IN THE SUPREME COURT OF IOWA

No. 14–1781

Filed April 3, 2015

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

Complainant,

vs.

JOHN E. CEPICAN,

Respondent.

On review of the report of the Grievance Commission of the 

Supreme Court of Iowa.

Grievance commission recommended revocation of attorney’s 

license. LICENSE SUSPENDED. 

Charles L. Harrington and David J. Grace (until withdrawal) then 

Amanda K. Robinson, Des Moines, for complainant. 

John E. Cepican, Bettendorf, pro se. 
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CADY, Chief Justice.

The Iowa Supreme Court Attorney Disciplinary Board charged 

John E. Cepican with violating the Iowa Rules of Professional Conduct

pertaining to neglect of client matters, failure to follow trust account 

procedures upon receipt of retainers, and failure to respond to the Board. 

The Grievance Commission of the Supreme Court of Iowa found Cepican 

converted client funds without a colorable future claim to them. It

recommended Cepican’s license to practice law be revoked. On our 

review, we find Cepican violated the rules of professional conduct, but he 

was not provided with adequate advance notice that he was charged with 

converting client funds. We suspend his license to practice law for a 

period not less than six months. 

I. Background Facts and Proceedings. 

John Cepican is an Iowa lawyer. He was admitted to practice law 

in 1974 and developed a practice primarily limited to the area of 

intellectual property. He maintained an office in Bettendorf, but was not 

actively engaged in his practice by the time this disciplinary action 

proceeded to hearing. Cepican is sixty-six years old. 

The Board brought a three-count complaint against Cepican 

alleging various violations of the Iowa Rules of Professional Conduct 

involving his actions with three clients. Each count in the complaint 

involved a different client, and the evidence at the hearing showed 

Cepican caused substantial heartache and harm to each of them. In the 

first count, Cepican represented a client to secure a patent for an 

invention involving a toy. Over time, he neglected to perform certain 

legal services and failed to adequately communicate with the client. After 

the client brought a complaint against him, Cepican failed to reply to the 

Board on numerous occasions. 
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The two other counts in the complaint also involved neglect of 

client matters. One of the counts involved a complex scientific invention 

by the client. The neglect by Cepican was serious enough for the United 

States Patent and Trademark Office (USPTO) to issue notices of 

abandonment of the patent application of the client. The conduct by 

Cepican in this and other cases eventually led to a default judgment 

excluding him from practicing before the USPTO. 

The final two complaints also alleged Cepican failed to follow 

proper trust account procedures upon receiving client retainers. In the 

second count, Cepican received a client retainer for legal work he agreed 

to perform. He then neglected the work and failed to refund the retainer 

after the client became dissatisfied with his inaction. In the third 

complaint, Cepican received a $5000 retainer from the client to perform 

legal work, but again failed to complete the work or return the retainer. 

He also failed to place the retainer in his trust account and failed to 

provide the client with an accounting. The client subsequently brought a 

lawsuit against Cepican to recover the retainer and obtained a default 

judgment in the amount of $5000. 

After Cepican failed to respond to the allegations of the complaint, 

the commission deemed the allegations in the complaint to be admitted. 

Additionally, Cepican was prohibited from introducing witnesses or 

evidence on the charges and was not permitted to object to any evidence 

offered by the Board. These actions were a result of sanctions imposed 

by the commission based on Cepican’s failure to respond to discovery 

requests. The case then proceeded to a hearing limited to the imposition 

of sanctions. In a prehearing brief, the Board explained that the trust 

fund allegations involved the claim that Cepican “did not follow proper 

trust account procedures with respect to said retainers.”
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The evidence at the hearing revealed Cepican had experienced 

numerous problems in his personal and professional life over a period of 

several years prior to the complaints and the hearing. Cepican testified

he had no desire to return to the active practice of law, but requested the 

commission make a recommendation that he be suspended from the 

practice of law for a period of time. At the close of the hearing, the Board 

told the commission that Cepican’s trust fund conduct warranted a 

revocation of his license based on his admission to the allegations that 

he converted retainer funds for his personal use before the fees were fully 

earned. 

The commission concluded Cepican’s trust fund violation 

constituted stealing because no evidence was presented during the 

hearing that he had a colorable future claim to the $5000 retainer 

provided by the client in the third count. The commission found this 

conclusion was also supported by evidence that the client obtained a 

judgment against Cepican for the full amount of the retainer. 

Consequently, it recommended that his license to practice law be 

revoked. 

