Court Opinion

ID: 4250332
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:24:44.704561+00
Date Added: 2024-06-11T14:44:15.667986
License: Public Domain

IN THE SUPREME COURT OF IOWA

                              No. 144 / 05-1133

                           Filed February 17, 2006

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

      Appellee,

vs.

ROBERT CLAUSS, JR.,

      Appellant.

      On review of the report of the Grievance Commission.

      Attorney  appeals  from  findings  and  recommendations  of  Grievance
Commission.  LICENSE SUSPENDED.

      Michael  J.  Carroll  of  Babich,  Goldman,  Cashatt  &  Renzo,  P.C.,
Des Moines, for appellant.

      Charles L. Harrington and Wendell Harms, Des Moines, for appellee.

LARSON, Justice.
      Robert Clauss, Jr., was cited by our attorney disciplinary  board  for
violations of  our  code  of  professional  ethics  in  two  respects:   his
notarization of documents without a valid notary commission  and  attempting
to simultaneously represent two clients with potentially adverse  interests.
 The Grievance Commission of this court concluded that the  violations  were
established by the board and recommended suspension of Clauss’s license  for
not less than ninety days.  We affirm the findings of code  violations,  but
increase the suspension to a minimum of six months.
      I.  The Expired Notary Public Commission.
      The board charged that Clauss notarized nine  documents  between  1996
and 2000 while his notary commission was expired.  The commission  concluded
that the board  proved  this  charge  and  that  this  conduct  amounted  to
misrepresentation under  DR 1—102(A)(6)  (conduct  adversely  reflecting  on
fitness to practice law).   The  commission  concluded,  however,  that  his
conduct  was  not  intentional,  that  real  estate  transactions  were  not
involved, and that no party  had  been  harmed.   It  recommended  a  public
reprimand  for  this  violation.   We  agree  that  the  board  proved  this
violation and consider that along with the  conflict-of-interest  violations
in imposing discipline.
      II.  The Conflict-of-Interest Issue.
      The second count of the board’s  complaint  involved  a  tale  of  two
clients—both  of  them  represented  by  Clauss  despite  their  conflicting
interests.  The first client  was  National  Management  Corporation,  which
retained Clauss to collect past-due rental  payments  from  Clauss’s  second
client, Kay Clark.
      Clauss called  Clark  to  try  to  arrange  payment  of  her  debt  to
National. In the course of their conversation, Clark  told  Clauss  she  had
problems of her own:  she had breached a covenant  not  to  compete  with  a
previous  employer  and  had  been  enjoined  from  running  her   competing
professional recruitment business.  As a result of the conversation, it  was
decided that Clauss could possibly represent Clark in attempting to get  the
injunction lifted.  That way Clark could operate her business  and  generate
income to apply toward National’s judgment against her.[1]
      Although the plan appeared to be beneficial to  all  involved,  Clauss
saw,  with  good  reason,  that  problems  could  arise   from   this   dual
representation.  He contacted a lawyer more experienced in ethics  cases  to
inquire about whether to proceed and, if so, how to avoid ethical  problems.
 That attorney advised Clauss that he could, consistently  with  our  ethics
rules, represent both Clark and National, provided he obtained waivers  from
both of them.  Clauss wrote a letter to Clark concerning a possible  waiver:

      I am asking you to waive any conflict I may have in  representing  you
      in your covenant not to compete case and National Mgt.  Corp.  at  the
      same time when you are a debtor of National Mgt. Corp.   Ethically,  I
      simply wanted to bring this matter to your attention by  way  of  full
      disclosure.  I spoke with Jerry Woods [acting on behalf  of  National]
      and he has no problems under these circumstances.  I am sending  Jerry
      an identical letter.

Clauss wrote a similar, but not identical, letter to National, stating:

      Per our telephone  conversation,  I  am  asking  that  you  waive  any
      conflict I may have in representing you and Kay  Clark  . . .  at  the
      same time who is a debtor of National Mgt. Corp.  Ethically, I  simply
      wanted to  bring  this  matter  to  your  attention  by  way  of  full
      disclosure.  I spoke with Kay Clark and  she  has  no  problems  under
      these circumstances.  I am sending her an identical letter.

Both National and Clark agreed to waive any conflict, pursuant  to  Clauss’s
suggestion.
       Despite  Clauss’s  efforts  to  obtain  valid  waivers,   they   were
insufficient under our rules.  Our disciplinary rules are quite clear  on  a
lawyer’s responsibilities under these circumstances:

      A lawyer  shall  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, except to the extent permitted under DR 5—105(D).

DR 5—105(B).  A waiver of a conflict of interest is  not  valid  unless  the
attorney has made a full disclosure of the  possible  consequences  of  dual
representation.

      In the situations covered by DR 5—105(B) . . ., a lawyer may represent
      multiple clients if it is  obvious  that  the  lawyer  can  adequately
      represent  the  interest  of  each  and  if  each  consents   to   the
      representation after full disclosure of the possible  effect  of  such
      representation  on  the   exercise   of   the   lawyer’s   independent
      professional judgment on behalf of each.

