text:
    The PEOPLE of the State of Colorado, Petitioner, v. John A. SCRUGGS, Respondent.
    No. 01PDJ052.
    Office of the Presiding Disciplinary Judge of the Supreme Court of Colorado.
    July 30, 2002.
    Attorney Regulation. The Hearing Board disbarred Respondent John A. Scruggs, attorney registration number 18977, from the practice of law following a trial in this default proceeding. The Hearing Board found that respondent knowingly converted clients' funds in two separate matters, and abandoned representation of his clients in two matters, warranting disbarment. In addition to knowing conversion and abandonment, the Hearing Board found numerous other rule violations arising from respondent's representation of eight separate clients. Respondent was ordered to pay res-titation and the costs of the disciplinary proceeding.
   Opinion by

Presiding Disciplinary JUDGE ROGER L. KEITHLEY and Hearing Board members, SHERRY A. CALOIA and E. STEVEN EZELL, both members of the bar.

REPORT, DECISION AND IMPOSITION OF SANCTION

SANCTION IMPOSED: ATTORNEY DISBARRED

A sanctions hearing pursuant to C.R.C.P. 251.15 was held on June 27, 2002, before the Hearing Board consisting of the Presiding Disciplinary Judge ("PDJ") and two hearing board members, Sherry A. Caloia and E. Steven Ezell, both members of the bar. Naney L. Coben, Deputy Attorney Regulation Counsel, represented the People of the State of Colorado (the "People"). John A. Seruggs ("Seruggs"), the respondent, did not appear either in person or by counsel.

The People filed a Complaint in this matter on October 83, 2001. The Citation and Complaint were sent via regular and certified mail to the respondent on the same date. The People filed a proof of service on October 80, 2001 and an amended proof of service on November 23, 2001. The Amended Proof of Service shows that the Citation and Complaint were received at Scruggs's registered business address. Respondent failed to file an Answer or otherwise respond to the Complaint.

On January 8, 2002, the People moved for default on the claims set forth in the Complaint, and on March 5, 2002, the PDJ granted the motion as to the facts set forth in the Complaint, which were deemed admitted, and as to the claims set forth in the Complaint with the exception of the alleged violations of Colo. RPC 1.16(d) in claims four and eight. On April 12, 2002, the PDJ issued an order dismissing those claims.

At the sanctions hearing, exhibits 1 through 3 were offered by the People and admitted into evidence. The Hearing Board considered the People's argument, the facts established by the entry of default, the exhibits admitted, and made the following findings of fact which were established by clear and convincing evidence.

I. FINDINGS OF FACT

John A. Seruggs has taken and subscribed to the oath of admission, was admitted to the bar of the Supreme Court on October 25, 1989 and is registered upon the official ree-ords of this court, attorney registration number 18977. Scruggs is subject to the jurisdiction of this court pursuant to C.R.C.P. 251.1(b).

All factual allegations set forth in the Complaint were deemed admitted by the entry of default, and are therefore established by clear and convincing evidence. See Complaint attached hereto as exhibit 1. The entry of default also deemed established the alleged violations of The Rules of Professional Conduct set forth therein, with the exeeption of the two allegations of Colo. RPC 1.16(d) which were dismissed.

II. CONCLUSIONS OF LAW AND IMPOSITION OF SANCTION

In two separate matters (Pierce and Schmitz) Seruggs accepted clients' funds, failed to perform the services for which he was hired, and failed to refund Pierce's funds in the amount of $350.00 and Schmitz's funds in the amount of $500.00 despite their demands that he do so. By accepting the clients' funds, failing to perform the services he was hired to perform, failing to refund the unearned portion of the $850.00 to his clients, knowing that he had not performed the services for which the funds were paid is sufficient evidence to conclude that Scruggs knowingly converted his clients' funds in violation of Colo, RPC 8. 4(c)(engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation). See People v. Elliott, 39 P.3d 551, at 555 (Colo. PDJ 2000), 2000 Colo. Discipl.LEXIS 40 (disbarring attorney for his accepting advance fees from two clients, performing some but not all of the services for which he was paid, retaining the fees for one year in one matter and two years in another matter, and abandoning the clients, citing People v. Singer, 897 P.2d 798, 801 (Colo.1995)(holding that extensive and prolonged neglect is considered willful misconduct)); People v. Silvola, 915 P.2d 1281, 1284 (Colo.1996)(finding that misconduct that occurred over an extended period of time must be deemed to be willful); People v. Varallo, 913 P.2d 1, 11 (Colo.1996)(holding that knowing misappropriation [for which the lawyer is almost invariably disbarred] consists simply of a lawyer taking a client's money entrusted to him, knowing that it is the client's money and knowing that the client has not authorized the taking, citing In re Noonan, 102 N.J. 157, 160, 506 A.2d 722 (1986).)

These two incidents of knowing conversion, standing alone, are sufficient to warrant disbarment. See Varallo, 918 P.2d at 11. Additionally, in the Pierce and Schmitz matters, Seruggs failed to communicate with the clients in violation of Colo. RPC 1.4(a)(an attorney shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information). In the Pierce matter, Seruggs failed to take steps to resolve the client's dispute with her health insurer, and in the Schmitz matter, Scruggs failed to commence a non-contested divorcee proceeding. Such conduct constitutes neglect in violation of Colo. RPC 1.8(an attorney shall act with reasonable diligence and promptness in representing a client). In both matters, the Complaint alleges that the extent of Seruggs' neglect rose to the level of abandonment.

To find abandonment rather than merely neglect, there must be proof that the attorney-during a given time period-was required to accomplish specific professional tasks for the client, failed to accomplish those tasks, and failed to communicate with the client. People v. Carvell, No. 99PDJ096, slip op. at p. 9 (Colo. PDJ September 11, 2000), 2000 Colo. Discipl. LEXIS 26. The proof must objectively indicate that the attorney has deserted, rejected and/or relinquished the professional responsibilities owed to the client. Id. The totality of facts establish that Seruggs deserted, rejected and/or relinquished the professional responsibilities owed to his clients and thereby abandoned them. The presumed sanction for knowing conversion coupled with abandonment of an attorney's clients also results in disbarment. See People v. Ain, 35 P.3d 734, 789 (Colo. PDJ 2001)(attorney disbarred for abandonment of a client matter, knowingly converting funds, for making misrepresentations and for violation of court order); People v. Wallace, 986 P.2d 1282, 1284 (Colo.1997) (disbarring lawyer who abandoned clients, causing them serious harm, and knowingly misappropriated client funds); People v. Townshend, 933 P.2d 1327, 1329 (Colo.1997) (lawyer disbarred who effectively abandoned two clients after accepting retainers and failing to account for or return the unearned retainers); People v. Gilbert, 921 P.2d 48, 50 (Colo.1996) (attorney disbarred for converting client funds in conjunction with abandonment of practice); People v. Steinman, 930 P.2d 596, 599-600 (Colo.1997) (lawyer disbarred who accepted fees from clients and then abandoned them while keeping their money and causing serious harm).

With regard to the Schmitz matter, Seruggs failed, upon termination, to take steps reasonably necessary to protect the clients' interests in violation of Colo. RPC 1,16(d)(an attorney shall, upon termination of representation, take steps to the extent reasonably practicable to protect a client's interests, including ... refunding any advance payment of any fee not earned).

In three separate matters (Guhl, Thilman, and Fontinelli) Scruggs was ordered by the court to reduce an order to writing and submit it for the court's signature. Scruggs failed to do so in a timely fashion in each of the three cases in violation of Colo. RPC 8.4(c)(an attorney shall not knowingly disobey an obligation under the rules of a tribunal). Seruggs also neglected these three clients' legal matters in violation of Colo. RPC 1.3(neglect). In the Fontinelli matter, Seruggs failed to communicate with the client in violation of Colo. RPC 14(a)(failure to communicate with client), and caused prejudice to the administration of justice as a result of the delay in filing the written permanent orders for over a five-month period in violation of Colo. RPC 8.4(d)(engaging in conduct prejudicial to the administration of justice).

In one matter (Bohlman), Scruggs neglected the client's matter in violation of Colo. RPC 1.3(neglect) by failing to timely forward discovery to the client and thereafter provide it to opposing counsel, resulting in the entry of judgment for opposing counsel's attorney's fees against the client. Scruggs delay in providing discovery required the court to hold a hearing on attorneys' fees causing prejudice to the administration of justice in violation of Colo. RPC 8.4(d). Similarly, in the Weaver matter, Scruggs failed to file disclosures and was ordered by the court to pay opposing counsel's attorneys' fees and failed to do so in violation of Colo. RPC 34(c)(an attorney shall not knowingly disobey an obligation under the rules of a tribunal).

