Court Opinion

ID: 4249689
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:20:28.617934+00
Date Added: 2024-06-11T14:44:06.001152
License: Public Domain

IN THE SUPREME COURT OF IOWA
                                No. 09–1745

                             Filed May 27, 2011

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

      Appellee,

vs.

RICHARD J. MURPHY,

      Appellant.

      On appeal from the report of the Grievance Commission of the

Supreme Court of Iowa.

      Appeal      from   Grievance   Commission   report   in   disciplinary

proceeding recommending that attorney be publicly reprimanded.

LICENSE SUSPENDED.

      David L. Brown and Jay D. Grimes of Hansen, McClintock & Riley,

Des Moines, for appellant.

      Charles L. Harrington and Elizabeth E. Quinlan, Des Moines, for

appellee.
                                    2

CADY, Chief Justice.

      This appeal comes from a report of a division of the Grievance

Commission of the Supreme Court of Iowa. See Iowa Ct. R. 35.10. The

Iowa Supreme Court Attorney Disciplinary Board alleged Richard J.

Murphy violated ethical rules when representing his wife in her capacity

as conservator and guardian and in representing the seller and buyer in

the sale of the ward’s home.

      The grievance commission found Murphy violated the Iowa Code of

Professional Responsibility for Lawyers and recommended he be publicly

reprimanded.    Upon our review, we find Murphy committed several

serious ethical violations and suspend him from the practice of law for a

period of eighteen months.

      I. Background Facts and Proceedings.

      Richard J. Murphy was admitted to practice law in Iowa in 1964.

He moved to Osceola with his wife, Patricia, and began his practice.

Murphy and Patricia raised three children, including Thomas Murphy,

who now practices law with Murphy. Murphy primarily practices in the

areas of real estate, probate, and tax. On occasions, Patricia worked as a

secretary in Murphy’s law office.       During his forty-five-year career,

Murphy has been active in civic groups such as Rotary Club and the

Jaycees. He has never been disciplined.

      Murphy served as the Clarke County Attorney at the beginning of

his career. While serving in this capacity, Murphy became acquainted

with Helen Doss, who was the Clarke County Auditor.               Murphy

eventually became Doss’s personal attorney and periodically performed

various legal services for her.    Murphy’s family, including Patricia,

became personal friends with Doss. Doss was widowed with no children,
                                     3

and it became well known in the community that Doss, over time, relied

on Patricia to assist her with her needs.

      At some point, Doss also began to include Patricia and Murphy in

her financial planning. In 1992, she named Murphy as the beneficiary of

her life insurance policy. She also named Patricia as a co-owner of an

account she maintained at Great Western Bank. Murphy assisted in the

transaction by driving Doss to the bank where she signed documents to

establish the joint ownership. Doss also named Murphy as a joint owner

of a certificate of deposit she maintained at Union Planters Bank.

      In late July 2000, Murphy prepared and filed a voluntary petition

for appointment of a guardian and conservator for Doss.          Doss was

ninety-two years old at the time and had fallen several times in her

home.    Consequently, Doss agreed to move from her home into an

extended care unit at the county hospital.       After Doss moved into the

care unit, she began to exhibit signs of dementia. Doss acknowledged in

the petition for appointment of guardian and conservatorship that she

was “unable to care for [her] personal safety or to . . . provide for [her]

necessities . . . and [was] unable to make, communicate, or carry out

important decisions concerning [her] financial affairs.”

      The district court entered an order appointing Patricia as the

guardian and conservator of Doss.           Murphy was designated as the

attorney for Patricia.

      After the conservatorship and guardianship was opened, Doss

continued to include the Murphys in her estate planning.         This was

generally done by continuing to make Patricia a joint owner of her

financial accounts and by making gifts to Patricia and Murphy.

      In February 2001, Doss directed Brenton Bank by written

correspondence to remove the name of a relative as co-owner of two
                                      4

certificates of deposit maintained at the bank and to substitute Patricia

as co-owner. Murphy had a telephone conversation with a person at the

bank the day before Doss signed the letter requesting the change.

