Court Opinion

ID: 4436234
Source: CourtListenerOpinion
Date Created: 2019-09-06 14:03:41.710212+00
Date Added: 2024-06-11T14:58:19.886773
License: Public Domain

IN THE SUPREME COURT OF IOWA
                               No. 19–0662

                         Filed September 6, 2019

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

      Complainant,

vs.

KYLE L. EARLEY,

      Respondent.

      On review of the report of the Iowa Supreme Court Grievance

Commission.

      Grievance commission recommends revocation of an attorney’s

license to practice law for violations of ethical rules. LICENSE REVOKED.

      Tara van Brederode and Crystal W. Rink, Des Moines, for

complainant.

      Kyle L. Earley, Grinnell, pro se.
                                      2

MANSFIELD, Justice.

      A newly admitted Iowa attorney received retainers to handle family

law matters, did essentially no work on those matters, and used the funds

instead for personal purposes.        The Iowa Supreme Court Attorney

Disciplinary Board sought revocation of the attorney’s license, and the

attorney did not contest revocation or argue he had a colorable future

claim to the funds when he converted them.           A division of the Iowa

Supreme Court Grievance Commission held a hearing and concluded that

most of the alleged ethical violations had occurred and that revocation was

the proper sanction. On our review, we agree with the commission and

therefore revoke the attorney’s license to practice law.

      I. Facts and Procedural History.

      Kyle Earley graduated from law school in 2017 and was admitted to

the Iowa bar that same year. At relevant times, he maintained a solo

private practice in Grinnell. This disciplinary proceeding concerns Earley’s

representation of two different clients.

      A. Ryan Patterson Matter. In 2018, Earley began representing

Ryan Patterson in a dissolution of marriage action. Patterson agreed to

pay Earley $250 per hour with a cap of $1500. Patterson also agreed to

pay $300 for anticipated expenses. On April 27, Patterson’s mother gave

Earley a check in the amount of $1800 for the representation. Earley

deposited this check into his client trust account the same day.

Thereafter, Earley drafted a petition for dissolution that he did not file. He

performed no other work on the case.

      Between March 14 and July 25, Earley moved $5910 from his client

trust account into his business checking account. He also moved $2590

from his client trust account into his personal checking account.          By

July 31, these account transfers left $2 remaining in Earley’s client trust
                                     3

account. The unearned portion of the funds received for the Patterson

dissolution matter were among those transfers.       Earley did not notify

Patterson of the time, amount, or purpose of the withdrawals or furnish

an accounting.

      On June 12, in a responsive letter to the Office of Professional

Regulation, Earley self-reported his conversion of client funds:

            The main purpose of this letter . . . is to self-report
      multiple ethics violations regarding my trust account
      management. I’m not sure where to start, so I will start at the
      beginning.

      Earley went on to describe a variety of challenges he faced as he

began his legal career as a solo practitioner. He explained that due to

financial strain, he took on cases that were beyond his realm of expertise.

He began experiencing depression and anxiety.        Earley described his

ongoing resentment toward his father.       He noted that his father, an

attorney, had committed ethical violations of his own before ultimately

being disbarred. Earley continued,

            With respect to my violations, I don’t have the specifics
      at the moment. I just know that I’ve taken money from my
      trust account before I earned it, multiple times. If I were to
      estimate, I would say at least 5 times. I will fully cooperate
      with your Office however. I will release my trust account
      records and give you my compensation agreement records.

            I am deeply sorry for my actions. I am ashamed and
      embarrassed. I am completely lost at the moment. I honestly
      don’t know what I want, or how I want this situation to play
      out. But I know that I’m not in a good place, mentally right
      now. And that I need help. So, I’m asking for help.

      On August 7, Earley sent a letter to Patterson admitting he had

taken Patterson’s $1800 without earning the funds:

             I apologize for taking so long to respond to you. The
      truth is that I’ve been avoiding this conversation because I am
      ashamed of my actions.
                                 4
       There’s really no easy way to say this, so I’ll just say it.
I no longer have your $1800, nor can I represent you in your
divorce case.

       For what it’s worth, I am GENUINELY sorry for my
actions. Eventually, I will make this right. You have my word
as a man. But I realize that doesn’t really mean much at this
point in time.

         I figure that I at least owe you an explanation. So, here
it is.

       Several months ago I began to experience crippling
anxiety, which coincided with mounting financial difficulties.
I attempted to get treatment, but nothing helped. I have since
made the decision to quit the practice of law and have
withdrawn from all of my cases.

       I have enclosed a copy of a letter that I sent to the Office
of Professional Regulation (which oversees attorneys in Iowa)
back in June, self-reporting multiple ethics violations
(including the handling of your flat fee payment). I’ve enclosed
this letter so that you may have a little bit of insight into what
was happening with my state of mind at the time.

