author: PER CURIAM.

text:
    In the Matter of Disciplinary Proceedings Against Michael D. Mandelman, Attorney at Law: Office of Lawyer Regulation, Complainant-Respondent-Cross-Appellant, v. Michael D. Mandelman, Respondent-Appellant-Cross-Respondent.
    Supreme Court

      Nos. 2003AP3348-D & 2004AP2633-D.

      Oral argument April 6, 2006.

    Decided May 17, 2006.

    2006 WI 45
    (Also reported in 714 N.W.2d 512.)

      For the respondent-appellant-cross-respondent there were briefs by Daniel W. Hildebrand and DeWitt Ross & Stevens S.C., Madison, and oral argument by Daniel W. Hildebrand.

    For the complainant-respondent-cross-appellant, there were briefs by Robert G. Krohn and Roethe Krohn Pope LLP, Edgerton, and oral argument by Robert G. Krohn.

   PER CURIAM.

¶ 1. Attorney Michael D. Mandel-man has appealed that portion of a referee's report finding that the Office of Lawyer Regulation (OLR) proved by clear, satisfactory, and convincing evidence that Attorney Mandelman engaged in misconduct with respect to his representation of five clients. The OLR has cross-appealed the referee's findings and conclusion with respect to one of the counts as to which the referee found the OLR had not met its burden of proof.

¶ 2. We conclude that all of the referee’s findings of fact, including those challenged by the OLR, are supported by satisfactory and convincing evidence. We also agree with the referee's conclusions of law that Attorney Mandelman engaged in professional misconduct. We further agree with the referee that a nine-month suspension of Attorney Mandelman's license to practice law is appropriate, and we also find it appropriate that Attorney Mandelman pay the full costs of the proceeding, which total $37,088.08 as of April 19, 2006.

¶ 3. Attorney Mandelman was admitted to practice law in Wisconsin in 1980 and practices in Milwaukee. In 1990 he received a one-year suspension for misconduct consisting of 27 violations of attorney ethics rules, including repeated neglect of client matters, failure to return client funds promptly, contacting persons injured in an auto accident to obtain professional employment and representing multiple clients with adverse interests, settling a client's claim without authorization, misrepresenting to the Board of Attorneys Professional Responsibility (BAPR) (the predecessor to the OLR) work he had performed on a client's behalf, attempting to limit his potential malpractice liability to a client, failing to communicate with clients, compensating persons to recommend his employment or as a reward for employment recommendation, failing to responsibly manage his client trust account, and failing to cooperate with the BAPR in its investigation of client grievances. See In re Disciplinary Proceedings Against Mandelman, 158 Wis. 2d 1, 460 N.W.2d 749 (1990).

¶ 4. In 1994 Attorney Mandelman received an 18-month suspension, consecutive to the termination of the earlier suspension. When the first suspension period ended, Attorney Mandelman petitioned for reinstatement of his license. This court denied the petition on two grounds. First, it found that while the first suspension was pending, additional professional misconduct was discovered, including post-suspension violation of the rules governing the handling of Attorney Mandelman's client trust account. Second, this court found that during the reinstatement proceeding itself, Attorney Mandelman gave incomplete and evasive responses to the district committee and to BAPR. See In re Disciplinary Proceedings Against Mandelman, 182 Wis. 2d 583, 514 N.W.2d 11 (1994).

¶ 5. In 1999 Attorney Mandelman consented to the imposition of a private reprimand for misconduct consisting of indicating in pleadings that he represented a client when in fact he did not represent the client, thereby knowingly making a false statement of fact to a tribunal.

¶ 6. On December 12, 2003, the OLR filed a complaint alleging 13 counts of misconduct. As will be discussed in further detail herein, the misconduct alleged in the OLR's December 2003 complaint is closely related to the misconduct at issue in a previous disciplinary proceeding involving Attorney Mandelman's partner, Jeffrey A. Reitz, which resulted in this court's suspending Attorney Reitz's license to practice law for five months. See In re Disciplinary Proceedings Against Reitz, 2005 WI 39, 279 Wis. 2d 550, 694 N.W.2d 894.

¶ 7. The first client matter detailed in the OLR's complaint involved Attorney Mandelman's representation of N.C. In March 1998 N.C. met with Attorney Mandelman to discuss a potential malpractice case against her former attorney, John Dade, who had represented N.C. in a custody dispute in 1995. N.C. told Attorney Mandelman she had lost custody of her child due to Attorney Dade's negligence. Attorney Mandel-man verbally agreed to represent N.C. in a malpractice action against Dade for a contingent fee of one-third of any recovery. N.C. testified she did not sign a contingent fee agreement. Attorney Mandelman said while he always had written fee agreements in contingency matters and that he never forgot to sign one in any case, he could not produce a written fee contract with N.C.

¶ 8. In June 1998 Attorney Mandelman filed a lawsuit against Dade in Jefferson County Circuit Court and in Walworth County Circuit Court. The Jefferson County case was ultimately dismissed.

¶ 9. Attorney Mandelman also agreed to represent N.C. in filing a petition to reopen a custody dispute between N.C. and her child's father. The agreed fee for those services was $275 per hour. In September 1998 N.C. gave Attorney Mandelman a $3000 check as an advance in the custody matter. Attorney Mandelman deposited this check into his business account. At the time the check was deposited Attorney Mandelman had worked 6.5 hours in the custody matter, for which N.C. owed him $1787.50.

¶ 10. In February 1999 N.C. wrote to Attorney Mandelman saying she had lost faith in his representation and discharged him in the custody case. Despite having received N.C.'s discharge by fax, Attorney Man-delman continued to work on the case.

¶ 11. On March 1, 1999, Attorney Mandelman became law partners with Reitz, forming Reitz & Man-delman, LLC. Attorney Reitz had extensive experience preparing cases for trial, but had limited trial experience so his role in the new firm was to prepare cases for trial, while Attorney Mandelman's role was to handle settlement negotiations, depositions, and trials.

¶ 12. On April 5, 1999, N.C. wrote to Attorney Mandelman advising him that she had retained new counsel in the custody case and requesting that he immediately refund the $3000 she had paid him. Beginning on April 14, 1999, and on several occasions thereafter, N.C. sent communications to Attorney Mandel-man asking for an itemized bill in the custody matter and also asking for a refund of her retainer.

¶ 13. On April 15, 1999, Reitz sent N.C. a letter advising that he would be her attorney in the malpractice case and that he would consult with Attorney Mandelman, whose function would be to handle court appearances and litigation.

¶ 14. On May 11, 1999, Dade's attorney sent Attorney Mandelman a first set of interrogatories and a request for production of documents, which requested answers within 30 days. Reitz requested various extensions of time to respond. On July 2, 1999, Dade's attorney informed Reitz that if a response to discovery was not received by July 12, 1999, he would seek sanctions, including dismissal of N.C.'s case.

¶ 15. By July 16, 1999, Reitz mailed N.C.'s signed interrogatories to Dade's attorney. Although N.C. had signed the document it was not notarized as required by Wis. Stat. § 804.08(l)(b)(1999-2000). In addition, Reitz failed to respond to the request for production of documents.

¶ 16. On July 23, 1999, Dade's counsel filed a motion for dismissal of N.C.'s case based on her failure to respond to the discovery request. That motion was heard on August 19, 1999. The trial court denied the motion to dismiss, sanctioned N.C. for her discovery violations, and ordered that full and fair responses to Dade's first discovery be provided by August 30, 1999.

¶ 17. On or about August 30, 1999, Reitz responded to the first discovery request and forwarded the documents to Dade's counsel. Throughout the fall of 1999 N.C. wrote to Reitz requesting a refund of the fees she had paid in the custody matter.

¶ 18. On October 27, 1999, N.C. wrote to Reitz confirming an October 25 conversation regarding settlement discussions. N.C. said she did not want to settle the malpractice case, and she asked about taking depositions. On November 5, 1999, Dade's counsel wrote to Reitz asking that he adequately identify the experts he intended to call as witnesses by November 10. Reitz failed to respond to the letter.

