Court Opinion

ID: 4099870
Source: CourtListenerOpinion
Date Created: 2016-11-18 14:21:36.342621+00
Date Added: 2024-06-11T07:45:41.199768
License: Public Domain

2016 WI 93

                  SUPREME COURT             OF   WISCONSIN
CASE NO.:               2016AP48-D
COMPLETE TITLE:         In the Matter of Disciplinary Proceedings
                        Against John Hotvedt, Attorney at Law:

                        Office of Lawyer Regulation,
                                  Complainant-Respondent,
                             v.
                        John Hotvedt,
                                  Respondent-Appellant.

                           DISCIPLINARY PROCEEDINGS AGAINST HOTVEDT

OPINION FILED:          November 18, 2016
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:

SOURCE OF APPEAL:
   COURT:
   COUNTY:
   JUDGE:

JUSTICES:
   CONCURRED:
   DISSENTED:
   NOT PARTICIPATING:

ATTORNEYS:
                                                                 2016 WI 93
                                                         NOTICE
                                           This opinion is subject to further
                                           editing and modification.   The final
                                           version will appear in the bound
                                           volume of the official reports.
No.    2016AP48-D

STATE OF WISCONSIN                     :            IN SUPREME COURT

In the Matter of Disciplinary Proceedings
Against John Hotvedt, Attorney at Law:

Office of Lawyer Regulation,                                  FILED
           Complainant,                                  NOV 18, 2016
      v.                                                    Diane M. Fremgen
                                                         Clerk of Supreme Court
John Hotvedt,

           Respondent.

      ATTORNEY   disciplinary   proceeding.       Attorney's         license

suspended.

      ¶1   PER CURIAM.    We review a report and recommendation of

Referee Richard C. Ninneman approving a stipulation filed by the

Office of Lawyer Regulation (OLR) and Attorney John E. Hotvedt.

In the stipulation, Attorney Hotvedt stipulated to the facts

underlying the five counts of misconduct alleged in the OLR's

amended complaint and joined the OLR in jointly recommending an

18-month suspension of Attorney Hotvedt's Wisconsin law license.
The referee agreed that an 18-month suspension was appropriate.
                                                                        No.     2016AP48-D

       ¶2    Upon    careful    review      of   this     matter,      we     uphold   the

referee's findings of fact and conclusions of law and agree that

an 18-month suspension is an appropriate sanction for Attorney

Hotvedt's misconduct.          We also find it appropriate to impose the

full   costs    of    this     proceeding,       which     are    $6,309.67       as     of

September 19, 2016, on Attorney Hotvedt.                   Since Attorney Hotvedt

has already made restitution to his law firm, the OLR does not

seek a restitution order.

       ¶3    Attorney       Hotvedt   was       admitted    to    practice       law     in

Wisconsin in 2001 and practices in Kenosha.                       He has no prior

disciplinary history.

       ¶4    On January 7, 2016, the OLR filed a complaint against

Attorney Hotvedt alleging five counts of misconduct.                            Attorney

Hotvedt filed an answer on February 12, 2016.                       The referee was

appointed on April 5, 2016.               The OLR filed an amended complaint

on   July    11,    2016.      The    parties'       stipulation        and     Attorney

Hotvedt's no contest plea was filed on August 8, 2016.

       ¶5    As part of the stipulation, Attorney Hotvedt agreed
that   the    referee   could       use    the    factual    allegations         of    the

amended     complaint   as     an   adequate      basis    in    the    record     for    a

determination of misconduct as to the five counts alleged in the

amended complaint.

       ¶6    According to the amended complaint, Attorney Hotvedt

was formerly employed at the Burlington, Wisconsin law firm of

Lloyd, Phenicie, Lynch, Kelly, Hotvedt & Terry, S.C.                            He was a

stockholder, director, and officer of the firm and had practiced
with the firm since he graduated from law school.                       By common and
                                            2
                                                                            No.     2016AP48-D

accepted     practice,       and        pursuant          to    written           employment

agreements, all attorneys at the firm understood and agreed that

revenues generated by the practice of law belonged to the firm.

      ¶7    In January 2014, Attorney Hotvedt and Attorney Todd

Terry told firm shareholders that they would be withdrawing from

the firm and establishing their own law practice in Kenosha.

The shareholders of the firm agreed to dissolve the corporation

effective May 31, 2014.            All firm members signed a dissolution

agreement winding up the corporation.

      ¶8    Subsequent      to    the    dissolution           of    the    firm,     and   in

connection with the winding up of the firm, Attorney Dennis

Lynch,     the    former    President         of    the    firm,       noticed        billing

discrepancies       attributable         to        Attorney         Hotvedt,       including

writing off substantial amounts of firm billings in the years

2011 through 2013.           In many instances, Attorney Hotvedt had

written off client billings, but clients reported to the firm

that they had paid legal fees directly to Attorney Hotvedt.