In another matter (Runia), Scruggs agreed to prepare a qualified domestic relations order and failed to prepare it for approximately five months in violation of Colo. RPC 1.3(ne-glect). In the Bergman matter, the client requested an accounting and written documentation confirming the terms of the resolution of a child support matter and Scruggs failed to communicate with the client in violation of Colo. RPC 14(a). Also, Scruggs failed to provide the requested information to his client in violation of Colo. RPC 1.15(b)(an attorney shall, upon request, provide to a client a full accounting and promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive). In the Livingston matter, Scruggs violated Colo. RPC 8.4(h) (it is professional misconduct for an attorney to engage in any other conduct that reflects adversely on the attorney's fitness to practice law) by failing to pay court reporter services. In four matters, (Pierce, Schmitz, Weaver, Guhl), Seruggs failed to provide a written response to requests for information from the Office of Attorney Regulation Counsel constituting grounds for discipline pursuant to CRCP. shall constitute grounds for discipline where an attorney fails "to respond without good cause shown to a request by the ... Regulation Counsel ... or obstruction of the ... Regulation Counsel . in the performance of their duties ....) and separate violations of Colo. RPC 3.4(c) (an attorney shall not knowingly disobey an obligation under the rules of a tribunal) and Colo. RPC 8.1(b)(knowingly failing to respond reasonably to a lawful demand for information from a disciplinary authority).

These numerous other rule violations, taken together with Seruggs's failure to participate in this disciplinary proceeding lend additional support to the conclusion that disbarment is warranted. See People v. Jaramillo, 35 P3d 723 (Colo. PDJ 2001)(attorney disbarred where he knowing ly converted client funds in violation of Colo. RPC 8.4(c), he neglected three client matters in violation of Colo. RPC 1.3, he failed to communicate with clients in four different matters in violation of Colo. RPC 1.4(a), he engaged in conduct resulting in prejudice to the administration of justice in violation of Colo. RPC 8.4(d), he knowingly disobeyed the rules of a tribunal in one case in violation of Colo. RPC 84(c) and he failed to respond to requests for investigation in eight different matters in violation of C.R.C.P. 251.5(d);) Ain, 35 P.3d at 739 (attorney disbarred for abandonment of a client matter, knowingly converting funds, for making misrepresentations and for violation of court order). See also ABA Standards for Imposing Lawyer Sanctions (1991 & Supp.1992) ("ABA Standards") 4.11 ("Idlisbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client"); ABA Standard 4.41(b) (disbarment is warranted when a lawyer knowingly fails to perform services for a client and causes serious or potentially serious injury to a client); ABA Standard 4 41(c)(dis-barment is warranted when a lawyer engages in a pattern of neglect with respect to client matters and causes serious or potentially serious injury to the client); ABA Standard 6.22 (suspension is appropriate when a lawyer knowingly violates a court order or rule, and there is injury or potential injury to a client or a party). Pursuant to ABA Standards 9.22 and 9.82 respectively, the Hearing Board considered aggravating and mitigating factors in arriving at the appropriate sanction. Since Scruggs did not participate in these proceedings, no mitigating factors were established. The facts deemed admitted in the Complaint established several aggravating factors pursuant to ABA Standard 9.22. Seruggs had a dishonest or selfish motive, see id. at 9.22(b), he demonstrated a pattern of misconduct, see id. at 9.22(c), he engaged in multiple offenses, see id, at 9.22(d); he engaged in bad faith obstruction of the disciplinary proceeding, see id. at 9.22(e), the respondent had substantial experience in the practice of law having been Hcensed in Colorado since 1989, see id. at and Seruggs demonstrated indifference to making restitution, see id. at 9.22(J).

Moreover, Seruggs has had prior discipline, an aggravating factor under ABA Standard 9.22(a). In 1998, Scruggs received a private censure for conduct similar to the conduct giving rise to this proceeding. Seruggs represented a client, commingled the client's funds with his own in violation of Colo. RPC 1.15(@a)(an attorney shall hold property of clients or third persons that is in the attorney's possession separate from the attorney's own property), was ordered to prepare a qualified domestic relations order and failed to do so, and failed over a period of six months to return his client's phone calls in violation of Colo. RPC 1.8 and Colo. RPC 1.4(a).

The two incidents of knowing misappropriation and abandonment are sufficient to warrant disbarment. The numerous other incidents of neglect, failing to communicate, disregard of court orders and the legal needs of his clients, and Seruggs failure to participate in these proceedings confirms that disbarment is warranted.

III, ORDER

It is therefore ORDERED:

1. JOHN A. SCRUGGS, attorney registration number 18977 is DISBARRED from the practice of law effective thirty-one days from the date of this Order.
Scruggs is ordered to pay restitution within one year of the date of this Order to:
(A) Ms. Pierce in the amount of $350.00 with interest at the statutory rate from December 1, 2000, and
(B) Mr. Schmitz in the amount of $500.00 with interest at the statutory rate from June 29, 2000.
8. Seruggs is Ordered to pay the costs of these proceedings; the People shall submit a Statement of Costs within ten (10) days of the date of this Order. Respondent shall have five (5) days thereafter to submit a response thereto.

EXHIBIT 1

COMPLAINT

THIS COMPLAINT is filed pursuant to the authority of C.R.C.P. 251.9 through 251.14, and it is alleged as follows:

1. The respondent has taken and subscribed the oath of admission, was admitted to the bar of this court on October 25, 1989, and is registered upon the official records of this court, registration No. 18977. He is subject to the jurisdiction of this court in these disciplinary proceedings. The respondent's registered business address is 186 South Sherman Street, Denver, Colorado 80209.

The Pierce Matter, 01-01230

2. On or about September 12, 2000, Bonnie Pierce retained respondent to assist her with two legal matters. The first was a dispute she had with an insurance company concerning the cost of worker's compensation insurance for her company. The second matter concerned her health insurer's refusal to pay for medical tests and equipment that had previously been authorized for her personal use.

3. Ms. Pierce had an initial meeting with respondent at his home. At that time she paid him a $200.00 flat fee to address the matters referenced above.

4. After more than four months elapsed and Ms. Pierce had placed several phone calls to respondent concerning the status of the matters, the worker's compensation insurance issue was resolved and fully settled.

5. In December of 2000, respondent told Ms. Pierce that he would need additional funds to pursue her dispute with her health insurer. On December 22, 2000, Ms. Pierce delivered a check to respondent at his home in the amount of $850.00 to cover the additional fees requested. About one week later, Ms. Pierce delivered to the respondent some additional documents he had requested. At the time the additional information was provided to the respondent, respondent requested that Ms. Pierce call him in about a week to discuss the matter. That is the last time that Ms. Pierce spoke with respondent.

6. In early January, Ms. Pierce attempted to contact respondent by telephone. At that time, Ms. Pierce was receiving bills from the doctor's office and the company who leased the medical equipment (heart monitor) that she was using. After two weeks elapsed, Ms. Pierce called the respondent again and left a message requesting that he contact her concerning the health insurance matter. Respondent did not reply.

7. Ms. Pierce continued to call respondent every week to two weeks concerning the status of her legal matter. She left messages begging respondent to call her, as medical bills were continuously coming to her and she did not know what to do. She also asked, in her messages, if respondent needed any additional information from her.

8. In an effort to contact respondent, Ms. Pierce spoke with the person who had referred respondent to her. That person told Ms. Pierce that she would contact a friend of the respondent concerning the matter. However, this did not succeed in causing respondent to contact Ms. Pierce.

9. After three months of not receiving any return telephone calls, Ms. Pierce's husband called respondent and left voice mail messages three times, but received no reply. Ms. Pierce and her husband then went to respondent's home, where they were confronted by a lady who told them that respondent was not available, but that she would give him a message to call. After another week elapsed without a telephone call from respondent, Ms. Pierce filed a complaint with the Office of Attorney Regulation Counsel.

10. Respondent failed to respond to the request for investigation filed by Ms. Pierce, although it was mailed to respondent's registered business and home address.

11. Respondent has abandoned Ms. Pierce, thereby terminating the attorney/client relationship. Respondent continues to retain the $350.00 paid by Ms. Pierce to him to pursue the claim against her health insurer, although respondent has no right to the money.

