Court Opinion

ID: 2811135
Source: CourtListenerOpinion
Date Created: 2015-06-24 12:25:18.140949+00
Date Added: 2024-06-11T12:08:59.624749
License: Public Domain

2015 WI 60

                  SUPREME COURT          OF   WISCONSIN
CASE NO.:               2015AP460-D
COMPLETE TITLE:         In the Matter of Disciplinary Proceedings
                        Against
                        Jenny R. Armstrong, Attorney at Law:

                        Office of Lawyer Regulation,
                                  Complainant,
                             v.
                        Jenny R. Armstrong,
                                  Respondent.

                           DISCIPLINARY PROCEEDINGS AGAINST ARMSTRONG

OPINION FILED:          June 24, 2015
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:

SOURCE OF APPEAL:
   COURT:
   COUNTY:
   JUDGE:

JUSTICES:
   CONCURRED:
   DISSENTED:
   NOT PARTICIPATING:

ATTORNEYS:
                                                                            2015 WI 60
                                                                    NOTICE
                                                      This opinion is subject to further
                                                      editing and modification.   The final
                                                      version will appear in the bound
                                                      volume of the official reports.
No.     2015AP460-D

STATE OF WISCONSIN                                :              IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against Jenny R. Armstrong, Attorney at Law:

Office of Lawyer Regulation,                                             FILED
             Complainant,
                                                                    JUN 24, 2015
       v.
                                                                       Diane M. Fremgen
                                                                    Clerk of Supreme Court
Jenny R. Armstrong,

             Respondent.

       ATTORNEY     disciplinary          proceeding.         Attorney's         license
suspended.

       ¶1    PER CURIAM.       We review a stipulation filed pursuant
to    Supreme   Court   Rule    (SCR)     22.12    by      the   Office     of    Lawyer
Regulation      (OLR)   and    Attorney    Jenny      R.    Armstrong.           In    the
stipulation,      Attorney     Armstrong     does       not      contest     that      she
committed nine counts of professional misconduct and that a two-
year suspension of her license to practice law in Wisconsin is
appropriate     discipline.       The     parties       further      stipulate        that
                                                                    No.        2015AP460-D

Attorney Armstrong should pay $60,899.81 in restitution to a
former client.
     ¶2    Attorney      Armstrong   was        licensed    to   practice        law   in
Wisconsin in 1979.         She resides in Middleton.                  She has not
previously been the subject of a disciplinary proceeding.
     ¶3    During the events giving rise to this matter, Attorney
Armstrong was a licensed real estate broker doing business as
ABA Realty, Inc.        She was the only broker employed by the firm.
Attorney Armstrong was licensed by the office of the Insurance
Commissioner of Wisconsin to sell life, accident, and health
insurance lines for several companies.
     ¶4    From the 1980s until October 2005, Attorney Armstrong

had an attorney-client relationship with a woman we shall refer
to as B.R.T.     B.R.T. was born in October 1924.                 Briefly stated,
Attorney Armstrong engaged in a lengthy pattern of misconduct,
repeatedly overbilling her client, and ultimately, between 2000
and 2005, charging her client $170,651.95 for various tasks,
many of which were not legal in nature.
     ¶5    In    June    2000,   Attorney          Armstrong     sold       B.R.T.      a
deferred   annuity      policy   for        a    single     premium       of     $5,000.
Attorney   Armstrong      received     an       immediate    four     and       one-half
percent commission on the policy in the sum of $225.                              At the
time B.R.T. purchased the annuity policy, Attorney Armstrong was
doing legal work, financial planning, and financial management

for B.R.T. and billing B.R.T. for it.                  Attorney Armstrong did
not disclose to B.R.T. in writing that Attorney Armstrong would
receive a commission on the sale of the annuity policy prior to
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                                                                   No.    2015AP460-D

B.R.T. entering into the transaction.                Attorney Armstrong did
not obtain B.R.T.'s written consent to the transaction involving
Attorney Armstrong's receipt of a commission on the sale of the
annuity policy prior to the transaction.
      ¶6      The OLR alleged and the parties have stipulated that,
by selling to her legal client an annuity policy in June 2000,
for   which    Attorney    Armstrong      received   a     commission,         without
obtaining a separate written consent from the client waiving the
conflict      of   interest    and      indicating   the       client    was    given
reasonable opportunity to consult with independent counsel, and
in a transaction that was not fair or reasonable to the client,
Attorney Armstrong violated former SCR 20:1.8(a) (Count One).1
      ¶7      In   June   2005,    B.R.T.     executed     a    listing    contract
giving Attorney Armstrong's realty firm, ABA Realty, Inc., the

      1
       SCR 20:1.8(a),         as   in    effect   prior    to     July    1,    2007,
provides:

           A lawyer shall not enter into a business
      transaction with a client or knowingly acquire an
      ownership, possessory, security or other pecuniary
      interest adverse to a client unless:

           (1) the transaction and terms on which the lawyer
      acquires the interest are fair and reasonable to the
      client and are fully disclosed and transmitted in
      writing to the client in a manner which can be
      reasonably understood by the client;

           (2) the client is given a reasonable opportunity
      to seek the advice of independent counsel in the
      transaction; and

              (3) the client consents in writing thereto.