        Two days later, Doss signed a letter addressed to Patricia directing

her to sell the E-bonds she owned and to reinvest the proceeds in

interest-bearing accounts payable to Patricia upon her death. As before,

this letter was prepared for Doss to sign. Murphy then referred Patricia

to a representative of A.G. Edwards & Sons, Inc.        The E-bonds were

redeemed for $125,840.71 and the proceeds were placed in an A.G.

Edwards joint account with Patricia a short time later. Patricia paid the

taxes on the transactions with the funds from another bank account held

by Doss.

        During this same time period, Murphy prepared a testamentary

will for Doss. It was signed by her on March 5, 2001, and designated

Patricia as the executor. This will left the bulk of her property to her

nieces and nephews. Murphy had prepared a living will for Doss in 1988

and a testamentary will for Doss in 1991.       In August 2000, just after

Doss was admitted to the extended care unit, Murphy prepared a codicil

to the 1991 will, substituting Patricia as the executor under the will.

        Doss also maintained two bank accounts with Clarke County State

Bank.     Once the conservatorship and guardianship was established,

Murphy only considered one of the two accounts at Clarke County State

Bank to be an account of the conservatorship, and he only disclosed the

activities of that account in the annual conservatorship report. Murphy

considered the second account to be the personal account of Doss and

did not disclose the account activities in the annual conservatorship

report.    Doss and Patricia wrote checks drawn on the undisclosed

account for a variety of reasons, including cash gifts to Patricia, Murphy,
                                     5

Care Center employees, and Doss. On one occasion, the account funds

were used to purchase a vacuum cleaner for the Murphys at a cost of

$1427.96. Checks from the account were often made payable to Murphy

and Patricia in increments of $500 or $1000.

        Murphy filed annual conservatorship reports with the court during

the period of the conservatorship proceedings, but failed to disclose any

of the transactions involving the transfer of property to Patricia or

himself. In addition to failing to disclose the account activities in one of

the two accounts with Clarke County State Bank, Murphy failed to

disclose the joint ownership of the A.G. Edwards account. He reported

the sale of the E-bonds, but did not disclose that his wife became a co-

owner of the proceeds. Similarly, Murphy did not reveal Patricia as the

substitute co-owner of the CDs at Brenton Bank.          Likewise, Murphy

failed to disclose in the annual reports filed with the court that Patricia

was a joint owner on the accounts maintained with Great Western Bank

and Union Planters Bank.        He never sought court approval before

transferring property or making gifts.

        In 2002, Doss sold her residence. Murphy’s son and law partner,

Thomas, provided legal services to the buyer of the home by examining

the abstract and preparing a title opinion of the buyer. Murphy provided

the legal services and advice to Patricia in the real estate transaction.

On appeal, Murphy asserts he was unaware his son provided legal

services to the buyer.

        Doss died on September 18, 2004. She was ninety-six years old at

the time. Her last will and testament was the will signed on March 5,

2001.     It made a single specific bequest to St. Jude’s Hospital for

$10,000 and left the remainder of the estate to her nieces and nephews

in equal shares. Murphy filed a petition to probate the will. The court
                                      6

appointed Patricia executor, and Murphy was designated as the attorney

for the executor. There were five nieces and nephews who would share

in the estate, including Harley D. Reed.

      Murphy made a claim for benefits under the life insurance policy

in October 2004. He was surprised to learn he had been designated as a

beneficiary.

      In November 2004, Murphy sent the beneficiaries a copy of the

will, but failed to include the second page showing Patricia had been

designated as the executor. In March 2005, Murphy filed the required

report and inventory of the estate with the district court. The total value

of the estate was $667,783.36. The schedule of joint tenancy property

listed Patricia as a joint tenant of numerous accounts totaling

approximately $240,000.     Murphy was listed as a joint tenant of the

Union Trust Bank account valued at approximately $36,000. The report

and inventory failed to identify the life insurance policy naming Murphy

as the beneficiary.

