Court Opinion

ID: 4249584
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:19:41.175006+00
Date Added: 2024-06-11T13:56:38.502237
License: Public Domain

IN THE SUPREME COURT OF IOWA
                              No. 11–1016

                          Filed May 25, 2012

IOWA SUPREME COURT ATTORNEY
DISCIPLINARY BOARD,

      Complainant,

vs.

SAMUEL ZACHARY MARKS,

      Respondent.

      On review of the report of the Grievance Commission of the

Supreme Court of Iowa.

      An attorney filed a notice of appeal concerning a recommendation

of the Grievance Commission of the Supreme Court of Iowa. ATTORNEY

REPRIMANDED.

      Charles L. Harrington and Elizabeth E. Quinlan, Des Moines, for

complainant.

      David L. Brown and Jay D. Grimes of Hansen, McClintock & Riley,

Des Moines, for respondent.
                                     2

WIGGINS, Justice.

         The Iowa Supreme Court Attorney Disciplinary Board brought a

complaint against the respondent, Samuel Zachary Marks, alleging

multiple violations of the Iowa Rules of Professional Conduct. A division

of the Grievance Commission of the Supreme Court of Iowa found the

respondent’s conduct violated the rules and recommended we suspend

his license with no possibility of reinstatement for six months. On our

de novo review, we find Marks violated our rules. However, we disagree

with the commission’s findings and recommended sanction. Instead, we

publicly reprimand him for his conduct.

         I. Scope of Review.

         We review attorney disciplinary proceedings de novo.       Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Axt, 791 N.W.2d 98, 101 (Iowa

2010).     The Board must prove disciplinary violations by a convincing

preponderance of the evidence. Id. 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. Adams, 809 N.W.2d 543, 545 (Iowa 2012).         We give respectful

consideration to, but are not bound by, the commission’s findings and

recommendations. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Earley, 774
N.W.2d 301, 304 (Iowa 2009). Upon proof of misconduct, we may impose

a greater or lesser sanction than that recommended by the commission.

Axt, 791 N.W.2d at 101.

         II. Factual Findings and Prior Proceedings.

         Marks has been licensed to practice law in Iowa since 2000. He

practices in the areas of bankruptcy and consumer protection.

         During the past five years, Marks has been disciplined multiple

times.     We temporarily suspended his license in 2006 and 2008 for
                                     3

failure to cooperate with the Board. Further, in 2007, the Board publicly

reprimanded him for lack of diligence, incompetence, and failing to

cooperate timely and fully with the Board.          Finally, in 2009, we

suspended his license for thirty days for neglecting client matters and

failing to cooperate with the Board. There, we took into account Marks’

prior disciplinary history and his battle with depression. In this case,

the Board alleges Marks committed ethical violations during his

representation of a client in a foreclosure action, after the termination of

the attorney–client relationship, and during his subsequent interactions

with the Board.
      A. Winona Property. In August 2005, Linda Kenney hired Marks

to defend her in a foreclosure action involving her house, located on

Winona Avenue in Des Moines. Marks filed an answer and a demand for

delay of sale on Kenney’s behalf.        Despite Marks’ efforts, the court

foreclosed Kenney’s interest in her house on November 29. The court set

a sheriff’s sale for May 29, 2006, which gave Kenney a six-month

redemption period.

      After subsequent attempts to find alternative financing failed, but

before the sheriff’s sale, Marks offered to purchase Kenney’s property,

pay off Kenney’s mortgage, and sell the home back to Kenney once she

obtained new financing.    Meanwhile, Kenney and her boyfriend would

continue to live in the home and make monthly payments to Marks.

      Marks recognized the need to terminate the attorney–client

relationship before he could enter into a transaction with Kenney.       To

that end, Marks drafted an agreement, dated April 14, 2006, which

stated the following:

      The undersigned parties acknowledge that Samuel Z. Marks
      and Marks Law Firm, P.C. provide no further legal
      representation to Linda Kenney. The undersigned parties
                                    4
      acknowledge that any legal representation provided in the
      past to Linda Kenney by Samuel Z. Marks and Marks Law
      Firm, P.C. is hereby terminated and there is no further
      expectation of representation.     The undersigned parties
      acknowledge that Linda Kenney wishes to enter into a real
      estate transaction with Samuel Z. Marks and Jennifer
      Marks. The undersigned parties acknowledge that Linda
      Kenney has the right and should seek independent counsel
      with respect to any real estate transaction entered into with
      Samuel Z. Marks and Jennifer Marks.