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                                                                          No.     2015AP460-D

exclusive right to sell B.R.T.'s duplex.                              Attorney Armstrong
prepared and executed the listing contract, which included a
"list price" of $450,000 and provided for a broker's commission
of seven percent if the conditions for earning the commission
were    satisfied.          At     the    time       Attorney     Armstrong     and     B.R.T.
entered       into    the    listing           contract,      Attorney    Armstrong        was
performing legal and other services relative to the duplex and
the    sale    of    the    duplex        and    billing      B.R.T.     for    that    work.
Attorney Armstrong did not obtain B.R.T.'s written consent to
the    transaction         involving       Attorney         Armstrong's       receipt    of    a
commission on the sale of the duplex prior to B.R.T. entering
into the listing contract.

        ¶8     The OLR alleged and the parties have stipulated that,
by contracting with B.R.T. to act as her real estate agent in
the sale of her duplex for a seven percent commission, while
simultaneously acting as her lawyer with respect to the sale,
without obtaining a separate written consent from the client
waiving the conflict of interest and indicating that the client
was    given    reasonable         opportunity         to    consult    with    independent
counsel, Attorney Armstrong violated former SCR 20:1.8(a) (Count
Two).
        ¶9     In April 2001, Attorney Armstrong prepared and filed
joint income tax returns for B.R.T. and her husband for the 2000
tax year.       Attorney Armstrong billed the couple $3,430.88.                           The

couple       paid    in    full.         The    income      tax     returns    prepared       by
Attorney       Armstrong      contained          errors,      and    Attorney     Armstrong
either knew or should have known of the errors, or knew or
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                                                                           No.     2015AP460-D

should have known that she did not have sufficient information
to complete accurate returns and that the necessary information
could have been obtained from the clients or other sources.
        ¶10    In    May   2002,      the       United     States      Internal      Revenue
Service (IRS) notified the couple of a deficiency and proposed
changes to the 2000 tax return, which increased the taxes they
owed    by    $2,156.        The    IRS    demanded       an    additional       payment     of
$2,717, which included interest.
        ¶11    In    December      2002,        Attorney       Armstrong     disputed       the
IRS's    proposed       changes     to     the       return    and    asserted      that    the
clients were entitled to a $435 tax refund.                           Attorney Armstrong
petitioned the United States Tax Court for a hearing on behalf

of the couple.          She also prepared and submitted an amended Form
1040    for    the    2000    tax     year      which,     as    it   turned       out,    also
included several errors.
        ¶12    Shortly     before     the        scheduled       trial     date,    the     IRS
completed an audit and reduced the amount of the clients' tax
deficiency; the clients agreed to a stipulation offered by the
IRS, under which they agreed to pay $1,136 in additional tax,
plus $195 in interest, for a total additional payment of $1,331.
        ¶13    Attorney Armstrong then billed B.R.T. and her husband
$4,118.95 for responding to the IRS notice of deficiency.                                   The
clients paid in full.
        ¶14    The OLR alleged and the parties have stipulated that,

by   preparing       and     filing       her    clients'       tax   returns      for     2000
without       accurate     information          that     she    already     knew,     should
reasonably have known, or could have readily obtained, thereby
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                                                          No.   2015AP460-D

resulting in a tax deficiency and added legal expenses for her
clients, Attorney Armstrong violated SCR 20:1.3 (Count Three).2
     ¶15   In addition, by charging additional fees of $4,118.95
to reduce an IRS tax deficiency determination from $2,156 to
$1,136, Attorney Armstrong violated former SCR 20:1.5(a) (Count
Four).3

     2
       SCR 20:1.3 provides that "[a] lawyer shall act with
reasonable diligence and promptness in representing a client."
     3
       SCR 20:1.5(a),   as   in   effect   prior   to    July   1,        2007,
provides:

          A lawyer's fee shall be reasonable.  The factors
     to be considered in determining the reasonableness of
     a fee include the following:

          (1) the time and labor required, the novelty and
     difficulty of the questions involved, and the skill
     requisite to perform the legal service properly;

          (2) the likelihood, if apparent to the client,
     that the acceptance of the particular employment will
     preclude other employment by the lawyer;

          (3) the fee customarily charged in the locality
     for similar legal services;

           (4) the amount involved and the results obtained;

          (5) the time limitations imposed by the client or
     by the circumstances;

          (6) the nature and length        of   the     professional
     relationship with the client;

          (7) the experience, reputation, and ability                of
     the lawyer or lawyers performing the services; and

           (8) whether the fee is fixed or contingent.