      ¶9    Review of firm accounts showed that Attorney Hotvedt
had deposited client fee payments directly into his own personal

bank account rather than depositing the fees into the law firm

account.         Attorney   Hotvedt      did       not    disclose         to   the    firm's

shareholders that he was depositing firm funds paid by clients

into his personal bank account.                Attorney Hotvedt continued his

conduct of depositing client funds belonging to the firm into

his personal bank account during 2014, after he had announced

his   departure      from   the    firm       and     after     he     had      executed    a
dissolution agreement.
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                                                                   No.    2016AP48-D

    ¶10        As part of its investigation into the grievance filed

against       Attorney   Hotvedt,   the       OLR    discovered    that   in   2014

Attorney      Hotvedt    established   his     own    consulting    company,    JBG

Consulting Services, during the time period in                     which he was

preparing to leave the firm.           Through this consulting company,

Attorney Hotvedt converted additional attorney's fees belonging

to the firm.         The OLR's investigation revealed that the total

amount     of    identifiable    client       funds    converted    by     Attorney

Hotvedt from his former law firm was over $173,000.

    ¶11        The   OLR's   amended   complaint        alleged    the    following

counts of misconduct:

              Count One:   By converting client funds belonging
               to the firm in an amount in excess of $173,000
               over the years 2011 through 2014, Attorney
               Hotvedt violated SCR 20:8.4(c).1

              Count Two:     By writing off client fees owed to
               the   firm,     Attorney  Hotvedt   violated  SCR
               20:8.4(c).

              Count Three:     By establishing JBG Consulting
               Services to convert client fees while employed by
               the firm for the purpose of advancing his own
               financial interests, Attorney Hotvedt violated
               SCR 20:8.4(c).

              Count Four:   By misrepresenting to the firm that
               he would not bill or otherwise recover client
               fees from firm clients; by converting client
               funds owed to his law firm, by writing off client
               billings; by establishing JBG Consulting Services
               for the purpose of converting client fees owed to

    1
       SCR 20:8.4(c) provides:    "It is professional misconduct
for a lawyer to: . . . engage in conduct involving dishonesty,
fraud, deceit or misrepresentation.

                                          4
                                                    No.   2016AP48-D

            the firm, Attorney Hotvedt breached his fiduciary
            duties owed to his firm and his duty of honesty
            in his professional dealings with the firm,
            thereby violating a standard of conduct set forth
            by the Supreme Court in In re Disciplinary
            Proceedings Against Shea, 190 Wis. 2d 560, 527
N.W.2d 314 (1995), actionable via SCR 20:8.4(f).2

           Count Five:   By failing to disclose to the OLR
            the full extent of funds converted from the firm;
            by failing to initially disclose the full amount
            of fees received from JBG Consulting Services, an
            entity that served to convert client funds
            belonging to the firm; by failing to disclose to
            the OLR that he had converted additional firm
            funds through another bank after specifically
            denying to the OLR that there was any other bank
            into which such deposits were made, Attorney
            Hotvedt violated SCR 22.03(2)3 and SCR 22.03(6),4
            enforced through 20:8.4(h).5

    2
       SCR 20:8.4(f) provides:  "It is professional misconduct
for a lawyer to: . . . violate a statute, supreme court rule,
supreme court order or supreme court decision regulating the
conduct of lawyers.
    3
        SCR 22.03(2) provides:

    Upon commencing an investigation, the director shall
    notify the respondent of the matter being investigated
    unless   in   the   opinion   of   the   director   the
    investigation of the matter requires otherwise.     The
    respondent shall fully and fairly disclose all facts
    and circumstances pertaining to the alleged misconduct
    within 20 days after being served by ordinary mail a
    request for a written response.      The director may
    allow additional time to respond.     Following receipt
    of the response, the director may conduct further
    investigation and may compel the respondent to answer
    questions,   furnish   documents,   and   present   any
    information deemed relevant to the investigation.

                                 5
                                                                  No.   2016AP48-D

      ¶12     In the stipulation, Attorney Hotvedt represented that

he    fully     understands        the   misconduct        allegations;    fully

understands his right to contest the matter; fully understands

the       ramifications    of      his   entry     into     the    stipulation;

acknowledges that he has had the representation and advice of

counsel; and states that the entry into the stipulation is made

knowingly and voluntarily.

      ¶13     As noted above, the parties agreed that an appropriate

level of discipline for Attorney Hotvedt's misconduct was an 18-

month suspension of his license to practice law in Wisconsin.