DR 5—105(D) (emphasis added).
      This is a poster case for the introductory  rule  to  DR 5,  which  is
aimed at preventing a lawyer from accepting employment if it  puts  his  own
financial interests in  conflict  with  his  client’s.   Entitled  “Refusing
Employment When  the  Interests  of  the  Lawyer  May  Impair  the  Lawyer’s
Independent Professional Judgment,” that rule provides:

      Except with the consent of the client after full disclosure, a  lawyer
      shall  not  accept  employment  if  the  exercise  of   the   lawyer’s
      professional judgment on behalf of the client will  be  or  reasonably
      may be affected by the lawyer’s own financial, business, property,  or
      personal interests.

DR 5—101(A) (emphasis added).
      An unconflicted lawyer  working  on  behalf  of  National  would  have
discovered,  perhaps  through  a  debtor’s  examination,  where  Clark   had
deposits or accounts receivable  that  could  be  subjected  to  payment  on
National’s judgment.  Clauss did not do that.  In fact, as of  the  time  of
the commission hearing, he had not  remitted  any  funds  to  National  from
Clark, despite the fact he had  collected  substantial  sums  for  Clark  by
pursuing claims for her against other  parties  and  had  received  attorney
fees for himself on those collections.
      This respondent was required to do more than simply warn  his  clients
that there were potential conflicts and ask them to waive  those  conflicts.
His  actions  involved  conflicts  between  his   clients,   prohibited   by
DR 5—105(B), (C), and (D), and he undertook representation of  both  clients
without  making  “full  disclosure  of   the   possible   effect   of   such
representation on the exercise  of  the  lawyer’s  independent  professional
judgment on behalf of each,” as required by DR 5—105(D).  We have said,

            [i]n a dual representation situation, it is  not  enough  for  a
      lawyer simply to inform the client that  the  lawyer  is  representing
      both sides.  Full disclosure under DR 5—105(D) requires the

            attorney not only  to  inform  the  prospective  client  of  the
           attorney’s relationship with the [other  client],  but  also  to
           explain in detail the pitfalls that may arise in the  course  of
           the  transaction  which  would  make  it  desirable   that   the
           [prospective client] obtain independent counsel.

Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Wagner, 599 N.W.2d 721,
728 (Iowa 1999) (quoting In re Dolan, 384 A.2d 1076, 1080 (N.J. 1978)).
       We  conclude  the  respondent   violated   DR 5—101(A)   (prohibiting
acceptance  of  employment  if  the  lawyer’s  professional  judgment   will
reasonably be affected by the lawyer’s own financial, property, or  personal
interests);  DR 5—105(C)  (providing  that  a  lawyer  shall  not   continue
multiple employment if his exercise of professional judgment  is  likely  to
be  adversely  affected  by  the  representation  of  another  client);  and
DR 5—105(D) (requiring full  disclosure  of  possible  effects  of  multiple
representation).
      III.  Discipline.
      We note, as an aggravating factor in determining the discipline to  be
imposed, that National was harmed financially because apparently it did  not
ever get any of the money that Clauss  ultimately  collected  for  Clark  in
other cases in which Clauss represented her.  Presumably, National  did  not
obtain another attorney to act for it  because  Clauss  had  preempted  that
responsibility.  See Wagner, 599 N.W.2d at 730 (harm  to  client  considered
as aggravating factor); Comm. on Prof’l  Ethics  &  Conduct  v.  Baker,  269
N.W.2d 463, 466 (Iowa 1978) (same).
      We also consider prior discipline.  Wagner, 599 N.W.2d  at  730;  Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Clauss, 530 N.W.2d 453,  455
(Iowa 1995).  In 1989 Clauss was suspended for six  months  for  income  tax
violations, making false  statements  to  our  client  security  commission,
failing to properly monitor a client’s trust account,  and  commingling  his
clients’ money with his office account.  Comm. on Prof’l  Ethics  &  Conduct
v. Clauss, 445 N.W.2d 758 (Iowa 1989).   In  1991  he  was  reprimanded  for
obtaining a default judgment,  based  on  a  material  misrepresentation  of
fact, against a collection debtor who had already paid the  account.   Comm.
on Prof’l Ethics & Conduct v. Clauss, 468 N.W.2d 213 (Iowa 1991).   In  1995
he was suspended for a minimum  of  three  years  for  falsely  signing  his
wife’s name  to  a  return  of  service,  falsely  notarizing  it,  and  for
withdrawing a client’s trust funds to pay his own fees, even though the  fee
was disputed.  In that case, we expressed this concern about the  future  of
the respondent’s law practice:

      If and when Clauss applies for readmission he should  be  prepared  to
      convince us he will pose no threat to the public or to the  reputation
      of the legal profession.