       Factually, here is what occurred with respect to your
situation. I deposited your $1800 flat fee payment in my trust
account on 4/27/18. Legally, I’m only supposed to draw that
money out after I’ve earned it. In your particular case, I don’t
recall doing much work on your divorce, other than some in
person conversations that we had while I was working with
you on your criminal cases. But, for all practical purposes, I
acknowledge that I didn’t do any real work on your case.
Thus, I was not entitled to withdraw any of that $1800 from
my account.       Doing so was against the terms of our
compensation agreement and was a violation of Iowa attorney
ethical rules.

       You can find information on how to file an ethics
complaint against an Iowa attorney at www.iowacourts.gov. I
have also enclosed a copy of the Attorney Complaint Form
with this letter. As I mentioned, I have self-reported my
violations. But I encourage you to file an official complaint as
well.

       Please know that at no time did I misuse your money
with immoral intentions. At the time I withdrew the money, I
just really needed the cash (for financial obligations). Since I
fully intended on handling your entire divorce, I thought (at
the time) that I was only infringing on the Iowa ethical rules.
I don’t mean to minimize the importance of following the
ethical rules. I only mean that, from your perspective, I
                                    5
      thought it would be a “no harm, no foul” situation. However,
      shortly after taking out your money, my entire world just sort
      of collapsed and I was unable to function anymore. At that
      point, I was obligated to remove myself from the practice of
      law. Having done so, I now have no way to fulfill the terms of
      our agreement.

      On September 21, the Client Security Commission sent a letter to

Earley regarding the Patterson matter. See Iowa Ct. R. 39.12. The letter

notified Earley that Patterson had sought $1800 in reimbursement from

the Clients’ Security Trust Fund.       The Client Security Commission

requested documents from Earley as part of its investigation into the

matter.

      On September 28, Earley responded as follows:

             I believe my letter to Mr. Patterson dated August 7,
      2018 (which was attached to your claim notice letter),
      sufficiently explains what occurred with respect to the
      situation with Mr. Patterson.      Simply put, I wronged
      Mr. Patterson. My actions were inexcusable. I deserve
      punishment and Mr. Patterson deserves to be reimbursed for
      his financial loss.

            I am deeply ashamed of my behavior. At this point, all
      I can do is apologize, try to make things right (as best I can)
      and attempt to learn and grow from what has been an
      enormously difficult 1st year of my law practice.

      B. Jonathan     Beltz   Matter.     In   2018,   Earley   also    began

representing Jonathan Beltz in a dissolution matter. The parties agreed

to a rate of $250 per hour with fees to be capped at $1500. On March 14,

Beltz tendered $900 in cash to Earley for the representation. The same

day, Earley deposited the $900 into his client trust account.          Earley

performed only one hour of work on Beltz’s case.

      The fund transfers that Earley made between March 14 and July 25

included the unearned portion of Beltz’s $900 advance fee payment.

Earley did not notify Beltz of the time, amount, or purpose of the

withdrawals, and he did not provide Beltz with a complete accounting.
                               6

Also on September 28, Earley said the following in a letter to Beltz:

       I apologize for taking so long to write this letter. The
truth is that I have been avoiding contacting you because I am
ashamed and embarrassed of my behavior.

      Here’s the short version of what occurred since our last
contact. Basically, I experienced a prolonged struggle with
mental health issues, lasting several months, which
manifested as extreme, crippling anxiety. I handled the
experience very poorly. I withdrew from all of my cases (for
ethical reasons) and basically disappeared from the world for
a few months.

      During that process, I spent the money that was in my
trust account, which included the $900 flat fee payment you
gave me to handle your divorce.

       Ethically, I am not allowed to withdraw ANY of that
money from my trust account until I have earned it and
informed you. As you can see from my billing below, I did not
bill out the entire $900, nor did I inform you of my
withdraw[al] of any of that money. These are very serious
violations of the Iowa attorney ethical rules.

       You can find information on how to file an ethics
complaint against an Iowa Attorney at www.iowacourts.gov. I
have also enclosed a copy of the Attorney Complaint form with
this letter. I have already self-reported these violations. But
I encourage you to file an official complaint as well.

      I will eventually make this right and refund your entire
$900. However, I have had a difficult few months in which I
have not been working and have had no income. In addition,
there are other clients of mine that are in similar positions. It
may be quite a while before I can make that right with
everyone.

      In the meantime, I have recently learned about “The
Client[s’] Security Trust Fund” of Iowa. This fund provides for
reimbursement by the legal profession for losses caused to the
public in cases in which lawyers betray their client’s trust and
misappropriate funds.

