Opinion ID: 2633740
Heading Depth: 3
Heading Rank: 1

Heading: whether the committee's findings were supported by substantial evidence

Text: {17} Respondent argued generally to both the hearing panel and to this Court that the hearing committee's findings were not supported by substantial evidence. In briefs to the hearing panel, Respondent argued that the hearing committee erred by not adopting findings addressing two situations: (1) findings establishing that he did not misappropriate funds; and (2) findings concerning his representation of Guttman and Verdugo. {18} Our review of the hearing committee's factual findings is deferential to the hearing committee, viewing the evidence in the light most favorable to the hearing committee's decision and resolving all conflicts and reasonable inferences in favor of the decision reached by the hearing committee. In re Bristol, 2006-NMSC-041, ¶ 16, 140 N.M. 317, 142 P.3d 905. Moreover, when findings of fact are supported by substantial evidence . . . refusal to make contrary findings is not error. Griffin v. Guadalupe Med. Ctr., Inc., 1997-NMCA-012, ¶ 22, 123 N.M. 60, 933 P.2d 859. Indeed, failure to make a finding of fact is regarded as a finding against the party seeking to establish the affirmative. Landskroner v. McClure, 107 N.M. 773, 775, 765 P.2d 189, 191 (1988). In reviewing findings, we determine whether the fact-finder's decision is supported by substantial evidence, not whether the [factfinder] could have reached a different conclusion. In re Ernesto M., Jr., 1996-NMC039, ¶ 15, 121 N.M. 562, 915 P.2d 318. {19} Relying on In re Bristol, 2006-NMSC-041, ¶ 17, 140 N.M. 317, 142 P.3d 905, Respondent argued to the hearing panel that the panel could make additional findings on issues not considered by the hearing committee. Respondent sought to persuade the panel that it could and should make additional findings on the following issues: that Respondent followed accepted local billing practices when he deposited a flat fee in his operating account; that such a deposit was proper because flat fees were treated as earned when received; that he had earned the flat fee; and that he had earned the other client fees that were deposited in the account. In addition, Respondent argued that the panel should make additional findings regarding YHA's business practices and his representation of Guttman and Verdugo. Respondent's reliance on In re Bristol is misplaced. Evidence regarding the issues on which Respondent sought additional findings was considered by the hearing committee; the committee simply chose not to accept Respondent's proposed findings concerning that evidence. See Landskroner, 107 N.M. at 775, 765 P.2d at 191 (stating that failure to make a finding is regarded as a rejection of that finding). {20} Accordingly, we review only the findings that Respondent argues are not supported by substantial evidence. At oral argument before the hearing panel and before this Court, Respondent challenged whether findings under Counts I and II, numbered 9-15 and which address the handling of the flat fee paid by A-Affordable Bail Bonds, were supported by substantial evidence. The challenged findings state that Respondent deposited a check for $5,325.00 from his client, along with other checks, into a personal bank account. By engaging in this conduct, the findings state, Respondent commingled personal funds with those received from clients and spent the commingled funds on various personal expenses. The findings also state that Respondent did not earn the entirety of his $5,325.00 fee before spending it. The committee determined that these actions constituted misappropriation and conversion. {21} As Respondent correctly points out, statements that Respondent misappropriated and converted funds are legal conclusions, which we will review de novo. The other findings, however, were supported by the following evidence. Joe Ruiz testified that a check for $5,325.00 (which was introduced into evidence) was delivered to Respondent to pursue an appeal. Respondent testified that he deposited the check into a personal account of his that had previously been used for a political campaign, but which had been dormant for some, time. Respondent's bank statement showed that on February 28, 2003, the balance in the account was $262.29. The check for $5,325.00 was deposited into the account on February 28, 2003, and other checks and cash were subsequently deposited in March 2003. The bank statement also shows that Respondent wrote multiple checks on the account between March 10, 2003, and May 10, 2003. Indeed, Respondent testified that he believed that when he received flat fees from clients, he had earned the money when it was paid to him. {22} This was sufficient evidence to support the findings that Respondent deposited his client's funds into a personal account and commingled those funds with his own money. Respondent contends, however, that because he had completed a substantial amount of work on the client's appeal, there was insufficient evidence to support a finding that he had not earned