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                                                                     No.     2015AP460-D

      ¶16     From some time before 2000 and through September 2005,
Attorney Armstrong invoiced B.R.T. a flat fee of $500 per month
for services identified under a matter name of "POA/Financial."4
Attorney Armstrong's records indicate that between April 2000
and October 2005 she spent from two to four and one-half hours
per month, with a monthly average of 2.69 hours, on this matter.
Attorney       Armstrong's         work    on      this     matter     was        mostly
nonprofessional clerical work, such as receiving, scanning, and
filing dividend checks, depositing checks, writing checks, and
bookkeeping.
      ¶17     However, the monthly invoices issued to B.R.T. under
the       "POA/Financial"     matter       described        the      activities       as

"professional services," such as "Received, Reviewed, Processed
Financial Documents for the Month, Conferences with Client and
Financial      Advisors."           The    parties        stipulate        that   these
descriptions did not fairly or accurately describe the services
performed, and included work that was not properly billable to a
client.
      ¶18     Attorney    Armstrong       sought    to    justify     the    flat    fee
arrangement by estimating two hours of work per month, billed at
her   normal     hourly     rate     of   $250     for    professional       services.
However, the actual legal work consisted of about 15 minutes or
less per month.          The remainder of the time was spent on non-

      4
       The reference to "POA" was to powers of attorney executed
by B.R.T. in 1998 and 2004, appointing Attorney Armstrong to
serve as her attorney-in-fact.

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                                                                        No.     2015AP460-D

legal     clerical       activities.         Attorney        Armstrong       charged     the
monthly $500 flat rate despite language in both the 1998 and
2004      powers        of     attorney      setting         her   compensation          as
reimbursement for "all reasonable costs and expenses actually
incurred and paid" on behalf of the client.
        ¶19     The OLR alleged and the parties have stipulated that,
by billing B.R.T. a flat fee of $500 per month from May 1, 2000,
through October 1, 2005, for legal work that generally consisted
of only 15 minutes or less, despite the aforementioned language
in the written powers of attorney, Attorney Armstrong violated
former SCR 20:1.5(a) (Count Five).
        ¶20     In      addition,     between         September        1,     2004,     and

November 1,          2005,    Attorney    Armstrong      billed    B.R.T.        somewhere
between        $58,422.32      and   $62,815.20         for    what     was     primarily
nonprofessional work assisting B.R.T. with matters related to
her duplex.           This work included "general contractor" type of
services        (such    as    consulting      with    her     client       about     needed
repairs, soliciting bids, and helping select contractors such as
painters, carpenters, plumbers, and the like); property manager
services       (such     as   dunning     tenants     for     unpaid    rent,       fielding
complaints, keeping accounting records for rents, listing the
duplex        for    lease,    and   seeking     new    tenants);           retaining    and
supervising workers to clean the duplex; personally sorting and
boxing the client's personal property; and running errands (such

as picking up parts and supplies, boxes, plastic bags, packing
tape, mulch, and the like).

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                                                                   No.     2015AP460-D

      ¶21   Attorney     Armstrong         charged     her       client     at     her
professional   rate     of   $250    per    hour     for   these       services    and
charged her client $150 per hour for services performed by legal
assistants.
      ¶22   The OLR alleged and the parties have stipulated that,
by charging her $250 hourly rate as an attorney, and by charging
her   paraprofessional       staff   rate    of    $150    per     hour,    for    the
aforementioned nonprofessional work, Attorney Armstrong violated
former SCR 20:1.5(a) (Count Six).
      ¶23   B.R.T.'s husband, John, died in April 2004, and B.R.T.
retained Attorney Armstrong to perform legal services relative
to John's estate.      When John died, he owned a 1993 Mercury Sable

automobile, the depreciated value of which was likely less than
ten percent of its original base price of $17,500.                          Attorney
Armstrong   billed     B.R.T.   approximately        $3,265      for    services    in
cancelling the auto insurance on the vehicle and transferring
the vehicle title to John's daughter.
      ¶24   The OLR alleged and the parties have stipulated that,
by charging B.R.T. approximately $3,265 during 2004 and 2005 to
cancel auto insurance and transfer a vehicle title, Attorney
Armstrong violated former SCR 20:1.5(a) (Count Seven).
      ¶25   In December 1998, an entity named Trustmark issued a
check payable to B.R.T. in the sum of $315.                        In July 2004,
B.R.T. attempted to deposit the check, but her bank rejected and

returned the check as stale.          B.R.T. gave Attorney Armstrong the
stale check and asked her to try to get a replacement.                             The
parties have stipulated that between July 15 and October 26,
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                                                                              No.       2015AP460-D