II. Scope of Review. 

“We review attorney disciplinary matters de novo.” Iowa Supreme 

Ct. Att’y Disciplinary Bd. v. Lemanski, 841 N.W.2d 131, 133 (Iowa 2013). 

III. Ethical Violations and Sanctions. 

An attorney who misappropriates a client retainer fee either 

violates the rules pertaining to the safekeeping of client funds and client 

trust accounts, Iowa Rules of Professional Conduct 32:1.15 and Iowa 

Court Rules chapter 45, or commits theft in violation of the rules of 

professional conduct pertaining to misconduct involving dishonesty, 

fraud, deceit, or misrepresentation, Iowa Rules of Professional Conduct 
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32:8.4(c). The difference in the conduct is critical because of the 

difference in the sanctions imposed. Theft of client funds is grounds for

revocation, while the failure to follow the rules governing retainer fees 

normally results in a less severe sanction. See Iowa Supreme Ct. Att’y 

Disciplinary Bd. v. Powell, 830 N.W.2d 355, 358–59 (Iowa 2013) 

(recognizing a consistent pattern of revocation for client fund conversion 

and suspension for trust fund violations involving the early taking of 

fees). Often, the critical distinction between the two violations rests on 

whether or not the attorney had a colorable future claim to the funds. 

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Carter, 847 N.W.2d 228, 232

(Iowa 2014). An attorney in a disciplinary proceeding has the burden to 

produce evidence of a colorable future claim, but the burden of proving 

theft remains with the Board. Id. at 232–33.

In this case, no evidence was presented by Cepican concerning a 

colorable future claim to the client retainer in the amount of $5000. He 

was precluded from introducing any evidence as a sanction for failing to 

answer the complaint and discovery requests. Yet, there was evidence a

client obtained a judgment against Cepican in the amount of $5000 in a 

lawsuit brought to recover the retainer. There was also evidence from

the clients indicating Cepican did little work in their cases.

On our de novo review, we conclude it is unnecessary for us to 

determine if Cepican committed theft of retainer funds to justify the 

recommended sanction of revocation. We conclude the complaint in the 

proceedings before the commission did not provide adequate notice to 

Cepican of the charge of theft, and this lack of notice denied him a 

reasonable opportunity to defend against the claim and the sanction of 

revocation. 
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An attorney in a disciplinary action is entitled to notice of the 

specific charges of misconduct alleged to have been committed. Iowa Ct. 

R. 35.5. The charges must be known to the attorney before the hearing 

begins. In re Ruffalo, 390 U.S. 544, 551, 88 S. Ct. 1222, 1226, 20 

L. Ed. 2d 117, 122 (1968) (holding the quasi-criminal nature of 

disciplinary cases requires fair notice of the charges); see also Iowa 

Supreme Ct. Att’y Disciplinary Bd. v. Nelson, 838 N.W.2d 528, 536 n.2 

(Iowa 2013) (citing Ruffalo and noting that “the [B]oard must disclose the 

charges against an attorney before the proceedings commence”). The 

notice requirement is a basic component of procedural due process. 

Nelson, 838 N.W.2d at 536 n.2. 

An attorney is given sufficient notice of misconduct alleging theft or 

misappropriation of a client retainer when the complaint is not only 

predicated on a violation of the rules pertaining to the safekeeping of 

property and trust accounts, but also includes allegations that the rule 

prohibiting conduct involving dishonesty, fraud, deceit, or 

misrepresentation was violated. See Iowa Rs. Prof’l Conduct 32:1.15, 

32:8.4(c); Iowa Ct. Rs. 45.1, 45.2, 45.7. The complaint should 

specifically allege misappropriation or conversion of a client retainer for 

personal use without a colorable future claim. See Iowa Supreme Ct. 

Att’y Disciplinary Bd. v. Kelsen, 855 N.W.2d 175, 183 n.3 (Iowa 2014). 

We recognize notice of an allegation of theft of a retainer may be satisfied 

with less precise language in the complaint, but only when supplemented 

by a record that shows the attorney actually had an opportunity to 

submit evidence of a colorable future claim at the disciplinary hearing 

and understood the issue was being litigated. See id. (finding attorney 

understood the charge and presented evidence to establish a colorable 

claim).
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In this case, the allegations in the complaint did not provide 

adequate notice to Cepican that he faced a claim of misconduct in the 

nature of theft that would support revocation of his license. The 

complaint only alleged he obtained retainers and did not deposit them 

into his trust account, even though the retainers had not been earned. 

