Opinion ID: 1684998
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: First, we consider Smith's claim that the referee's findings of fact are clearly erroneous. Smith contends that the main issue in this case is client neglect that occurred because of her illnesses. She alleges that the referee erred by focusing on her mismanagement of the trust funds, that the evidence does not support the referee's findings, and that the referee's findings did not take her illnesses into account. If a referee's findings of fact are supported by competent, substantial evidence, this Court is precluded from reweighing the evidence and substituting its judgment for that of the referee. See Florida Bar v. Jordan, 705 So.2d 1387, 1390 (Fla.1998). The record demonstrates that Smith's misconduct was the result of substantial financial mismanagement rather than misappropriation. Therefore, the referee was correct in examining Smith's mismanagement of the client funds. Smith admitted depositing the Munims' $1665 into her operating account instead of her trust account. She also testified about unintentionally using those funds for expenses rather than applying them towards the Munims' filing fee. Further, a Bar auditor conducted an audit of Smith's account and determined that she deposited the $1665 check into her operating account. The auditor also found that on January 13, 2000, the balance in Smith's operating account was $1,766.25 short of her obligation to the Munims. We find that the record supports the referee's findings that Smith deposited the Munims' check into her operating account and that the balance in Smith's account was insufficient to cover her financial obligations to the Munims. We also find that the referee's factual findings demonstrate that the referee took Smith's illnesses into account. In her report, the referee outlined Smith's health problems that began in the summer of 1999 and extended to January 2001, when she had the emergency surgery related to her deceased fetus. The referee also repeatedly referred to Smith's health problems and even considered them as mitigating factors. We conclude that the referee's findings of fact are supported by competent, substantial evidence.
The referee recommended that Smith be found guilty of two violations of rule 4-8.4(c) (a lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation) for her mismanagement of the Munims' funds and for writing the worthless $100 check to her phone answering service. Smith asserts that because her financial misconduct was the result of extraordinary sloppiness and negligence, the referee's findings do not support the referee's recommendations that Smith violated rule 4-8.4(c). Smith claims the record does not demonstrate that she had the intent necessary to result in violations of the rule. Smith is correct that the element of intent must be shown to find a violation of rule 4-8.4(c). However, in Florida Bar v. Fredericks, 731 So.2d 1249 (Fla.1999), this Court stated that in order to satisfy the element of intent it must only be shown that the conduct was deliberate or knowing. Id. at 1252. See also Florida Bar v. Barley, 831 So.2d 163, 169 (Fla.2002). In Fredericks, this Court noted that the motive behind the attorney's action was not the determinative factor. Rather, the issue was whether the attorney deliberately or knowingly engaged in the activity in question. In the instant case, Smith deposited the Munims' check into her operating account, rather than her trust account, and spent the funds on unrelated expenses. Smith was unable to offer a valid explanation for her actions. Further, in January 2000, a month after she deposited the check, the balance in her operating account was still over $1700 short to cover her obligation to the Munims. We find that Smith's misconduct regarding the Munims' funds was deliberate or knowing, and approve the referee's recommendation of this violation of rule 4-8.4(c). However, we disapprove the referee's recommendation that Smith violated the rule by writing a single worthless check to her phone answering service. We acknowledge that issuing worthless checks can result in a serious rule violation. See Florida Bar v. Kassier, 730 So.2d 1273 (Fla.1998) (issuing numerous worthless checks constituted a violation of rule 4-8.4(c)). However, considering the facts of the instant case, where Smith wrote a single check for a modest amount and there is no evidence that she knew the check would be returned, we cannot find that Smith intended to defraud the company. Therefore, Smith did not have the intent necessary to result in a violation of rule 4-8.4(c) when she wrote the check to the answering service. [1]
Smith next alleges that the referee did not properly consider the facts in finding the aggravating factors. She argues that the referee's finding of a pattern of misconduct is not supported by the evidence because she does not have a prior disciplinary history. She also claims that the finding of multiple offenses is not supported because the misconduct in the instant case was an isolated incident that took place during Smith's period of illness. This Court has held that a referee's finding as to the existence of a particular aggravator is considered a factual determination and is therefore presumed correct and will be upheld unless clearly erroneous or lacking in evidentiary support. Florida Bar v. Barley, 831 So.2d 163, 170 (Fla. 2002). See also Florida Bar v. Wolis, 783 So.2d 1057 (Fla.2001). In contrast to Smith's claim that there was no pattern of misconduct, the record indicates that she established a pattern of neglecting her clients. Her failure to properly process the Munims' case (Count I) started in November 1999 and continued until she finally reimbursed them the filing fee in October 2000. With regard to Kebbab's case (Count II), he hired Smith in October 2000 because his immigration status would expire in late December 2000. It was not until the spring or summer of 2001, after Kebbab went to the INS and discovered that his case had never been filed and that his status had been changed to illegal, that Smith concluded his case. These two cases demonstrate that Smith's pattern of neglect extended well over one and one-half years. Smith's claim that the record does not support the referee's finding of multiple offenses is without merit. The fact that the referee recommended thirteen rule violations supports the finding of this aggravating factor. Smith has failed to show that the referee's finding of these two aggravating factors is clearly erroneous or lacking in evidentiary support.