      Reed subsequently contacted Murphy about the estate and the

probate proceedings. He requested a copy of the report and inventory

from Murphy. Murphy eventually responded by providing him a copy of

the report and inventory, but failed to include the schedules of the report

identifying the amount of the gross estate and property held in joint

tenancy. Reed eventually learned of the gross value of the estate from

the clerk of court.

      Once Reed discovered the extent of the property that was subject

to co-ownership by the Murphys, the residual beneficiaries contacted an

attorney to investigate the matter.       Following lengthy negotiations, the

Murphys and the beneficiaries entered into a settlement agreement. The

agreement required the Murphys to restore specific funds to the estate.
                                      7

      The board eventually filed a complaint against Murphy alleging

unethical conduct.    The board claimed Murphy’s conduct in the Doss

estate matter violated Iowa Code of Professional Responsibility for

Lawyers DR 1–102(A)(1) (prohibiting a lawyer from violating a disciplinary

rule); DR 1–102(A)(3) (prohibiting a lawyer from engaging in illegal

conduct involving moral turpitude); DR 1–102(A)(4) (prohibiting a lawyer

from engaging in conduct involving dishonesty, fraud, deceit, or

misrepresentation); DR 1–102(A)(5) (prohibiting a lawyer from engaging

in conduct prejudicial to the administration of justice); DR 1–102(A)(6)

(prohibiting a lawyer from engaging in any other conduct that adversely

reflects on the fitness to practice law); DR 5–101(A) (prohibiting a lawyer

from accepting employment if the exercise of the lawyer’s professional

judgment may be affected by the lawyer’s own financial, business,

property, or personal interest without full disclosure to and consent of

the client); DR 5–101(C) (prohibiting a lawyer or a lawyer’s partners or

associates from preparing an instrument in which a client desires to

name the lawyer beneficially); DR 5–105(B) (requiring a lawyer to decline

proffered employment if the exercise of independent professional

judgment on behalf of a client will be or is likely to be adversely affected

by the acceptance of the proffered employment); DR 5–105(C) (prohibiting

a lawyer from continuing multiple employment if the exercise of

independent professional judgment on behalf of a client will be or is

likely to be adversely affected by the acceptance of the proffered

employment); DR 5–105(E) (requiring a partner, association or law firm of

a lawyer who must decline or withdraw from employment to also decline

or withdraw from employment); and DR 6–101(A)(3) (prohibiting a lawyer

from neglecting a client’s matter).
                                        8

      In general, Murphy’s response to the board’s complaint was that

he followed the instructions of Doss when taking any action with regard

to her property. He explained that any gifts from Doss to him or Patricia

arose from Doss’s generous nature and close relationship with them.

Murphy denied any undue influence over Doss and described her as a

strong-willed woman with an independent mind, especially with regard to

her finances.

      A hearing was held before the grievance commission.                    The

commission found Murphy violated four disciplinary rules. It found he

violated DR 1–102(A)(1) (prohibiting the violation of a disciplinary rule),

DR 1–102(A)(5) (prohibiting conduct prejudicial to the administration of

justice), DR 1–102(A)(6) (prohibiting conduct that adversely reflects on

the practice of law), and DR 5–105(B) (declining employment when

independent professional judgment on behalf of a client will likely be

adversely affected). Violations under the first three rules were based on

findings by the commission that Murphy failed to comply with several

provisions of the code in representing Patricia in the conservatorship.

These provisions governed self-dealing, gifting, transferring property, and

accounting for assets. The commission not only found Murphy violated

these provisions, but that he also violated the probate code in

representing Patricia in her capacity as executor by failing to disclose

during the probation proceedings the beneficial interest he held in the

life insurance policy.   Finally, the commission found Murphy violated

DR 5–105(B) because he should have declined to represent Patricia due

to   the   personal   benefit    the   two   individuals   derived    from   the

conservatorship.

      The commission found the board failed to establish Murphy

engaged     in   conduct        involving    moral   turpitude,      dishonesty,
                                       9

misrepresentation, or deceit. It also found the board failed to establish

Murphy prepared an instrument that named him beneficiary and that he

neglected a client matter. Finally, the commission found the board failed

to establish that Murphy impermissibly continued to represent Patricia

in the real estate transaction after their son prepared a title opinion for

the buyer.