       Your particular case should qualify for reimbursement.
If successful, this will get you a refund of your $900 much
quicker than I will be able to provide it. I have enclosed a copy
of the claim form should you choose to pursue
reimbursement. I encourage you to do so. I will cooperate
fully with the claims process. I know it would certainly help
alleviate my cons[cience] regarding the situation.
                                      7
             Once again, I apologize profusely that I provided such
      poor lawyering services to you and that your life was adversely
      affected by my difficulties and behavior. If I don’t hear from
      the Client Security Trust Fund regarding a pending claim, I
      will be in contact once I can start repayment of your refund.

              To date, I have spent the following time on your case:

       DATE              TIME             DESCRIPTION

       3/14/18           0.8              Meeting with Client

                                          Text Message
       3/14/18           0.1
                                          Exchange with Client

                                          Text Message from
       3/14/18           0.1
                                          Client

       TOTAL             1.0 hours @ $250 an hour = $250

              Best of luck to you in your future.

      C. This Proceeding.        On September 11, Earley’s license was

suspended for failing to comply with client security and continuing legal

education requirements. Approximately two months later, on December 7,

the Board filed a complaint against Earley alleging ethical violations

arising out of Earley’s representation of Patterson and Beltz.          The

complaint also alleged that Earley had “misappropriated or converted

client funds without a colorable future claim to the funds.” See Iowa Ct.

R. 36.8(1).

      Earley did not file an answer. On February 18, 2019, the matter
proceeded to hearing before the commission. Beltz and Earley testified at

the hearing. Beltz recounted hardship he had suffered because of Earley’s

failure to move forward in the representation:

            Q. Due to the six-months delay, did you -- to your
      knowledge, did you lose any rights or motions that were filed
      by opposing counsel in the dissolution matter? A. I believe
      that we could have had a custody order already set in place.
      I haven’t been allowed to see my son, but for maybe about ten
                                      8
      minutes in the last two and a half months. He’s two years old
      and my world.

            ....

            Q. Are there any other issues with that dissolution that
      have been affected by the gap in time or the lack of
      representation in the six months between March 14th and
      September 28th of last year, that you are aware of? A. She
      almost took everything, because we’re still legally joined and
      not legally separated, and I’m struggling hard.

Beltz also testified that he was now representing himself in his dissolution

proceeding because he did not have the funds to hire a second attorney.

      For his part, Earley admitted that he had “convert[ed] client funds

without a colorable future claim.” He admitted that he had also converted

funds from clients other than Beltz and Patterson. Earley recounted that

he had serious mental health issues, which culminated in an inpatient

hospitalization in October 2018. He added, “I deserve disbarment. And if

you went that route, I wouldn’t blame you, and I would accept it. I don’t

know if I want to be an attorney or not.”

      Earley went on,

      I would like to hope that someday I’ll get better and be able to
      redeem myself. Anybody that knows me well knows that, like,
      I’m very big on growth, becoming a better person. I consider
      myself a moral person, and so I’ve -- as dark as it is right now,
      like, I do think eventually I’ll come out of this a better person.
      But what I did was wrong; I don’t deserve to be a lawyer, so I
      understand if you don’t want me to be anymore.

      Discussing his background, Earley explained that he had flunked

out of college several times because he spent his twenties “basically

partying.” When he was twenty-nine and found out that he was going to

have a son, Earley enrolled in college for the last time and did well. Earley

went on to complete law school, but by then he was over $250,000 in debt

and feeling significant financial pressure.
                                      9

      On April 19, the commission issued findings of fact and conclusions

of law.   The commission found that Earley had violated Iowa Rules of

Professional Conduct 32:8.4(b) (“commit[ting] a criminal act that reflects

adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer”),

32:8.4(c) (“engag[ing] in conduct involving dishonesty, fraud, deceit, or

misrepresentation”), 32:1.3 (failing to act with reasonable diligence in

representing a client), 32:1.15(a) (failing to keep client property separate),

32:1.15(c) (withdrawing funds that have not been earned), and 32:1.15(f)

(failing to comply with trust account rules). The commission found as

mitigating circumstances that Earley had been in his first year of practice,

was suffering from mental health issues, and had admitted his wrongdoing

and expressed remorse. It noted client harm as an aggravating factor. The

commission further noted that Earley had not attempted to assert a

colorable future claim defense.      The commission recommended that

Earley’s license to practice law be revoked.

