Case Title: Office of Lawyer Regulation v. Daniel F. DeMaio

Citation: 2009 WI 95

Docket Number: 2008AP001119-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2009-10-01T00:00:00Z

Document:
2009 WI 95 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2008AP1119-D 
COMPLETE TITLE: 
 
 
In the Matter of Disciplinary Proceedings 
Against Daniel F. DeMaio, Attorney at Law: 
 
Office of Lawyer Regulation, 
          Complainant-Respondent, 
     v. 
Daniel F. DeMaio, 
          Respondent-Appellant. 
 
 
 
 
DISCIPLINARY PROCEEDINGS AGAINST DeMAIO 
 
 
OPINION FILED: 
October 1, 2009   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
        
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
        
 
COUNTY: 
        
 
JUDGE: 
        
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
        
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
      
 
 
 
 
2009 WI 95
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2008AP1119-D  
 
 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against Daniel F. DeMaio, Attorney at Law: 
 
Office of Lawyer Regulation, 
 
          Complainant-Respondent, 
 
     v. 
 
Daniel F. DeMaio, 
 
          Respondent-Appellant. 
 
FILED 
 
OCT 1, 2009 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
ATTORNEY 
disciplinary 
proceeding.   
Attorney 
publicly 
reprimanded.   
 
¶1 
PER CURIAM.   We review a report and recommendation by 
Referee James G. Curtis that Attorney Daniel F. DeMaio be 
publicly reprimanded for his professional misconduct and that he 
be 
ordered to pay the full costs of this disciplinary 
proceeding. 
¶2 
Following the filing of the referee's report and 
recommendation, 
Attorney DeMaio filed a document entitled 
"Respondent's Dispositional Memo," which purported to address 
No. 
2008AP1119-D   
 
2 
 
the question of the appropriate sanction.  After the Office of 
Lawyer Regulation (OLR) filed a motion to strike this filing 
because it was not a notice of appeal, Attorney DeMaio withdrew 
the document.  Thus, since no appeal has been filed, our review 
proceeds under SCR 22.17(2).1 
¶3 
When reviewing a referee's report and recommendation 
in a disciplinary matter, we will affirm the referee's findings 
of fact unless they are found to be clearly erroneous, but we 
review conclusions of law de novo.  See In re Disciplinary 
Proceedings Against Inglimo, 2007 WI 126, ¶5, 305 Wis. 2d 71, 
740 N.W.2d 125; In re Disciplinary Proceedings Against Carroll, 
2001 WI 130, ¶29, 248 Wis. 2d 662, 636 N.W.2d 718.  With respect 
to the question of discipline, we determine the appropriate 
level of discipline given the particular facts of each case, 
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. 
¶4 
Attorney DeMaio was admitted to the practice of law in 
Wisconsin in 1990 and currently practices in Hudson.  In 1998 he 
                                                 
1 SCR 22.17(2) states: 
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. 
No. 
2008AP1119-D   
 
3 
 
received a private reprimand.  That is the only prior discipline 
imposed on Attorney DeMaio. 
¶5 
All three counts in this disciplinary proceeding 
relate to Attorney DeMaio's representation of and interactions 
with client M.B.  The relevant facts set forth below are taken 
from the referee's findings of fact. 
¶6 
As of 2004 M.B. was married to, but separated from, 
G.P.  M.B. and G.P. together owned a piece of residential real 
estate that will be referenced in this decision simply as the 
"Property."  In February 2004 M.B. and G.P. signed a listing 
contract for the sale of the Property.  The Property was subject 
to a number of mortgages.  On May 13, 2004, First National Bank 
of Hudson (FNB) obtained a judgment of foreclosure on the 
Property.  A sheriff's sale was held later in 2004, at which 
time FNB became the entity entitled to purchase the Property, 
subject to the circuit court confirming the sale. 
¶7 
Attorney DeMaio's attorney-client relationship with 
M.B. began in October 2004, when the St. Croix County circuit 
court appointed Attorney DeMaio at county expense to represent 
M.B. in a criminal proceeding.  The circuit court ordered M.B. 
to make monthly $100 payments to the county as reimbursement for 
payment of Attorney DeMaio's fees.  M.B. made two such payments.  
In April 2005 the state filed a motion to dismiss the criminal 
charges against M.B., and the circuit court granted the motion 
to dismiss.  The court approved Attorney DeMaio's fee request 
and ordered that M.B.'s cash bail of $750 and her two $100 
No. 
2008AP1119-D   
 