¶ 19. On November 15,1999, Reitz filed a motion to withdraw as N.C.'s attorney. On November 24 Dade's counsel filed a letter objecting to Reitz's motion to withdraw, citing various discovery violations and failure to name experts.

¶ 20. Following additional requests from N.C., Re-itz ultimately, on December 8, 1999, sent N.C. the balance of the $3000 attorney fees she had paid in the custody matter.

¶ 21. On December 10, 1999, the trial court denied Reitz's motion to withdraw in the malpractice case. On December 13 Dade's counsel again requested names of potential experts and set a deadline of December 17, 1999, for Reitz to provide them. Reitz failed to respond. On January 4, 2000, Dade's counsel filed a motion for dismissal for failure to follow court orders and for failure to file the necessary expert opinions. A hearing was scheduled on the motion for January 18, 2000.

¶ 22. Reitz scheduled a deposition of Dade to be conducted on the afternoon of January 14, 2000, at the Reitz & Mandelman law office. Attorney Mandelman normally conducted all depositions in cases handled by the firm, but he agreed to conduct Dade's deposition only if N.C. stated in writing that she had been satisfied with Attorney Mandelman's work and that she had specifically requested Attorney Mandelman to conduct the deposition. Shortly before the deposition was to begin, Reitz met with N.C. and had her sign the following document:

RELEASE OF MICHAEL MANDELMAN

I, N.C., understand that Michael Mandelman has not recently been working on my case against John Dade and has agreed to do the deposition of John Dade January 14, 2000, only on condition that this release, waiver and authorization is executed. I am providing Mr. Mandelman with information regarding my case this date and with questions that I wish him to ask of John Dade at the deposition. I hereby authorize Mr. Mandel-man to conduct this deposition and release Michael D. Mandelman from any claims that I may have against him for whatever reason relating to any matters that he has worked on for me, hereby waiving the same..[sic] I have at this time no intention of filing any complaint, grievance, lawsuit or any other action with anybody against Michael D. Mandelman. I wish for Michael D. Mandelman to conduct this deposition of John Dade understand that this statement is necessary so that he can can [sic] proceed with my claim with the confidence necessary that he has my support in this matter.

¶ 23. Reitz informed N.C. that if she did not sign the document the deposition would not occur and N.C. would lose the case. Neither Attorney Mandelman nor Reitz advised N.C. in writing to obtain independent representation before signing the release. After N.C. signed the release, Attorney Mandelman conducted Dade's deposition.

¶ 24. In January 2000 there were unsuccessful settlement negotiations in the malpractice case. On the date of Dade's hearing on the motion to dismiss Reitz filed a brief in opposition to the motion, arguing that N.C.'s failure to submit summaries of her experts' opinions did not violate the scheduling order because she had no experts to testify on her behalf. The motion asked that N.C. be allowed to proceed without an expert witness.

¶ 25. Following the hearing, the trial court issued an order dismissing the case. The court found that N.C. could not succeed in proving the case without an expert witness, and she had failed to identify any expert who was willing to testify that Dade had been negligent. The court dismissed the case with prejudice and awarded costs in favor of Dade. N.C. subsequently agreed to waive the right to appeal the trial court's decision. In return Dade agreed to waive his counsel's costs and any unpaid legal fees that N.C. still owed to him.

¶ 26. The OLR's complaint alleged the following counts of misconduct with respect to his representation of N.C.:

COUNT ONE — By failing to provide N.C. with a written fee agreement for the malpractice representation, Mandelman charged a contingent fee without a written fee agreement, in violation of SCR 20:l.5(c).
COUNT TWO — By failing to deposit into his trust account the $3,000.00 check from N.C., Mandelman failed to hold in trust, separate from his own property an advance fee, in violation of former SCR 20:1.15(a).
COUNT THREE — By failing to file a petition to reopen N.C.'s custody matter and by failing to pursue N.C.'s malpractice action against Dade in a timely manner, Mandelman failed to act with reasonable diligence and promptness in representing a client, in violation of SCR 20:1.3.
COUNT FOUR — By continuing work on N.C.'s custody matter after she had discharged him, Mandelman failed to withdraw from the representation, in violation of SCR 20:1.16(a)(3).
COUNT FIVE — By failing to respond to N.C.'s requests for an accounting of her $3,000.00 payment to him, Mandelman failed to render a full accounting regarding property in his possession, in violation of former SCR 20:1.15(b).
COUNT SIX — By participating in having N.C. sign a document entitled "Release of Michael Mandelman" in which N.C. agreed to release Mandelman from any claims that she had against him, Mandelman made an agreement prospectively limiting his liability to a client who was not independently represented by counsel, in violation of SCR 20:1.8(h).

¶ 27. Another client matter detailed in the OLR's complaint involved Attorney Mandelman's representation of C.K., who sustained severe injuries in July 1998 when his motorcycle was forced off the road by a pickup truck. In late January 1999 C.K. retained Attorney Mandelman to represent him in a claim against German-town Mutual, the insurer of the pickup truck's driver.

¶ 28. In February and March 1999 Attorney Man-delman sought copies of C.K.'s medical records and bills from various treatment providers, along with wage loss verification. When Reitz became partners with Attorney Mandelman the C.K. file was assigned to Reitz. Between March 1999 and July 2000 Reitz performed certain legal services on behalf of C.K., including obtaining copies of treatment records and billings and engaging in settlement negotiations with Germantown Mutual.

¶ 29. In late July 2000 C.K. was frustrated about the slow pace of negotiations and told Attorney Man-delman in a phone conversation that he wanted a lawsuit to be commenced. On July 31, 2000, Attorney Mandelman wrote to C.K. and advised him he "would do everything possible to expedite this matter."

¶ 30. In November 2000 a $12,000 settlement offer was made to C.K. The offer was not accepted. Over the next six or seven weeks, settlement negotiations continued until Germantown Mutual reduced its settlement offer to $8000. That offer was refused on February 7, 2001.

¶ 31. C.K. was being pursued for payment of medical bills by a number of health care providers, including General Clinic, which served C.K. with a summons to appear in court on January 16, 2001. C.K. faxed the summons to Reitz and was assured that Reitz would take care of it.

¶ 32. On January 15, 2001, Reitz spoke with an attorney for General Clinic in an effort to arrange a delay of a judgment being taken. The attorney advised Reitz he would take judgment, but would delay docketing it for 30 days to give C.K. time to make arrangements to pay. Reitz did not relay this conversation to C.K. After hearing nothing from Reitz for 45 days, General Clinic commenced a garnishment action against C.K. Between February and May 2001 neither Reitz nor Attorney Mandelman took any substantive effort to advance C.K.'s personal injury case towards suit. In early June 2001 Reitz made a final, unsuccessful effort to mediate the case.

¶ 33. On July 17, 2001, one day before the statute of limitations was to run, Reitz filed a summons and complaint in Shawano County Circuit Court. The defendants filed an answer on September 7, 2001. No substantive action was taken by Attorney Mandelman or Reitz for the balance of 2001, with the exception of receiving and responding to interrogatories filed by the defendants.

¶ 34. In March 2002 C.K. called the court to check on the status of his case. The clerk informed him that if a status conference was not arranged soon the judge would dismiss the case. C.K. contacted Reitz with that information and Reitz secured a May 1, 2002, status conference date. Subsequently, C.K. sought other attorneys to take over the case but could find no one willing to share the fee with Attorneys Reitz and Mandelman. For that reason C.K. did not terminate Reitz and Mandelman's services. C.K.'s case was settled shortly before a February 2003 trial date.