      II. Standard of Review.

      “We review attorney disciplinary matters de novo.” Iowa Supreme

Ct. Att’y Disciplinary Bd. v. Lynch, 901 N.W.2d 501, 506 (Iowa 2017)

(quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Pederson, 887 N.W.2d

387, 391 (Iowa 2016)); see Iowa Ct. R. 36.21(1). “The Board must prove

attorney misconduct by a convincing preponderance of the evidence, a

burden greater than a preponderance of the evidence but less than proof

beyond a reasonable doubt.” Lynch, 901 N.W.2d at 506 (quoting Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Willey, 889 N.W.2d 647, 653 (Iowa

2017)).

      When, as here, the attorney does not answer the Board’s complaint,

the alleged facts are deemed admitted. Iowa Supreme Ct. Att’y Disciplinary

Bd. v. McCuskey, 814 N.W.2d 250, 257 (Iowa 2012). However, we conduct
                                       10

an independent review of the ethical violations.          Id.   We respectfully

consider the commission’s recommendations as to sanction, but we “have

the discretion to ‘impose a greater or lesser sanction than what the

commission has recommended upon proof of an ethical violation.’ ” Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Noel, 923 N.W.2d 575, 582 (Iowa

2019) (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Mathahs, 918

N.W.2d 487, 489 (Iowa 2018)).

      III. Rule Violations.

      We agree with the commission that Earley violated numerous rules

of professional conduct. He neglected the Beltz and Patterson matters.

See Iowa R. Prof’l Conduct 32:1.3.          He violated proper trust account

practices by withdrawing unearned fees and not notifying his clients of the

withdrawals.    See id. r. 32:1.15(c), (f).   Also, and most importantly, he

misappropriated client funds in both matters, taking money for personal

purposes to which he knew he was not entitled. See id. rs. 32:1.15(a),

32:8.4(b), (c); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Moran, 919 N.W.2d

754, 759 (Iowa 2018). 1

      When the Board charges misappropriation or conversion of client

funds by an attorney, an attorney seeking to rely on a colorable future
claim defense must raise that defense in his or her answer. See Iowa Ct.

R. 36.8(2). Earley did not do so. To the contrary, he acknowledged at the

hearing that he had no colorable future claim to the funds. The convincing

preponderance of evidence shows that as Earley needed money between

March 2018 and July 2018, he depleted his client trust account with the

      1“[A]   criminal conviction is not a prerequisite to finding a violation [of
rule 32:8.4(b)].” See Moran, 919 N.W.2d at 759 (quoting Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Thomas, 844 N.W.2d 111, 116 (Iowa 2014)).
                                      11

knowledge he was not going to be able to get work done on his clients’

cases.

         IV. Discipline.

         “There is no uniform sanction for a particular ethical violation.”

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Bauermeister, 927 N.W.2d 170,

174 (Iowa 2019). Still, “[w]e seek to ‘achieve consistency with prior cases

when determining the proper sanction.’ ”          Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Crotty, 891 N.W.2d 455, 466 (Iowa 2017) (quoting Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 769 (Iowa

2010)).

         “[W]e have found revocation appropriate ‘in nearly every case where

an attorney converts client funds without a colorable claim.’ ”        Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Kowalke, 918 N.W.2d 158, 163 (Iowa

2018) (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Guthrie, 901

N.W.2d 493, 500 (Iowa 2017)). The amount converted does not alter the

sanction. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Suarez-Quilty, 912

N.W.2d 150, 159–60 (Iowa 2018) (revoking the license of an attorney who

converted $630 without a colorable future claim). Likewise, mitigating

factors do not come into play. When an attorney converts client funds

without a colorable future claim, “we need not consider mitigating and

aggravating factors that may be present . . . .” Guthrie, 901 N.W.2d at 500.

Accordingly, we agree with the commission that revocation is the

appropriate sanction here.

         This is an unfortunate case. Earley has had to deal with burdens of

family dysfunction, mental illness, and six-figure student debt. Yet, as he

acknowledged to the commission, he should not be practicing law. Beltz

and Patterson, and apparently other clients, suffered unjustified harm

when Earley took their retainers, did not do the work, and used the
                                      12

retainers to pay his personal debts. The legal community as a whole also

suffered unjustified harm. All attorneys are required to contribute to the

Clients’ Security Trust Fund, and the reputation of all attorneys takes a

hit to some degree when any attorney misappropriates client funds.

      V. Disposition.

      We revoke Earley’s license to practice law in the State of Iowa.

Pursuant to our rules, Earley may apply for readmission after a period of

at least five years. See Iowa Ct. R. 34.25(7). In the event of application for

readmission, Earley must demonstrate that he is of good moral character

and worthy of readmission to the bar. See id. r. 34.25(9). Earley must

also pay all fees. See id. r. 34.25(9)(d).

      LICENSE REVOKED.