Opinion ID: 2515588
Heading Depth: 1
Heading Rank: 5

Heading: Regulation Counsel's Appeal

Text: While we recognize we have plenary power over attorney disciplinary matters, we have nonetheless established standards of review which we apply when reviewing decisions of the Hearing Board. The standard of review for decisions of the Hearing Board finding no violation of a rule differs subtly from the standard of review for findings of a violation because of the nature of the Board's decision. When the Hearing Board determines a violation occurred, it applies a clear and convincing evidence standard. Because this is a finding of fact, we will disturb this finding only if it was clearly erroneous or not supported by substantial evidence in the record. In re Haines, 177 P.3d at 1244. However, if the Hearing Board does not find a violation, the clearly erroneous standard for factual findings is not applicable. Rosen, 198 P.3d at 119. When the Board returns a finding of no violation, it does not make a factual finding that we can review; we have described the determination of no violation as the absence of a factual finding. Id. A determination that no violation occurred is a finding that the evidence is insufficient to convince the Board of a violation by a standard of clear and convincing evidence. We do not suggest that there will always be a particular piece of evidence the absence of which the Board can point to in order to demonstrate insufficient evidence. Rather, the insufficiency may be a general shortcoming in the persuasiveness of the evidence as a whole. The advantage of having a trier of fact hear testimony is that she is able to evaluate the credibility of the witnesses, detect nuances in testimony, and determine the overall persuasiveness of the evidence. Therefore, a hearing officer may find it difficult to explain a failure to find a violation by the standard of clear and convincing evidence, particularly when it is based on a general uncertainty about the evidence as a whole. Further, the Hearing Board's three panel members may have been unconvinced for different reasons. Recognition that reasonable people may view evidence differently is one of the reasons justifying the three-person panel. Here, the Hearing Board did not make an extraordinary effort to explain what failed to convince them that Fisher violated Rules 1.7, 3.3, 3.4, and 8.4. While a clear explanation of the short-comings of the evidence would facilitate our review, we will not require the Board to make findings as to why it is unconvinced of a violation. To do so might require each member of the Board to attempt to explain possibly separate dissatisfaction with the degree to which the evidence is persuasive. In the absence of a detailed explanation of the shortcomings of the evidence, we may look to the possible reasons a Board might be unconvinced. If we can articulate a reason the Board could have been unconvinced of a violation, whether or not it represents the Board's actual reasoning, we will affirm because, based on this reason, we cannot say that no reasonable fact finder could be unconvinced of a violation by a standard of clear and convincing evidence. Accordingly, we affirm the Hearing Board if we find from review of our record that a reasonable person could find that any one of many possible views of the evidence does not meet the clear and convincing standard. Therefore, in the absence of legal error, we will only overturn the Hearing Board's failure to find a violation if no reasonable fact finder could be unconvinced of a violation by the standard of clear and convincing evidence. Rosen, 198 P.3d at 119. Appeals from the Hearing Board's finding of no violation should be taken sparingly, as it is unusually difficult to show error. Rather than creatively explore the many possible reasons for the panel's decision, it is sufficient that we simply conclude the panel could reasonably reach such a conclusion. If we choose to discuss how the panel may have found the evidence less than convincing, we will affirm the Hearing Board if we conclude a reasonable explanation exists justifying the Board's finding of no violation. Further, we recognize that our discussion may not even reflect the panel's actual dissatisfaction with the evidence. Therefore, we will overturn the Hearing Board's determination a violation did not occur only if we cannot find any reasonable explanation for the Board's determination, and conclude that no reasonable fact finder could be unconvinced of a violation by a standard of clear and convincing evidence.
