Court Opinion

ID: 9693084
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:21:51.60132+00
Date Added: 2024-06-11T12:02:36.484952
License: Public Domain

Dissenting Opinion by
WILNER, Judge, in which HARRELL, Judge, joins.
At the direction of the Attorney Grievance Commission, Bar Counsel filed a petition against respondent, Gary Davis, charging him of having violated Rules 1.15 and 8.4(b), (c), and (d) of the Maryland Rules of Professional Conduct. The alleged violations arose from the manner in which Davis, in his capacity as owner and president of a title insurance company, handled certain funds entrusted to the company in the course of real estate settlements. In particular, Bar Counsel alleged that Davis, through his company, had retained interest earned on trust funds in violation of Maryland Code, § 10-306 of the Business Occupations and Professions (BOP) Article and § 22-103 of the Insurance Article.
The Court holds, and I agree, that, because the funds in question were not received by Davis in his capacity as a lawyer, there was no violation of BOP, § 10-306 or Rule 1.15. I part company with the Court, however, in its decision to avoid construing, and thus finding a violation of, § 22-103 of the Insurance Article — a violation that is clear beyond cavil— and, by reason of that violation, a violation of Rule 8.4(d) as well.
Title insurance companies are subject to both statutory and administrative regulation. See Insurance Article, §§ 11 — 401— 11-409, providing for the regulation of rates and policies and requiring that certain information be disclosed to the Insurance Commissioner, and § 22-102, requiring the sending of certain notices in connection with real estate settlements. Section 22-103 contains requirements and prohibitions with respect to money received in trust — money that “a person entrusts to a title insurer or its agent to hold for the benefit of a buyer in a real estate transaction or for a beneficial owner, in connection with an escrow, settlement, closing, or title *383indemnification.” § 22-103(a)(3). Section 22-103(b) requires title insurers and their agents to pool and commingle trust money received from clients or beneficial owners in connection with escrows, settlements, closings, or title indemnifications if, in the judgment of the insurer or agent, a separate deposit of the trust money would not generate interest in an amount greater than $50 or the cost of administering a separate account. Under § 22-103(c), the interest earned from such commingled funds, less any service charges, must be paid quarterly to the Maryland Affordable Housing Trust. Those provisions are the equivalent for title insurers of the IOLTA arrangement applicable to lawyers’ trust accounts. See BOP, § 10-303 and Maryland Rule 16-608.
Section 22 — 103(f)—the provision most applicable here — provides that, except for trust money required by subsections (b) and (c) to be commingled, trust money in the possession of a title insurer or agent “may be deposited in any other deposit or investment vehicle: (1) specified by the client or beneficial owner; or (2) as agreed on by the client or beneficial owner and the title insurer or its agent.” Unlike the situation in Attorney Grievance Commission v. Lichtenberg, 379 Md. 335, 842 A.2d 11 (2003), which we consolidated with this case, there is no doubt whatever that, by acquiescing in the “sweeping” scheme suggested by his bank, Davis violated § 22-103(f).
As owner and president (and thus as agent) of a title insurer, he deposited trust funds received for the benefit of clients in an account, other than a commingled account permitted by subsections (b) and (c), that had been neither specified nor agreed to by the client or by any possible beneficial owner of the funds, and the clear and intended effect of that arrangement was that, without the consent of his clients or any beneficial owners of the trust funds, his company retained all of the net interest earned on those accounts. There is no conceivable basis upon which he was entitled to divert the interest on trust funds received for the benefit of clients to his own use or that of his company. Indeed, as the “sweeping” scheme was described to us, it appears that more than the *384diversion of interest was involved: each night, the principal balances in the accounts — the actual trust funds — were automatically diverted to his own use and thus, at least for the night, misappropriated.
The record, in this case establishes that the misappropriation was with the actual intent of depriving the clients of the interest earned on trust funds deposited for their direct or indirect benefit, and, even if that conduct was the product of negligence, of Davis being unaware that it was unlawful, it nonetheless is, indeed, unlawful. When a lawyer, even when acting in another capacity, takes money that does not belong to him and that, under the law, he has no right to take, he commits conduct prejudicial to the administration of justice, and thus violates Rule 8.4(d).
The Court — as far as I can tell for the first time in its history — has chosen to ignore both a clear violation of the Rules of Professional Conduct and the Court’s ultimate responsibility for enforcing those rules, by deliberately refusing to address the statutory basis for those violations.
The Court admits that “the inquiry of this Court, as well as the thrust of both Bar Counsel’s and respondent’s arguments before this Court, centers on the proper application and interpretation of § 22-103(f) of the Insurance Article of the Maryland Code,” but then declines to construe the statute on the ground that the necessary issue should not be addressed unless the Insurance Commissioner is a party to the litigation, which effectively means it can never be addressed in an attorney disciplinary proceeding. Such a deferral is unprecedented, extraordinary, and wholly inappropriate.
In Attorney General v. Waldron, 289 Md. 683, 692, 426 A.2d 929, 934 (1981), we held, explicitly,, that “the regulation of the practice of law, the admittance of new members to the bar, and the discipline of attorneys who fail to conform to the established standards governing their professional conduct are essentially judicial in nature and, accordingly, are encompassed in the constitutional grant of judicial authority to the courts of this State.” Quoting from Pub. Serv. Comm’n v. *385Hahn Transp., Inc., 253 Md. 571, 583, 253 A.2d 845, 852 (1969), we added that “[u]nder our constitutional system of separation of powers, the determination of what constitutes the practice of law and the regulation of the practice and of its practitioners is, and essentially and appropriately should be, a function of the judicial branch of government.” Attorney General v. Waldron, 289 Md. at 692, 426 A.2d at 935. Over and over and over again, in nearly every attorney grievance case, we have emphasized that, in these special proceedings, this Court has “original and complete jurisdiction.” Attorney Grievance v. Smith, 376 Md. 202, 229, 829 A.2d 567, 583 (2003); Attorney Grievance v. Garfield, 369 Md. 85, 97, 797 A.2d 757, 763 (2002); Attorney Grievance v. Snyder, 368 Md. 242, 253, 793 A.2d 515, 521 (2002); Attorney Griev. Comm. v. Garland, 345 Md. 383, 392, 692 A.2d 465, 469 (1997); Attorney Griev. Comm’n v. Kent, 337 Md. 361, 371, 653 A.2d 909, 914 (1995) (Emphasis added).
That jurisdiction, in this case, cannot be implemented without construing § 22-103(f), and yet the Court declines to address the statute, preferring either to allow the Insurance Commissioner to deal with the issue or to wait until a case arises in which the Commissioner is a party. Such a deferral appears to me to be applying the doctrine of primary jurisdiction, disguised as something else, and it is flat-out inconsistent with the notion that this Court has a Constitutionally-based “original and complete” jurisdiction over attorney discipline matters. If, as we have held, our jurisdiction is “complete,” it cannot be regarded as shared with any administrative agency. As Waldron makes clear, this is not an area in which the Legislature is even competent to allocate jurisdiction between the courts and executive agencies. This is not a situation in which a court and an administrative agency have concurrent jurisdiction over the same matter. This is not a situation in which Bar Counsel could have obtained any relief from the Insurance Commissioner. The Commissioner could, if he chose to do so, take some action against the title insurance company, or Davis as its agent, for violating the insurance law, but he would be powerless to determine whether Davis had *386violated a Rule of Professional Conduct, much less to do anything about such a violation.1
The effect of the Court’s deferral in this case is nothing less than an impermissible delegation of what we have already held to be a judicial function to an executive agency that has no authority in the matter.2 The exercise of our “original and complete” jurisdiction may, from time to time, require us to construe a statute over which an administrative agency has jurisdiction, and we are entirely competent to do so. See Attorney Griev. Comm’n v. Eisenstein, 333 Md. 464, 635 A.2d 1327 (1994) (disciplining attorney for taking fees in excess of those allowed under Longshore and Harbor Workers’ Compensation Act).
*387I would find that, as a title insurance agent, Davis violated the statute and, by doing so, also, as a lawyer, violated Rule 8.4(d). Upon that finding, I would then address the question of what sanction to impose or, indeed, on this record, whether to impose any sanction.
Judge HARRELL has authorized me to state that he joins in this dissenting opinion.