¶ 35. The OLR's complaint alleged the following counts of misconduct with respect to Attorney Mandelman's representation of C.K.:

COUNT EIGHT — By failing to pursue C.K's personal injury claim in a timely manner, as C.K's lawyer and as a partner in the firm, Mandelman failed to act with reasonable diligence and promptness in representing a client in violation of SCR 20:1.3.
COUNT NINE — By failing to respond to C.K's requests for information, Mandelman failed to ensure that a client was kept reasonably informed about the status of a matter and further failed to promptly comply with reasonable requests for information from a client, in violation of SCR 20:1.4(a). Mandelman is responsible for a violation of SCR 20:1.4(a) by reason of his own conduct and based upon the joint responsibility to represent C.K. as partners in a law firm providing legal services under SCR 20:5.1(c)(2).

¶ 36. The next client matter detailed in the OLR's complaint involved Attorney Mandelman's representation of T.O., who injured his back in October 1999 when, while stopped at a traffic signal, he leapt off his motorcycle to avoid being run over by a truck that was backing up toward him. T.O. retained an attorney to represent him in a personal injury action. That attorney secured a $5000 settlement offer from the truck driver and his insurer, but T.O. rejected the offer. That attorney filed suit in Waushara County Circuit Court against the truck driver, the truck driver's employer, and Sentry Insurance. The attorney did not serve the defendants in the case because shortly after it was filed in October 2000 T.O. met with Attorney Mandelman and retained him to take over the case.

¶ 37. Reitz prepared, but never filed with the court, a formal notice of retainer on behalf of T.O. No formal substitution of attorneys was prepared on behalf of T.O. Attorneys Mandelman and Reitz received T.O.'s file from the other attorney in early November 2000. They delayed service of the summons and complaint to give them a chance to fully review the file.

¶ 38. On December 27, 2000, the circuit court sent a 20-day dismissal order to the first attorney and to the defendant, indicating that the matter would be dismissed without prejudice within 20 days if certificates of service were not then on file. Reitz filed certificates of service with the court on January 2, 2001.

¶ 39. The defendants' answers to the complaint were due in mid-February 2001. No answers were filed, no appearances were made by any attorneys on behalf of the defendants, and no extensions of time to answer were filed or documented. On March 29, 2001, the circuit court sent a letter to the first attorney and to Reitz, indicating that no substitution of attorneys had been filed, nor any scheduling initiated. The court asked for a response within 30 days.

¶ 40. On April 6, 2001, the first attorney responded, copying Reitz, and advised the court it was up to Reitz to prepare and file the substitution stipulation and order. Reitz neither responded to the court's letter nor to the first attorney's letter. On May 2, 2001, T.O.'s case was dismissed without prejudice for failure to prosecute. A copy of the dismissal order was sent to Reitz.

¶ 41. The OLR's complaint alleged the following count of misconduct with respect to Attorney Mandelman's representation of T.O.:

COUNT TEN — By failing to file in court a notice of substitution, which resulted in the dismissal of T.O.'s case, Mandelman failed to act with reasonable diligence and promptness in representing a client in violation of SCR 20:1.3. Mandelman is responsible for a violation of SCR 20:1.3 by reason of his own conduct and based upon the joint responsibility to represent T.O. as partners in a law firm providing legal services under SCR 20:5.1(c)(2).

¶ 42. Another client matter detailed in the OLR's complaint involved Attorney Mandelman's representation of J.D. On November 20, 2001, J.D. retained Attorney Mandelman to represent her in an employment claim against a former employer, the law firm of Daniel Kondos, in connection with a sexual harassment matter. In November and December 2001 Attorney Mandelman negotiated with counsel for Kondos's law firm regarding a possible settlement of the claim.

¶ 43. On December 20, 2001, J.D. filed a complaint against Kondos with the Wisconsin Equal Rights Division (ERD) and the Equal Employment Opportunity Commission (EEOC) alleging sexual harassment. J.D. prepared and typed the complaint under Attorney Mandelman's direct supervision.

¶ 44. On January 16, 2002, an officer of the ERD advised J.D. that he had sent her complaint to Kondos. He further advised that if J.D. was unable to reach a compromise with Kondos, he would investigate her complaint. A copy of the letter was sent to Reitz. On or about January 18, 2002, J.D. telephoned Attorney Man-delman requesting some explanation about the letter and the materials she had received from ERD. Attorney Mandelman's response was vague and of little assistance to J.D.

¶ 45. On January 25, 2002, counsel for Kondos filed with ERD a narrative response to J.D.'s complaint and an answer and affirmative defenses. A copy was sent to Reitz. The answer denied J.D.'s allegations and raised various affirmative defenses, including the defense that J.D.'s claim was barred due to her failure to file it within the 300-day statute of limitations. On or about January 26, 2002, J.D. asked Attorney Mandel-man how he intended to respond to the Kondos submissions. Attorney Mandelman indicated he did not know how to respond and would have to think about it. Attorney Mandelman neither responded to Kondos's narrative response, nor did he respond to Kondos's answers and affirmative defenses.

¶ 46. On February 14, 2002, ERD sent a letter addressed to Reitz indicating it was proceeding with an investigation of J.D.'s claim and enclosing a copy of the Kondos response. ERD informed Reitz it would be necessary for J.D. to provide a written rebuttal to Kondos's response by February 25, 2002. ERD also indicated it would assume J.D. agreed with all of the Kondos points if she did not dispute them in her rebuttal. ERD requested that J.D. have her witnesses telephone ERD by February 25. Attorney Mandelman failed to inform J.D. of ERD's requests.

¶ 47. On March 13, 2002, ERD wrote to Reitz and advised him they had not received a response to their February 14 letter and that an initial determination would be issued based on the facts in ERD's file. Neither Attorney Mandelman nor Reitz responded to ERD's letter.

¶ 48. On April 8, 2002, ERD issued three orders with respect to J.D.'s claim. The orders were sent to J.D. with a copy to Reitz. Among other things, ERD dismissed the claim against the employee of the Kondos law firm whom J.D. accused of sexual harassment. ERD also found that a portion of J.D.'s complaint did not meet the timeliness requirements of the Wisconsin Fair Employment Law, which required a complaint to be filed within 300 days of the alleged act of discrimination. In addition, ERD found no probable cause with regard to J.D.'s claim and dismissed the complaint. The decision stated that J.D. failed to refute Kondos's response and failed to have her witnesses telephone the investigator on her behalf. The decision also stated that the investigation of J.D.'s complaint revealed that there was no information to support her claim. J.D. had 30 days to appeal this determination.

¶ 49. J.D. received the ERD decision. From discussions with Attorney Mandelman she understood that Attorney Mandelman would take care of the pending ERD matters, including the appeal. J.D. contacted ERD around May 13, 2002, and learned that the file had been closed on May 8 because the agency had never received a timely appeal. That same day J.D. contacted Attorney Mandelman about the status of the case and Attorney Mandelman said he knew nothing about the dismissal and that Reitz was working on the case and would keep her informed.

¶ 50. J.D. spoke with Reitz on or about May 14, 2002, and he agreed to fax her the work done on the case. After receiving nothing from Reitz, J.D. contacted Attorney Mandelman on May 15, inquiring about Reitz's work. She received no response.

¶ 51. On May 16, 2002, J.D. wrote to Attorney Mandelman expressing concern about her loss of the right to appeal and asking how the problem was to be handled. She received no response. On May 17 Attorney Mandelman acknowledged he had done nothing on the case and said he would telephone Kondos's counsel to try to reach a settlement.

¶ 52. On May 21, 2002, Attorney Mandelman advised J.D. that Kondos had agreed to pay $3000 to settle the claim. J.D. asked Attorney Mandelman to make a $10,000 counter-offer. The offer was made and Kondos refused it. In June 2002 Attorney Mandelman advised J.D. to settle the case and told her his fee would be $250. Attorney Mandelman said he would call J.D. back regarding the settlement, but he did not do so.

¶ 53. By letter dated June 18, 2002, EEOC sent J.D. a document entitled "Dismissal and Notice of Rights." The letter informed J.D. that EEOC had upheld ERD's decision but that she had the right to sue Kondos in federal court within 90 days. Attorney Man-delman never advised J.D. that she had the right to sue in federal court. On June 26, 2002, J.D. wrote to Attorney Mandelman and discharged him.

