Opinion ID: 2298333
Heading Depth: 2
Heading Rank: 5

Heading: MRPC 8.4(b), (c), and (d)

Text: An act prejudicial to the administration of justice is one that tends to bring the legal profession into disrepute. Att'y Griev. Comm'n v. Rose, 391 Md. 101, 111, 892 A.2d 469, 475 (2006). We have noted, on all too many occasions, that the commingling of personal and client funds, including the failure to maintain a separate trust account, is prejudicial to the administration of justice. Att'y Griev. Comm'n v. Carithers, 421 Md. 28, 56, 25 A.3d 181, 197-98 (2011) (citing Att'y Griev. Comm'n v. Clark, 363 Md. 169, 183, 767 A.2d 865, 873 (2001)) (concluding that misappropriation of client funds and failure to maintain client trust account violated MRPC 8.4(d)). The hearing judge concluded that the respondent's conduct violated MRPC 8.4(d). We agree. The respondent acknowledged that he did not maintain a separate client trust account and commingled client settlement proceeds with his operating account, a clear violation of MRPC 8.4(d). Carithers, 421 Md. at 56-57, 25 A.3d at 198; Zuckerman, 386 Md. at 374-75, 872 A.2d at 713. Further, the respondent's inexplicable failure to pay his clients' medical bills, in violation of his agreement to do so, exposed Spearman and Silver to potential lawsuits from the UMPTWC or anyone who might acquire the right to sue on debts. Such conduct erodes the public confidence in, and brings disrepute to, the legal profession and is, therefore, prejudicial to the administration of justice. Regarding MRPC 8.4(b) and (c), the hearing judge concluded that the respondent violated these rules also. Although the hearing judge did not explicate her rationale for these conclusions, in this case and under the circumstances, we engage the presumption that hearing judges know the law and correctly apply it. Att'y Griev. Comm'n v. Jeter, 365 Md. 279, 288, 778 A.2d 390, 395 (2001); see also Att'y Griev. Comm'n v. Keiner, 421 Md. 492, 508, 27 A.3d 153, 163 (2011) (stating that hearing judge's failure to mention certain facts does not mean he or she failed to consider those facts, and does not warrant the grant of an exception). Based on the unexcepted-to findings of fact, we agree that the respondent's conduct violated MRPC 8.4(b) and (c). MRPC 8.4(c) proscribes attorney conduct that is dishonest, fraudulent, deceitful, or a misrepresentation. The respondent never paid his clients' medical bills, despite agreeing to do so; deposited the clients' settlement funds into his operating account without authorization; claimed he had paid the bills, but provided no evidence to rebut the AGC's evidence to the contrary; and assured both clients that he would take care of the matter, which he did not. The respondent's conduct violated MRPC 8.4(c). Further, misappropriation of client or third-party funds violates MRPC 8.4(c). Roberts, 394 Md. at 164, 904 A.2d at 573; Att'y Griev. Comm'n v. Kapoor, 391 Md. 505, 527-29, 894 A.2d 502, 515-17 (2006) (holding that attorney violated MRPC 8.4(c) by failing to deposit client fund into trust account and to pay client's medical providers)); see also Att'y Griev. Comm'n v. McCulloch, 397 Md. 674, 683, 919 A.2d 660, 665 (2007) (holding that attorney who deposited unearned retainer into operating account and spent it on unauthorized purpose violated MRPC 8.4(c)). Misappropriation is `any unauthorized use by an attorney of [a] client's funds entrusted to him [or her],' whether or not temporary or for personal gain or benefit. Att'y Griev. Comm'n v. Glenn, 341 Md. 448, 484, 671 A.2d 463, 481 (1996) (quoting In re Harrison, 461 A.2d 1034, 1036 (D.C.App.1983)). Further, `The co-mingling of client and attorney funds always creates the potential for misappropriation, even when there is no intent to misappropriate. A misappropriation necessarily occurs whenever the attorney withdraws funds from a co-mingled account for his or her own purpose and, as a result, leaves the account insufficient to cover all client funds, and such a misappropriation is never innocent. It is not necessarily willful, however, or for the conscious purpose of unlawfully taking funds held in trust for another.' Att'y Griev. Comm'n v. Hayes, 367 Md. 504, 516 n. 10, 789 A.2d 119, 127 n. 10 (quoting Att'y Griev. Comm'n v. Bernstein, 363 Md. 208, 231, 768 A.2d 607, 619-20 (2001) (Wilner, J., dissenting)). The respondent misappropriated his clients' settlement funds. He commingled client and personal funds and did not provide financial records to establish how the funds were spent. Despite claiming to have paid the medical bills, the respondent could not provide any evidence to refute the AGC's claims that the medical bills were unpaid. A permissible inference is that the respondent misappropriated funds that belonged rightfully to the creditors, which left an insufficient balance to pay his clients' medical bills. See Nwadike, 416 Md. at 197-98, 6 A.3d at 297; Roberts, 394 Md. at 156-57, 904 A.2d at 568-69. Misappropriation comes in three degrees of culpability; intentional, knowing, and negligent. Glenn, 341 Md. at 485, 671 A.2d at 481. A knowing misappropriation is the taking by a lawyer of `a client's money entrusted to him, knowing that it is the client's money and knowing that the client has not authorized the taking.' Id. (quoting In re Roth, 140 N.J. 430, 658 A.2d 1264, 1272 (1995). Proving a knowing state of mind is difficult, but an `inculpatory statement' is not required; instead, `circumstantial evidence can add up to the conclusion that a lawyer `knew' or `had to know' that client funds were being invaded.' Id., 341 Md. at 485-86, 671 A.2d at 481 (citing In re Roth, 658 A.2d at 1273)). The respondent knowingly misappropriated client funds. Although he did not disclose expressly his intent by making an inculpatory statement, the sum of the circumstantial evidence demonstrates that the respondent knew he invaded his clients' funds and those of third persons. The respondent acknowledged that he did not maintain a client trust account and placed his clients' funds into his operating account. Therefore, he knew that he commingled client and personal funds and used them for purposes unauthorized by the clients. A knowing misappropriation of client funds is a violation of MRPC 8.4(c). See Att'y Griev. Comm'n v. Webster, 402 Md. 448, 466, 474, 937 A.2d 161, 171, 176 (2007) ([the Court of Appeals] ha[s] consistently noted that the failure to deposit client funds into escrow accounts amounts to a violation of MRPC 8.4(c) and (d).); Roberts, 394 Md. at 164, 904 A.2d at 573 (holding that attorney who misappropriated client settlement proceeds and failed to pay client medical providers violates MRPC 8.4(c)). Finally, the respondent violated MRPC 8.4(b). We have previously concluded that the respondent violated Maryland Code, Business Occupations and Professions Article, § 10-306 and MRPC 8.4(c). Misconduct constituting a violation of § 10-306 and rule 8.4(c) also supports a violation of MRPC 8.4(b). Att'y Griev. Comm'n v. Nussbaum, 401 Md. 612, 637-39, 934 A.2d 1, 15-16 (2007) ([A] finding of `deceit/misrepresentation' is equivalent to a finding of willfulness to support a violation of Section 10-607(b) and thereby a violation of MRPC 8.4(b). . . .).