      The commission recommended that Murphy receive a public

reprimand.     The commission declined to impose a more severe

recommendation        due   to   Murphy’s   lengthy   career,   lack   of   prior

disciplinary action, and the imposition of a settlement agreement with

the residual beneficiaries.      The commission also concluded the matter

constituted a one-time lapse of judgment.

      II. Standard of Review.

      “We review attorney disciplinary proceedings de novo.”                Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Wagner, 768 N.W.2d 279, 281 (Iowa

2009).    We give the commission’s findings and recommendations

respectful consideration, but are not bound by them. Id. at 282. The

board has the burden of proving attorney misconduct by a convincing

preponderance of the evidence. Id. at 281. Upon proof of misconduct,

the court may impose a lesser or greater sanction than recommended by

the commission. Id. at 282.

      III. Discussion of Violations.

      Guardianships and conservatorships exist to help needy minors

and adults with impaired decision-making capacity in caring for

themselves or their financial affairs. See Iowa Code § 633.552(2)(a)–(b)

(2011) (describing the categories to support the guardianship); id.

§ 633.566(2)(a)–(b)     (describing   the    categories    to   support      the

conservatorship). When this need is adjudicated, the court appoints a
                                     10

person to serve as a guardian or conservator to provide the essential

assistance. See id. § 633.3(7), (20). A guardianship primarily deals with

the needs of people who are unable to care for their own safety or provide

for the basic necessities of life, while a conservatorship primarily

oversees and controls financial needs and matters. 14 Julie L. Pulkrabek

& Gary J. Schmit, Iowa Practice: Probate § 36:1, at 881 (2010).

      After a conservatorship is established, the law authorizes the

conservator to take possession of all the property of the ward. Iowa Code

§ 633.640. Correspondingly, the law imposes a duty on the conservator

to protect, preserve, and account for the property, and to perform all

other legal duties required by law.       Id. § 633.641.   The ward has no

general power to convey or dispose of property once a conservatorship is

established unless authorized by the court.       Id. § 633.637.   Moreover,

self-dealing by a conservator is specifically prohibited except by court

order. Id. § 633.155. A conservator may make gifts on behalf of a ward

from assets of the conservatorship, but only when authorized by the

court under special circumstances. Id. § 633.668. The conservator is

required to file annual reports with the court that include an inventory of

the property of the conservatorship. Id. § 633.670. The report must also

account for all disbursements and activities concerning the condition of

the conservatorship.     Id. §§ 633.670–.671.      Overall, the conservator

serves the interest of the ward and the statutory protections exist to

accomplish this goal.     Generally, conservators are considered to be

fiduciaries and are liable for a breach of their duties and responsibilities.

Id. §§ 633.649 (recognizing conservators have powers of fiduciaries),

633.160 (making fiduciaries liable for breach of duty).

      The legal duties and responsibilities imposed on conservators and

guardians often require the services of an attorney to help navigate
                                       11

through the maze of legal requirements. Although the conservator is the

client of such an attorney, the attorney also normally advances the

interests of the ward in representing the conservator.        See Estate of

Leonard ex rel. Palmer v. Swift, 656 N.W.2d 132, 146 (Iowa 2003) (noting

the conservator generally intends the ward to be the beneficiary of the

lawyer’s services because “a conservator has a statutory duty to protect

the estate of a ward”). Thus, an attorney representing a conservator may

owe a duty to the ward as a third-party intended beneficiary to the

contract between the conservator and the attorney. Id. This tripartite

relationship underscores the important entrusted roles of attorneys in

guardianships and conservatorships. In this role, attorneys are guided

not only by the law, but also by their code of professional responsibility.

      Murphy    failed   to   follow   numerous   statutory   provisions   in

representing Patricia, most notably in changing ownership of numerous

financial accounts owned by Doss into joint accounts owned with

Patricia. His actions allowed Patricia to become the sole owner of these

accounts upon Doss’s death. Murphy generally sought to minimize the

culpability of his conduct by attributing it to Patricia and claiming his

representation of her did not result in any personal gain to himself. He

then minimized Patricia’s conduct           by arguing she resolved any

improprieties by settling the claims made against her by the beneficiaries

and by claiming the transfers of property to her were consistent with the

wishes of the ward.      Finally, Murphy sought to align his professional

duties only to Patricia and claimed any statutory deficiencies in

representing her were merely the result of oversights and inadvertence.