. Deferral to the Insurance Commissioner is particularly pointless in this case where, as the Majority acknowledges, the Insurance Administration "declined Bar Counsel’s invitation to clarify” the Administration’s interpretation of Section 22 — 103(f) under the facts presented. Why should the Court shirk its responsibility for the regulation of attorney conduct in order to defer to an executive branch agency that apparently has little or no interest in weighing in on a related subject? Having declined the opportunity to express its expert opinion here, one could infer logically that the agency has nothing to add and instead defers to the Court’s traditional role in interpreting legislative enactments.

. It is questionable whether the Insurance Commissioner even has primary jurisdiction over ordinary civil claims that arise from an alleged violation of § 22-103, but he certainly cannot have primary jurisdiction over an attorney grievance matter based on that statute. I am not at all sure that, if one of Davis’s clients had filed a civil action in court to recover interest that accrued on funds held in trust for him by Davis, we would have insisted that the client turn first to the Insurance Commissioner for relief. See Zappone v. Liberty Life, supra, 349 Md. 45, 706 A.2d 1060. Although the Commissioner has general authority to hold hearings, discipline companies and agents subject to his jurisdiction, and provide certain forms of relief to persons who suffer loss because of violations of the Insurance Code by entities or persons subject to regulation, there is no administrative procedure attached specifically to § 22-103, and there is nothing in that statute that evidences an intent by the Legislature that claims under that statute be submitted first to the Insurance Commissioner. The statute is not an interconnected part of an overall regulatory scheme, for which some administrative expertise exists. It is a stand-alone statute regulating trust accounts, and it does not appear to me that any special administrative expertise is required in interpreting it.