Opinion ID: 2068232
Heading Depth: 1
Heading Rank: 3

Heading: Lichtenberg And Davis

Text: Both Respondents look to our decisions in Attorney Grievance v. Lichtenberg, 379 Md. 335, 842 A.2d 11 (2004), and its companion case, Attorney Grievance v. Davis, 379 Md. 361, 842 A.2d 26 (2004) for the general proposition that an attorney acting solely as a title agent cannot be liable for MRPC violations. Purcell contends that [i]n both Lichtenberg and Davis, this Court held that an attorney acting as a settlement agent, who did not have any attorney-client relationship with the parties to the settlement, was not subject to disciplinary proceedings under the Rules of Professional Conduct. Johnson also cites Lichtenberg and Davis, contending that Bar Counsel failed to establish that Johnson was acting as attorney during any relevant time of the real estate transaction. Johnson argues that our holdings in Lichtenberg and Davis warrant dismissal of the instant matter. In Lichtenberg, title agent Myles Louis Lichtenberg was the president of a real estate title company, Guaranteed Title and Escrow (GTE). Though licensed as an attorney, Lichtenberg had never been actively involved in the practice of law. Key to the charges against Lichtenberg was Section 22-103 of the Insurance Article, which required a title insurer or its agents to pool settlement and trust funds from its clients that otherwise would not generate interest of more than $50.00, or an insufficient amount to cover the cost of maintaining a separate account for the proceeds of each individual settlement. See Md.Code (2002 Repl.Vol.) § 22-103(b) of the Insurance Article. Section 22-103(c) provided that the interest earned on funds deposited into this account were to be paid to the Maryland Affordable Housing Trust (MAHT). Section 22-103(f) provided for the procedures to be followed for settlement proceeds that are expected to generate interest in excess of $50.00 and provided for the creation of a deposit or investment vehicle that was specified by the client or beneficial owner or agreed on by the client or beneficial owner and the title insurer or its agent. GTE maintained both a MAHT account for settlement proceeds generating less than $50.00 in interest, and a non-MAHT account for proceeds generating more than $50.00 in interest. Judge Irma Raker, writing on behalf of the Court, summarized the parties arguments: Bar Counsel argues that respondent violated the statute and that as a result, we should discipline him in his capacity as a lawyer. Bar Counsel maintains that respondent violated § 22-103(f) by not securing the consent of any beneficial owner before he retained the interest on settlement proceeds, notwithstanding the fact that he secured the consent of his client. Bar Counsel also alleges that the statute requires consent that conformed to the applicable administrative regulation, which mandates that any funds not deposited into a MAHT account must be pursuant to a written agreement that is either (1) a separate agreement or (2) if part of another agreement, in conspicuous type and initialed by the buyer or beneficial owner. COMAR. 31.16.03.05B. Respondent argues that although GTE retained all of the interest earned on the settlement proceeds which were received in the Gigioli transaction and maintained by GTE's non-MAHT escrow account, he complied with all the statutory requirements of § 22-103(f). Respondent's argument is twofold: First, respondent argues the statute is written in the disjunctive and that the use of the word or clearly contemplates that consent of either the beneficial owner or the client satisfies the statute; and respondent obtained the consent of Mr. Gigioli in the HUD-1 Addendum in accordance with all applicable statutes, a finding of fact by the hearing court to which Bar Counsel does not take exception. Second, respondent argues that obtaining consent from every conceivable beneficial owner is not possible and was not contemplated by the statute. As result, he argues the disciplinary petition must be dismissed. Lichtenberg, 379 Md. at 354-55, 842 A.2d at 22-23. Judge Raker distilled Bar Counsel's argument to its essence: Bar Counsel's complaint against respondent boils down to one contention: that by depositing into his title insurance company's account the interest from funds entrusted to him by clients of the title insurance company, without the express consent of the `beneficial owners,' respondent violated the Maryland Rules of Professional Conduct. Lichtenberg, 379 Md. at 353, 842 A.2d at 21. As the Court saw it, if Lichtenberg did not violate the Insurance Article, then he did not violate any rules of professional conduct. Rather than addressing Bar Counsel's contentions regarding the Insurance article  or the responses proffered by Lichtenberg  we determined that it was injudicious under the circumstances to engage in an analysis of the Insurance