Marks and Kenney signed the agreement.           Marks testified that he

believed the agreement severed the attorney–client relationship and that

he entered into the transaction for the sole purpose of helping Kenney

remain in her house. He also testified he never intended to profit from

the transaction.

      On April 26, Marks’ wife took out a purchase money mortgage on

the property. Although the mortgage was in his wife’s name, Marks also

signed the mortgage as a borrower.      On April 28, Kenney executed a

warranty deed transferring the property to Marks’ wife. Marks admitted

he was involved in the preparation of the deed. Marks and his wife then

purchased the property from the bank, satisfying the amount Kenney

owed on her mortgage. Kenney testified she did not realize she actually

transferred the property to Marks’ wife until after she had done so.

      Kenney and her boyfriend continued to live in the house and made

sporadic payments to Marks. On February 25, 2009, Kenney and Marks’

wife executed a written real estate contract, naming Kenney and her

boyfriend as the buyers and Marks’ wife as the seller. Marks prepared

this contract. The contract set up a payment plan by which Kenney and

her boyfriend would buy the property back from Marks’ wife by making

monthly payments.

      As of December 13, 2010, the date of Marks’ hearing before the

commission, Kenney and her boyfriend continued to live in the home.
                                    5

Marks estimated at the hearing that he was between $30,000 and

$40,000 behind on his mortgage payments. He also testified he would

immediately sign the deed over to Kenney if she obtained financing for

the amount of his mortgage.

      B.   Disciplinary Proceedings.    Kenney filed a complaint against

Marks with the Board on July 16, 2008. Marks received notice of the

complaint against him on July 23. The notice informed Marks that Iowa

Rule of Professional Conduct 32:8.1(b) required him to provide the Board

with a response. It also directed him to Iowa Court Rule 34.7, which

governs a respondent’s failure to respond to a complaint. A copy of the

complaint was enclosed with the notice.
      On August 26, Marks received a second notice of complaint from

the Board stating that his failure to respond within ten days could result

in a temporary suspension of his license to practice law.             On

September 23, the Board requested that the supreme court issue a

notice of possible temporary suspension to Marks.     On September 30,

the clerk of the supreme court filed a notice of possible temporary

suspension for failure to respond. The notice informed Marks that his

license would be suspended unless he responded within twenty days of

the issuance of the notice. Marks responded on October 21. At no time

prior to his response did Marks seek an enlargement of his time to

respond to the complaint.

      The Board filed a complaint alleging Marks violated the Iowa Rules

of Professional Conduct by entering into a business transaction with a

current client, representing a current client in a transaction materially

adverse to the interests of a former client, failing to cooperate with the

Board, and engaging in conduct prejudicial to the administration of

justice.   The commission found Marks violated rule 32:1.8(a), which
                                    6

prohibits a lawyer from entering into a business transaction with a client

absent certain safeguards. It also found Marks violated rule 32:8.1(b) by

failing to cooperate with the Board and rule 32:8.4(d) by engaging in

conduct prejudicial to the administration of justice.         Finally, the

commission noted it did not need to determine whether Marks violated

rule 32:1.9(a), which prohibits a lawyer from representing a current

client in a transaction materially adverse to the interests of a former

client absent the informed written consent of the former client, because it

found Marks had not severed the attorney–client relationship.           The

commission then stated it would have found that Marks violated rule

32:1.9(a) if it had determined Marks terminated the attorney–client

relationship because Marks represented his wife throughout the real

estate deal.

      III. Ethical Violations.

      A.       Conflicts of Interest.   Because the Board frames its
allegations against Marks in the alternative, we will consider each

alternative separately.

      1. Business transaction with a current client. While rule 32:1.8(a)

does not prohibit business dealings between a lawyer and his or her

client, it imposes stringent requirements on such a transaction.        Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Wintroub, 745 N.W.2d 469, 474

(Iowa 2008). The rule provides as follows:

            (a) 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 in a manner
      that can be reasonably understood by the client;
                                      7
            (2) the client is advised in writing of the desirability of
      seeking and is given a reasonable opportunity to seek the
      advice of independent legal counsel on the transaction; and

            (3) the client gives informed consent, in a writing
      signed by the client, to the essential terms of the transaction
      and the lawyer’s role in the transaction, including whether
      the lawyer is representing the client in the transaction.