4 
 
monthly payments be applied toward the payment of Attorney 
DeMaio's fees and expenses. 
¶8 
While Attorney DeMaio was representing M.B. on the 
criminal matter, he also began to represent her on a private pay 
basis with respect to debt relief matters.  In light of the 
foreclosure 
action 
and 
the 
sheriff's 
sale 
regarding 
the 
Property, Attorney DeMaio told M.B. that he could delay the 
foreclosure process by filing a bankruptcy petition on behalf of 
M.B. and G.P.  M.B. retained Attorney DeMaio to pursue a 
bankruptcy action.  At least initially, the primary purpose of 
these efforts was to preserve any equity in the Property for 
M.B. and G.P. 
¶9 
The referee found that Attorney DeMaio never entered 
into 
a 
written 
fee 
agreement 
with 
M.B. 
regarding 
his 
representation of her on debt relief matters.  In addition, 
there is no writing which itemizes Attorney DeMaio's time, the 
work he performed, or the expenses he incurred when representing 
M.B., with the exception of his work on the criminal matter. 
¶10 Attorney DeMaio had M.B. complete a relatively short 
debt relief client information sheet.  Attorney DeMaio then 
filed a Chapter 13 personal bankruptcy petition on M.B.'s 
behalf.  Although a Chapter 13 petition is designed for 
individuals with employment income, M.B. had no employment 
income at the time the petition was filed.  In addition, the 
petition was filed only on behalf of M.B. and did not include 
G.P. 
No. 
2008AP1119-D   
 
5 
 
¶11 The bankruptcy court ordered M.B. to submit a Chapter 
13 plan and other documents by December 20, 2004.  It also 
scheduled an initial meeting of M.B.'s creditors for January 18, 
2005. 
¶12 On December 16, 2004, Attorney DeMaio sent a letter to 
M.B. asking her to come to his office immediately in order to 
prepare a Chapter 13 plan.  On December 17, 2004, Attorney 
DeMaio sent another letter to M.B., this time advising her that 
the Property had been sold at a sheriff's sale and was awaiting 
court confirmation of the sale. 
¶13 On December 20, 2004, the United States bankruptcy 
trustee assigned to M.B.'s case filed a motion seeking dismissal 
of her Chapter 13 petition because she had failed to file a plan 
as required by the bankruptcy court's order.  M.B. gave a $700 
money order to Attorney DeMaio that he was to send to the 
trustee as evidence of her good faith.  Attorney DeMaio 
forwarded the money order to the trustee on January 18, 2005.  
Also on that date Attorney DeMaio and M.B. attended the initial 
meeting of creditors. 
¶14 Despite the pendency of the trustee's motion to 
dismiss, Attorney DeMaio and M.B. did not file a Chapter 13 
plan.  Consequently, on January 21, 2005, the bankruptcy court 
dismissed the bankruptcy petition.  According to a specific 
finding by the referee, the dismissal of the Chapter 13 
bankruptcy 
proceeding 
did 
not 
end 
the 
attorney-client 
relationship between Attorney DeMaio and M.B. with respect to 
obtaining debt relief for M.B. 
No. 
2008AP1119-D   
 
6 
 
¶15 On or about January 31, 2005, the trustee sent to 
Attorney DeMaio a $700 check made payable to M.B.  The check was 
intended to be a refund of the $700 money order that Attorney 
DeMaio had submitted on M.B.'s behalf.  Although M.B. may have 
been informed orally that Attorney DeMaio's office had received 
the $700 refund check, Attorney DeMaio did not inform M.B. of 
that fact in writing.  The referee further found that Attorney 
DeMaio never sought written authority or permission from M.B. to 
deposit the $700 check.  Attorney DeMaio deposited the $700 
check into an account that his law office maintained.  Although 
Attorney DeMaio initially stated that the check had been 
deposited into a "Cost Account," he later told the OLR District 
Committee that he had deposited the check into his "Earned Fee 
Account." 
¶16 Attorney DeMaio knew from his representation of M.B. 
that M.B. and G.P. were attempting to sell the Property even 
while the sheriff's sale was awaiting confirmation.  M.B. had 
attempted to convince Attorney DeMaio that he should consider 
personally purchasing the Property.  In late February 2005 
Attorney DeMaio told M.B. that he and his wife might be 
interested in the Property and that they wished to view it.  As 
a result, M.B.'s real estate agent showed the Property to 
Attorney DeMaio and his wife, who expressed an interest in 
purchasing it. 
¶17 At some point around this time, M.B. learned that the 
confirmation of the sheriff's sale of the Property was imminent.  
She subsequently met with Attorney DeMaio.  Attorney DeMaio 
No. 
2008AP1119-D   
 
