered to pay the costs of this 
proceeding which total $28,832.91, as of October 18, 2006.3  
¶49 IT IS ORDERED that Attorney Shawn G. Rice is publicly 
reprimanded for his professional misconduct. 
¶50 IT IS FURTHER ORDERED that within 60 days of the date 
of this order Shawn G. Rice pay to the Office of Lawyer 
Regulation the costs of this proceeding.  If the costs are not 
paid within the time specified, and absent a showing to this 
court of his inability to pay the costs within that time, the 
license of Shawn G. Rice to practice law in Wisconsin shall be 
suspended until further order of the court. 
                                                 
3 By S.Ct. Order 05-01, 2006 WI 34, 287 Wis. 2d xiii, 714 
N.W.2d Ct.R-21 (May 1, 2006), this court amended the rules 
pertaining to imposition of costs in lawyer disciplinary matters 
filed on or after July 1, 2006.  The complaint in this matter 
was filed May 5, 2005; the new rules are not applicable here.   
No. 
2005AP1181-D   
 
 
 
1