the entirety of his fee before spending it. In addition, Respondent argues, to conclude that Respondent misappropriated and converted client funds would require additional findings. {23} We first address whether there was sufficient evidence to support a finding that Respondent had not earned the entirety of his fee before spending it. Respondent argued at oral argument before this Court that he testified before the hearing committee that he had earned the fee by reviewing the case, discussing the case history and procedure with his client, and by preparing everything needed to go forward with his client's appeal. It is clear from the record, however, that the Court of Appeals dismissed the appeal because Respondent did not file a notice of appeal from the judgment in a timely manner under Rule 12-201(A)(2) NMRA. {24} The timely filing of a notice of appeal is a mandatory precondition to the Court of Appeals' jurisdiction, which will only be, overlooked in unusual circumstances, such as judicial error. See Trujillo v. Serrano, 117 N.M. 273, 277-78, 871 F.2d 369, 373-74 (1994). Consequently, Respondent's failure to' timely file the notice of appeal rendered all work done on the appeal irrelevant because the appeal was foreclosed. Under these circumstances, Respondent cannot claim to have earned any of his client's fee. Therefore, the hearing committee's finding, that Respondent had not earned the entirety of his client's fee before spending it, is supported by substantial evidence, even if that finding is, in fact, an understatement of what occurred. {25} Whether these findings, taken together, support the conclusion that Respondent misappropriated or converted client funds, is a separate issue. As this Court explained in In re Cannain, 1997-NMSC-001, 122 N.M. 710, 712, 930 P.2d 1162, 1164 (1997) (citations omitted), misappropriation necessarily involves a dishonest motive and an intent to deprive the client of his or her funds and will almost inevitably result in disbarment. Similarly, [c]onversion is the unlawful exercise of dominion and control over property belonging to another in defiance of the owner's rights, or acts constituting an unauthorized and injurious use of another's property, or a wrongful detention after demand has been made. Sec. Pac. Fin. Servs. v. Signfilled Corp., 1998-NMC046, ¶ 15, 125 N.M. 38, 956 P.2d 837. Thus, both misappropriation and conversion require intentional wrongdoing. Misuse of client funds, on the other hand, occurs when a lawyer withdraws client funds for an improper purpose, but does so in error, without an intent to deprive the client of the funds. In re Cannain, 122 N.M. at 711-12, 930 P.2d at 1163-64. In this case, the hearing committee made no finding that Respondent had a dishonest motive when he withdrew client funds before he had earned them. Indeed, the evidence suggests that Respondent erroneously believed he was entitled to withdraw the flat fee he had' deposited into his personal account. That Respondent was incorrect does not necessarily make him dishonest, and here the hearing committee did not find dishonesty on Respondent's part. That too is supported by substantial evidence, whether or not this Court would have found similarly if we were acting in a fact-finding capacity. {26} We take this opportunity to emphasize that in New Mexico, [a] lawyer's fee shall be reasonable. Rule 16-105(A) NMRA. In this context, we have previously held that non-refundable unearned fees are unreasonable. See In re Dawson, 2000-NMSC-024, ¶ 11, 129 N.M. 369, 8 P.3d 856. Thus, it follows that a flat fee for future legal services cannot be considered as earned when paid and must be held in trust until earned. As we wrote in In re Dawson, [i]n order for lawyers and their clients to know what portion of a flat fee or retainer may properly be withdrawn from trust, lawyers must inform their new clients of the basis upon which they will compute the amount of fee earned . . . and maintain records that will enable them to determine the ongoing status of the fee, even when the fee arrangement is for a flat fee[.] Id. ¶ 12 (citations omitted). In this case, the fee was not placed in trust and, as we stated earlier, was never earned because Respondent failed to file a timely, appeal on his client's behalf. {27} Here, the evidence was sufficient to support findings that Respondent commingled his client's funds with his own and withdrew funds that he had not yet earned. The evidence may have supported a finding of wrongful intent necessary to conclude that Respondent misappropriated or converted his client's funds, but neither the hearing committee nor the hearing panel made any such finding. We defer to the hearing committee when it comes to fact-finding. Without such a finding of wrongful intent, the only conclusion that can be drawn is that Respondent misused or commingled his client's funds, but did not convert them, and should be punished accordingly. {28} We do not address Respondent's second issue, regarding whether the hearing panel concluded that Respondent's conduct was not intentional.