7 
 
admits that he had a conversation with M.B. concerning his 
interest in purchasing the Property and the matter of the real 
estate agent's commission.  Attorney DeMaio asserts that M.B. 
raised the question as to whether she could avoid paying a 
commission to the real estate agent by filing a bankruptcy 
petition.  The referee did not make a specific factual finding 
as to when these discussions occurred.     
¶18 Attorney DeMaio did begin to prepare Chapter 7 
bankruptcy documents for M.B. in mid-March 2005.  According to 
the referee's report, "DeMaio stated he does not recall 
precisely why he was preparing Chapter 7 bankruptcy documents 
for [M.B.] at that time, but he 'presumes' it was at [M.B.'s] 
request."  As part of these efforts, Attorney DeMaio also sent 
forms to G.P. to be completed and returned.  Attorney DeMaio 
sent no further written communications to M.B. requesting 
additional information or indicating that additional steps 
needed to be taken in order to commence a Chapter 7 bankruptcy 
action.  Attorney DeMaio, however, never filed a Chapter 7 
bankruptcy on behalf of M.B. or G.P. 
¶19 On March 14, 2005, FNB obtained an order confirming 
the sheriff's sale of the Property to FNB.  FNB took title to 
the Property and changed the locks on the house.  M.B. had 
vacated the Property by this time. 
¶20 Either M.B. or the real estate agent informed Attorney 
DeMaio that FNB had obtained title to the Property.  After FNB 
took title to the Property, Attorney DeMaio contacted FNB and 
expressed an interest in purchasing the Property from the bank.  
No. 
2008AP1119-D   
 
8 
 
Attorney DeMaio initially offered to pay $250,000 for the 
Property, but the bank responded that the purchase price was 
$270,000.  Attorney DeMaio and his wife subsequently purchased 
the Property from FNB for $270,000.   
¶21 Attorney DeMaio did not inform M.B. that he intended 
to make an offer to purchase the Property before he submitted an 
offer to the bank.  The appraisal report and property inspection 
report connected with Attorney DeMaio's offer to purchase are 
dated March 28, 2005, after FNB took title to the Property.  The 
transaction closed on April 1, 2005, with Attorney DeMaio and 
his wife receiving a warranty deed from FNB. 
¶22 The referee expressly found that no discussion took 
place at any time between Attorney DeMaio and M.B. where 
Attorney DeMaio advised M.B. of an actual or potential conflict 
of interest between them because of Attorney DeMaio's interest 
in the Property.  Attorney DeMaio never prepared any writing 
advising M.B. of the potential conflict of interest, and he did 
not obtain a written waiver of the potential conflict of 
interest. 
¶23 The 
referee also explicitly found that Attorney 
DeMaio's purchase of the property from FNB did not cause any 
economic loss or detriment to M.B.  When M.B. and G.P. had 
initially placed the Property on the market, the asking price 
was $334,000.  The listing price, however, was reduced several 
times.  By March 2005 the listing price had dropped to $275,000, 
with $6,200 in allowances, for a net asking price of $268,800.  
Thus, Attorney DeMaio did not benefit from purchasing the 
No. 
2008AP1119-D   
 
9 
 
property from the bank instead of from M.B. and G.P.  In 
addition, the referee found that at this sales price, there 
would not have been any equity in the home for M.B. and G.P. 
after satisfying the loan obligations to the bank. 
¶24 Based on these findings of fact, the referee concluded 
that Attorney DeMaio had violated former SCR 20:1.15(d)(1),2 by 
failing to notify M.B. in writing that he had received the $700 
refund check from the bankruptcy trustee.  Although no written 
notice was provided, in violation of the rule's requirements, 
the referee did note that Attorney DeMaio believed that M.B. had 
been informed that the check was in Attorney DeMaio's office.3   
¶25 In addition, the referee concluded that Attorney 
DeMaio had demonstrated a lack of diligence and promptness, in 
                                                 
2 Former SCR 20:1.15(d)(1) (effective July 1, 2004, through 
June 30, 2007) provided:   
 
Upon receiving funds or other property in which a 
client has an interest, or in which the lawyer has 
received notice that a 3rd party has an interest 
identified by a lien, court order, judgment, or 
contract, the lawyer shall promptly notify the client 
or 3rd party in writing.  Except as stated in this 
rule or otherwise permitted by law or by agreement 
with the client, the lawyer shall promptly deliver to 
the client or 3rd party any funds or other property 
that the client or 3rd party is entitled to receive. 
3 We note that there was no claim in the OLR's complaint 
that Attorney DeMaio violated any rule by depositing the check 
into 
a 
regular 
business 
account 
instead 
of 
immediately 
delivering it to M.B. or depositing it into a client trust 
account.  The referee therefore reached no legal conclusions on 
this subject.  We also do not reach the issue. 
No. 
2008AP1119-D   
 
