Court Opinion

ID: 9675406
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:52:44.110772+00
Date Added: 2024-06-11T18:16:34.340692
License: Public Domain

PATIENCE DRAKE ROGGENSACK, J.
¶ 61. (idissenting in part). The court's per curiam decision approves the discipline of Attorney Mitchell J. Barrock for violations of various supreme court rules. Per cu-riam op., ¶ 3.1 agree that Attorney Barrock should be disciplined for rule violations. I write in partial dissent because I conclude that Attorney Barrock should not be disciplined for the alleged violation of SCR 20:1.15(d)(3) because this court has concluded that it is permissible to fail to hold settlement proceeds received from a personal injury claim in an attorney trust account when the attorney knows there is a claim by another person to a portion of those proceeds. Yorgan v. Durkin, 2006 WI 60, ¶ 2, 290 Wis. 2d 671, 715 N.W.2d 160. In my view, the court's decision in Yorgan modifies when an attorney has an obligation to retain settlement proceeds in his trust account, to which proceeds another person makes a claim. The court has concluded that a known claim to a portion of the proceeds is insufficient to lawfully prevent an attorney from distributing the proceeds to him and others. Id. Rather, the court has *227concluded that what is required to validly assert such a claim is either the agreement of the attorney into whose trust account the proceeds were paid or an equitable lien against the proceeds. Id. The court also concluded that public policy does not favor imposing liability on an attorney who disburses all of the proceeds without paying one who makes a claim to the attorney in possession of those proceeds. Id. Given the court's reasoning in Yorgan, in my view, Attorney Barrock should not be sanctioned for a violation of SCR 20:1.15(d)(3) on the facts of this case. Accordingly, I would remand to the referee for a recommendation for discipline that should be imposed when the violation of SCR 20:1.15(d)(3) is not considered, and I respectfully dissent, in part, from the majority opinion.
¶ 62. No one cites Yorgan to us. Perhaps that is because it was not released until June 2, 2006 and the referee issued his Decision and Recommendations on May 31, 2006. Of course there may be differences between a civil claim that settlement proceeds have been distributed in contravention of an alleged contractual right of recovery against them and an allegation that the Rules of Professional Conduct have been violated because settlement proceeds have been distributed in contravention of an alleged contractual right of recovery against them. However, as we recognized in Yorgan, disciplinary cases may be based in factual contexts similar to those on which civil actions are based.1 In addition, the factual context in which Yorgan arose is on all fours with the facts related by the referee *228as a precursor to his conclusion that Attorney Barrock violated SCR 20:1.15(d)(3).2
¶ 63. Dr. Yorgan is a chiropractor who provided chiropractic services to Ms. Hernandez for personal injuries that resulted from an automobile accident. Yorgan, 290 Wis. 2d 671, ¶ 53. Because Ms. Hernandez was not able to pay for the health care she required, Ms. Hernandez made a written assignment to Dr. Yorgan of proceeds that may be received from her personal injury claim. That agreement provided:
I hereby authorize and direct you, my attorney, to pay directly to Dr. Yorgan such sums as may be due and owing him for health services rendered to me by reason of this accident and to withhold such sums from any settlement, judgement [sic] or verdict as may be necessary to protect his interests.
Id., ¶ 56.
¶ 64. Attorney Durkin represented Ms. Hernandez in her civil claim for the same accident that resulted in the personal injuries for which Dr. Yorgan provided treatment. Id., ¶ 53. Moreover, the circuit court found that Ms. Hernandez's written assignment was sent to Attorney Durkin's office at the time Dr. Yorgan transmitted Ms. Hernandez's treatment records that Attorney Durkin had requested, about November 1, 2000. Id., ¶ 57. The circuit court also found that Attorney Durkin settled Ms. Hernandez's personal injury claim *229about June, 2003, and that prior to reaching a settlement, Attorney Durkin contacted Dr. Yorgan to see if he would reduce the amount then due for chiropractic services. Id. When Dr. Yorgan refused to do so, Attorney Durkin paid himself from the settlement proceeds and sent the rest of it to Ms. Hernandez, who was subsequently nowhere to be found. Id. There was no evidence in the record that Ms. Hernandez provided Attorney Durkin any instructions about the disbursement of the settlement proceeds to Dr. Yorgan that were contrary to the assignment she executed in favor of Dr. Yorgan. Id. Accordingly, Attorney Durkin had notice of an assignment, expressly created by his client. Id., ¶ 1 and ¶ 57.
¶ 65. This court concluded that Attorney Durkin had no obligation to pay Dr. Yorgan from the settlement proceeds Attorney Durkin received because Attorney Durkin did not sign an agreement to do so. Id., ¶ 2. In so concluding, it also concluded that Attorney Durkin had no obligation to retain the disputed funds in his trust account. Accordingly, Dr. Yorgan was denied all recovery for the health care he provided. Id., ¶ 2.
¶ 66. In the disciplinary case now before us, Attorney Barrock is found to have violated SCR 20:1.15(d)(3), which provides in relevant part:
Disputes regarding trust property. When the lawyer and another person or the client and another person claim ownership interest in trust property identified by a lien, court order, judgment, or contract, the lawyer shall hold that property in trust until there is an accounting and severance of the interests. If a dispute arises regarding the division of the property, the lawyer shall hold the disputed portion in trust until the dispute is resolved.