Article and to construe the statute and the obligations of a title agent vis-a-vis the trust account and MAHT account because [i]n order for us to address this issue, we would be required to interpret a provision of the Insurance Article that has not previously been addressed judicially. Id. at 355, 842 A.2d at 23. This analysis would have required a determination of whether § 22-103(f) of the Insurance Article was violated when [Lichtenberg] did not inform the `beneficial owners' of the interest-sweeping provision in the contract. Id. We observed that this interpretation was not at all self-evident and there was a complete absence of any case or authority on this issue in this State or elsewhere in the country. Id. The Court also noted that the Insurance Commissioner was not a party to the disciplinary proceedings and thus would be precluded from input on an issue of significant importance to many title insurance agents and brokers practicing in this State. Id. at 355, 842 A.2d at 23. We held: [N]either party can refer us to a single opinion, decision, or action issued by the Insurance Administration on this question; indeed, at oral argument, Bar Counsel informed us that he had contacted the Commissioner of the Insurance Administration but had received no answer to his inquiry on the issue. Instead, they both would have us opine without receiving any input from the agency in charge of administering this statute. We decline to do so. Neither a criminal conviction nor a statutory violation is a prerequisite for this Court to proceed with disciplinary action against an attorney. Nonetheless, under the circumstances of this case, where the basis of Bar Counsel's complaint relates to conduct not connected with the practice of law, it would be inappropriate for this Court to determine in the first instance if respondent violated the Insurance Article, and then to impose sanctions with respect to his license to practice law, particularly where the Commissioner was aware of the conduct and declined to exercise his authority to regulate respondent's conduct as an agent or broker. Accordingly, Bar Counsel's exception to the hearing court's interpretation of § 22-103 is overruled. Id. at 356-57, 842 A.2d at 23-24 (citation omitted, emphasis added). Without any violation of Insurance Article Section 22-103, the alleged Rule 1.15 violation could not stand: Bar Counsel alleges that respondent violated Rule 1.15(a), (b), and (c), dealing with a lawyer's safekeeping of property. We agree with the hearing court with respect to Rule 1.15(a) and (c), and find no violation of those provisions because respondent's actions were not in connection with legal representation of a client. Rule 1.15(b), unlike (a) and (c), does not indicate explicitly whether it applies to actions outside the course of legal representation. We do not decide the question of whether 1.15(b), like (a) and (c), contemplates some sort of nexus with legal representation, because the only plausible violation of this provision by respondent arises only if he violated § 22-103(f) of the Insurance Article by not notifying the beneficial owners, which we have already discussed and dismissed. Thus, Bar Counsel's exception is overruled. Id. at 357-58, 842 A.2d at 24 (emphasis added). In stark contrast to Lichtenberg, the findings of fact and conclusions of law in this case are not dependent on a violation of the Insurance Article, and so our reasons in Lichtenberg for refusing to find a violation do not apply. In Davis, Respondent Gary E. Davis was both an attorney in private practice and founder of Allegiance Title & Escrow, Ltd. (Allegiance Title). Davis did not attend or conduct any settlements on behalf of the company, but did contribute to the operation of Allegiance Title by reviewing and signing deeds. Davis set up a MAHT account for funds less than $150,000, as these funds were likely to generate less than $50.00 in interest or the cost of administering a separate account. Deposits of $150,000 or greater were to be deposited into the company's existing escrow account. Monies held in the existing escrow account were transferred or swept by the Bank at the end of each banking day into a separate interest bearing account maintained for the benefit of the company. Davis admitted that the beneficial owners were not given notice and their consent was not acquired prior to Allegiance Title depositing trust money into its escrow account and the sweep account. The Attorney Grievance Commission initiated a disciplinary proceeding against Davis, alleging that as an attorney, his title insurance company could not retain the benefit of the interest earned in the sweep accounts because this constituted a violation of Insurance Article Section 22-103. The hearing judge accepted Bar Counsel's argument that Allegiance Title's retention of the interest earned from their sweep account violated the