Court Opinion

ID: 4329453
Source: CourtListenerOpinion
Date Created: 2018-11-09 15:09:14.27338+00
Date Added: 2024-06-11T14:47:26.185282
License: Public Domain

IN THE SUPREME COURT OF IOWA
                              No. 18–1365

                        Filed November 9, 2018

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

      Complainant,

vs.

DEREK T. MORAN,

      Respondent.

      On review of the report of the Iowa Supreme Court Grievance

Commission.

      Grievance commission recommends the revocation of an attorney’s

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

      Tara van Brederode and Amanda K. Robinson, for complainant.

      Derek T. Moran, Urbandale, pro se.
                                      2

WATERMAN, Justice.

      The Iowa Supreme Court Attorney Disciplinary Board charged

attorney Derek T. Moran with violating rules of professional conduct in

connection with his representation of numerous commercial truck drivers

and his representation of a parent in a child custody matter. The charges

included misappropriation or conversion of client funds. Moran failed to

meet his burden under Iowa Court Rule 36.8(2) to produce evidence that

he had a colorable future claim to unearned funds. The Iowa Supreme

Court Grievance Commission found Moran violated multiple rules of

professional   conduct,   including   conversion     of   client   funds   and

recommended revocation of his license. On our review, we determine that

Moran converted client funds for his personal use, among other violations,

and we revoke his license to practice law in the State of Iowa.

      I. Background Facts and Proceedings.

      Until his temporary suspension in April 2016, Derek Moran

practiced law in Urbandale, Iowa.         We find the following facts on our

de novo review of the record.

      A. CDL Consultants.        CDL Consultants provides safety and

compliance services to motor carriers and professional drivers nationwide.

As part of its services, CDL Consultants hires attorneys to represent its

customers who have received traffic citations that may affect their

commercial driver’s licenses. The goal of the legal representation is to

resolve the citations in a manner avoiding loss of driving privileges and

employment. CDL Consultants hired Moran to represent its customers

who received traffic citations in Iowa.       There was no written contract

between CDL Consultants and Moran. The parties worked on a case-by-

case basis. CDL Consultants referred drivers’ citations to Moran and paid

Moran separately for each citation. Moran agreed to enter an appearance
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on behalf of the cited driver and attempt to negotiate a favorable

resolution. Moran was paid a flat fee between $150 and $350 per citation.

If the case went to trial, Moran would be paid an additional fee.

      Approximately a year and a half into this business relationship, CDL

Consultants began receiving complaints from drivers. The drivers reported

that Moran failed to communicate with them, failed to appear in court or

inform them of required court dates, or entered guilty pleas without their

permission. Some reported that their licenses had been suspended for

missing court appearances. CDL Consultants tried to contact Moran, but

he stopped returning phone calls and stopped responding to emails. CDL

Consultants sent a staff person from Chicago to Moran’s office in

Urbandale. The staff member could see Moran inside, but Moran refused

to come to the door.

      Complaints against Moran were made by thirty-four professional

drivers in thirty-five cases (one driver had two separate cases). Moran

pocketed fees totaling $6900 from CDL Consultants to represent these

clients. In four cases, Moran failed to enter an appearance or take any

action. In nine cases, Moran entered an appearance and plea of not guilty,

but then failed to perform further work or notify the clients of court dates,

leading to their convictions when no one appeared for trial. In twenty-two

cases, Moran entered guilty pleas without the client’s consent.

      On November 25, 2015, CDL Consultants sent Moran a letter

expressing its concern that he had not been working on the cases despite

having been paid $6900. CDL Consultants demanded a refund of the legal

fees. Moran did not respond to the letter and did not refund any of the

fees. There is no evidence Moran deposited the fees into a trust account,

and Moran did not provide any accounting of his legal services. There is,

however, evidence that Moran took unearned fees.
                                     4

      CDL Consultants had to hire other counsel to take over the cases

and   incurred   approximately    $11,000–$12,000      in   additional   legal

expenses. Some of the drivers lost their jobs after their commercial driver’s

licenses were suspended in the cases Moran had mishandled. Others

faced discipline, loss of bonuses, and higher insurance rates.

      B. The Tharp Representation.          Travis Tharp hired Moran to

represent him in a child custody matter. Moran agreed to represent Tharp

for a flat fee of $750 paid in three monthly installments of $250. Moran

filed a petition on behalf of Tharp on February 12, 2014. Tharp was in an

accident and hospitalized eleven days before a hearing. Tharp informed

Moran of his injury, but did not want to continue the hearing. Tharp

wanted the case to move forward as quickly as possible due to allegations

that his daughter was being abused while in the care of other family

members.

      Nonetheless, without Tharp’s consent, Moran filed a motion to

continue the hearing. Despite his injuries, Tharp was prepared to go to

court and was disappointed when Moran informed him that Moran had

obtained a continuance without Tharp’s permission.