¶ 54. The OLR's complaint alleged the following count of misconduct with respect to Attorney Mandelman's representation of J.D.:

COUNT ELEVEN — By failing to make reasonable efforts to ensure that his firm had in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct, and by the firm's failure to file a response to Kondos' Answer and Affirmative Defenses, by failing to submit a rebuttal to Kondos' response, and by failing to ensure that J.D.'s witnesses telephoned ERD's investigator, Mandel-man failed to act with reasonable diligence and promptness in representing a client in violation of SCR 20:1.3 and SCR 20:5.l(a).

¶ 55. The final client matter detailed in the OLR's complaint involved Attorney Mandelman's representation of L.K., who was involved in a five-car collision on 1-94 in September 1999. On September 22 L.K. retained Attorney Mandelman to represent her in the personal injury claim resulting from the accident. Following the accident L.K. treated with a chiropractor, Dr. Gregory Daniels. The treatment lasted until January 31, 2000, at which time Dr. Daniels released L.K. from his care.

¶ 56. Between February and May 2000 Reitz collected L.K's medical records, bills, and wage loss information. On May 16, 2000, Reitz submitted the last of the bills and records to American Country Insurance Company and made a settlement demand. Between May 17 and October 20,2000, no substantive action was taken by either Attorneys Mandelman or Reitz with regard to the case. Between October 21, 2000, and January 4, 2001, Attorney Mandelman pursued settlement negotiations with American Country. American Country's top offer was $17,000, which was rejected.

¶ 57. L.K. discussed her claim with Attorney Mandelman on January 3, 2001, and told him she wanted him to file suit immediately. Attorney Mandel-man told her he would proceed with the lawsuit. Attorney Mandelman confirmed this conversation in a letter dated January 4, 2001, in which he promised to "immediately place this matter in suit."

¶ 58. Between January 4, 2001, and March 7, 2001, L.K. made numerous phone calls to Attorneys Mandelman and Reitz to get a status report on her case. Neither Attorney Mandelman nor Reitz returned her calls. On March 7, 2001, L.K. spoke with Reitz, who told her he would file the lawsuit and serve the summons and complaint. The same day Reitz prepared a summons and complaint but did not file them with the court.

¶ 59. On March 29, 2001, Reitz sent a copy of the summons and complaint to L.K., saying "[p]lease find enclosed a copy of the Summons and Complaint for your lawsuit." There was no indication that the documents Reitz sent L.K. were a draft.

¶ 60. L.K. believed the complaint had been filed and, after waiting 45 days for the defendants to answer the complaint, contacted Reitz by phone on May 2, 2001. Reitz told L.K. he would set a date with the judge to arbitrate her claim. On June 5, 2001, L.K. telephoned Reitz, who told her no court date had yet been scheduled and that she should call him back. On June 22, 2001, L.K. again telephoned Reitz, who informed her the court would most likely schedule a court date in two to six weeks.

¶ 61. On June 9, 2001, L.K. met with Reitz and told him she would not accept a $17,000 offer from the insurance company. She repeated her desire to litigate the claim. Between May and September 2001 Reitz pressed American Country to mediate the case without having to actually commence the action. By September 23, 2001, it was apparent that American Country did not want to increase its settlement offer or mediate, so on that date a new, but substantively identical summons and complaint was prepared for filing. Reitz failed to file the new summons and complaint. On or about December 17,2001, L.K. retained a different law firm to pursue her case when neither Attorney Mandelman nor Reitz had filed her lawsuit.

¶ 62. The OLR's complaint alleged the following count of misconduct with respect to Attorney Mandelman's representation of L.K.:

COUNT THIRTEEN — By failing to pursue L.K.'s personal injury claim in a timely manner, Mandelman failed to act with reasonable diligence and promptness in representing a client in violation of SCR 20:1.3. Mandelman is responsible for a violation of SCR 20:1.3 by reason of his own conduct and based upon the joint responsibility to represent L.K. as partners in a law firm providing legal services under SCR 20:5.1(c)(2).

¶ 63. In October 2004 the OLR filed a second complaint alleging that by failing to file income tax returns, by filing untimely income tax returns, and by failing to pay income taxes when due, Attorney Man-delman violated a standard of conduct for attorneys, contrary to SCR 20:8.4(i).

¶ 64. John A. Fiorenza was appointed referee in the consolidated cases. A hearing was conducted over the course of eight days. The referee filed his report and recommendation on August 19,2005. The referee found that the OLR had met its burden of proof with respect to counts one, three, six, eight, nine, ten, eleven, twelve, and thirteen of the December 2003 complaint. The referee's report also noted that in July 2005 Attorney Mandelman's attorney had informed the referee that Attorney Mandelman admitted the allegations in the October 2004 complaint dealing with failure to file income tax returns and failure to pay income taxes.

¶ 65. Of particular significance to Attorney Mandelman's appeal is the professional relationship between Attorneys Reitz and Mandelman and their clients' perception of that relationship. The referee stated:

There has been testimony given by many of the clients of Attorney Mandelman that they retain Mr. Mandelman and either at the initial conference with Mr. Mandelman or some time thereafter, it was explained that Attorney Reitz would be assisting Mandel-man on the case. At times the clients were told that Mr. Reitz would do the "work-up" on the case and that Mr. Mandelman would be taking the Depositions and appearing in Court and trying the case. Other clients testified that they never met Mr. Reitz in person but at times they would talk to him on the phone or see some letters that were written by Mr. Reitz.
There was no testimony that indicated that the clients were told or knew that the responsibilities of each of these attorneys were separate and distinct from the other attorney. Mr. Mandelman never informed any of his clients that he would not be responsible for any actions that were taken by Mr. Reitz.

¶ 66. The OLR had requested a one-year suspension of Attorney Mandelman's license. The referee concluded that a nine-month suspension was appropriate. The referee also recommended that Attorney Man-delman be required to pay the costs of the proceeding.

¶ 67. Attorney Mandelman has appealed the referee's conclusions of law regarding the allegations in the OLR's December 2003 complaint with respect to counts one, six, eight, nine, ten, eleven, twelve, and thirteen. Attorney Mandelman vigorously disputes that he is responsible for actions taken by Reitz. Attorney Mandelman asserts that SCR 20:5.1(c)(2) states a rule of accessorial liability rather than vicarious liability and requires that a partner or supervising lawyer know of conduct by a partner or subordinate at a time when adverse consequences to the client can be avoided and, in the face of that knowledge, fails to take remedial action. Attorney Mandelman argues that the referee's analysis of SCR 20:5.1(c)(2) in effect applied a respon-deat superior theory which does not apply in attorney disciplinary proceedings.

¶ 68. Attorney Mandelman argues that the record is clear that he had no direct supervisory authority over Reitz and that the two were equal partners. He contends that the erroneous work performed on behalf of the various clients as detailed in the OLR's complaint was wholly within Reitz's realm of professional responsibility. Attorney Mandelman says, "[u]nder the OLR's theory, Mandelman should have done all his own work and Reitz's too." Attorney Mandelman contends the mere fact that he spoke to the various clients at different times does not obviate the fact that Reitz remained responsible for handling their cases.

¶ 69. Attorney Mandelman also takes issue with the referee's finding of fact that he failed to provide a written contingent fee agreement in N.C.'s malpractice case. He says the facts of record establish that he used written fee agreements in thousands of cases and in this single lone instance he was simply unable to locate the written contingent fee agreement and there is nothing to prove that he did not have N.C. sign an agreement "other than the recall of a manipulative complainant."

¶ 70. With respect to the referee's finding that Attorney Mandelman entered into an agreement with N.C. prospectively limiting his liability for malpractice, Attorney Mandelman claims he did not know what type of document Reitz prepared; all Attorney Mandelman wanted was an "acknowledgment" from N.C. that she was "happy" with what Attorney Mandelman had done; and Attorney Mandelman never looked at the document before proceeding with the Dade deposition.