¶ 67. Attorney Barrock's violation of SCR 20:1.15(d)(3) arises from a claim made against settle*230ment proceeds by Attorney Hupy, who initially represented Attorney Barrock's client, WF., for the same personal injury claim for which Attorney Barrock collected settlement proceeds. As part of Attorney Hupy's representation of W.F., W.F. signed a contingency fee agreement whereby Attorney Hupy allegedly would receive 33V3% of any recovery and would have a lien on the proceeds of the personal injury claim for the payment of that contingency fee.3 Per curiam op., ¶ 8.
¶ 68. Approximately one year after Attorney Hupy entered into the agreement to represent WF, W.F. decided to retain Attorney Barrock. Id., ¶ 9. As part of Attorney Barrock's representation of W.F., WF. also entered into a retainer agreement with Attorney Bar-rock. Id., ¶ 11.
¶ 69. When Attorney Hupy became aware of Attorney Barrock's representation, he asked Attorney Barrock to acknowledge Attorney Hupy's lien against proceeds received in the future from WF.'s personal injury claim. Id., ¶ 14.
*231¶ 70. Attorney Barrock did not do so. Id., ¶ 15. Attorney Barrock continued to, represent W.F. and obtained a settlement of $34,135. Id., ¶ 16. However, he paid Attorney Hupy nothing, but distributed the proceeds to himself, to his father, who was also an attorney, and to W.F. Id. When Attorney Hupy learned that a distribution had been made, he sued Attorney Barrock and also reported Attorney Barrock's actions to OLR. Id., ¶ 22.
¶ 71. The referee's conclusion of law, that was adopted by this court in its disciplinary decision, determined that:
Attorney Barrock failed to hold in his Trust Account a portion of the settlement he had negotiated with Omni Insurance Company despite his actual knowledge of a dispute regarding Attorney Hupy's firm's lien as to a portion of those funds. This is a direct violation of SCR 20:1.15(d).
¶ 72. I write dissenting in part because the attorney conduct in Yorgan is the same as Attorney Barrock's conduct here. Both attorneys knew another person claimed an interest in settlement proceeds that came into their hands. This knowledge caused the settlement funds that each attorney deposited into his trust account to be subject to a dispute about the ownership of those funds, which would appear to cause each attorney's conduct to fall within the ambit of SCR 20:1.15(d)(3). However, it appears to me that Yorgan put a gloss on when a portion of settlement proceeds is in "dispute." That is, this court concluded that Attorney Durkin was not bound to retain the settlement proceeds from Ms. Hernandez's lawsuit because he had not signed an agreement to be bound by the contractual assignment Ms. Hernandez made to Dr. Yorgan. Yorgan, *232290 Wis. 2d 671, ¶ 2. We also concluded that the failure to pay Dr. Yorgan did not violate public policy. Id. If Attorney Durkin was not bound to retain the settlement proceeds in his trust account, under law or public policy until a court had determined whether Dr. Yorgan had a valid claim against the proceeds, then how could those proceeds be in "dispute" under SCR 20:1.15(d)(3), which requires retaining them when a dispute is present?
¶ 73. The concurrence asserts that the dissent "conflates" Attorney Hupy's OLR complaint with his civil claim. Per curiam op., ¶ 39 (Abrahamson, C.J., concurring). The concurrence then goes on to assert that the "crux" of this disciplinary action is that a lawyer released trust account funds to which he knew another lawyer claimed an interest, while the "crux" of a civil action is a court determination of whether a claimant has a valid claim to the funds. Id., ¶ 41.
¶ 74. While I acknowledge that the focus is different in the two actions, does the concurrence really believe a disciplinary action will lie against Attorney Durkin in the Yorgan matter after we have determined that Attorney Durkin properly ignored Dr. Yorgan's claim to a portion of the trust account funds? The court did conclude that Attorney Durkin's distribution did not violate any rights of Dr. Yorgan and did not violate public policy. Yorgan, 290 Wis. 2d 671, ¶ 2. Certainly, the Supreme Court Rules contained in SCR ch. 20 are grounded in public policy. To me, the OLR case and the civil action, while having differing focuses, should not result in public policy conclusions that are inconsistent with one another.
¶ 75. In summary, in this disciplinary action, it was an attorney who claimed an interest in the funds in an attorney's trust account. In Yorgan, it was a chiro-*233praetor who claimed an interest in the funds in an attorney's trust account. In my view before this court's decision in Yorgan, it did not matter whether the interest claimed was grounded in a common law lien, a statutory lien or a contract assigning a portion of the proceeds to another. The terms of SCR 20:1.15(d)(3) covered all such claims if they showed the proceeds were in "dispute." However, in Yorgan, we concluded that the distribution of all of the settlement proceeds to others violated no law and was not contrary to public policy. Id.
¶ 76. Therefore, the court's determination in Yorgan put a gloss on what type of claim can be made against trust account proceeds, which gloss affects this case. To explain further, I cannot agree that it is not contrary to public policy to distribute trust account funds to which a chiropractor makes a claim, but it is contrary to public policy to distribute trust account funds to which an attorney makes a claim. Therefore, I conclude Attorney Barrock did not violate SCR 20:1.15(d)(3). Accordingly, I respectfully dissent from that portion of the discipline imposed for a violation of SCR 20:1.15(d)(3), and I would remand the matter to the referee to make a recommendation about discipline that does not include a finding that Attorney Barrock violated SCR 20:1.15(d)(3) under the facts of this case.