The Hearing Board determined Fisher did not violate the rule requiring representation not be limited by a lawyer's own interests as alleged in the first complaint. Regulation Counsel argues it was legal error for the Board to find no violation because, by representing Ms. Varner in the sale of the marital residence, Fisher also advanced his own claims against the proceeds of the sale. However, this is not a claim of legal error, and we will reverse the Hearing Board only if we find that no reasonable fact finder could be unconvinced of a violation of Rule 1.7(b) by clear and convincing evidence. Id. Rule 1.7(b) states: A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's . . . own interests, unless: (1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation.. . . Therefore, the rule requires a lawyer not represent a client if that representation may be materially limited by the attorney's own interests unless the attorney reasonably believes the representation will not be adversely affected and the client consents after consultation. The Hearing Board determined no conflict existed and Fisher therefore did not have to consult with Ms. Varner or obtain her consent. Regulation Counsel argues Fisher's deed of trust gave him a direct financial interest in the sale of the residence, and, as such, he was not in a position to explore alternatives to the sale of the residence or maximize Ms. Varner's return on the sale. The comments to the rule state a lawyer's own interests should not be permitted to have adverse affect on representation of a client. Colo. RPC 1.7 cmt. In its comments to Model Rule 1.7, largely the same as Colo. RPC 1.7(b), the ABA states the mere possibility of ... harm does not itself require disclosure and consent. Model Rule of Professional Conduct 1.7, cmt. 8. Rather, the ABA urges the focus for determining whether a conflict exists is the likelihood that a difference in interests will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client. Id. Therefore, the focus of a Rule 1.7(b) inquiry is on the effect the attorney's interest may have on the client. [6] Here, the judge in the Varner's dissolution of marriage case previously ordered the marital residence sold, and ordered Ms. Varner pay her own attorney fees. The judge knew Ms. Varner's only asset, aside from the OPM benefits, was her equity in the marital residence. Two months after the judge ordered the home sold, there was a contract for sale on the house for the full asking price. From the record, it appears Fisher had no role in determining the asking price. There is no indication Fisher's interest in the marital residence affected the sale price, the speed of the sale, or the decision of the trial court to order the sale of the home. The Hearing Board may have found that Fisher's interest would not negatively affect Ms. Varner. In fact, Ms. Varner and Fisher's interests were aligned with regard to the sale of the residence. The court ordered the sale, and, as Ms. Varner's attorney, Fisher was obliged to complete the sale. Both Fisher and Ms. Varner hoped to accomplish a swift sale of the property and, once an offer was tendered at the asking price, to complete the sale. Fisher sought this outcome in order to ensure that his attorney fees were paid, while Ms. Varner sought this outcome, as required by court order, to discharge debts she owed. Accordingly, because the Board may have concluded Fisher and Ms. Varner's interests were not adverse to one another, it cannot be said that no reasonable fact finder could be unconvinced of a Rule 1.7(b) violation by clear and convincing evidence. Regulation Counsel further argues Fisher's continued work aimed at ensuring the completion of the sale of the Varner residence after he received Ms. Varner's order to stop work also violated Rule 1.7(b). Regulation Counsel asserts that, because of his desire to see the sale completed, Fisher continued work on the sale, disregarding Ms. Varner's request. The Hearing Board did not make factual findings regarding this claim. However, given the relative ambiguity of the stop work order, Ms. Varner's refusal to return communications to Fisher, and Fisher's subjective understanding that the stop work order only applied to new matters, we will not overturn the Board's determination that Fisher did not violate Rule 1.7(b). Because we can articulate several reasonable explanations as to why the Hearing Board may have been unconvinced of a violation by the standard of clear and convincing evidence, we conclude a reasonable fact finder could be unconvinced Fisher violated Rule 1.7(b) by clear and convincing evidence. Accordingly, we affirm the Hearing Board's determination that Fisher did not violate Colo. RPC 1.7(b).
Regulation Counsel argues Fisher violated the rules prohibiting false statements of material fact to tribunals [7] when he failed to update Ms. Varner's financial affidavit showing his interest in the marital residence. Colo. RPC 3.3(a)(1) states a lawyer shall not knowingly make a false statement of material fact or law to a tribunal. Under 3.3(a)(1), failure to disclose material information to a tribunal is the equivalent of making a false statement of material fact. Model Rule of Professional Conduct 3.3, cmt. 3; In re Cardwell, 50 P.3d 897 (Colo.2002) (holding when client pled guilty to driving under the influence of alcohol, criminal defense attorney had obligation to inform the court client committed perjury when he denied previous alcohol-related convictions). Colo. RPC 3.3(a)(4) disallows an attorney from offering evidence the lawyer knows to be false. If a lawyer has offered material evidence and later learns that the evidence is false, the lawyer shall take reasonable remedial measures. Colo. RPC 3.3(a)(4). Therefore, the focus of a Rule 3.3(a)(1) inquiry is not on the falsity of the statement, but on the materiality of the statement. Similarly, when a lawyer learns that previously submitted evidence is false, under Rule 3.3(a)(4), he must only correct it if the evidence was material. Here, the affidavit provided to the trial court showing security interests in the Varner residence was false in that it was not amended to include Fisher's deed of trust once he obtained it from Ms. Varner. However, the focus of the Board's inquiry was on the materiality of the failure to amend the affidavit. The ABA comments to Model Rule of Professional Conduct 4.1, requiring lawyers not make false statements of material fact in transactions with others, provides a statement is material if it could have influenced the hearer. Model Rule of Professional Conduct 4.1, cmt. 1. This definition squares with this court's holding in People v. Small, 962 P.2d 258 (Colo.1998), where we found an attorney violated Colo. RPC 3.3(a)(1) even though his misrepresentation to a trial court did not affect the outcome of the case. Accordingly, the concept of materiality encompassed in Colo. RPC 3.3(a)(1) is not directed by the outcome of a particular matter, but rather whether there is potential that the information could influence a determination as to that matter. Under the Colorado attorney's lien statute, an attorney has a lien on money, property, claims, or judgment which she aids in obtaining. § 12-5-119. The lien arises by operation of law as soon as the attorney commences representation. Id. Therefore, Fisher already had an interest, represented by an attorney's lien, in Ms. Varner's equity in the home at the time the trial judge issued the permanent orders. [8] The fact of Fisher's interest in Ms. Varner's equity was surely material to the trial court when dividing Mr. and Ms. Varner's equity and determining maintenance. However, the trial court was aware Fisher had an interest in Ms. Varner's equity in the marital residence, whether secured by the deed of trust or an attorney's lien. Because the trial court was aware of this interest, it is possible the Hearing Board could have determined Fisher's deed of trust in the marital residence was not material information. Accordingly, because we can articulate at least one reasonable explanation as to why the Board may have been unconvinced of violations of Rule 3.3(a)(1) and (a)(4), we cannot find that no reasonable fact finder could be unconvinced of such violations by a clear and convincing evidence standard. We therefore affirm the trial court's determination Fisher did not violate Rule 3.3(a)(1) and (a)(4).