CLAIM I

12. The averments of paragraphs 1 through 11 are incorporated herein.

13. Respondent knowingly converted Pierce's fees in the amount of $350.00 to his own use and benefit, which is conduct involving dishonesty, in violation of Colo. RPC 8.4(c).

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM II

14. The averments of paragraphs 1 through 11 are incorporated herein by reference.

15. Respondent failed to keep Pierce reasonably informed about the status of her legal matter and failed to promptly comply with her reasonable requests for information, in violation of Colo. RPC 1.4(a).

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM III

16. The averments of paragraphs 1 through 11 are incorporated herein.

17. Respondent neglected Pierce's legal matter and failed to represent Pierce diligently, in violation of Colo. RPC 1.8.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM IV

18. The averments of paragraphs 1 through 11 are incorporated herein.

19. Respondent failed to protect Pierce's interest at the time he terminated his services on her behalf in violation of Colo. RPC 1.16(d).

Wherefore, complainant seeks relief as set forth more fully below.

The Schmitz Matter, 01-00785

20. On June 29, 2000, Arron Schmitz hired respondent as his attorney to represent him in a non-contested divorcee proceeding. Schmitz paid respondent a $500.00 flat fee at the time he retained him.

21. After about a month and a half, respondent showed Schmitz papers that had been drafted to begin the process. Schmitz signed the paperwork, and it was filed on or about October 26, 2000, roughly four months after Schmitz had retained the respondent, and only after Schmitz made several telephone calls to the respondent concerning the status of the legal matter.

22, In December of 2000, Schmitz con—-tacted his wife to find out if she had received the divoree paperwork. Schmitz's wife informed Schmitz that she had not received any paperwork and that she had not been served with the documents to begin the divoree process.

23. Beginning in the middle of January, 2001, Schmitz began to attempt to contact respondent concerning the legal matter. Schmitz left a voice mail message for respondent, but respondent did not respond.

24. Thereafter, Schmitz called respondent's office on January 31, February 1, February 12, and February 13, 2001. Each time Schmitz left a voice mail message for the respondent. The respondent has never responded to Schmitz' messages. Respondent terminated his relationship with Schmitz by abandoning his representation of him.

25. Respondent did not respond to the request for investigation filed by Schmitz with the Office of Attorney Regulation Counsel, although a copy of it was mailed to respondent's registered business and home addresses.

26. Respondent has abandoned Schmitz, thereby terminating the attorney/client relationship. Respondent has retained all of the funds paid by Schmitz to the respondent, without completing the work agreed to and without authorization.

CLAIM V

27. The averments of paragraphs 20 through 26 are incorporated herein.

28. Respondent knowingly converted funds belonging to Schmitz to his own use and benefit, which is conduct involving dishonesty, in violation of Colo. RPC 8.4(c).

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM VI

29. The averments of paragraphs 20 through 26 are incorporated herein.

30. Respondent failed to keep Schmitz reasonably informed about the status of his legal matter and failed to promptly comply with Schmitz's reasonable reqtuiests for information, in violation of Colo. RPC 1.4(a).

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM VII

31. The averments of paragraphs 20 through 26 are incorporated herein.

32. Respondent neglected Schmitz's legal matter and failed to represent Schmitz diligently, in violation of Colo. RPC 1.3.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM VIII

33. The averments of paragraphs 20 through 26 are incorporated herein.

34. Respondent failed to protect Schmitz's interest at the time of his termination in violation of Colo. RPC 1.16(d).

Wherefore, complainant seeks relief as set forth more fully below.

The Weaver Matter, 00-08544

35. On December 21, 1999, a domestic relations court ordered respondent to pay $350.00 to opposing counsel in attorney's fees as result of respondent's failure to file disclosures. As of this date, although respondent is aware of the order, respondent has not paid the court-ordered sum.

36. Respondent never submitted a written response to the request for investigation in this matter which was sent to respondent's registered address pursuant to the applicable rule of procedure.

CLAIM IX

37. The averments of paragraphs 35 through 86 are incorporated herein.

38. Respondent violated Colo. RPC 8.4(c) by knowingly disobeying the court's order requiring him to pay attorney's fees.

Wherefore, complainant seeks relief as set _ forth more fully below.

The Guhl Matter, 00-03946

39. On April 19, 2000, respondent appeared before Magistrate Rice in Arapahoe County District Court and read an oral stipulation into the record on behalf of his client, Mr. Guhl, Respondent was ordered to prepare a written order within 15 days.

40. As of February 1, 2001, no written order had been submitted to the court.

41. Respondent received a copy of the request for investigation in the Guhl matter, but never submitted a written response to it.

CLAIM X

42. The averments of paragraphs 39 through 41 are incorporated herein.

48. Respondent violated Colo. RPC 8.4(c) by knowingly disobeying the court's order requiring him to prepare and file the Guhl order within 15 days.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XI

44. The averments of paragraphs 39 through 41 are incorporated herein.

45, Respondent neglected Gubl's matter and failed to represent Guhl diligently, in violation of Colo. RPC 1.8.

Wherefore, complainant seeks relief as set forth more fully below.

The Thilman Matter, 00-04158

46. Respondent represented Thomas Thilman in a dissolution of marriage matter.

47. On May 19, 1999, the matter came before Magistrate Rice in Arapahoe County District Court for a status hearing. Respondent was ordered to prepare a proposed order within 15 days. Respondent failed to do so.

48. On June 24, 1999, the court contacted respondent by telephone concerning the order, which had not yet been filed.

49. On July 20, 1999, the court entered an order requiring respondent to submit the formal order within 10 days.

50. An order, signed by both counsél, was not filed until October 18, 1999.

CLAIM XII

51. The averments of paragraphs 46 through 50 are incorporated herein.

52. Respondent violated Colo. RPC 8.4(c) by knowingly disobeying the court's orders requiring him to prepare and file the Thil-man order within the time specified.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XIII

58. The averments of paragraphs 46 through 50 are incorporated herein.

54. Respondent neglected Mr. Tillman's representation and failed to represent Tillman diligently, in violation of Colo. RPC 1.8.

Wherefore, complainant seeks relief as set forth more fully below.

The Bohlmann Matter, 00-04160

55. The respondent was retained to represent Ms. Bohlimann in a dissolution of marriage action.

56. Respondent received discovery from opposing counsel in February 1999. Respondent did not forward the discovery to Bohi-mann for response until April 1999.

57. In late April 1999, Bobhlmann returned her discovery responses to the respondent. Respondent did not provide those responses to opposing counsel until August 1999.

58. On July 18, 1999, the presiding magistrate entered an order compelling Bohl-mann's responses to the discovery opposing counsel had propounded, and ordering Bohl-mann to pay $800.00 as and for reasonable attorney's fees to opposing counsel within 10 days.

59. In addition, judgment in the amount of $2,909.90 was entered against respondent for opposing counsel's attorney's fees resulting from respondent's delay during the course of proceedings. That sum included the $300.00 the magistrate ordered Bohl-mann to pay.

CLAIM XIV

60. The averments of paragraphs 55 through 59 are incorporated herein.

61. Respondent violated Colo. RPC 1.3 by neglecting Bohlmann's legal matter and failing to represent Ms. Bohlmann diligently.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XV

62. The averments of paragraphs 55 through 59 are incorporated herein.

63. Respondent engaged in conduct prejudicial to the administration of justice by his failure to handle the discovery matter described above properly, thereby causing a hearing on the matter and the entry of an order for attorney's fees against his client. Respondent's conduct violates Colo. RPC 8.4(d).

Wherefore, complainant seeks relief as set forth more fully below.

The Runia Matter, 00-04161

64. Respondent was hired to represent Mr. Runia in a dissolution of marriage action.

65. The decree of dissolution of marriage was entered in complainant's case in November 1998. A qualified domestic relations order was needed to provide retirement benefits among the parties. Respondent agreed to prepare the document as part of his representation of complainant.

66. A proposed qualified domestics relations order was not prepared by respondent until March or April, 2000.

CLAIM XVI

67. The averments of paragraphs 64 through 66 are incorporated herein.

68. Respondent neglected Runia's legal matter and failed to represent Runia diligently, in violation of Colo. RPC 1.3.

Wherefore, complainant seeks relief as set forth more fully below.

The Bergmann Matter, 00-04162

69. Bergmann hired respondent in July 1999 to represent him in connection with child support disputes that he had with his ex-wife.