 Yorgan v. Durkin, 2006 WI 60, ¶ 22, 290 Wis. 2d 671, 715 N.W.2d 160 (citing In the Matter of Allen, 802 N.E.2d 922, 924 (Ind. 2004) and Matter of Rawson, 833 P.2d 235, 238 (N.M. 1992)), two disciplinary cases, as support for the court's conclusion that Dr. Yorgan should have had Attorney Durkin sign a *228letter of protection, if Dr. Yorgan expected Attorney Durkin to protect Dr. Yorgan's interest in the settlement proceeds.

 Many of the facts I quote come from the dissent in Yorgan. However, the majority opinion in Yorgan did not dispute that Attorney Durkin knew that Dr. Yorgan made a claim to the settlement proceeds from Ms. Hernandez's personal injury claim based on the written agreement he sent to Attorney Durkin. See Yorgan, 290 Wis. 2d 671, ¶ 1.

 The fee agreement between Attorney Hupy and WE is not a part of the record before this court. Therefore, because statutory liens under Wis. Stat. § 757.37 do not arise as a matter of course, we do not know whether Attorney Hupy's agreement actually granted him a statutory lien. See Weigel v. Grimmett, 173 Wis. 2d 263, 271, 496 N.W.2d 206 (Ct. App. 1992) (concluding that even with a written fee agreement there must he separate proof of an agreement for a lien); see also In the Matter of Richland Bldg. Sys., Inc., 40 B.R. 156, 157 (Bankr. W.D. Wis. 1984) (concluding that a written fee agreement was insufficient to support an attorney's lien because there was no specific proof of the granting of the lien). However, in my view, the basis for the claim against settlement proceeds makes no difference in regard to whether SCR 20:1.15(d)(3) applies because the Rule covers disputes that arise because of a claimed "lien, court order, judgment, or contract."