Next, we consider Smith's challenge to the referee's recommended discipline of a two-year suspension. In reviewing a referee's recommended discipline, this Court's scope of review is broader than that afforded to the referee's findings of fact because, ultimately, it is the Court's responsibility to order the appropriate sanction. See Florida Bar v. Anderson, 538 So.2d 852, 854 (Fla.1989); see also Art. V, § 15, Fla. Const. However, generally speaking this Court will not second-guess the referee's recommended discipline as long as it has a reasonable basis in existing case law and the Florida Standards for Imposing Lawyer Sanctions. See Florida Bar v. Temmer, 753 So.2d 555, 558 (Fla. 1999). It is well settled that the misuse of client funds held in trust is one of the most serious offenses a lawyer can commit and that disbarment is presumed to be the appropriate punishment. Florida Bar v. Travis, 765 So.2d 689, 691 (Fla.2000); see also Florida Bar v. Tillman, 682 So.2d 542 (Fla.1996). However, Florida Standard for Imposing Lawyer Sanctions 4.1 states that mitigating circumstances can be taken into account. If mitigating factors indicate that disbarment is not appropriate, suspension may be considered as an appropriate sanction. See Fla. Stds. Imposing Law. Sancs 4.12; see also Florida Bar v. Mason, 826 So.2d 985 (Fla.2002); Florida Bar v. Tauler, 775 So.2d 944 (Fla.2000). For the reasons expressed below, which include substantial mitigation, we find that the referee's recommended discipline does not have a reasonable basis in existing case law. The referee found that Smith's misconduct was not due to a dishonest or selfish motive. Rather, her lack of financial motivation contributed to her significant financial mismanagement. We agree. The record indicates that Smith's financial mismanagement was the product of extraordinary sloppiness and negligence in bookkeeping, rather than misappropriation or an intent to deceive her clients. We have imposed a two-year suspension under more egregious circumstances. In Florida Bar v. Mason, 826 So.2d 985 (Fla. 2002), an attorney created trust account shortages because she engaged in over eighty transfers of funds from her trust account to her operating account. After reviewing the record, this Court found that Mason's errors were due to mistakes in accounting practices and that she was not attempting to intentionally steal from her clients. Mason received a two-year suspension. The rationale in Mason is applicable to the instant case, in which Smith's misconduct is also due to financial mismanagement. Further, in both cases the referees only found two aggravating factors, while noting similar mitigating factors: (1) the respondents had personal and emotional problems (or a physical impairment); (2) efforts were made to correct the problems; (3) the respondents were overwhelmed by or inexperienced in handling the administrative responsibilities of a law practice; (4) the respondents had good reputations; and (5) the respondents showed remorse. However, we find Smith's misconduct to be less egregious than Mason's because Smith's financial mismanagement did not rise to the level displayed in Mason. Although Florida Bar v. Tauler, 775 So.2d 944 (Fla.2000), involved misappropriation, it provides guidance in the instant case. The mitigation in Tauler included extensive service to the indigent. Further, Tauler had diminished culpability because she suffered from extreme hardships. This Court suspended her for three years, stating that the disciplinary sanction was based on the unique mitigating circumstances present in the case, including Tauler's clear commitment to providing legal assistance to those in need. In comparison to Tauler, Smith did not engage in misappropriation. However, as in Tauler's case, the referee here found substantial mitigation. Smith has dedicated her career to helping those less fortunate. The record indicates that Smith has devoted all the years she has been an attorney to taking care of the indigent, the poor, the needy, [and] the downtrodden. Society could suffer for her loss during a lengthy suspension. See Florida