10 
 
violation of SCR 20:1.3,4 by failing to ascertain the status of 
the confirmation of the sheriff's sale of the Property.  
Attorney DeMaio initially contended that he had no obligation to 
determine the status of the confirmation because by March 2005, 
M.B. had no equity in the home and had moved to another 
residence.  The referee stated in his report, however, that when 
Attorney DeMaio filed the Chapter 13 bankruptcy petition in 
December 2004, a primary purpose of that filing was to attempt 
to preserve any equity that M.B. might have had in the Property, 
which depended on the amount that could be realized in a sale of 
the Property.  Consequently, the referee concluded that Attorney 
DeMaio retained an obligation to ascertain whether and when the 
confirmation would occur because that information was needed for 
Attorney DeMaio to continue to advise M.B. properly in early 
2005 regarding what legal options, if any, she might have.  This 
was especially true because Attorney DeMaio's expression of 
interest in the property may have given M.B. a glimmer of hope 
that some equity could be preserved.  Because he failed to 
obtain the confirmation information, the referee concluded that 
Attorney DeMaio had violated SCR 20:1.3. 
¶26 Finally, the referee also concluded that Attorney 
DeMaio had violated former SCR 20:1.7(b)5 by continuing his 
                                                 
4 SCR 20:1.3 states, "A lawyer shall act with reasonable 
diligence and promptness in representing a client." 
5 Former SCR 20:1.7(b) (effective prior to July 1, 2007) 
provided, in pertinent part: 
A lawyer shall not represent a client if the 
representation 
of that client may be materially 
No. 
2008AP1119-D   
 
11 
 
representation of M.B. despite the fact that the representation 
may have been materially limited by Attorney DeMaio's own 
interest in purchasing the Property, in which M.B. and her 
husband retained an interest.  The referee commented that 
Attorney 
DeMaio 
may 
have 
reasonably 
believed 
that 
the 
representation would not be adversely affected by his personal 
interest in his client's property, but such a belief did not 
satisfy the requirements of the rule because the rule also 
required Attorney DeMaio to consult with his client regarding 
the conflict and to obtain written consent to continue the 
representation.  Attorney DeMaio neither consulted with M.B. 
about the at least potential conflict of interest nor did he 
obtain a written waiver of the conflict. 
¶27 Although the referee found that Attorney DeMaio's 
purchase of the Property after the bank took title to it did not 
cause economic loss to M.B., the referee noted that it did 
create an appearance of impropriety in M.B.'s view.  M.B. placed 
her faith in Attorney DeMaio's efforts to avoid the foreclosure 
and to preserve any possible equity in the Property.  Even 
though there may not have been anything that could have been 
                                                                                                                                                             
limited by the lawyer's responsibilities to another 
client or to a third person, or by the lawyer's own 
interests, unless: 
(1) the 
lawyer 
reasonably 
believes 
the 
representation will not be adversely affected; and 
(2) the 
client 
consents 
in 
writing 
after 
consultation.  
No. 
2008AP1119-D   
 
12 
 
done as of March 2005 to change the situation regarding FNB's 
purchase of the Property or the loss of M.B.'s equity, Attorney 
DeMaio had learned of the situation regarding the Property by 
virtue of his representation, and he purchased the Property 
within a few weeks after M.B. lost title to her home.  The 
referee stated that under these circumstances it was very 
understandable for M.B. to feel betrayed by her attorney, 
especially when he had previously failed to consult with her or 
obtain a written waiver for a potential conflict of interest. 
¶28 With respect to the level of discipline, the OLR 
sought 
a 
60-day 
suspension, 
citing 
In 
re 
Disciplinary 
Proceedings Against Riegleman, 2003 WI 3, 259 Wis. 2d 1, 657 
N.W.2d 339, and In re Disciplinary Proceedings Against Krueger, 
2006 WI 17, 288 Wis. 2d 586, 709 N.W.2d 857.  On the other hand, 
Attorney DeMaio requested that the referee recommend a private 
reprimand.  He contended that his conduct was less harmful than 
that which occurred in Public Reprimand of William P. Skemp, 
2008-7, where Attorney Skemp actually completed the purchase of 
a house from his clients without consulting with them about the 
conflict of interest and without obtaining a written waiver, and 
also separately violated SCR 20:8.4(c) when he later resold the 
property without disclosing to the buyer that the property had 
been contaminated by a fuel oil spill.  
¶29 The referee did not find any of the precedents cited 
by the parties to be directly on point.  All three cases 
involved attorneys who were found to have engaged in dishonesty, 
fraud, 
deceit 
or 
misrepresentation, 
in 
violation 
of 
SCR 
No. 
2008AP1119-D   
 