Iowa R. Prof’l Conduct 32:1.8(a). By its terms, rule 32:1.8(a) only applies

if Marks and Kenney did not terminate the attorney–client relationship

prior to entering into a business transaction. We have stated that the

term “business transaction” has a broad meaning. Iowa Supreme Ct. Bd.

of Prof’l Ethics & Conduct v. Fay, 619 N.W.2d 321, 325 (Iowa 2000).

      Kenney executed a warranty deed transferring the property to

Marks’ wife on April 28. Although the deed indicates Kenney transferred

the property to Marks’ wife, Marks does not dispute that he was a party

to the transaction. Indeed, Marks proposed the transaction and testified

he was successful in his goal to keep Kenney in her house. He further

testified the transaction was in his wife’s name only because she could

get a better interest rate on a loan from the bank. Therefore, we must

determine whether Marks and Kenney terminated the attorney–client

relationship prior to the execution of the deed on April 28. The parties

contend the issue of whether Marks violated rule 32:1.8(a) turns on

whether the agreement of April 14, 2006, was sufficient to terminate the

attorney–client relationship. However, we need not decide whether this

agreement, by itself, was sufficient to terminate the relationship.

      A judgment is the final adjudication of the rights of the parties.

Iowa R. Civ. P. 1.951 (2005). In 2005, once a court entered judgment in

a civil case, a party had ten days to file a motion or bill of exceptions. Id.

r. 1.1007. Similarly, a party had thirty days to file a notice of appeal.

Iowa R. App. P. 6.5.     Generally, in a civil action, once the period for
                                      8

motions and appeals expires, the lawyer’s representation of his or her

client ends. In foreclosure actions, a mortgagor may satisfy its judgment

by paying the mortgagee the amount of the judgment prior to the sheriff’s

sale, but this action does not require the mortgagee to make any filings

with the court. See Iowa Code § 654.21 (2005).

      The court entered judgment against Kenney on November 29,

2005. Although Kenney filed a demand for delay of sale, which delayed

the sheriff’s sale until May 29, 2006, Kenney could not file any motions

or an appeal following December 29, 2005.        Therefore, Marks was not

necessarily representing Kenney in the foreclosure action following

December 29.      The agreement of April 14, 2006, makes it clear that

Marks terminated the attorney–client relationship and that Marks was no

longer representing Kenney when the transaction with Marks’ wife

occurred. Therefore, rule 32:1.8(a) is not applicable.

      2.   Continuing duty to former clients in the same or substantially

related matter.   Rule 32:1.9(a) imposes a continuing duty on a lawyer

with respect to conflicts of interest with former clients. It provides:

      A lawyer who has formerly represented a client in a matter
      shall not thereafter represent another person in the same or
      a substantially related matter in which that person’s
      interests are materially adverse to the interests of the former
      client unless the former client gives informed consent,
      confirmed in writing.

Iowa R. Prof’l Conduct 32:1.9(a). At the latest, Marks’ representation of

Kenney in the foreclosure action terminated on April 14, 2006. Nearly

three years later, Kenney and Marks’ wife executed a written real estate

contract naming Kenney and her boyfriend as the buyers and Marks’ wife

as the seller. The contract memorialized the deal Kenney believed she

was getting when she transferred the property to Marks’ wife in 2006.
                                     9

Marks prepared this contract.      A lawyer who prepares a contract is

engaged in the practice of law. Iowa Supreme Ct. Att’y Disciplinary Bd. v.

Netti, 797 N.W.2d 591, 604 (Iowa 2011); Comm. on Prof’l Ethics &

Conduct v. Toomey, 236 N.W.2d 39, 40 (Iowa 1975).             Therefore, we

conclude Marks was representing his wife in the sale of the property to

Kenney. Thus, we must determine whether Marks should have obtained

Kenney’s informed consent, confirmed in writing, prior to representing his

wife in the matter.