70. In September 1999, respondent notified complainant that he was initiating discussions with opposing counsel concerning the child support matters.

71. On December 20, 1999, respondent advised complainant that the matters had been resolved.

72. Thereafter, complainant requested that respondent provide him with an itemized accounting of his time, and written documentation confirming the terms of the resolution of the child support matter.

73. As of April 4, 2000, respondent had not provided any of the requested information to the complainant.

CLAIM XVII

74. The averments of paragraphs 69 through 78 are incorporated herein.

75. Respondent violated Colo. RPC 1.15(b) by failing to provide an accounting of his fees and costs when expressly requested by his client.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XVIII

76. The averments of paragraphs 69 through 78 are incorporated herein.

Ti. Respondent failed to keep his client reasonably informed about the status of his legal matter and failed to promptly comply with the client's reasonable requests for information, in violation of Colo. RPC 1.4(a).

Wherefore, complainant seeks relief as set forth more fully below.

The Fontinelli Matter, 00-04275

78. Respondent represented Ms. Fonti-nelli in a dissolution of marriage action. On May 31, 2000, the respondent, Ms. Fontinelli and Ms. Fontinelli's ex-husband appeared before a magistrate of the Adam's County District Court and read a permanent orders stipulation into the record. Respondent was ordered by the Magistrate to prepare written permanent orders and a decree within 30 days.

79. On July 10, 2000, the court entered another order giving respondent an additional 10 days to submit the orders.

80. On July 31, 2000, the court issued a show cause order requiring respondent to appear on September 7, at 8:80 a.m. to show cause why sanctions should not be imposed for his failure to submit the written orders. 81. On September 7, 2000, respondent ap-

peared and still had not prepared the orders. The court set the matter for administrative review on October 10, 2000, by which time respondent was to submit written permanent orders.

82. On October 10, 2000, the. court performed a review of the matter and noted that the orders still had not been submitted. Accordingly, a show cause order was entered requiring respondent to appear on November 13, 2000 at 8:80 a.m. to show cause why sanctions should not be imposed for his failure to comply with the court's previous orders.

88. Respondent failed to appear at the November show cause hearing. Accordingly, a bench warrant was issued for respondent's arrest, but stayed until December 12, 2000, when a review hearing was scheduled.

84. The review took place on December 12, 2000 and the permanent orders had still not been submitted. On that date, the court ordered that respondent was to return and show cause on February 7, 2001 why sanctions should not be entered against him. The sheriff was directed to serve the show cause order on the respondent personally, and if respondent failed to appear the bench warrant would issue.

85. Respondent submitted the permanent orders on December 22, 2000.

86. Respondent never advised his client that he had submitted the orders, and never sent her a copy of the orders.

CLAIM XIX

87. The averments of paragraphs 78 through 86 are incorporated herein.

88. Respondent violated Colo. RPC 1.3 by neglecting Ms. Fontinelli's matter and failing to represent her diligently.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XX

89. The averments of paragraphs 78 through 86 are incorporated herein.

90. Respondent violated Colo. RPC 3.4(c) by knowingly disobeying the court's many orders directing him to prepare the permanent orders in the Fontinelli matter.

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XXI

91. The Averments of paragraphs 78 through 86 are incorporated herein.

92. Respondent's disobedience, which necessitated further court action, constituted conduct prejudicial to the administration of justice in violation of Colo. RPC 8.4(d).

Wherefore, complainant seeks relief as set forth more fully below.

CLAIM XXII

93. The averments of paragraphs 78 through 86 are incorporated herein.

94. Respondent failed to keep Ms. Fonti-nelli reasonably informed about the status of her legal matter and failed to promptly comply with her reasonable requests for information, in violation of Colo. RPC 1.4(a).

Wherefore, complainant seeks relief as set forth more fully below.

The Livingston Matter, 01-00262

95. Respondent hired Irwin Seidman to report a deposition. Respondent purchased a transcript of the deposition, but never paid for it.

96. On October 6, 2000, a judgment was entered against respondent for the unpaid deposition fee, plus costs and interest, in the total amount of $324.90.

97. The judgment has not been paid.

CLAIM XXIII

98. The averments of paragraphs 95 through 97 are incorporated herein.

99. Respondent violated Colo. RPC 8.4(h) as a result of his failure to pay the court reporter and/or the judgment entered against him for the costs of the court reporter's services, which respondent expressly requested.

Wherefore, complainant seeks relief as set forth more fully below.

FAILURE TO COOPERATE

CLAIM XXIV

100. The averments of paragraphs 10, 25, 36, and 41 are incorporated herein.

101. Respondent was served with written notice of the requests for investigation filed by Pierce, Schmitz, Weaver, and Guhl, described above, but respondent failed to provide a written response to any of those requests for investigation as required by C.R.C.P. 251.10(a). Respondent's knowing failure to provide responses to the requests for investigation identified above, as required by C.R.C.P. 251.10(a), constitutes violations of C.R.C.P. 251.5(d), Colo. RPC 3.4(c) and Colo. RPC 8.1(b).

WHEREFORE, it is prayed that the respondent be found guilty of violations of various rules of conduct which establish grounds for discipline as provided in C.R.C.P. 251.5, and the Colorado Rules of Professional Conduct and that he be appropriately disciplined and assessed the costs of these proceedings, and that the court enter such further relief as may be allowable and appropriate based upon the evidence at trial.


source: Caselaw Access Project

license: Public Domain

text:
    The PEOPLE of the State of Colorado, Petitioner, v. Thomas D. LENAHAN, Respondent.
    Nos. 01PDJ017, 01PDJ054, 01PDJ060.
    Office of the Presiding Disciplinary Judge of the Supreme Court of Colorado.
    Aug. 9, 2002.

      Attorney Regulation. The Hearing Board disbarred Respondent Thomas D. Lenahan, attorney registration number 25498, from the practice of law following a trial in this proceeding. Respondent was employed by eight separate clients to resolve their tax problems. The Hearing Board found that in seven separate cases, respondent accepted clients' funds, failed to perform the services he was hired to perform, and failed to refund the unearned portion of the funds to his clients while knowing that he had not performed the services for which he had been paid the funds. The Hearing Board found that respondent's conduct constituted seven separate violations of Colo. RPC 84(c). In each of the eight cases, respondent severely neglected the clients' matters over an extended period of time in violation of Colo. RPC 1.8. In seven of the eight cases, the extend of respondent's neglect rose to the level of abandonment. The Hearing Board found numerous additional violations beyond respondent's knowing conversion of client funds and abandonment of clients. Respondent was ordered to pay restitution and the costs of the disciplinary proceeding.
   Opinion by

Presiding Disciplinary Judge ROGER L. KEITHLEY and Hearing Board members, HENRY C. FREY and WILLIAM J. MARTINEZ, both members of the bar.

REPORT, DECISION AND IMPOSITION OF SANCTION

SANCTION IMPOSED: ATTORNEY DISBARRED

A sanctions hearing pursuant to C.R.C.P. 251.15 was held on March 5, 2002, before the Hearing Board consisting of the Presiding Disciplinary Judge Roger L. Keithley ("PDJ") and two hearing board members, Henry C. Frey and William J. Martinez, both members of the bar. Terry Bernuth, Assistant Attorney Regulation Counsel, represented the People of the State of Colorado (the "People"). Thomas D. Lenahan ("Lena-han"), the respondent, appeared pro se.

This matter arises from three separate proceedings, Case No. O1IPDJO17, A Case No. 01PDJO054, and Case No. O1PDJ060, which were consolidated upon the People's motion on June 29, 2001.

In Case No. O1PDJO054, the People filed a Complaint, amended it on May 15, 2001, and filed a Proof of Service of the Amended Complaint on June 19, 2001. Service was proper pursuant to C.R.C.P. 251.82(b). Lena-han failed to file an Answer or otherwise respond. Upon the People's motion, the PDJ granted default as to the facts set forth in the Amended Complaint, and granted in part and denied in part default as to the violations set forth therein.

The People filed a Complaint in Case No. O1PDJO60 on May 29, 2001. Service was proper pursuart to C.R.C.P. 251.82(b). Len-ahan failed to file an Answer or otherwise respond to the Complaint. Upon the People's motion, the PDJ granted default as to the facts set forth in the Complaint, which were deemed admitted, and granted in part and denied in part default on the violations set forth therein. The People amended the Complaint, filed proof of proper service of the Amended Complaint pursuant to CRCP. 251.32(b), and moved for default, which the PDJ granted on December 19, 2001, thereby establishing the rule violations alleged.