Cepican admitted, as required by the commission’s sanction, all the 

allegations in the complaint, but the possibility that he faced a 

revocation of his license to practice law was not raised until the 

conclusion of the hearing. Thus, his conduct in failing to respond to the 

complaint cannot be deemed a waiver of his right to contest the 

allegations of theft. Under the circumstances, Cepican did not have a 

fair opportunity to know the issue of theft was in play and to produce 

evidence to show he had a future colorable claim to the retainer. This 

defense is established by evidence the attorney had a good-faith intent to 

perform the work even when the attorney failed to perform enough of the 

work to exhaust the retainer. See Carter, 847 N.W.2d at 233–34

(permitting a colorable future claim to “shield an attorney from 

revocation when the premature fee claim exceeds the actual fee earned if 

the funds converted were retainer funds”). Furthermore, a default 

judgment entered against an attorney in the civil action over a retainer 

would not render the colorable-future-claim defense inapplicable in a 

subsequent disciplinary action. See Iowa Supreme Ct. Att’y Disciplinary 

Bd. v. Rhinehart, 827 N.W.2d 169, 177–78 (Iowa 2013) (explaining the 

requirements for issue preclusion based on prior proceedings).1 The 

1Two default judgments were imposed against Cepican. First, the USPTO 

entered a default judgment excluding Cepican from practice before the USPTO. This 

judgment was admitted for preclusive effect regarding Cepican’s neglect and 

abandonment of his patent cases under Iowa Court Rule 35.7. The second default 

judgment was from an Iowa court for the amount of the retainer in Count III. The 

 
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difference in burden of proof between an ordinary civil action and a 

disciplinary action generally means civil actions do not have preclusive 

effect in disciplinary hearings. See Iowa Ct. R. 35.7(3)(b) (requiring the 

burden of proof in the original proceeding be greater than mere 

preponderance of the evidence); Iowa Supreme Ct. Bd. of Prof’l Ethics & 

Conduct v. Murphy, 669 N.W.2d 254, 257 (Iowa 2003) (finding the 

difference in burden of proof prevented issue preclusion). Additionally, a

default judgment is not a final judgment on the merits for the purposes 

of issue preclusion. See Winnebago Indus., Inc. v. Haverly, 727 N.W.2d 

567, 572 (Iowa 2006) (“Iowa law is clear that issue preclusion requires 

that the issue was ‘actually litigated’ in the prior proceeding. . . . . ‘In the 

case of a judgment entered by confession, consent, or default, none of 

the issues is actually litigated.’ ” (Citations omitted.) (quoting 

Restatement (Second) of Judgments § 27 cmt. e, at 257 (1982))). Thus, 

Cepican could have asserted the defense of colorable future claim at the 

hearing. 

Accordingly, we do not consider whether Cepican violated the rules 

of professional conduct pertaining to the misappropriation of a retainer 

without a colorable future claim. The other violations alleged by the 

Board in the complaint were established at the hearing and support the 

imposition of discipline. Based on all the evidence presented at the 

hearing, we suspend Cepican from the practice of law for a period of time 

not less than six months. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. 

Bartley, ___ N.W.2d ___, ___, (Iowa 2015) (suspending license for six 

judgment is not included in this record. Further, no notice was provided to Cepican 

that the Board intended to use it for preclusive effect. See Iowa Ct. R. 35.7(3)(c). 

However, the commission effectively granted the judgment preclusive effect to conclude 

Cepican performed no work on the case. 

_________________________
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months for neglect, trust account violations, and misrepresentation); 

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Hauser, 782 N.W.2d 147, 153–

54 (Iowa 2010) (suspending license for six months for severe neglect, 

failure to communicate, and trust account violations); Iowa Supreme Ct. 

Att’y Disciplinary Bd. v. Walker, 712 N.W.2d 683, 685–86 (suspending 

license for six months for neglect, misrepresentation, and failure to 

communicate resulting in harm to the clients). 

The sanction imposed does not minimize the seriousness of the 

conduct by the attorney or the harm caused to the clients. It considers 

all the objectives of imposing sanctions on attorneys who violate the 

rules of professional responsibility. But, it also recognizes, as we must, 

that the legal process must be fair and, in this case, include fair advance 

notice when a revocation of license to practice law is on the line. 

IV. Conclusion. 

We suspend the license of John E. Cepican to practice law in Iowa 

for a period not less than six months. Cepican shall comply with all 

rules pertaining to the suspension. See Iowa Ct. R. 35.13. Costs of this 

proceeding are assessed against Cepican. See id. r. 35.27(1). 

LICENSE SUSPENDED. 

All justices concur except Wiggins, J., who takes no part.