¶ 71. Attorney Mandelman also contends that the referee's recommendation for a nine-month license suspension is excessive. He asserts that the five-month license suspension imposed against Reitz "sets a reasonable upper-end standard for discipline in this case."

¶ 72. Attorney Mandelman also argues that the costs of the proceeding should be prorated based on the OLR's failure to prove its entire case.

¶ 73. The OLR argues that there is sufficient proof that Attorney Mandelman violated SCR 20:5.1(c)(2). In support of this argument the OLR says in each of the subject cases both Attorneys Mandelman and Reitz performed services for the same client on the same case; Reitz & Mandelman LLC was essentially a two-lawyer operation; each client considered Mandel-man or both Mandelman and Reitz to be their attorneys; while Attorney Mandelman claims he did not supervise Reitz, it is clear that from time to time Attorney Mandelman did direct Reitz to perform certain activities and then failed to follow up on whether Reitz had done so; Attorneys Mandelman and Reitz had apparent comparable managerial authority in the law firm as to each particular file; all files were readily accessible to both attorneys; and Attorney Mandelman has acknowledged that there was nothing to prevent him from checking on the status of a file. The OLR also contends that Attorney Mandelman had ample notice of client complaints and ample time to take measures to rectify problems but failed to do so.

¶ 74. The OLR also asserts that Attorney Mandel-man bears the burden of contradicting N.C.'s testimony that there was no written contingent fee in the malpractice case, and Attorney Mandelman has failed to produce such an agreement. The OLR says the agreement prospectively limiting Attorney Mandelman's liability to N.C. is perhaps the most serious of all the misconduct counts, and it says it is the most dramatic example of Attorney Mandelman's lack of credibility. The OLR says the suggestion that Reitz mistakenly incorporated release language into the document when Attorney Mandelman told Reitz he simply wanted an acknowledgment that N.C. was "happy" with his representation is simply not credible. The OLR says Attorney Mandelman's claim that he was not aware of the specific content of the release is similarly incredible. The OLR says Attorney Mandelman knew that N.C. was a difficult client and that she was angry at him. He asked Reitz to draft the document and assured himself that the document had been signed before he took the Dade deposition. The OLR says the document was presumably in the file over which Attorney Mandelman had control, and those circumstances necessarily lead to the inference that Attorney Mandelman did know of the document's content.

¶ 75. The OLR has cross-appealed the referee's conclusion that Attorney Mandelman's failure to deposit N.C.'s $3000 retainer check into his trust account did not violate former SCR 20:1.15(a). While the OLR acknowledges that the conduct in this case predates the July 2004 rule changes which clearly would have required placing the retainer check into a trust account, it asserts the rule in Wisconsin always was that such payments should have been placed in an attorney's client trust account.

¶ 76. Attorney Mandelman argues that the referee correctly concluded he was not required to deposit N.C.'s $3000 payment of advance fees into his trust account. He notes that Attorney Richard Cayo testified as an expert witness on Attorney Mandelman's behalf and opined that, during the relevant time period, it was a very open question among legal ethics professionals what treatment had to be afforded to retainers. Attorney Mandelman says if the issue was as clear as the OLR contends, there would have been no reason for this court to create SCR 20:1.15(b)(4) to specifically provide that advance payment of fees and costs must be deposited into a lawyer's trust account.

¶ 77. The OLR argues that Attorney Mandelman's extensive prior disciplinary history warrants a minimum nine-month license suspension. The OLR says "Mandel-man has not gotten the message. Prior discipline has not been effective in preventing a repeat of the same type of unprofessional conduct."

¶ 78. 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 sanction 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.W2d 686. After careful review of the record, we conclude that the referee's findings of fact Eire not clearly erroneous, and we adopt them. We also agree with the conclusions of law that flow from the referee's findings of fact, except we do not agree that, in his handling of the C.K. matter, Attorney Mandelman violated SCR 20:5.1(c)(2).

¶ 79. We find that the record supports all of the referee's findings and conclusions with respect to Attorney Mandelman's handling of the N.C. matter. We further find that Attorney Mandelman failed to act with reasonable diligence and promptness in his representation of the various clients, as alleged in the OLR's complaint. We also find that he failed to keep C.K. reasonably informed about the status of a matter and failed to promptly comply with reasonable requests for information received from C.K.

¶ 80. The referee concluded that Attorney Man-delman violated SCR 20:5.1(c)(2) with respect to his handling of the C.K., T.O. and L.K. matters. We agree with the referee's analysis as to the T.O. and L.K. matters but not as to C.K.'s case.

¶ 81. SCR 20:5.1(c)(2) provides that a lawyer shall be responsible for another lawyer's violation of the rules of professional conduct if the lawyer is a partner in the law firm in which the other lawyer practices and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action. The preamble to the rules of professional conduct for attorneys provides: " 'Knowingly,' 'Known,' or 'Knows' denotes actual knowledge of the fact in question. A person's knowledge may be inferred from circumstances."

¶ 82. In addition, the comment to SCR 20:5.1 states:

Paragraph (c)(2) defines the duty of a lawyer having direct supervisory authority over performance of specific legal work by another lawyer. Whether a lawyer has such supervisory authority in particular circumstances is a question of fact. Partners of a private firm have at least indirect responsibility for all work being done by the firm, while a partner in charge of a particular matter ordinarily has direct authority over other firm lawyers engaged in the matter. Appropriate remedial action by a partner would depend on the immediacy of the partner's involvement and the seriousness of the misconduct. The supervisor is required to intervene to prevent avoidable consequences of misconduct if the supervisor knows that the misconduct occurred. . . .

Contrary to Attorney Mandelman's assertion that a finding that he violated SCR 20:5.1(c)(2) is tantamount to holding him responsible for matters over which Reitz had exclusive control, we find that the record demonstrates that Attorney Mandelman had direct responsibility for the T.O. and L.K. cases and he had actual knowledge that the matters were not being handled with reasonable diligence but failed to take appropriate remedial action.

¶ 83. T.O. retained Attorney Mandelman to take over his personal injury case in which a different attorney had already filed a lawsuit in circuit court but had not yet served the summons and complaint. After receiving the file from the other attorney, Attorneys Mandelman and Reitz delayed service of the summons and complaint. Although service was eventually effectuated, no substitution of attorneys was ever filed, no scheduling was initiated, and the case was ultimately dismissed for failure to prosecute. We agree with the referee that the evidence supports a finding that Attorney Mandelman knew that T.O.'s case was not being handled with reasonable diligence and promptness by Reitz and failed to take reasonable remedial action.

¶ 84. We further agree with the referee's findings and conclusion that Attorney Mandelman violated SCR 20:5.1(c)(2) with respect to his handling of the L.K. matter. L.K. retained Attorney Mandelman to represent her in her personal injury case. Although Attorney Mandelman claims Reitz then took over responsibility for the file, the record reveals that L.K. told Attorney Mandelman she wanted him to file her lawsuit immediately, and Attorney Mandelman promised he would do so. He followed this promise up with a letter. L.K. subsequently made numerous phone calls to both Attorneys Mandelman and Reitz trying to get a status report on her case. There is ample evidence to support a finding that Attorney Mandelman knew L.K.'s case was not being handled with reasonable diligence and promptness and failed to take reasonable remedial action.

¶ 85. We disagree with the referee's conclusion that Attorney Mandelman violated SCR 20:5.1(c)(2) with respect to the handling of the General Clinic collection action filed against C.K. Although C.K. did retain Attorney Mandelman to represent him in his personal injury claim, the record indicates that C.K. dealt exclusively with Reitz on the collection action, and it was Reitz who assured C.K. he would take care of that matter and it was Reitz who failed to do so. Unlike the T.O. and L.K. matters, the record does not support a finding that Attorney Mandelman knew of Reitz's failure to take care of the C.K. collection matter at a time when its consequences could have been avoided or mitigated.