      After the continuance, Moran neglected Tharp’s case and ceased

communicating with Tharp for several months, until Tharp told Moran he

could pay another $250. Moran accepted that payment and again stopped

communicating with Tharp despite Tharp’s numerous attempts to reach

Moran. In January 2016, the court dismissed Tharp’s case for lack of

prosecution pursuant to Iowa Rule of Civil Procedure 1.944. Moran did

not tell Tharp about the dismissal. Tharp learned of the dismissal when

he went to the courthouse to determine the status of his case. Once the

case was dismissed, Tharp lacked the money to hire another attorney.

Tharp did not receive any refund from Moran.
                                     5

      C. Failure to Cooperate with Disciplinary Authority. The Board

repeatedly attempted to contact Moran regarding the CDL Consultants

and Tharp matters. Moran failed to respond to any notices and inquiries

from the Board. Accordingly, we temporarily suspended Moran’s license

to practice law on April 14, 2016.

      On September 20, 2017, the Board filed a complaint against Moran

with the grievance commission alleging numerous violations of the Iowa

Rules of Professional Conduct. The Board gave Moran notice pursuant to

Iowa Court Rule 36.8 that if we found Moran violated the disciplinary rules

alleged in the complaint for misappropriation or conversion of client funds,

he was at risk of having his law license revoked. See Iowa Ct. R. 36.8(1).

The notice also stated that if the Board were able to establish that funds

were missing from his trust account, the burden would shift to Moran to

prove he had a colorable future claim to the funds. Id. Attorney Alexander

Wonio filed an answer on behalf of Moran. In his answer, Moran gave

notice that he intended to rely on a defense of a colorable future claim to

the funds. See id. r. 36.8(2). The disciplinary case was set for hearing on

February 15, 2018.

      The Board served discovery on Moran on October 30, 2017. Moran

failed to respond to the discovery requests. The Board filed a motion to

compel on January 3, 2018. The commission granted the motion, and

Moran was required to comply with the discovery request by January 31.

Before that deadline expired, Wonio filed a motion to withdraw due to lack

of communication from Moran.             The commission granted Wonio

permission to withdraw. Moran never complied with the Board’s discovery

requests.
                                     6

      After Wonio’s withdrawal, the commission rescheduled the hearing

to May 3 to allow Moran time to find new counsel or to prepare to represent

himself. Moran did not hire a new attorney.

      The commission held the hearing on May 3. Moran did not appear

for the hearing. The commission issued its “Findings of Fact, Conclusions

of Law, and Recommendations” on August 9. The commission found that

Moran violated the following Iowa Rules of Professional Conduct when

representing clients for CDL Consultants: rule 32:1.3 (acting “with

reasonable diligence and promptness in representing a client”); rule

32:1.4(a)(2) (consulting with client about the means by which client’s

objectives are to be accomplished); rule 32:1.4(a)(3) (“keep[ing] the client

reasonably informed about status of the matter”); rule 32:1.4(a)(4)

(complying promptly with reasonable requests for information); rule

32:1.15(a) (holding client “property . . . in a lawyer’s possession in

connection with a representation separate from lawyer’s own property”);

rule 32:1.15(c) (depositing unearned fees into a client trust account until

they are earned); rule 32:8.4(b) (“commit[ting] a criminal act that reflects

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

in other respects”); and rule 32:8.4(c) (“engag[ing] in conduct involving

dishonesty, fraud, deceit, or misrepresentation”);.

      The commission found that Moran violated the following rules of

professional conduct in representing Tharp: rule 32:1.3; rule 32:1.4(a)(2);

rule 32:1.4(a)(3); rule 32:1.4(a)(4); rule 32:8.4(b); and rule 32:8.4(c). The

commission also found that Moran violated rule 32:8.1(b) (failing to

respond to a lawful demand for information from a disciplinary authority).

      The commission recommended we revoke Moran’s license based on

its finding that he converted client funds.       The Board recommends
                                     7

revocation.    Moran has not responded to the Board’s statement

recommending revocation.

      II. Standard of Review.

      We review attorney disciplinary cases de novo. Iowa Supreme Ct.

Att’y Disciplinary Bd. v. Cross, 861 N.W.2d 211, 217 (Iowa 2015). The

Board has the burden of proving a violation of an ethical rule “by a

convincing preponderance of the evidence.”        Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96, 102 (Iowa 2012).          “A

convincing preponderance of the evidence is more than a preponderance

of the evidence, but less than proof beyond a reasonable doubt.” Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Thomas, 844 N.W.2d 111, 113 (Iowa

2014) (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. McCarthy, 814
N.W.2d 596, 601 (Iowa 2012)).