At the sanctions hearing, exhibits 1 through 14 were offered by the People and admitted into evidence. The People presented testimony from Dawn Petras, Brian Good-head, Diane Kandt, James Topliss, Randy Perry, Richard Pfeifer, Michael Blanchette, and Thomas D. Lenahan, who also testified on his own behalf. The Hearing Board considered the testimony of the witnesses, the facts established by the entry of default, the exhibits admitted, and made the following findings of fact which were established by clear and convincing evidence.

I. FINDINGS OF FACT

Thomas D. Lenahan has taken and subscribed to the oath of admission, was admitted to the bar of the Supreme Court on May 10, 1995, and is registered upon the official records of this court, attorney registration number 25498. Lenahan is subject to the jurisdiction of this court pursuant to C.R.C.P. 251.1(b).

All factual allegations in the Complaints and Amended Complaints set forth below were deemed admitted by the entry of default, and are therefore established by clear and convincing evidence.

Case No. 01PDJ054

Claim One: the Perry Matter

On August 12, 1998, Jay and Randi Perry (the "Perrys") retained Lenahan to file an offer in compromise with the IRS to resolve a tax problem. The Perrys paid Lenahan $1,500 for his representation. When the Per-rys continued to receive demand letters from the IRS after they retained Lenahan, he told them to disregard them and said he had spoken to someone at the IRS to resolve their tax problem. On February 24, 1999, the Perrys paid an additional $1,500 to Lena-han. A year after they had first contacted Lenahan, the Perrys were informed by the IRS that their assets could be seized due to their failure to resolve the pending taxes owed to the IRS. When the Perrys informed Lenahan what the IRS had said, he reprimanded them for talking directly to the IRS. In February 2000, the IRS told the Perrys that they intended to start collection proceedings against them unless an offer in compromise was received within forty-five days, and informed the Perrys that Lenahan had not contacted the IRS. After the Perrys demanded an explanation from Lenahan, he contacted the IRS, but did not file an offer in compromise. Thereafter, the Perrys heard nothing from Lenahan and, in April 2000, the IRS garnished the Perrys' bank account and seized $1,300. Since April 2000, the Perrys have had no communication from Lenahan despite their efforts to contact him. On October 25, 2000, the Perrys wrote to Lenahan demanding that he return their $3,000. They have not received a refund.

Claim II: the Petras Matter

Wayne Petras and his wife (the "Petras-es") hired Lenahan in the summer of 1996 to resolve their state and federal tax problems and paid him $1,400, the amount he request ed. Since 1996 the Petrases have left numerous messages for Lenahan, and he would cceasionally over the years return their calls and state that he was working on their case. Lenahan did not negotiate an offer in compromise for the Petrases with the IRS or with the State of Colorado; in fact, he performed no legal work for them. In April 2000, the State of Colorado garnished the Petrases' bank account for non-payment of the taxes. Thereafter, the Petrases hired other counsel.

The last communication the Petrases had with Lenahan was in April 2000 following the garnishment of their bank account. They demanded a refund of the $1,400 they had paid him in 1996, and Lenahan stated he would refund the money. Thereafter, they never heard from him again and did not receive a refund. When the Petrases attempted to contact him, his telephone numbers had been disconnected. The Petrases terminated Lengahan's representation by letter dated October 26, 2000.

Claim III: The Goodhead Matter

Brian Goodhead ("Goodhead"), who was suffering from chronic life-threatening conditions, wanted to resolve a tax problem before his demise. In June 1997, Goodhead met with Lenahan regarding the personal and business withholding taxes and penalties he owed the IRS. Goodhead and Lenahan entered into a contract for legal services. Lena-han stated to Goodhead that he would resolve the tax problem by negotiating an offer in compromise with the IRS in exchange for a fee of $2,400. Goodhead borrowed $2,400 from his life insurance policy and paid the full amount to Lenahan on June 24, 1997. Goodhead provided Lenahan with his original tax returns from 1985 through 1988.

Thereafter, Goodhead called Lenghan every few months to inquire about the status of his offer in compromise. Lenahan initially told Goodhead that the negotiation was progressing with the IRS, and later said that the offer in compromise was in "limbo" at the IRS due to a lawsuit. Goodhead repeatedly asked for copies of documents that Lenahan had provided to the IRS but never received them.

In late 1998, Lenahan told Goodhead that he had offered the IRS $4,000 to settle the tax matter but that the offer was still in limbo. Goodhead again asked for copies of documents but never received them. On March 10, 1999, Lenahan wrote to Goodhead stating that due to a recent tax reform, the IRS was increasing the percentage of offers in compromise it accepted. On March 28, 1999, Goodhead met with Lenahan's business partner who informed him that Lenahan had left his law practice and taken numerous client files with him. Goodhead made many attempts to find Lenahan without success; his telephone numbers had been disconnect ed and Lenahan had no current address.

On June 9, 2000, three years after Good-head had paid the advance fee and after he had contacted the Office of Attorney Regulation Counsel, Lenahan called Goodhead and stated that he had filed an offer in compromise with the IRS but that another offer needed to be filed because of the change in tax law. Lenahan told Goodhead that if he filled out an offer in compromise he would earn the fee Goodhead had paid him. A few days later, Goodhead received an envelope in the mail from Lenahan which contained a blank offer in compromise form with no correspondence and no explanation.

On October 81, 2000, Goodhead demanded in writing that Lenahan provide him with an accounting and refund the money he was paid. Lenahan has never responded to Goodhead, has not provided an accounting, and has not provided a refund. Goodhead never received his original documents and file.

Claim IV: The Kandt Matter

On August 6, 1998, Diane Kandt and her husband (the "Kandts") retained Lenahan to resolve a serious tax problem. They signed a fee agreement and paid an initial $1,500 requested by Lenahan with the agreement to pay an additional $1,500 when Lenahan submitted the offer in compromise to the IRS. Thereafter, the Kandts attempted to contact Lenahan many times. On one occasion, Len-ahan told the Kandts that he was talking to the IRS about their offer in compromise and that he had forwarded all the necessary documents to the IRS. The Kandts never received any copies of documents that indicated Lenahan had filed an offer in compromise with the IRS or had performed any other work. In September 1999, Lenahan told the Kandts that the IRS was temporarily not considering offers in compromise. Beginning in January 2000, the Kandts called Len-ahan nearly every day for a period of several months, but Lenahan did not return their calls. The Kandts gave up trying to reach Lenahan and retained other counsel. They were informed by the IRS that Lenahan did not submit any documents on their behalf. Lenahan has not refunded the funds paid to him by the Kandts nor has he provided their file to them.

Claim V;: the Topliss Matter

James Topliss ("Topliss") hired Lenahan to resolve a tax dispute for him, and entered into a fee agreement on May 22, 1998. Len-aban requested and Topliss faid $1,500 for Lenahan's services the same day. Subsequent to their initial meeting, Topliss never received any telephone calls or correspondence from Lenahan. Both Topliss and his attorney wrote letters to Lenahan on three separate occasions requesting information regarding the status of the matter and demanding Lenahan refund his money. Lena-han did not respond, and has not refunded the client's funds.

Claim VI: The Bullen Matter

Mr. Bullen ("Bullen") sought tax advice from Lenahan and his business associate. He signed a fee agreement and paid Lenahan $1,500 to resolve his tax problem. After meeting with Lenahan in June, 1998, Bullen has had no contact with Lenahan for over two years. Lenahan has not responded to Bullen's phone messages. Bullen entrusted Lenahan with original documents which have not been returned to him. On November 1, 2000, Bullen wrote to Lenahan and demanded an accounting, a refund of his $1,500 payment, and his documents. Lenahan has not returned the funds, has not provided an accounting and has not returned any of Bul-len's original documents.

Claim VII (sic VIII): the Blanchette Matter

Michael Blanchette ("Blanchette") hired Lenahan to resolve an income tax problem and executed a fee agreement with Lenahan. Lenahan requested and Blanchette paid $3,000 on September 28, 1998. After several months, when Blanchette called Lenahan to inquire about the status of his case, Lenahan told him that his case was on hold because the IRS was undergoing internal changes. In the spring of 1999, Lenahan told Blan-chette that his offer in compromise had been submitted to the IRS and that Lenahan was waiting for a revenue officer to be assigned. At the time Lenahan uttered this statement it was false: he had not submitted the offer in compromise to the IRS.