¶ 86. After careful review of the record, we reject the arguments made in the OLR's cross-appeal, and we affirm the referee's findings of fact which led to his conclusions of law that the OLR failed to meet its burden of proof with respect to Attorney Mandelman's failure to deposit N.C.'s $3000 retainer check into his trust account. As Attorney Mandelman's expert witness opined, at the time in question it was unclear whether such a retainer had to be placed in a client trust account.

¶ 87. As to the appropriate sanction to be imposed, we agree with the referee that a nine-month suspension of Attorney Mandelman's license to practice law is appropriate. While Attorney Mandelman argues that the five-month suspension imposed as a result of Reitz's misconduct should be the upper-end standard for discipline here, we note that Attorney Mandelman has been found to have committed more counts of misconduct than Reitz and, unlike Reitz, he has been disciplined on three prior occasions. Under the circumstances we deem a nine-month suspension appropriate.

¶ 88. We also conclude that Attorney Mandelman should pay the full costs of the proceeding totaling $37,088.08. Although Attorney Mandelman argues that because the referee found that the OLR failed to meet its burden of proof with respect to some of the counts alleged in the December 2003 complaint, this court should exercise its discretion to award something less than full costs, we decline to depart from the general practice of imposing the full costs on a disciplined lawyer.

¶ 89. IT IS ORDERED that the license of Michael D. Mandelman to practice law in Wisconsin is suspended for nine months commencing June 21, 2006, as discipline for his professional misconduct.

¶ 90. IT IS FURTHER ORDERED that within 60 days of the date of this order, Attorney Michael D. Mandelman pay to the Office of Lawyer Regulation the costs of this proceeding. If the costs are not paid within the time specified and absent a showing to this court of his inability to pay the costs within that time, the license of Michael D. Mandelman to practice law in Wisconsin shall remain suspended until further order of this court.

¶ 91. IT IS FURTHER ORDERED that Michael D. Mandelman comply with the provisions of SCR 22.26 concerning the duties of a person whose license to practice law in Wisconsin has been suspended.

       SCR 20:1.5(c) provides: Fees.
      (c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and if there is a recovery, showing the remittance to the client and the method of its determination.

       Former SCR 20:1.15 applies to misconduct committed prior to July 1, 2004. Former SCR 20:1.15(a) provided in relevant part: Safekeeping property.
      (a) A lawyer shall hold in trust, separate from the lawyer's own property, that property of clients and third persons that is in the lawyer's possession in connection with a representation or when acting in a fiduciary capacity. Funds held in connection with a representation or in a fiduciary capacity include funds held as trustee, agent, guardian, personal representative of an estate, or otherwise. All funds of clients and third persons paid to a lawyer or law firm shall he deposited in one or more identifiable trust accounts ....

       SCR 20:1.3 provides that "[a] lawyer shall act with reasonable diligence and promptness in representing a client."

       SCR 20:1.16(a)(3) provides that "... a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if the lawyer is discharged."

       Former SCR 20:1.15(b) provided: Safekeeping property.
      (b) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person in writing. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall render a full accounting regarding such property.

       SCR 20:1.8(h) provides: Conflict of interest: prohibited transactions.
      (h) A lawyer shall not make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement, or settle a claim for such liability with an unrepresented client or former client without first advising that person in writing that independent representation is appropriate in connection therewith.

       Count Seven of the complaint involved Attorney Mandelman's representation of a client named J.S. The OLR subsequently voluntarily dismissed this count so it will not be discussed in further detail.

       SCR 20:1.4(a) provides that "[a] lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information."

       SCR 20:5.1(c)(2) provides: Responsibilities of a partner or supervisory lawyer.
      (c) A lawyer shall be responsible for another lawyer's violation of the Rules of Professional Conduct if:
      (2) the lawyer is a partner in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.

       SCR 20:5.1(a) provides that "[a] partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct."

       SCR 20:8.4(f) provides that 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."


source: Caselaw Access Project

author: FINE, J.

license: Public Domain

text:
    In re the Termination of Parental Rights to Torrance E. Jr., a person under the age of 18: State of Wisconsin, Petitioner-Respondent, v. Shirley E., Respondent-Appellant.
    Court of Appeals

      No. 2005AP2752.

      Submitted on briefs January 26, 2006.

      Decided February 14, 2006.

    2006 WI App 55
    (Also reported in 711 N.W.2d 690.)

      On behalf of the respondent-appellant, the cause was submitted on the briefs oí Andrea Taylor Cornwall, assistant state public defender.
    On behalf of the petitioner-respondent, the cause was submitted on the brief of E. Michael McCann, district attorney, and Rebecca A. Kiefer, assistant district attorney, of Milwaukee.
    On behalf of Torrance P a brief was filed by the guardian ad litem Shelia Hill-Roberts, of the Legal Aid Society of Milwaukee, Inc.
    Before Fine, Curley and Kessler, JJ.

       Petition to review granted 5-9-06.

   FINE, J.

¶ 1. Shirley E. appeals from an order terminating her parental rights to Torrance L. E, Jr. Although in default, she contends that the trial court deprived her of her right to an attorney during the dispositional phase of the proceedings when the State was obligated to prove grounds supporting the order. See Evelyn C.R. v. Tykila S., 2001 WI 110, ¶¶ 3, 24-26, 246 Wis. 2d 1, 7, 17-18, 629 N.W.2d 768, 771, 776 (despite birth-parent's default, trial court must hold an evidentiary hearing to determine whether there is "clear and convincing evidence" that there are grounds to consider if termination is in the best interests of the birth-parent's child). We agree, vacate the order, and remand for further proceedings.

I.

¶ 2. In November of 2004, the State filed a petition to terminate Shirley E.'s parental rights to Torrance, who was then a little more than five and one-half years old. According to the petition, Shirley E. was in Michigan, where she was living with her mother and had been "recently paroled." The petition alleged that termination was warranted because Shirley E. failed to assume her parental responsibility for the boy, see Wis. Stat. § 48.415(6), and because the child was in continuing need of protection or services, see § 48.415(2).

¶ 3. Shirley E. was personally served with the petition in Michigan, and appeared by her then recently-appointed lawyer, Sheila Smith, and by telephone from Michigan. The trial court adjourned the matter and told Shirley E. that she would have "to attend future court hearings" in person, warning her that if she did not appear personally, "your rights will be automatically terminated." Shirley E. never appeared again either in person or by telephone at any of the adjourned dates so patiently agreed-to by the trial court. Her lawyer, however, made all court appearances.

¶ 4. Ultimately, the trial court found Shirley E. to be in default. Nevertheless, Smith told the trial court during a hearing on the termination of the birth-father's parental rights to Torrance that she would "like to have a further role" in the case, apparently to seek a re-opening of the default, noting: "I suspect that [Shirley E.] may be sitting on the stand at some point trying to explain to the Court why she didn't make court appearances." The trial court later told Smith at the hearing that she was "relieved of any further duties in this case," but that it "would entertain a motion to vacate default" if Shirley E. contacted the lawyer.

¶ 5. Some three months later, the trial court, a different judge presiding, heard evidence supporting the petition to terminate Shirley E.'s parental rights to Torrance. To her credit, Smith appeared on Shirley E.'s behalf, despite having been "relieved of any further duties" in the case. She explained her presence:

[M]y recollection — maybe this is not reflected on the docket — if I did not have any contact with Ms. E[.], that I would be relieved of my duties. Given this is a termination of parental rights case, and I have an obligation to remain in contact with my client because of infective [sic -transcriber's error] assistance of counsel, I have had contact with her and discussed with her the reasons she was unable to travel from Michigan to Wisconsin for the purposes of these proceedings.