Clauss, 530 N.W.2d at 455.
      We are, of course, concerned with the maintenance of  some  degree  of
consistency in our disciplinary cases as far  as  sanctions  are  concerned.
See Iowa Supreme Ct. Attorney Disciplinary Bd. v. Howe, 706 N.W.2d 360,  381
(Iowa 2005).  Both Howe and Iowa Supreme Court Attorney  Disciplinary  Board
v.  Zenor,  707 N.W.2d 176  (Iowa  2005),  involved  attorneys  who   were
simultaneously acting in their prosecuting capacity  and  also  representing
criminal defendants.  We imposed  minimum  suspensions  of  four  months  in
those cases.  In Committee on Professional Ethics & Conduct  v.  Carty,  515
N.W.2d 32 (Iowa 1994), a lawyer was engaged  in  a  series  of  transactions
with his client without securing independent counsel. We held that a  public
reprimand was sufficient.  In  Iowa  Supreme  Court  Board  of  Professional
Ethics & Conduct v. Fay, 619 N.W.2d 321 (Iowa  2000),  an  attorney  entered
into a business transaction with his client without advising the  client  of
a possible conflict of interest or the need  for  independent  counsel.   We
suspended his license for thirty days.
      An attorney who had  conflicts  by  borrowing  money  from  ex-clients
without advising them of the need for independent counsel and  alternatively
representing both a husband and wife in a dissolution action  was  suspended
for a period of three months.  Iowa Supreme  Ct.  Bd.  of  Prof’l  Ethics  &
Conduct v. Walters, 603 N.W.2d 772, 778 (Iowa 1999).  In Iowa Supreme  Court
Board of Professional Ethics & Conduct v. Bisbee, 601 N.W.2d 88,  91  (Iowa
1999), a lawyer who took advantage of an elderly client by entering  into  a
business agreement with her  and  collecting  an  exorbitant  share  of  the
profits from their joint venture  was  suspended  for  a  minimum  of  three
years.  In Wagner, 599 N.W.2d at 721, the lawyer, who represented  both  the
buyer and seller of property, failed  to  divulge  to  the  buyer  that  the
attorney had an interest in the transaction and failed to  insist  that  the
buyer obtain independent counsel.  We suspended his license  for  a  minimum
of three months.  A lawyer who violated conflict-of-interest rules  and  who
had been disciplined before was suspended for a minimum  of  two  months  in
Iowa Supreme Court Board of Professional Ethics &  Conduct  v.  Winkel,  599
N.W.2d 456 (Iowa 1999).  In a more egregious case, Iowa Supreme Ct.  Bd.  of
Prof’l Ethics & Conduct v. Stamp, 590 N.W.2d 496 (Iowa  1999),  an  attorney
representing an estate purchased estate assets for  considerably  less  than
their value without obtaining court approval and  concealed  the  matter  in
the estate’s final report.  We suspended his license for a  minimum  of  one
year.  In Iowa Supreme Court Board  of  Professional  Ethics  &  Conduct  v.
Isaacson, 565 N.W.2d 315 (Iowa 1997), the lawyer  misstated  material  facts
regarding a client’s purchase of property owned by the lawyer and failed  to
divulge substantial conflicts of interest.  We  suspended  his  license  for
six months.
      IV.  Disposition.
       We  give  respectful  consideration  to  the  recommendation  of  the
Grievance Commission, but are not bound by it.  Bisbee, 601 N.W.2d  at  90.
We  affirm  the  commission’s  findings   that   the   respondent   violated
DR 1—102(A)(6), by acting as a notary without  a  valid  notary  commission,
and DR 5—101(A), by accepting employment when the exercise  of  professional
judgment may be affected by his own financial interests.   In  addition,  he
violated DR 5—105(C) by failing to  avoid  multiple-client  employment  when
the exercise of professional judgment may be  affected  and  DR 5—105(D)  by
failing to make full  disclosure  of  possible  effects  of  multiple-client
representation.
       Based  on  these  violations,  exacerbated  by  the  fact  that   the
respondent benefited financially from his representation of a second  client
at the expense of the first, and together  with  his  extensive  history  of
disciplinary  infractions,  we  conclude  that  the  ninety-day   suspension
recommended by the commission  is  insufficient.   Accordingly,  we  suspend
Robert Clauss’s license to practice law in this state indefinitely  with  no
possibility of reinstatement for a period of six months  from  the  date  of
the filing of this opinion.  This suspension applies to all  facets  of  the
practice  of  law.   See  Iowa  Ct.  R.  35.12(3).   Upon  application   for
reinstatement, Clauss shall have the burden to establish  that  he  has  not
practiced during the period of suspension, that he  meets  all  requirements
of Iowa Court Rule 35.13, and that he has paid the costs of this  proceeding
as taxed to him.
      LICENSE SUSPENDED.
-----------------------
      [1]It is not clear who initiated the idea.   The  board  alleged  that
Clauss had initiated it and charged him with solicitation  in  violation  of
DR 2—103(A) and DR 2—104(A).  We agree with the commission  that  the  board
did not prove its solicitation charge because the record was  unclear  about
who proposed this arrangement.