In August 1999, Lenahan told Blanchette that he had a verbal acceptance of an offer in compromise from the IRS and that Blan-chette would be contacted by the IRS in writing to confirm the offer. Lenahan's statement was false; at the time he uttered it he had not prepared or filed the offer in compromise nor did he have a verbal acceptance of the offer in compromise. When several months passed and Blanchette did not hear from the IRS, he questioned Lena-han, who told him that he had not heard from the IRS because the agent assigned to his case was on medical leave but that written confirmation and acceptance of his offer in compromise would be forthcoming. This was a false statement; at the time Lenahan uttered it he had not filed an offer in compromise with the IRS.

In December 1999, Blanchette contacted the IRS directly and was told that they had no file or pending offer in compromise. Blanchette confronted Lenahan with the information and Lenahan stated that he had submitted the documents but that the IRS had lost the file. Blanchette asked for proof and Lenahan was unable to provide it. Blan-chette threatened to sue Lenahan for his failure to perform the requested legal work. In December 1999, Lenahan requested Blan-chette sign a form offer in compromise, and stated that he would submit the offer immediately. Lenahan submitted the offer in compromise to the IRS in December 1999. Blanchette spoke with Lenahan in February 2000 and thereafter Lenahan refused to take Blanchette's calls or communicate with him in any other manner.

Case No. 01PDJ060

The Pfeifer Matter

On July 20, 1998 Rick Pfeifer ("Pfeifer") retained Lenahan to resolve a tax problem arising from Pfeifer's failing to pay or being delinquent in paying income tax over a twenty year period. Lenahan advised Pfeifer that he could resolve the problem by preparing and negotiating offers in compromise with the Internal Revenue Service ("IRS") and with the state. Pfeifer signed a fee agreement which required a fee of $3,000 to perform the legal work, and paid $1,500 to Lenahan at the same time. The additional $1,500 was due when the offer in compromise was submitted to the tax authorities. Lena-han's hourly rate on the fee agreement was $145 per hour. Pfeifer gave Lenahan all of his tax records.

Thereafter, Pfeifer spoke to Lenahan twice. Both times, Lenahan told him that the IRS was in a lawsuit and was not processing offers in compromise. In early March 1999, Pfeifer received a letter from Lenahan which stated that all offers in compromise were in limbo with the IRS, that the IRS was only beginning to process them, and that Lenahan still had not prepared the offer in compromise for Pfeifer. After Pfeifer discussed the matter again with Lenahan at his office in March 1999, Pfeifer never heard from Lenahan again. Lenahan did not prepare the documents he had agreed to prepare in July 1998. Neither the IRS nor the state ever received any documentation from Lenahan, and the state pursued Pfeifer. When the state attempted to contact Lena-han, he was no longer at his business number.

Pfeifer attempted to contact Lenahan but has not been able to reach him. Lenahan continues to retain possession of Pfeifer's tax records and funds. Lenahan met with Pfeifer for a one hour initial consultation, prepared and sent him a letter to him and had two very short conversations with him. The total amount of work did not exceed three hours. Lenahan earned only $485 of the $1,500 paid to him. Pfeifer wrote to Lena-han and demanded a refund.

II. CONCLUSIONS OF LAW

The facts deemed admitted and the violations deemed established by the entry of default sustain a finding that in seven separate cases (Perry, Petras, Goodhead, Kandt, Topliss, Bullen and Pfeifer) Lenahan accepted clients' funds, failed to perform the services for which he was hired, and failed to refund the funds to the clients when they requested he do so. Lenahan's accepting the clients' funds, failing to perform the services he was hired to perform, failing to refund the unearned portion of the funds to his clients, while knowing that he had not performed the services for which the funds were paid is sufficient evidence to conclude that Lenahan knowingly converted his clients' funds in violation of Col® RPC 8 A(c)(engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation). See People v. Varallo, 913 P.2d 1, 11 (Colo.1996)(holding that knowing misappropriation ... consists simply of a lawyer taking a client's money entrusted to him, knowing that it is the client's money and knowing that the client has not authorized the taking, citing In re Noonan, 102 N.J. 157, 160, 506 A.2d 722 (1986)). See also People v. Silvola, 915 P.2d 1281, 1284 (Colo.1996)((finding that misconduct that occurred over an extended period of time must be deemed to be willful).

In the Petras matter, Lenahan represented to the client that he would return the funds paid to him, which was a false statement when uttered in violation of Colo. RPC 8.4(c)(engaging in conduct involving dishonesty, deceit, fraud or misrepresentation). In the Blanchette matter, Lenahan informed the client that he had submitted an offer in compromise to the IRS when he had not, that the IRS had made a verbal acceptance of the offer when it did not, and that the delay in resolving the matter was due to the IRS having lost the client's file when in fact the IRS never acquired the file from Lenahan. Each of the statements were false when uttered and Lengahan knew them to be false, constituting three separate violations of Colo. RPC 8 4(c).

In each of the eight cases giving rise to this proceeding, Lenahan failed to communicate adequately with the clients despite the clients' repeated attempts to learn the status of their cases in violation of Colo. RPC 1.4(a)(an attorney shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information). In each of the eight cases, Lenahan severely neglected the clients' matters over an extended period of time in violation of Colo. RPC 1.8(an attorney shall act with reasonable diligence and promptuess in representing a client). In seven of the eight cases (Perry, Petras, Good-head, Kandt, Topliss, Bullen and Pfeifer) the extent of Lenahan's neglect rose to the level of abandonment. To find abandonment rather than merely neglect, there must be proof that the attorney-during a given time period-was required to accomplish specific professional tasks for the client, failed to accomplish those tasks, and failed to communicate with the client. People v. Carvell, No. 99PDJ096, slip op. at p. 9 (Colo. PDJ September 11, 2000), 2000 Colo. Discipl. LEXIS 26. The proof must objectively indicate that the attorney has deserted, rejected and/or relinquished the professional responsibilities owed to the client. Id. The totality of facts establish that Lenahan deserted, rejected and/or relinquished the professional responsibilities owed to theses seven clients and thereby abandoned them.

In six separate matters (Perry, Petras, Goodhead, Kandt, Bullen and Pfeifer) Lena-han failed to take steps reasonably necessary to protect the clients' interests by returning the files to the clients following their termination of his representation in violation of Colo. RPC 1.16(d)(an attorney shall, upon termination of representation, take steps to the extent reasonably practicable to protect a client's interests, including ... refunding any advance payment of any fee not earned). In several cases, the documents Lenahan failed to return included original tax documents.

III IMPOSITION OF SANCTION

The seven incidents of knowing conversion are sufficient to warrant disbarment. See Varallo, 913 P.2d at 11. The sanction of disbarment is also warranted for knowing conversion coupled with the seven incidents of abandonment of clients. See People v. Wallace, 936 P.2d 1282, 1284 (Colo.1997) (disbarring lawyer who abandoned clients, causing them serious harm, and knowingly misappropriated client funds); People v. Townshend, 933 P2d 1327, 1329 (Colo.1997)(Iawyer disbarred who effectively abandoned two clients after accepting retainers and failing to account for or return the unearned retainers). See also ABA Standards for Imposing Lawyer Sanctions (1991 & Supp.1992) ("ABA Standards") 4.11 ("[dlisbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to a client"); ABA Standard 4.41(b)(disbarment is warranted when a lawyer knowingly fails to perform services for a client and causes serious or potentially serious injury to a client). The additional six incidents of Lena-han's violation of Colo. RPC 1.16(d) adds additional grounds for disbarment where, in the present case, Lenahan took possession of the original tax documents belonging to the clients and refused to return them after abandoning their legal matters. The withholding of the clients' original tax documentation evidences Lenahan's lack of professionalism. Lenahan exhibited no concern for the perilous position in which he placed his clients by failing to return critical documentation to them. Pursuant to ABA Standards 9.22 and 9.82 respectively, the Hearing Board considered aggravating and mitigating factors in arriving at the appropriate sance tion. In mitigation, Lenahan has had no prior discipline. See id. at 9.82(a). Lenahan also presented testimony of developing chronic clinical depression and significant alcohol dependency, both of which may be considered as mitigating factors pursuant to ABA Standards 9.82) (Supp.1992). However, the consideration of these conditions as mitigating factors has been confined to those situations where it is shown by medical evidence that the lawyer is affected by the disability, that the disability caused the misconduct, that the lawyer's recovery from the disorder is demonstrated by a meaningful period of successful rehabilitation, and that the recovery arrested the misconduct and its recurrence is unlikely. In re Egbune 971 P.2d 1065, 1073 (Colo.1999). Lenahan did not meet these requirements. Accordingly, neither Lenahan's claimed depression nor alcohol dependency cannot be considered by the Hearing Board as mitigating factors in arriving at the appropriate sanction. The facts deemed admitted in the Amended Complaints and Complaint in this consolidated matter establish several aggravating factors pursuant to ABA Standard 9.22. Lenahan had a dishonest or selfish motive, see id. at 9.22(b), he demonstrated a pattern of misconduct, see id. at 9.22(c); he engaged in multiple offenses, see id, at 9.22(d); he engaged in bad faith obstruction of the disciplinary proceeding, see id. at 9.22(e), and he demonstrated indifference to making restitution, see id. at 9.22(J). The Hearing Board noted that Lenahan's clients were vulnerable, most notably Mr. Goodhead, see id. at 9.22(h). At the conclusion of the hearing, Lenahan expressed remorse for his conduct and stated his belief that an order requiring him pay restitution to his clients was warranted.