The trial court noted that Shirley E. was still not present, indicated there was "no motion to vacate the default," and reiterated the earlier trial judge's ruling that Smith was "relieved of any further duty" in the case: "You can leave, Ms. She[il]a Smith." Smith protested that she had an "obligation to stay in contact with my client, which I have," and asserted that Shirley E. "was unemployed for a significant period of time, and because of poverty, she was not able to travel to Wisconsin." The trial court reiterated that Smith's role in the case was over, telling her, "you can go." The transcript indicates that "Ms. Smith exits the courtroom," apparently unwillingly because the transcript records her as first saying, "Great" to which the trial court responded, "Great."

II.

¶ 6. We need not repeat at any length the significance-both to the parties involved and to society-of an attempt to terminate a person's parental rights to his or her children.

Terminations of parental rights affect some of parents' most fundamental human rights. At stake for a parent is his or her "interest in the companionship, care, custody, and management of his or her child." Further, the permanency of termination orders "work[s] a unique kind of deprivation. In contrast to matters modifiable at the parties' will or based on changed circumstances, termination adjudications involve the awesome authority of the State to destroy permanently all legal recognition of the parental relationship." For these reasons, "parental termination decrees are among the most severe forms of state action."

Evelyn C.R., 2001 WI 110, ¶ 20, 246 Wis. 2d at 15, 629 N.W.2d at 775 (citations and quoted sources omitted; alteration in original). Thus, "termination proceedings require heightened legal safeguards against erroneous decisions." Id., 2001 WI 110, ¶ 21, 246 Wis. 2d at 15, 629 N.W.2d at 775; see also State v. Lavelle W., 2005 WI App 266, ¶ 2, 288 Wis. 2d 504, 507-508, 708 N.W2d 698, 699 (termination affects a person's fundamental rights, which require judicial protection). Accordingly, as noted, even where a parent is in "default," the trial court must hold an evidentiary hearing to determine whether there is "clear and convincing evidence" that there are grounds to consider if termination is in the best interests of the birth-parent's child. Evelyn C.R., 2001 WI 110, ¶¶ 3, 24-26, 246 Wis. 2d at 7, 17-18, 629 N.W.2d at 771, 776. Additionally, at least by statute in Wisconsin, a person whose parental rights are at stake must be represented by counsel, unless the person knowingly waives that right. M.W. & I.W. v. Monroe County Dep't of Human Servs., 116 Wis. 2d 432, 437-441, 342 N.W.2d 410, 413-415 (1984); Wis. Stat. § 48.23(2).

¶ 7. The requirement that those who seek to terminate a person's parental rights prove by the middle burden of proof, "clear and convincing evidence," that there are grounds to terminate even when the person is in default (thus eliminating the parent's right to a full fact-finding hearing, either before a jury or a judge — see Wis. Stat. § 48.31), means, per force, that more needs to be done than a mere "prove up" permitted in the run-of-the-mill civil case when a defendant has defaulted, see Wis. Stat. Rule 806.02(5). Significantly, however, even in civil cases not implicating the fundamental rights of birth-parenthood, a defaulting party may appear at the prove-up hearing and "cross-examine the plaintiffs witnesses and present evidence to mitigate or be heard as to the diminution of damages." Carmain v. Affiliated Capital Corp., 2002 WI App 271, ¶ 30, 258 Wis. 2d 378, 393, 654 N.W.2d 265, 272. A fortiori, a parent in a termination-of-parental-rights case is entitled to no less, unless, of course the adult parent knowingly waives the right to counsel at the Evelyn C.R. hearing. Cf. Wis. Stat. § 48.23(2) (parent younger than eighteen years "who appears before the court" may not waive counsel).

¶ 8. Although it may very well be that the result here would be the same if Smith had been permitted to participate in the evidentiary hearing required by Evelyn C.R., the reason persons whose parental rights are at stake are entitled to legal representation is because lawyers can point out gaps in the petitioner's syllogism or supporting evidence, if there are any. See State v. Anson, 2002 WI App 270, ¶ 9, 258 Wis. 2d 433, 441-442, 654 N.W.2d 48, 51-52 (criminal case). The harmless-error rule advocated here by both the State and Torrance's guardian ad litem does not apply to deprivation of counsel. Holloway v. Arkansas, 435 U.S. 475, 488, 489 (1978) (" 'The right to have the assistance of counsel is too fundamental and absolute to allow courts to indulge in nice calculations as to the amount of prejudice arising from its denied.'") ("[T]he assistance of counsel is among those 'constitutional rights so basic to a fair trial that their infraction can never be treated as harmless error.'") (quoted sources omitted) (criminal case). Further, the harmless-error argument is based on their misteiken contention that Smith, had she been allowed to stay for the Evelyn C.R. hearing, would have had no right to participate. See ¶ 7 of this opinion. Thus, Shirley E. was entitled to have her lawyer present and participate at the Evelyn C.R. hearing. Accordingly, we vacate the order terminating Shirley E.'s parental rights to Torrance, and remand for further proceedings, expressing no view whether, at this late date, Shirley E. may seek to vacate the order of default.

By the Court. — Order vacated and cause remanded.

       The trial court later explained that it frames the wording harshly in an attempt to impress upon parents the need to comply with the order to appear: "I give very harsh warnings. I say, 'you will be defaulted and your rights will be automatically terminated.' That is a little harsher than reality."

       The State had represented that there was a Wisconsin arrest warrant for Shirley E., and "[t]hat could be another reason why she's not here." The trial court never made any findings of fact as to why Shirley E. never appeared personally, and we express no opinion on that or whether, irrespective of the reason Shirley E. never complied with the trial court's direction that she appear personally, default may or should be vacated.

       A parent younger than eighteen years "who appears before the court" may not, however, waive counsel. Wis. Stat. § 48.23(2).


author: BROWN, J.

text:
    In re the Commitment of Terry L. Olson: State of Wisconsin, Petitioner-Respondent, v. Terry L. Olson, Respondent-Appellant.

    Court of Appeals

      No. 2004AP412.

      Submitted on briefs December 15, 2005.

      Decided February 15, 2006.

    2006 WI App 32
    (Also reported in 712 N.W.2d 61.)

      On behalf of the respondent-appellant, the cause was submitted on the briefs of Melinda A. Swartz, assistant state public defender of Milwaukee.
    On behalf of the petitioner-respondent, the cause was submitted on the brief of Peggy A. Lautenschlager, attorney general, and Maura FJ Whelan, assistant attorney general.
    Before Snyder, PJ., Brown and Anderson, JJ.

       Petition to review denied 5-9-06.

   BROWN, J.

¶ 1. On September 10, 2003, the court signed an order committing Terry L. Olson to the Department of Health and Family Services, pursuant to Wis. Stat. ch. 980 (1999-2000) (sexually violent person commitments). Olson claims on appeal that ch. 980 is unconstitutional because its definition of "dangerousness" lacks "a temporal context" limited to "imminent danger." (Emphasis omitted.) We reject this challenge. Our supreme court expressly refused to recognize a similar "imminent danger" requirement in the context of Wis. Stat. ch. 51 commitments. Our courts have recognized that, as a class, sexually violent persons pose an even greater threat to the public than ch. 51 committees. Not only have they already perpetrated acts that demonstrate their willingness to commit violent sex offenses, their existing mental disorders diminish their capacity to avoid reoffending. Those who treat ch. 980 committees must invest a great deal of time and effort in equipping these individuals with coping mechanisms that enable them to control their predatory desires. It is this propensity for sexual violence, not the precise point at which it may manifest itself, that makes the individual particularly threatening to society. Further, the supreme court has upheld ch. 980 against numerous constitutional attacks and has expressed no misgivings about the lack of an "imminent danger" requirement. Although the issue was not squarely presented in these cases, it was certainly conspicuous, so we doubt that the court would read an imminence requirement into ch. 980.

¶ 2. A petition alleging that a person is a sexually violent person must allege that the person satisfies several criteria: First, the person has been convicted, adjudicated delinquent, or acquitted by reason of mental disease or defect of a sexually violent offense. Wis. Stat. § 980.02(2)(a). Second, the individual is within ninety days of being discharged from confinement, parole, or extended supervision for a sentence imposed for a sexually violent offense. Sec. 980.02(2)(ag). Third, the person has a mental disorder. Sec. 980.02(2)(b). Finally, the petition must allege that the person is dangerous because this mental disorder makes it likely that he or she will commit further acts of sexual violence. Sec. 980.02(2)(c).