2004, Attorney Armstrong billed B.R.T. approximately $562.50 to
attempt to have a $315 stale check reissued, thereby violating
former SCR 20:1.5(a) (Count Eight).
        ¶26   Finally,       following          John's     death,         B.R.T.       wanted       to
close    John's      AOL    account.           The   parties        have     stipulated         that
Attorney      Armstrong      billed       B.R.T.       about    $385       for    the       work    to
cancel    this    account,         thereby       violating       former          SCR    20:1.5(a)
(Count Nine).
        ¶27   Attorney Armstrong has stipulated that she understands
the misconduct allegations; that she understands her right to
contest this matter; that she understands her right to consult
with     counsel,      and    has        done    so;     that       she    understands             the

ramifications should the court impose a two-year suspension; and
that    her    entry       into    the    stipulation          is     made       knowingly         and
voluntarily and represents her admission to the facts and to the
alleged       misconduct          and    her     agreement          with     the        level      of
discipline sought by the OLR, as well as her assent to making
restitution as recommended by the OLR.                          The stipulation states
that it did not result from plea-bargaining.
        ¶28   With    respect       to    restitution,          the    parties         stipulated
that $16,500 represents a reasonable fee for the "POA/Financial"
services.      The OLR recommends that we require Attorney Armstrong
to make restitution to B.R.T. in the sum of $16,500 for these
services.

        ¶29   With    respect       to    the     IRS    notice       of     deficiency,           the
stipulation provides that $500 represents a reasonable fee for
the    services      performed.           The    OLR     recommends        that        we   require
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                                                                               No.     2015AP460-D

Attorney Armstrong to make restitution to B.R.T. in the sum of
$3,618.95 for this matter.
          ¶30    With respect to the work performed relating to the
duplex,         the    stipulation    provides           that   $8,307.64          represents    a
reasonable fee for the services performed.                              The OLR recommends
that we require Attorney Armstrong to make restitution to B.R.T.
in the sum of $37,568.36 for these services.
          ¶31    With respect to the estate of B.R.T's husband, the
stipulation provides that $1,000 represents a reasonable fee for
the   services         performed.        The    OLR       recommends         that    we   require
Attorney Armstrong to make restitution to B.R.T. in the sum of
$3,212.50 in this matter.

          ¶32    Attorney         Armstrong's             professional               misconduct,
including         the     systematic        overcharging           of        her     client,    is
deplorable.            Her     misconduct      is   aggravated          by    her    refusal    to
acknowledge           wrongdoing     throughout          much   of      the       investigation.
Her   conduct          absolutely    warrants        a    lengthy       suspension        of   her
license to practice law.
          ¶33    After       reviewing       the         matter,        we         approve     the
stipulation, in part to facilitate payment of restitution to the
victim and in reliance on the cases cited by the OLR in support
of    a     two-year      suspension.           See,       e.g.,     In      re     Disciplinary
Proceedings Against Gilbert, 227 Wis. 2d 444, 595 N.W.2d 715
(1999).         We suspend Attorney Armstrong's license to practice law
in this state for a period of two years.                                We direct Attorney
Armstrong         to     pay    restitution         to    B.R.T.     in       the     amount    of
$60,899.81.            Because this matter is being resolved without the
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                                                              No.   2015AP460-D

appointment of a referee, and because the OLR has not sought
costs, we do not impose the costs of this proceeding on Attorney
Armstrong.
      ¶34    IT IS ORDERED that the license of Jenny R. Armstrong
to practice law in Wisconsin is suspended for a period of two
years, effective July 24, 2015.
      ¶35    IT IS FURTHER ORDERED that within 60 days of the date
of   this   order,     Jenny   R.   Armstrong   shall   pay   $60,899.81    in
restitution to B.R.T.
      ¶36    IT IS FURTHER ORDERED that Jenny R. Armstrong shall
comply with the provisions of SCR 22.26 concerning the duties of
a person whose license to practice law in Wisconsin has been

suspended.
      ¶37    IT   IS   FURTHER      ORDERED   that   compliance     with   all
conditions of this order is required for reinstatement.                    See
SCR 22.29(4)(c).

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    No.   2015AP460-D

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