IV. ORDER

It is therefore ORDERED:

1. THOMAS D. LENAHAN attorney registration number 25498 is DISBARRED from the practice of law effective thirty-one days from the date of this Order.
2. Lenahan is ordered to pay restitution within one year of the date of this Order with interest at the statutory rate from the date of this Order to:
A. Michael Blanchette in the amount of
$3,000; B. Wayne Petras in the amount of $1,400;
C. Diane Kandt in the amount of $1,500;
D. Mr. Bullen in the amount of $1,500;
E. The Client Protection Fund with regard to Brian Goodhead in the amount of $2,400;
F. The Client Protection Fund with regard to James Topliss in the amount of $1,500;
G. The Client Protection Fund with regard to Jay and Randi Perry in the amount of $3,000; and
H. The Client Protection Fund with regard to Rick Pfeifer in the amount of $1,500.
«8. Lenahan is Ordered to pay the costs of these proceedings; the People shall submit a Statement of Costs within ten (10) days of the date of this Order. Respondent shall have five (5) days thereafter to submit a response thereto.

      . The People filed a Petition for Immediate Suspension in Case No. O1PDJO17 on February 27, 2001. On April 5, 2001, the Supreme Court immediately suspended Lenahan's license to practice law.

      . The PDJ denied default on the alleged violation of Colo. RPC 8.4(c) in claim two, the Petras Matter, arising from respondent's alleged utterance of a false statement, which was thereafter dismissed.


author: KENNETH L. BUETTNER, Presiding Judge: CAROL M. HANSEN, C.J.,

text:
    2002 OK CIV APP 43
    PEZOLD, RICHEY, CARUSO AND BARKER, a Partnership of Professional Corporations, Plaintiff/Appellee, v. CHEROKEE NATION INDUSTRIES, INC., an Oklahoma Corporation, Defendant/Appellant. Cherokee Nation Enterprises, an Oklahoma Corporation, and Cherokee Nation, Defendants, v. Terry Barker, Third-Party Defendant.
    No. 95,867.
    Court of Civil Appeals of Oklahoma, Division No. 3.
    Oct. 12, 2001.
    Certiorari Denied March 14, 2002.
    Joel L. Wohlgemuth, Thomas M. Ladner, Norman Wohlemuth Chandler & Dowdell, Tulsa, OK, for Plaintiff/Appellee.
    Lloyd E. Cole, Jr., Ralph F. Keen, Jr., Stilwell, OK, Lee I. Levinson, Bodenhamer & Levinson, Tulsa, OK, for Defendant/Appellant.
   Opinion by

KENNETH L. BUETTNER, Presiding Judge:

. T1 This is an appeal of an attorney fee award under 12 0.8.1991 § 986. We find no abuse of discretion and affirm.

1 2 Plaintiff/ Appellee Pezold, Richey, Caruso & Barker (Law Firm) represented Defendant/Appellant Cherokee Nation Industries, Inc. (CNT) as plaintiff in a breach of contract lawsuit. Law Firm began its representation of CNI under an hourly-rate agreement, but, because CNI had difficulty paying the legal bills, the parties agreed to a contingent fee for work after October 1, 1996." The case settled and Law Firm received into its trust account settlement funds totaling $1,866,137.12.

T3 Law Firm withheld from the settlement proceeds a contingent fee of $699,801.42, $52,240.50 in costs including a finance charge of $6,097.50, $88,254.75 in previously billed but unpaid hourly fees, $1,542.40 in-other charges, and $59,163.53 for outstanding billings to other Cherokee Nation entities. On January 21, 1997, Law Firm distributed to CNI the sum of $972,067.75, which included the settlement balance of $965,134.52 as well as earned interest of $6,983.28. CNI retained other counsel and objected to the distribution on January 23, 1997. The following day, Law Firm filed this declaratory judgment action. CNI counterelaimed for rescission of the contingent fee agreement, breach of contract, and conversion. On February 14, 1997, Law Firm released to CNI under protest the $59,163.53 it had withheld for billings to other Cherokee Nation entities. CNI filed a separate action in another county for fraud and misrepresentation, and that action was consolidated with the declaratory judgment action.

4 After trial, the trial court granted judgment to Law Firm, declaring Law Firm was entitled to receive its hourly fees for legal services rendered to CNI through September 30, 1996. However, the trial court reduced the amount of such fees from $88,254.75 to $54,566.90 because Law Firm had increased its hourly billing rates without notifying CNI. The trial court denied CNU's counterclaims for fraud, breach of contract, undue influence, and rescission. The Court of Civil Appeals affirmed the trial court's judgment in Case No. 98,856.

15 Law Firm moved for attorney fees pursuant to 12 0.S8.1991 § 936, asserting it was the prevailing party on "claims to recover monies owed by CNI under the parties' legal services agreement." Law Firm maintained it had "received an affirmative judgment in the amount of $54,566.90." CNI objected, arguing Law Firm did not bring an action for the recovery of monetary damages related to labor 'and services rendered, but rather, as a trustee and holder of funds, brought. an equitable action seeking a declaration of the rights of the parties and construction of their fee agreement. The trial court ruled Law Firm "sought and recovered compensation for legal services rendered," and awarded it attorney fees of $294,706.00:

16 CNI seeks review of that order, contending the trial court erred in awarding fees under § 986 because Law Firm's action was not in the nature of a collection on an established debt, but an equitable action brought to determine entitlement to un-dis-bursed trust funds. It argues Law Firm did not receive a damages judgment against CNI, but instead received an equitable declaration by the trial court determining Law Firm's rights and entitlement to the remaining funds in its trust account. CNI contends there was never a failure to pay the amounts claimed by Law Firm, and Law Firm had the money in its possession and control at all times. CNI points out the trial court had earlier ruled the paramount issues in the case were equitable, and tried the case to an advisory jury.

T7 Law Firm argues it not only sought a money judgment for unpaid fees and damages of $88,254.75 for breach of contract, but it also defended CNTs effort to have the contingent fee agreement voided. The amount at issue with respect to the contingent fee agreement was $699,801.42. It contends the recovery of attorney fees is authorized by § 986 because the underlying nature of its suit was one for labor or services.

18 Attorney fees are not available under § 936 merely because a suit involves a contract relating to labor or services; the suit must be "brought for labor and services." Russell v. Flanagan, 1975 OK 173, 544 P.2d 510, 512. A suit is brought for labor and services if "the damages arose directly from the rendition of labor or services, such as a failure to pay for those services." Burrows Const. Co. v. Indep. School Dist. No. 2 of Stephens Co., 1985 OK 57, 704 P.2d 1136, 1188. The court must look to the underlying nature of the suit to determine the applicability of § 936, Id.

19 The underlying nature of the instant case was the recovery of attorney fees. The judgment entered by the trial court included a finding that Law Firm was "entitled to recover from CNI the amount of $54,566.90 for unpaid hourly fees under the oral agreement of the parties." In addition, the trial court entered judgment in favor of Law Firm on CNI's effort to void the contingent fee agreement and recover the $699,801.42 paid thereunder. As a result, both actions come within the literal terms of § 986. The fact that the money was held in a trust account pending judicial decision is immaterial. Likewise, it is irrelevant that the action to recover for services rendered was denominated equitable rather than legal in nature.