      Matters are substantially related when they “involve the same

transaction or legal dispute or if there otherwise is a substantial risk that

confidential factual information as would normally have been obtained in

the prior representation would materially advance the client’s position in

the subsequent matter.” Iowa R. Prof’l Conduct 32:1.9 cmt. [3]. The real

estate contract dictating the terms of the sale of the property from Marks’

wife to Kenney involved a matter substantially related to the foreclosure

action as defined by rule 32:1.9(a) because the contract and foreclosure

action concerned Kenney’s property and her ability to remain in her

home. Further, Marks’ representation of his wife was adverse to Kenney

because Marks’ wife took ownership of the property while Kenney still

had a right of redemption. She also became the financier of Kenney’s

repurchase of the property.      Therefore, in this situation, Marks was

required to obtain informed consent from Kenney.

      Our rules define “informed consent” as “the agreement by a person

to a proposed course of conduct after the lawyer has communicated

adequate information and explanation about the material risks of and

reasonably available alternatives to the proposed course of conduct.” Id.

r. 32:1.0(e).   Consequently, before a lawyer can represent an adverse

client, the lawyer must communicate adequate information to the former
                                     10

client and explain to the former client the material risks of the

representation and the reasonable alternatives available. The informed

consent must be confirmed in writing.

      While representing Kenney in the foreclosure action, Marks gained

an intricate knowledge of Kenney’s financial condition.      He knew that

Kenney was unable to save her house from foreclosure because she did

not have the financial ability to do so. We believe Marks should have

known that because of Kenney’s financial situation there was a

reasonable possibility that she would still be unable to retain her home

even if she entered into an agreement with Marks’ wife. Marks should

have informed Kenney that if she entered into a contract with his wife

and was unable to make the payments, then she would be subject to

further litigation and a potential personal judgment against her.       If

Kenney did not enter into the real estate contract, she would have only

lost her house and not have potentially been subject to further litigation

or a personal judgment.     Additionally, Marks should have disclosed to

her that if she did not enter into the transaction with Marks, she would

lose her home, but the litigation over the home would cease and there

would be no deficiency judgment against her.

      In defense of his failure to obtain Kenney’s informed consent in

writing prior to representing his wife, Marks essentially argues the

subsequent representation was not materially adverse to Kenney because

he did a good deed by assuming Kenney’s mortgage, which allowed her to

remain in her home. Marks’ altruistic intentions may be noble, but they

do not excuse his failure to comply with his ethical obligations. Because

there is no indication in the record that Marks received Kenney’s

informed consent confirmed in writing to Marks’ representation of his

wife in the real estate transaction, Marks violated rule 32:1.9(a).
                                    11

      B.    Failure to Cooperate with the Board.          Attorneys must

cooperate with disciplinary investigations. Iowa Supreme Ct. Bd. of Prof’l

Ethics & Conduct v. Honken, 688 N.W.2d 812, 821 (Iowa 2004).           The

commission found Marks violated rules 32:8.1(b) and 32:8.4(d) because

he did not cooperate with the Board’s investigation. We agree.

      Rule 32:8.1(b) requires that “a lawyer in connection with . . . a

disciplinary matter, shall not . . . knowingly fail to respond to a lawful

demand for information from [a] . . . disciplinary authority.”     Iowa R.

Prof’l Conduct 32:8.1(b). Under our rules, a respondent in an attorney

disciplinary proceeding must provide a written response within twenty

days of receiving the complaint. Iowa Ct. R. 34.6(4). Failure to respond

to the complaint is a violation of our rules.     Iowa Supreme Ct. Att’y

Disciplinary Bd. v. Johnson, 792 N.W.2d 674, 680 (Iowa 2010); Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Marks, 759 N.W.2d 328, 331 (Iowa

2009).     If the respondent fails to respond, we may infer from the

circumstances that the respondent knowingly failed to respond. Iowa R.

Prof’l Conduct 32:1.0(f). Marks first received notice of the complaint on

July 23, 2008.     He did not respond until October 21, almost three

months later and only after repeated notices from the Board and a notice

of possible temporary suspension from the supreme court clerk. These

circumstances show Marks knowingly did not respond to the Board’s

inquiries. Therefore, Marks violated rule 32:8.1(b).

      Rule 32:8.4(d) prohibits a lawyer from engaging “in conduct that is

prejudicial to the administration of justice.” Id. r. 32:8.4(d). It is well

established that a lawyer’s failure to respond to inquiries from the Board

constitutes conduct prejudicial to the administration of justice. See Iowa

Supreme Ct. Att’y Disciplinary Bd. v. Plumb, 766 N.W.2d 626, 631, 632

(Iowa 2009); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ireland, 748
                                    12
N.W.2d 498, 502 (Iowa 2008); Iowa Supreme Ct. Att’y Disciplinary Bd. v.

