Opinion ID: 1931842
Heading Depth: 2
Heading Rank: 2

Heading: The Kim Funds

Text: Neither can we accept the Board's finding that Edwards misappropriated any of the Kim funds. After receiving the $5,500 settlement check from State Farm and depositing it in her operating account, Ms. Edwards transferred $4,000 of that money to her escrow account. According to the settlement sheet executed by Mr. Kim, Edwards was entitled to $1,833 in attorney's fees from the settlement check. After all disbursements had been made to Kim and others named in the distribution agreement, only $333 of the Kim funds remained in the escrow account. Ms. Edwards then made a payment of $766.55, apparently unauthorized by Kim, to Barbara Bailey, another attorney, for work performed in the Kim case. The only certain conclusion from these facts is that the payment to Ms. Bailey exhausted the remaining $333 of the Kim settlement proceeds, an amount to which Edwards was already entitled. Nothing in the record indicates that the payment to Bailey was made with money that Edwards was obliged to pay to Kim or to anyone else involved in the Kim case. It follows that any additional money disbursed to Bailey came from funds other than those belonging to Kim. Although such conduct could perhaps form the basis for a claim of misappropriation, i.e., if Bar Counsel could establish that Edwards used other client funds to make the payment to Bailey, on the present record there is no evidence that Kim or any other client had any interest in the money remaining in the escrow account at the time that Edwards drew the check to Bailey. Since no evidence in the record supports a finding that Edwards used any client money to pay Ms. Bailey, a finding of misappropriation cannot be based on that transaction. See In re Micheel, 610 A.2d at 233. The only other possible instance of misappropriation with regard to the Kim funds [7] was Edwards' deposit of the $5,500 settlement check on June 19 in her operating account when the account carried a negative balance of $103.60, which effectively reduced the amount of the deposit to $5,396.40. As we have held, misappropriation occurs when the balance in that account falls below the amount due to the client. In re Micheel, 610 A.2d at 233. However, there was no dispute that Edwards was entitled to approximately $1,870 of the settlement proceeds in fees and costs, according to the settlement sheet executed on June 24. Therefore, despite the negative balance in her operating account at the time of the deposit, the balance in that account after the deposit was sufficient to cover the amount still due to Kim.