$10 CNI also appeals the amount of the attorneys fee award raising three issues. The first issue is that the trial court awarded fees of $200 an hour for Mr. Wohlemuth's time and $150 an hour for Mr. Ladner's time. The evidence presented by Law Firm was that these rates were fair and reasonable in the community. CNI did not dispute that fact, but argued that Law Firm should be limited by lower hourly rates previously agreed upon with the insurance company paying the fees ($110 and $100 an hour respectively).

T11 In accordance with State ex rel. Burk v. Oklahoma City, 1979 OK 115, 598 P.2d 659, the trial court initially determines hourly compensation by multiplying hours times rate. These factors are determined by evidence submitted to the court. The hourly rate is based upon standards in the local legal community. Green Bay Packaging v. Preferred Packaging, 1996 OK 121, 932 P.2d 1091, 1100. This time and labor amount may then be adjusted by other Burk factors. One of those factors is "the customary fees" in similar cases.

12 In this case, Law Firm had negotiated a reduced hourly rate with the insurance company paying its fees. While this fact may be taken into account by the trial court, there is no abuse of discretion in awarding the full value of the attorneys' time based upon standard rates in the community. Such an award is not an "enhanced fee" as argued by CNI. A party required to pay attorneys fees under a prevailing party attorney fee statute is not necessarily entitled to the benefit of a special contract between attorney and client.

113 The second issue argued by CNI is that the trial court awarded a duplicate amount of $8,251.25 which had previously been awarded as a discovery sanction against the Cherokee Nation. However, the Cherokee Nation was not required to pay the fees because of sovereign immunity. See September 7, 2000 Opinion in Case No. 94,054. CNI does not dispute that the fees were incurred by Law Firm. The fact that Law Firm sought payment for this work from two different sources is not the critical factor. There was no recovery from the Cherokee Nation:; so there was no abuse of discretion in including this work in the award to Law Firm.

114 The third argument is that the $294,706.00 fee award was disproportionate to the amount in controversy. The initial claim by Law Firm was for $88,256.75. CNI counterclaimed and put in issue the $699,801.42 contingent fee. It is the underlying nature of the suit that determines whether § 986 is applicable. Burrows Construction Co. v. Independent School District, 1985 OK 57, 704 P.2d 1136, 1137. The underlying issue in this case was how much CNI owed Law Firm for its legal services. The claims directly related to the rendition of labor or services: the failure to pay for the services and the effort to recover money paid for services. Under these facts, § 986 applied to the entire proceeding.

1 15 We do not find that an attorney fee of $292,949.50 is so disproportionate to the total amount in controversy, $788,058.17, or the results obtained, $754,868.32, to result in an abuse of discretion.

16 The trial court had before it evidence relating to the relevant Burk factors. CNI has failed to demonstrate an abuse of discretion by the trial court. The award of attorneys fees is AFFIRMED.

€ 17 GARRETT, J., concurs.

18 HANSEN, C.J., dissents with separate opinion.

CAROL M. HANSEN, C.J.,

dissenting:

T1 Attorney fees are not available under § 936 in equitable matters. Puckett v. Cornelson, 1995 OK CIV APP, 72, 897 P.2d 1154, 1157. This action is equitable in nature (law of the case appeal No. 93,856). Thus, attorney fees are not available in this action. I therefore dissent.

{2 Without explanation, the majority declares it irrelevant to the determination of the underlying nature of the instant case that in the previous appeal this action was denominated equitable rather than legal in nature. Although CNI was denied a jury trial below, the majority now declares this action to have been to recover attorney fees for services rendered. This holding is inconsistent with prior case law and with this Court's opinion filed January 26, 2001, in the previous appeal arising from this case.

3 The Oklahoma Supreme Court has consistently rejected attorney fees under § 986 in matters related to contracts for labor or services where the plaintiff did not seek damages directly arising from the rendition of labor or services. See, e.g., Russell v. Flanagan, 1975 OK 173, 544 P.2d 510, 512 (suit for breach of warranty of work performed under contract), and Burrows Const. Co. v. Indep. School Dist. No. 2 of Stephens Co., 1985 OK 57, 704 P.2d 1136, 1138 (suit for lost profits flowing from breach of contract). In those cases where the plaintiff sued to recover payment directly for labor or services, the Oklahoma Supreme Court has allowed attorney fees under $ 986. See, e.g., Doyle v. Kelly, 1990 OK 119, 801 P.2d 717 (breach of insurance agent's commission agreement).

14 An action to recover for labor or services rendered, for which attorney fees are available under $ 986, constitutes a claim at law. Puckett v. Cornelson, 1995 OK CIV APP 72, 897 P.2d 1154, 1157. In such a case, the parties are entitled to a jury trial. Okla. Const. Art. 2, § 19, and Okmulgee Producing & Refining Co. v. Wolf, 1923 OK 57, 212 P. 415, 416, 88 Okla. 188. On the other hand, trusts are within the exclusive jurisdiction of courts of equity to administer, Childers v. Breese, 1949 OK 201, 202 Okla. 377, 213 P.2d 565, 568, and a trustee in the administration of a trust is subject to the supervision of a court of equity, Evans v. First Nat. Bank of Stillwater, 1944 OK 53, 193 Okla. 665, 146 P.2d 111, 113. Attorney fees are not available under § 986 in equitable matters. Puckett, 897 P.2d at 1157.

15 In Puckett, the Court dealt with the application of § 986 when a case involves both legal and equitable matters. The plaintiff sued the corporate defendant to recover consulting fees. He also sued a corporate shareholder, seeking to pierce the corporate veil and impose personal liability on the shareholder for his consulting fees. The trial court granted judgment against the corporation but denied the plaintiff's claim against the shareholder. It then granted attorney fees to the shareholder under § 986. In reversing the trial court's award, Judge Joplin stated,

An action to recover for labor or services rendered constitutes a claim at law, while an action against a corporate officer or shareholder to recover on a corporate debt stands purely in equity.... While the trial court granted judgment to [plaintiff] on his legal claim for labor and services rendered against [corporation], the trial court granted judgment to [shareholder] on [plaintiff's] equitable claim to impose liability for the corporate debt on [shareholder] individually, and we find no authority authorizing an equitable award of attorney fees absent evidence of clearly wanton, vexatious, malicious or other like egregious conduct.... [Wle therefore conclude the trial court erred in granting attorney fees to [shareholder] as prevailing party on [plaintiff's] equitable claim.

Puckett, 897 P.2d at 1157 (citations omitted).

16 The underlying nature of the instant case was litigated in the previous appeal, Case No. 98856. CNI sought a jury trial below. The trial court denied its demand. The Court of Civil Appeals affirmed, holding CNI was not entitled to a jury trial because the action was equitable in nature. The Court applied an equitable standard of review to the trial court's fact findings. "When an appellate court rules on an issue, that ruling becomes the law-of-the-case and controls all subsequent proceedings in the action which will not be reversed on appeal." Gay v. Hartford Underwriters Ins. Co., 1995 OK 97, ¶ 18, 904 P.2d 83, 88.

17 Had Law Firm sought a judgment for damages arising from CNU's failure to pay for its services, CNI would have been entitled to a jury trial. Law Firm did not seek and did not receive such a judgment. Instead, it sought and received a judgment declaring its rights in disputed client funds it held in trust as the client's fiduciary. Law Firm did not sue to recover payment of fees; rather, it already had the funds in its possession and sought the court's direction as to disbursal of the funds. Such an action is not a civil action to recover payment for labor or services within the scope of § 986. Accordingly, I would reverse the trial court's order awarding attorney fees to Law Firm.

      . The dissent relies solely on Puckett v. Comnel-son, 1995 OK CIV APP 72, 897 P.2d 1154, for the assertion that a claim for legal services is a claim at law, and that an action, equitable in nature, cannot support recovery of attorney fees under § 936. Puckett contains no such broad propositions of law. We agree that the equitable action asserted in Puckett, action to recover from corporation officer or shareholder for a corporate debt, will not support § 936 attorney fees. In the instant declaratory judgment action, Law Firm sought to directly recover for its services. The issues were (1) interpretation of the contingent fee agreement, ie., whether previously billed amounts were due, and (2) whether CNI could rescind the contingent fee agreement. As a result, there were no issues triable by a jury, and the case could properly be called an equitable action.

      . For example, no one would suggest that no fee is payable where the attorney agrees to represent a client on a pro bono basis.

      . Although attorney fees are available in breach of trust cases, 60 O.$.Supp.1999 § 175.57(D), this case involves no allegations Law Firm caused injury to the trust res; therefore, that section is not applicable here.