      The positions taken by Murphy obscure the responsibilities

imposed by law and ignores the obvious. After the conservatorship was

established, Murphy actively assisted his wife in arranging the financial
                                    12

affairs of Doss so that Patricia would become the sole owner of a

substantial portion of her financial accounts upon Doss’s death. Murphy

and his wife also accepted cash gifts of thousands of dollars from Doss

and even permitted her to purchase a vacuum cleaner for them that cost

nearly $1500. All of these activities were strictly forbidden by the law

without full disclosure and authorization by the court.

      Murphy, of course, failed to disclose his actions to the court, and

the evidence clearly supported a finding that he purposely did so to

perpetrate a larger scheme to benefit himself and his wife. If Doss did

intend to include the Murphys in her estate planning during the last

years of her life, the law required Murphy to explain the transactions to

the court and obtain court approval. Moreover, disclosure of this matter

would have given the court the opportunity to appoint a guardian ad

litem to fully and independently consider the interests of Doss, among

other things. The law clearly defined the path Murphy was required to

follow if Doss desired to transfer property to the Murphys.       Instead,

Murphy chose to hide his activities from the court and the legal

beneficiaries of Doss’s estate. This obscuration reveals the dishonesty at

the core of Murphy’s actions.    In truth, the evidence presented at the

hearing supports a finding that Murphy and Patricia systematically took

advantage of their positions of trust and confidence.          Instead of

exercising this trust and confidence as demanded by the law and the

ethics of the legal profession, Murphy secretly rearranged the financial

affairs of an elderly, incompetent woman to benefit himself and his wife.

      Murphy’s conduct in transferring property to his wife’s name and

in permitting gifts to be made without disclosure to the court and

authorization by the court violated DR 1–102(A)(3) (prohibiting a lawyer

from engaging in illegal conduct involving moral turpitude), DR 1–
                                   13

102(A)(5) (prohibiting a lawyer from engaging in conduct prejudicial to

the administration of justice), and DR 1–102(A)(6) (prohibiting a lawyer

from engaging in any other conduct that adversely reflects on the fitness

to practice law).     Moreover, the conduct violated DR 1–102(A)(4)

(prohibiting a lawyer from engaging in conduct involving dishonesty,

fraud, deceit, or misrepresentation). Murphy purposely engaged in acts

of misrepresentation by failing to disclose the transactions in the annual

reports and by failing to seek court authority to make gifts. His conduct

showed a pattern consistent with deceit, which continued in the

probation proceedings.   Murphy was an experienced lawyer who knew

his conduct was wrong, and he sought to keep it from the scrutiny of

others, including the district court. No other honest assessment of the

facts and circumstances can be drawn.

      While Murphy’s conduct was serious, he did not violate all of the

disciplinary rules alleged by the board.      He did not violate DR 1–

102(A)(1), which prohibits a lawyer from violating a disciplinary rule. We

have held that this rule does not serve as an additional allegation to

another violation of a disciplinary rule.      Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Ackerman, 786 N.W.2d 491, 496 n.3 (Iowa 2010).

      Most of the other violations alleged by the board were based on

conflicts of interest associated with Murphy’s representation of Patricia

after having represented Doss over the years and Murphy’s acceptance of

assets from Doss during the period of time he represented her.        The

board also argued that Doss actually became Murphy’s client during a

time when he was involved in representing Patricia as the conservator.

      We conclude the evidence was insufficient to support a violation of

these additional allegations asserted by the board. Instead, the overall

thrust of the misconduct in this case went to Murphy’s violations of the
                                    14

statutes governing conservatorships and his misrepresentation and

deceit. Nevertheless, Murphy did violate DR 5–105(C) when he and his

firm represented both the buyer and the seller in the sale of the Doss

home. The prohibition against representing multiple clients applies even

if the interests are not antagonistic and no fraud, improper notice, or

economic harm exists. Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.