Bar v. Lord, 433 So.2d 983, 986 (Fla.1983) (discipline for unethical conduct must be fair to society, which includes not denying the public the services of a qualified lawyer as a result of an unduly harsh sanction). Further, Tauler and Smith both suffered from severe hardships. Tauler had an overbearing husband who had received a serious back injury, causing him to lose his surgical practice. Tauler's husband had filed for bankruptcy, and they were in the process of losing their home. Tauler was found to have diminished culpability due to the circumstances surrounding [her] misconduct. Tauler, 775 So.2d at 947. Although this Court will not excuse an attorney for dipping into his trust funds as a means of solving personal problems, it will recognize that judgment can be impaired so as to diminish culpability. Florida Bar v. Shanzer, 572 So.2d 1382, 1384 (Fla.1991). See also Florida Bar v. Condon, 632 So.2d 70 (Fla.1994). In comparison to Tauler, Smith suffered from various illnesses for an extensive period, Smith lost her baby, and, due to her work helping society's downtrodden instead of pursuing a more lucrative practice, she sometimes operated without a support staff. Smith became overwhelmed due to a combination of medical problems and financial struggle. We find that under these circumstances, Smith had diminished culpability. Further, because Smith did not engage in misappropriation, we find Smith's misconduct to be less egregious than Tauler's. Smith's misconduct was due to financial mismanagement rather than misappropriation. Also, her case presents substantial mitigation, which includes her various medical problems and extensive service to society's less fortunate. Further, we disapprove the referee's recommendation that Smith violated rule 4-8.4(c) by issuing one worthless check to her phone answering service. Considering these factors, we conclude case law indicates that the referee's recommended discipline does not have a reasonable basis of support. Although we are troubled by Smith's financial mismanagement and neglect of her clients, we conclude that the instant facts and case law indicate that a one-year suspension is the appropriate sanction.
Finally, Smith claims the referee erred in recommending that she pay $2997 in restitution to the Munims for mishandling their INS paperwork. The Bar states that the referee's recommended amount of $2997 should be offset by the $1665 Smith already reimbursed to the Munims. The remaining amount, $1332, represents the Munims' expenses for replacing the material they submitted to INS. Rule 3-5.1(i), Restitution, states that a referee may order restitution if a respondent has received a clearly excessive, illegal, or prohibited fee or ... the respondent has converted trust funds or property. The purpose of Bar discipline procedures is to protect the public. See Florida Bar v. Cox, 794 So.2d 1278 (Fla. 2001). In Florida Bar v. Della-Donna, 583 So.2d 307 (Fla.1989), this Court stated that [d]isciplinary actions cannot be used as a substitute for what should be addressed in private civil actions against attorneys. They are not intended as forums for litigating claims between attorneys and third parties.... We cannot and should not turn restitution as a condition to practicing our profession into a judgment for a third party. 583 So.2d at 312 (citations omitted). See also Florida Bar v. Neale, 384 So.2d 1264, 1265 (Fla.1980) (The rights of clients should be zealously guarded by the bar, but care should be taken to avoid the use of disciplinary action under [the rules of ethics] as a substitute for what is essentially a malpractice action.). Pursuant to rule 3-5.1(i) and case law, this Court does not award restitution to clients unless it is related to excessive or illegal fees or theft of client funds or property. As the remaining amount of $1332 represents the Munims' expenses for replacing the material they submitted to INS, we agree with Smith that the referee improperly recommended restitution of those expenses. Therefore, we disapprove the referee's recommendation that Smith pay this additional restitution to the Munims.