Regulation Counsel argues Fisher's failure to update Ms. Varner's affidavit after he obtained the deed of trust also violated the rule prohibiting attorneys from disobeying the rules of a tribunal. The rule provides a lawyer shall not knowingly disobey an obligation under the rules of a tribunal.... Regulation Counsel argues Fisher violated this rule because, under C.R.C.P. 26.2 as it existed in 2003, [9] an attorney is under a duty to supplement its disclosures ... when [the attorney] learns that in some material respect the information disclosed is incomplete or incorrect. As discussed above, it is possible the Hearing Board found that Fisher's failure to correct the affidavit did not materially change the evidence before the trial court. Accordingly, we will not overturn the decision of the Hearing Board on these grounds because we cannot find that no reasonable fact finder could be unconvinced of a Rule 3.4(c) violation by a standard of clear and convincing evidence. Regulation Counsel also asserts Fisher violated Rule 3.4(c) by collecting $350 more than authorized by the trial court order enforcing his attorney's lien. Fisher and Ms. Varner entered into a fee agreement at the commencement of representation which allowed Fisher to charge a $350 collection fee from Ms. Varner. When Fisher enforced his attorney's lien, the trial court order authorized him to retain an amount of $3,581.63 from his client trust account. In addition to the $3,581.63 authorized by the trial court, Fisher retained $350 as a collection fee. The evidence establishes that the trial court order did not prohibit the retention of a collection fee, and Ms. Varner agreed to pay this sum, representing charges accruing from a purpose distinct from the attorney's lien, and thus not included within the lien amount. It is therefore possible the Hearing Board found the retention of the collection fee was not contrary to the trial court's order. Because we can articulate one reasonable explanation as to how the Hearing Board could have concluded there was not clear and convincing evidence establishing a Rule 3.4(c) violation, we will not reverse the decision of the Hearing Board.
Regulation Counsel argues the Hearing Board erred in not finding that Fisher violated the rule prohibiting lawyers from engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. This court has stated that in order for a lawyer to be found to have engaged in conduct involving dishonesty, fraud, deceit or misrepresentation, it must be shown that the lawyer possessed a culpable mental state greater than simple negligence.... [W]e conclude that the element of scienter must be shown. People v. Rader, 822 P.2d 950, 953 (Colo.1992) (referring to DR 1-102(A)(4), the precursor to Colo. RPC 8.4(c)). The element of scienter is shown when it is established that the attorney deliberately closed his eyes to facts he had a duty to see ... or recklessly stated as facts things of which he was ignorant. Id. (citing United States v. Benjamin, 328 F.2d 854, 862 (2nd Cir.1964)). Accordingly, a mental state of at least recklessness is required for an 8.4(c) violation. See People v. North, 964 P.2d 510, 513 (Colo. 1998). Here, it is possible the Hearing Board found Fisher did not have the requisite mental state when he failed to amend Ms. Varner's financial affidavit. For example, the Board could have believed Fisher's testimony that he did not think he was obligated to include his deed of trust in the affidavit, and this misunderstanding of the disclosure rules established only a mental state of negligence. Accordingly, there is sufficient evidence in the record for us to articulate a reasonable explanation as to how the Board may have been unconvinced of a violation. Therefore, a reasonable fact finder could be unconvinced of an 8.4(c) violation by a clear and convincing evidence standard, and we affirm the Hearing Board on this ground.