The referee agreed.

      ¶14     The    referee's       August      30,      2016    report      and

recommendation found that the OLR met its burden of proof with

respect to the five counts of misconduct set forth above.                     The

referee      said   the   amount    of    firm    money    misappropriated     by

Attorney      Hotvedt,     coupled       with    the      attorney's    admitted

allegations of failing to cooperate with the OLR, supported a

very serious level of discipline.                The referee commented that

      4
       SCR 22.03(6)  provides:      "In   the   course  of   the
investigation, the respondent's wilful failure to provide
relevant information, to answer questions fully, or to furnish
documents and the respondent's misrepresentation in a disclosure
are misconduct, regardless of the merits of the matters asserted
in the grievance."
      5
       SCR 20:8.4(h) provides:   "It is professional misconduct
for a lawyer to: . . . fail to cooperate in the investigation
of a grievance filed with the office of lawyer regulation as
required by SCR 21.15(4), SCR 22.001(9)(b), SCR 22.03(6), or SCR
22.04(1)."

                                         6
                                                                        No.      2016AP48-D

deciding on an appropriate level of discipline was made more

difficult since the parties reached a stipulation and no contest

agreement without a hearing, which meant the referee had no

opportunity to meet and observe Attorney Hotvedt's demeanor as

to his misconduct.

      ¶15   The referee went on to say that an 18-month suspension

for a relatively new attorney who recently started a new firm is

a     significant      discipline,         particularly           considering           the

additional time it may take for him to be reinstated under the

reinstatement procedures dictated by SCR 22.28(3).                          The referee

noted that Attorney Hotvedt has no prior disciplinary history;

he    reached    an    agreement      with    his        former    firm          regarding

restitution;     and    he    ultimately     was    willing       to   enter       into   a

stipulation and no contest agreement.               Upon consideration of all

those factors, the referee said he had no difficulty agreeing to

recommend the 18-month suspension recommended by both the OLR

and Attorney Hotvedt as part of the stipulation.

      ¶16   This court will adopt a referee's findings of fact
unless   they    are   clearly      erroneous.       Conclusions            of    law   are

reviewed de novo.            See In re Disciplinary Proceedings Against

Eisenberg, 2004 WI 14, ¶5, 269 Wis. 2d 43, 675 N.W.2d 747.                              The

court may impose whatever sanctions it sees fit, regardless of

the    referee's       recommendation.             See     In     re        Disciplinary

Proceedings Against Widule, 2003 WI 34, ¶44, 261 Wis. 2d 45, 660
N.W.2d 686.

      ¶17   We    adopt       the    referee's      findings           of     fact      and
conclusions of law that Attorney Hotvedt violated the supreme
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                                                                                           No.    2016AP48-D

court rules as alleged in the five counts set forth above.                                                  We

further agree with the referee that an 18-month suspension of

Attorney Hotvedt's license to practice law in Wisconsin is an

appropriate         level     of    discipline.                 Since        no       two        cases      are

precisely      the     same,       there     is       no       standard          sanction          for      any

particular      misconduct.             We   note          that       in     In       re    Disciplinary

Proceedings         Against    Brown,        2005 WI 49,       280 Wis. 2d 44,               695
N.W.2d 295,         this    court       accepted           a    stipulation                in    which       an

attorney agreed to an 18-month suspension for accepting fees

from clients while informing his law firm he was acting pro

bono, converting fees belonging to the law firm, and making

misrepresentations to the OLR as part of its investigation.                                                  We

find    the    misconduct          at   issue         in       this    case       to        be    somewhat

analogous to the misconduct in Brown, and we find a similar

suspension to be appropriate.                     We also deem it appropriate, as

is     our    usual      custom,        to   impose             the     full          costs       of     this

disciplinary proceeding on Attorney Hotvedt.

       ¶18    IT IS ORDERED that the license of John E. Hotvedt to
practice      law     in    Wisconsin        is   suspended                for    a        period      of    18

months, effective December 30, 2016.

       ¶19    IT IS FURTHER ORDERED that within 60 days of the date

of this order, John E. Hotvedt shall pay to the Office of Lawyer

Regulation the costs of this proceeding, which are $6,309.67.

       ¶20    IT    IS     FURTHER      ORDERED            that       John       E.    Hotvedt         shall

comply with the provisions of SCR 22.26 concerning the duties of

a person whose license to practice law in Wisconsin has been
suspended.
                                                  8
                                                        No.   2016AP48-D

    ¶21   IT    IS   FURTHER   ORDERED   that   compliance    with   all

conditions with this order is required for reinstatement.            See

SCR 22.28(3).

                                   9
    No.   2016AP48-D

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