      “Upon our de novo review of the record, we ‘determine whether an

attorney’s conduct violates our ethical rules, and if it does, we must

determine the proper sanction for the violation.’ ” Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Kowalke, 918 N.W.2d 158, 162 (Iowa 2018) (quoting

Iowa Supreme Ct. Att’y Disciplinary Bd. v. Gailey, 790 N.W.2d 801, 804

(Iowa 2010)). We are free to “impose a lesser or greater sanction than

recommended by the commission.” Van Ginkel, 809 N.W.2d at 102.

      III. Violations.

      On our de novo review of the record, we agree that Moran violated

the rules of professional conduct identified by the commission. Moran

neglected client matters, failed to communicate and consult with clients,

failed to provide clients with information about their cases, failed to

deposit fees into a client trust account, and failed to comply with requests

for information during the disciplinary proceedings. Most significantly,

Moran failed to offer evidence of a colorable future claim to funds he
                                      8

received for work he did not perform.      As a result, we agree with the

commission that the Board proved by a convincing preponderance of the

evidence that Moran converted funds for his own use and thereby violated

rules 32:8.4(b) and (c). Because this determination warrants revocation of

his license, it is unnecessary to discuss his other violations in detail. See

Kowalke, 918 N.W.2d at 162; Iowa Supreme Ct. Att’y Disciplinary Bd. v.

Carter, 847 N.W.2d 228, 231–32 (Iowa 2014).

         “The professional standards pertaining to the protection of client

funds ‘are well known and . . . long-standing.’ ” Carter, 847 N.W.2d at 232

(alteration in original) (quoting Iowa Supreme Ct. Bd. of Prof’l Ethics &

Conduct      v.   Anderson,   687 N.W.2d 587,    590    (Iowa   2004)).

“Misappropriation or conversion of client funds results in revocation,

except in instances in which the attorney had a colorable future claim to

the funds or did not take the funds for personal use.” Id. The Board

alleged Moran converted client funds.      See Iowa Ct R. 36.8(1).    In his

answer to the Board’s complaint, Moran alleged he had a colorable future

claim to the funds. Id. r. 36.8(2). Moran had the burden of coming forward

with evidence in support of a colorable future claim, while the burden of

proving conversion remained on the Board. Iowa Ct. R. 36.8(2); Carter,
847 N.W.2d at 232–33. Moran failed to respond to discovery and did not

participate in the disciplinary hearing. Moran presented no evidence that

he had a colorable future claim to funds he converted.

         Moran collected flat fees from both CDL Consultants and from

Tharp. There is no evidence that he deposited the funds into a client trust

account. Moran subsequently performed little to no work on many of the

cases.    He ceased communicating with his clients, resulting in missed

court appearances. His clients suffered harm as a result, including loss

of their commercial driver’s licenses and employment.        Moran refused
                                      9

demands to refund any of the fees he took. This case is similar to Iowa

Supreme Court Attorney Disciplinary Board v. Crum in which we revoked

the license of an attorney who “took money from four clients prior to

earning it and then ceased all contact” and refused refund requests. 861
N.W.2d 595, 606 (Iowa 2015). Moran “could not have earned the fees

because [he] did not perform the work the clients paid [him] to do for

them.” Id. Moreover, CDL Consultants had to incur $11,000 to $12,000

in additional fees to resolve the cases it had initially paid Moran to handle.

See id. (noting the “clients had to expend more money to hire a new

attorney to do the work they initially paid [him] to perform”).

      Although the record does not reveal if Moran has been charged with

a crime, “a criminal conviction is not a prerequisite to finding a violation

under our rules.” Thomas, 844 N.W.2d at 116. Professional misconduct

occurs when an attorney “commit[s] a criminal act that reflects adversely

on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other

respects.”   Iowa R. Prof’l Conduct 32:8.4(b).       Similarly, professional

misconduct includes “conduct involving dishonesty, fraud, deceit, or

misrepresentation.” Id. r. 32:8.4(c). We determine that the Board met its

burden of proving Moran violated those rules by converting client fees, and

we determine that Moran had no colorable future claim to the funds.

      IV. Sanctions.

      As we have repeatedly observed, “[t]here is no place in our profession

for attorneys who convert funds entrusted to them. It is almost axiomatic

that we revoke licenses of lawyers who do so.” Thomas, 844 N.W.2d at 117

(alteration in original) (quoting Comm. on Prof’l Ethics & Conduct v. Ottesen,

525 N.W.2d 865, 866 (Iowa 1994)). In fact, we have found revocation

appropriate “in nearly every case where an attorney converts client funds
                                   10

without a colorable future claim.” Iowa Supreme Ct. Att’y Disciplinary Bd.

v. Guthrie, 901 N.W.2d 493, 500 (Iowa 2017).

      Moran converted client funds for his own personal use. His behavior

is antithetical to the standards of ethics and professionalism we demand

from Iowa attorneys, and we agree with the commission and Board that

revocation is the appropriate sanction.

      V. Conclusion.

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

costs of this proceeding are assessed against him. Iowa Ct. R. 36.24(1).

      LICENSE REVOKED.