13 
 
20:8.4(c).  In the present case, the referee noted that Attorney 
DeMaio had not been charged with a violation of SCR 20:8.4(c), 
and there was no clear and convincing evidence that he had 
engaged in dishonest or deceitful acts.  He characterized 
Attorney DeMaio's misconduct as involving more of a lack of 
diligence and communication than dishonesty.  Further, none of 
the cases cited by the parties involved the same three rules 
violations that Attorney DeMaio had committed. 
¶30 The referee noted that Attorney DeMaio had received a 
prior reprimand in 1998, but gave that prior discipline little 
weight since it was fairly remote in time and did not involve 
similar misconduct.  The referee also indicated that he believed 
the fact that Attorney DeMaio's long-time secretary had been 
terminally ill with cancer during the relevant time period was a 
major mitigating factor due to her frequent absences from work 
and Attorney DeMaio's emotional difficulties with the situation.  
The referee stated that Attorney DeMaio had acknowledged that he 
had experienced a loss of empathy for clients during this time 
period and that he had given "shoddy treatment" to M.B.  The 
referee concluded that Attorney DeMaio had demonstrated genuine 
remorse for his misconduct in the representation of M.B.  
Ultimately, balancing the fact that Attorney DeMaio's misconduct 
resulted from a lack of diligence and communication with his 
client with the fact that his failure to consult with and obtain 
a written waiver from M.B. for the conflict of interest created 
an appearance of impropriety in M.B.'s eyes, the referee 
No. 
2008AP1119-D   
 
14 
 
concluded that a public reprimand would be the appropriate level 
of discipline.   
¶31 The referee also recommended that Attorney DeMaio be 
required to pay the full costs of this disciplinary proceeding.  
The OLR subsequently submitted a statement of costs showing 
total costs of $5,290.22 as of February 20, 2009.  Attorney 
DeMaio did not file an objection to the requested costs. 
¶32 We conclude that the referee's findings of fact are 
not erroneous, and we adopt them.  We also determine that those 
findings support the referee's conclusions that Attorney DeMaio 
committed the three violations alleged in the OLR's complaint.  
Attorney DeMaio had a clear obligation to notify M.B. of his 
receipt of the refund check.  Given the fact that he was 
advising M.B. regarding debt relief matters, he also clearly had 
an obligation to ascertain when the confirmation of the 
sheriff's sale would occur and whether M.B. had any options to 
prevent the confirmation.  With respect to the conflict of 
interest charge, although it appears that Attorney DeMaio did 
not have any negotiations with M.B. regarding price or the 
preparation of an offer to purchase her property, his interest 
in the Property and his expression of that interest to M.B. 
while she still had an interest in the Property may have 
materially limited his representation of M.B., such that he 
should have consulted with M.B. and obtained her written consent 
to continuing the representation. 
¶33 With respect to the level of discipline, we agree with 
the 
referee 
that 
a 
public 
reprimand 
is 
the 
appropriate 
No. 
2008AP1119-D   
 
15 
 
discipline to impose in this instance.  There was no finding by 
the referee that Attorney DeMaio maneuvered the situation to 
obtain a financial benefit for himself at his client's expense 
or that he engaged in dishonest or deceitful conduct.  On the 
other hand, he did fail to take certain necessary steps to 
provide proper representation to M.B., and his failure to 
consult with and obtain a written waiver from M.B. gave her the 
impression that he had looked out for his own interests rather 
than her interests.  We conclude that a public reprimand is 
commensurate with Attorney DeMaio's misconduct, and that it will 
properly serve to deter Attorney DeMaio and other attorneys from 
committing similar misconduct in the future. 
¶34 Finally, we determine that Attorney DeMaio should be 
required to pay the full costs of this disciplinary proceeding. 
¶35 IT IS ORDERED that Daniel F. DeMaio is publicly 
reprimanded for his professional misconduct. 
¶36 IT IS FURTHER ORDERED that within 60 days of the date 
of this order, Daniel F. DeMaio shall 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 Daniel F. DeMaio to practice law in Wisconsin 
shall be suspended until further order of the court. 
No. 
2008AP1119-D   
 
 
 
1