McCarthy, 722 N.W.2d 199, 205 (Iowa 2006); Comm. on Prof’l Ethics &

Conduct v. Bromwell, 389 N.W.2d 854, 857 (Iowa 1986). Marks did not

respond to the Board for nearly three months in this case. Therefore,

Marks violated rule 32:8.4(d).

      IV. Determination of Appropriate Sanction.

      To determine the appropriate sanction, we consider

      the nature of the violations, the attorney’s fitness to continue
      in the practice of law, the protection of society from those
      unfit to practice law, the need to uphold public confidence in
      the justice system, deterrence, maintenance of the
      reputation of the bar as a whole, and any aggravating or
      mitigating circumstances.

Ireland, 748 N.W.2d at 502. Moreover, the sanction “must be tailored to

the specific facts and circumstances of each individual case.” Comm. on

Prof’l Ethics & Conduct v. Rogers, 313 N.W.2d 535, 537 (Iowa 1981).

      One of Marks’ violations relates to his failure to obtain Kenney’s

informed consent confirmed in writing prior to the time that he

represented his wife. While we do not have any cases directly on point,

this situation is sufficiently analogous to one in which an attorney enters

into a business transaction with a current client without following the

rules in place to safeguard the interests of the client. In those cases, the

sanction can range from a public reprimand to revocation of the lawyer’s

license to practice law.   See, e.g., Comm. on Prof’l Ethics & Conduct v.

Hall, 463 N.W.2d 30, 36 (Iowa 1990) (revoking the license of a lawyer

who entered into a series of transactions with a client, resulting in the

client’s loss of several hundred thousand dollars); Comm. on Prof’l Ethics

& Conduct v. Mershon, 316 N.W.2d 895, 900 (Iowa 1982) (publicly

reprimanding an attorney who formed a corporation with a client).
                                    13

      In this case, there is no evidence indicating Marks’ actions harmed

his client. Marks stated he did not intend any outcome from engaging in

the transaction other than to allow Kenney to continue to live in the

house. He also testified he would immediately transfer the property back

to Kenney if she could obtain financing to pay off the mortgage.

Although Marks and his wife still own the property, Kenney and her

boyfriend continue to live in the house.
      The commission recommended a six-month suspension in large

part due to Marks’ disciplinary history. In 2009, we suspended Marks’

license to practice law for thirty days following his neglect of two matters

and his failure to cooperate with the disciplinary process. In doing so,

we took note of Marks’ previous disciplinary record, which included

sanctions for lack of diligence, incompetence, and multiple instances of

failing to cooperate with the Board. We also considered his depression a

mitigating factor.   Finally, we warned Marks that future misconduct

would result in harsher sanctions. We wrote:

             We also issue Marks a stern warning. He is teetering
      on the brink of disaster. Although he is fit to practice law,
      he has fallen into a pattern of neglect and non-cooperation
      these past few years. If he does not remedy this behavior, he
      will receive a harsher sanction next time he appears before
      us. Although we are sympathetic to the struggles Marks has
      endured with depression, his past conduct and record as a
      whole indicates he lacks diligence and professionalism.

Marks, 759 N.W.2d at 333 (citation omitted).

      However, all of Marks’ conduct that is the subject of the present

disciplinary action occurred prior to the date in 2009 when we

suspended his license for thirty days. Had we been aware in 2009 of the

conduct that is the subject of the present disciplinary proceeding, it is

unlikely that we would have suspended Marks’ license for more than
                                         14

thirty days. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Moorman, 729
N.W.2d 801, 805–06 (Iowa 2007). Therefore, we see no reason to elevate

Marks’ sanction here.        A public reprimand will do.         We also remind

Marks of our prior warning that future misconduct will result in harsher

sanctions.

       V. Disposition.

       For the above reasons, we publicly reprimand Marks rather than

impose the suspension recommended by the commission.                   We tax the

costs of this proceeding to Marks in accordance with Iowa Court Rule

35.26(1). 1
       ATTORNEY REPRIMANDED.

       1On February 20, 2012, we renumbered this rule to 35.27(1). Because Marks’

hearing before the grievance commission commenced prior to the renumbering, we
must refer to rule 35.26(1). See Iowa Ct. R. 35.26 (2012) (renumbered from rule 35.25
in February 2012).