Insurance Article since the beneficial owners within the meaning of the statute did not have knowledge of the funds allocation, nor had they consented to Allegiance Title's retention of the interest. The hearing judge, nonetheless, found no misconduct under the MRPC. Judge Raker, again writing for the Court, stated that Davis presented the same issue that the Court addressed in Lichtenberg and that the facts in the two cases were in all relevant aspects, similar. Davis, 379 Md. at 379-80, 842 A.2d at 37. Here, as in Lichtenberg, Bar Counsel essentially complains that respondent did not get the consent of the `beneficial owners' before he retained the interest in the accounts. Id. at 380, 842 A.2d at 37. We employed the same reasoning in Davis that we did in Lichtenberg  that we discipline attorneys for violation of Rule 8.4 when it is clear that a law has been violated, even if there is no criminal conviction, but not when such a violation is unclear[.] Id., 842 A.2d at 37-38. We concluded: This case differs from those cases in which we proceeded with disciplinary actions in the absence of a criminal conviction where, for example, the lawyer has failed to file or pay income taxes. There the violation is clear but the prosecution is uninitiated. Here, not only is the violation vague and unsubstantiated, but the presence and the advice of the regulating authority, an agency charged with protecting the public, is strikingly absent from any part of these proceedings. In this respect, this case is no different from Lichtenberg and will be dismissed. Id. at 381, 842 A.2d at 38. Again, our refusal to find a MRPC violation in Davis turned on Davis's failure to violate a specific MRPC rule because of the absence of any substantiation of an Insurance Article violation. Respondents differ with our interpretation of Lichtenberg and Davis and find support for their views in Attorney Grievance v. Goff, 399 Md. 1, 922 A.2d 554 (2007). Goff involved a trust account overdraft by an attorney who was also licensed as a title agent. Respondent Goff relied on Lichtenberg and Davis to bolster his argument that because he was not practicing law, he was not subject to disciplinary action. Overruling this exception, we distinguished Lichtenberg and Davis on the grounds that Goff had not been charged by bar counsel in his capacity as a title agent like the respondents in Lichtenberg and Davis had: This case is nothing at all like Lichtenberg and Davis. In neither of those cases was it contended, or even arguable, that the attorneys in those cases were practicing law. Indeed, in Lichtenberg, the Court clearly stated the context for its holding: The heart of Bar Counsel's complaint against respondent boils down to one contention: that by depositing into his title insurance company's account the interest from funds entrusted to him by clients of the title insurance company, without the express consent of the `beneficial owners,' respondent violated the Maryland Rules of Professional Conduct. Respondent does not engage in the active practice of law but instead was acting as a title agent whose main business activity is to conduct real estate settlements, which is governed pursuant to the Insurance Article of the Maryland Code, by the Commissioner of the Insurance Administration. 379 Md. at 353, 842 A.2d at 21. Davis, of course, involved the same issue. 379 Md. at 380, 842 A.2d at 37. At issue here is not the insurance company account, rather the respondent's escrow account. Also, here, the respondent undertook the representation of a client; that is not disputed and it was this representation that was the genesis of the issue, with the resolution of which the respondent was subsequently charged and which he was pursuing when the charged conduct occurred. Id. at 30, 922 A.2d at 570-71 (emphasis added). Respondents contend that Goff reinforces their argument that the key to our holdings in Lichtenberg and Davis was that the respondents were not practicing law. While it is true that the question of whether their conduct constituted practicing law was a component of our holdings in these cases, this does not absolve either Johnson or Purcell from liability under MRPC 1.15(b), 8.4(a) and (c), or Johnson from liability under MRPC 5.1(c) or 5.3(c). As we previously discussed in Lichtenberg  and reiterated in Goff  Lichtenberg turned on the respondent's alleged violation of the Insurance Article. In Lichtenberg, we did not decide the question of whether 1.15(b), like (a) and (c), contemplates some sort of nexus with legal representation, because the only plausible violation of this provision by respondent arises only if he violated § 22-103(f) of the Insurance Article[.] Lichtenberg, 379 Md. at 358, 842 A.2d at 25. Insurance Article Section 22-103 is not involved here, and different violations, based on different actions by Johnson and Purcell, have been alleged and proven.