Wagner, 599 N.W.2d 721, 726 (Iowa 1999).

      IV. Sanction.

      We do not impose a standard sanction for a particular type of

misconduct.   Iowa Supreme Ct. Att’y Disciplinary Bd. v. Schmidt, 796
N.W.2d 33, 42 (Iowa 2011).     While prior cases can be instructive, we

determine an appropriate sanction based on particular circumstances in

each case. Id. In tailoring this action to the particular circumstances in

each case,

      “we consider the nature of the violations, the attorney’s
      fitness to continue in the practice of law, the protection of
      society from those unfit to practice law, the need to uphold
      public confidence in the justice system, deterrence,
      maintenance of the reputation of the bar as a whole, and any
      aggravating or mitigating circumstances.”

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Casey, 761 N.W.2d 53, 61

(Iowa 2009) (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ireland,

748 N.W.2d 498, 502 (Iowa 2008)).

      We have imposed severe sanctions in the past for unprofessional

conduct by an attorney who engages in self-dealing and deceit during the

course of a guardianship and conservatorship. In Iowa Supreme Court

Board of Professional Ethics & Conduct v. Remer, 646 N.W.2d 91, 96

(Iowa 2002), we suspended a lawyer for three years for engaging in self-

dealing. We recognized the vulnerability of the relationship involved as

guardian and conservator and the need to impose strong discipline to
                                    15

deter others from violating the trust. Id. We also believed suspension

was needed to maintain the integrity of the profession. Id.

      The approach taken in Remer is consistent with other disciplinary

cases involving misrepresentation and deceit. We have repeatedly said

that conduct involving “ ‘[d]ishonesty, deceit, and misrepresentation by a

lawyer are abhorrent concepts to the legal profession, and can give rise to

the full spectrum of sanctions, including revocation.’ ” Iowa Supreme Ct.

Att’y Disciplinary Bd. v. Van Beek, 757 N.W.2d 639, 643 (Iowa 2008)

(quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Hall, 728 N.W.2d 383,

387 (Iowa 2007)). In the end, the circumstances of each case drive the

sanction in cases involving self-dealing and misrepresentation. See Iowa

Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Allen, 586 N.W.2d 383, 391

(Iowa 1998) (imposing a one-year suspension for conduct involving

unauthorized gifts to attorney from conservatorship and conversion of

funds); see also Van Beek, 757 N.W.2d at 643–44 (imposing a two-year

suspension for misrepresenting authenticity of a will, collecting probate

fee without court approval, and neglect).

      We think the sanction in this case falls between the three-year

suspension imposed in Remer and the one-year suspension imposed in

Allen. In Allen, the attorney had a very close relationship with the ward,

the unauthorized gifts were consistent with the intent of the ward, and

the gifts were repaid. In this case, Murphy was very close to the ward,

the ward had gifted and transferred property to Murphy and his wife

prior to the conservatorship, and the relatives of Doss who were the

beneficiaries under the will entered into a settlement agreement over the

matter. In Remer, the attorney had a history of disciplinary action and

expressed no remorse.
                                    16

      Considering all the particular circumstances of this case, including

all mitigating and aggravating factors, we impose a suspension of not

less than eighteen months. While Murphy has enjoyed a good reputation

in the community over his long career, the actions in this case

constituted calculated deceit and self-dealing. He violated the most basic

tenets of lawyering and violated the trust demanded of Iowa lawyers as

officers of the court.

      V. Conclusion.

      We suspend Murphy’s license to practice law indefinitely with no

possibility of reinstatement for a period of eighteen months from the

filing of this opinion. The suspension imposed applies to all facets of the

practice of law provided by Iowa Court Rule 35.12(3) and requires

notification to clients as provided by Iowa Court Rule 35.22. The costs of

this proceeding are taxed against Murphy pursuant to Iowa Court Rule

35.26(1).

      LICENSE SUSPENDED.

      All justices concur except Waterman, Mansfield, and Zager, JJ.,

who take no part.