¶ 3. It is the fourth requirement, dangerousness, that Olson finds objectionable. He points out Wis. Stat. ch. 980 is a civil commitment statute. According to Olson, due process prohibits involuntary civil commitments unless the petitioner can prove that the person to be committed poses a risk of imminent danger. He reaches this conclusion based on Lessard v. Schmidt, 379 F. Supp. 1376, 1381 (E.D. Wis. 1974), vacated, 421 U.S. 957 (1975), and reinstated on remand, 413 F. Supp. 1318 (E.D. Wis. 1976). In Lessard, the federal district court stated that the "findings and standard of proof necessary for an order of commitment are 'mental illness and imminent dangerousness to self or others beyond a reasonable doubt.'" Id. at 1380. Lessard held Wis. Stat. § 51.02 (1971) unconstitutional because it did not follow this standard. Lessard, 379 F. Supp. at 1378-79. At the very least, Olson contends, the statute should limit the time period over which the court assesses dangerousness to "the reasonably foreseeable future." Because it does not, it is also void for vagueness.

¶ 4. We review de novo whether a statute meets constitutional requirements. State v. Post, 197 Wis. 2d 279, 301, 541 N.W.2d 115 (1995). The challenger bears the burden of demonstrating the statute's infirmity beyond a reasonable doubt. Id. We accord particular deference to reasonable legislative judgments in the mental health arena, in which "[t]he only certain thing that can be said about the present state of knowledge and therapy regarding mental disease is that science has not reached finality of judgment." See id. at 311 (citation omitted); State v. Dennis H., 2002 WI 104, ¶ 13, 255 Wis. 2d 359, 647 N.W.2d 851. Even where the statutory scheme impinges upon a fundamental liberty, as commitment admittedly does, we will not invalidate it on substantive due process grounds as long as it is narrowly tailored to a compelling government interest. Post, 197 Wis. 2d at 302. Moreover, we will not declare a statute unconstitutionally vague unless it fails to give notice about what conduct the statute proscribes or fails to provide those who enforce the law with objective standards with which to do so. State v. Curiel, 227 Wis. 2d 389, 415, 597 N.W2d 697 (1999).

¶ 5. We deem Olson's reliance on Lessard misplaced. In 2002, our own supreme court considered a challenge to Wis. Stat. ch. 51 and never so much as mentioned Lessard. See generally Dennis H., 255 Wis. 2d 359. The court stated that substantive due process did not require the State to restrict the scope of its mental health commitment statutes to individuals who are imminently physically dangerous. Id., ¶ 38. Dennis H. observed that the statute was designed to protect "those who are chronically mentally ill and drop out of therapy or discontinue medication, giving rise to a substantial probability of a deterioration in condition to the point of inability to function independently or control thoughts or actions." Id., ¶ 41. "Deterioration," of course, can be gradual and might not result in immediate inability to function or control one's actions. Dennis H. wholly answers the question of whether ch. 51 requires an "imminence" requirement, and we are bound by that precedent. See Cook v. Cook, 208 Wis. 2d 166, 189, 560 N.W2d 246 (1997) (only the supreme court can overrule a supreme court decision).

¶ 6. If an imminence requirement is not mandated in Wis. Stat. ch. 51 commitments, it is even less appropriate for Wis. Stat. ch. 980 confinements. Our courts have recognized that ch. 980 serves two important compelling purposes: protecting the public from violent sex offenders and providing care and treatment to individuals whose mental disorders predispose them to sexual violence. Post, 197 Wis. 2d at 302-03. As a class, these individuals present a graver danger to the public than others with mental disorders. Id. at 322; State ex rel. Marberry v. Macht, 2003 WI 79, ¶ 31 n.10, 262 Wis. 2d 720, 665 N.W.2d 155. Whereas the state generally confines ch. 51 patients for reasons other than danger to others, such danger supplies the only basis for a ch. 980 commitment. Marberry, 262 Wis. 2d 720, ¶ 31 n.10. Individuals committed pursuant to ch. 980 pose a danger because their mental disorders affect their ability to control their antisocial behavior. Post, 197 Wis. 2d at 323-24. Overcoming these impulses may require a great deal of treatment aimed at developing adequate coping skills and sometimes entails the use of nontraditional therapies where other methods fail. Id. at 310-11, 324. Such therapy takes time, the length of which may differ from one offender to the next. Moreover, in every ch. 980 case, the individual's propensity for violence has already manifested itself in concrete behavior: the statute only allows commitment where the person has already committed a violent offense. See Post, 197 Wis. 2d at 317. The underlying propensity for uncontrollable violence is not confined to the immediate future but rather presents an ongoing threat to the public. Thus, the fact that the legislature did not myopically limit its view of dangerousness to the immediate future does not render the statute unconstitutionally infirm.

¶ 7. We find support for our conclusion in several supreme court precedents. We observe that despite numerous invitations to invalidate Wis. Stat. ch. 980, the court has declined to do so. Post, Curiel, and State v. Kienitz, 227 Wis. 2d 423, 597 N.W.2d 712 (1999), are just a few such opinions. Although none of these cases determined whether the definition of "dangerous" should be confined to a specific timeframe, the issue was nonetheless conspicuous in all three. Curiel and Kienitz addressed whether the legislature's failure to define "substantially probable" rendered ch. 980 unconstitutionally vague. See Curiel, 227 Wis. 2d at 395; Kienitz, 227 Wis. 2d at 426-27. At the time the court decided these cases, "substantial probability" was part of the definition of dangerousness. See Curiel, 227 Wis. 2d at 394-95 (citing 1995-96 version of statutes); Wis. Stat. § 980.02(2)(c) (1993-94). The court in both cases not only upheld the statute but also rejected the appellant's challenge that the evidence did not support a finding of dangerousness. See Curiel, 227 Wis. 2d at 415, 419-20; Kienitz, 227 Wis. 2d at 427, 442. In rejecting the sufficiency of the evidence challenges, the court obviously had to apply the definition of dangerousness to the facts. The relevance of the timeframe for future dangerousness was therefore readily apparent, yet, nowhere in either discussion does the court refer to an "imminence" requirement. Rather, both opinions simply make abstract references to "future dangerousness" and "future acts of sexual violence." See, e.g., Curiel, 227 Wis. 2d at 420; Kienitz, 227 Wis. 2d at 435, 440.

¶ 8. Moreover, the Kienitz decision noted that two of the experts who testified at Kienitz's trial had based their conclusions in part on a measure called the violence risk assessment guide (VRAG), which they used to assess his risk of future dangerousness. Kienitz, 227 Wis. 2d at 430-31. Using the VRAG, both doctors made predictions about Kienitz's probability of reof-fending within a ten-year timeframe. Id. One also made a prediction based on a seven-year interval. Id. at 430. The VRAG clearly assessed dangerousness over a period longer than the "immediate" or "imminent" future; yet, the court expressed no consternation at this fact. Instead, it simply noted that the circuit court had found the testimony of the experts to be "useful and informative." Id. at 442. Given the foregoing, we have grave doubts that the supreme court would read an "imminence" requirement into Wis. Stat. ch. 980.

¶ 9. The third case, Post, upheld many provisions of Wis. Stat. ch. 980 against substantive due process and equal protection challenges. Significantly, the court rejected a challenge that the nature and duration of the commitment bore no reasonable relationship to the purposes of commitment. See Post, 197 Wis. 2d at 313-17. The court acknowledged the potentially indefinite duration of the commitment, but observed that this duration was "intimately linked to treatment of [the committed person's] mental condition." Id. at 314. Noting the statutory provision for periodic mental examinations was designed to determine the ongoing need for commitment, the court continued:

Commitment ends when the committed person no longer suffers from a mental disorder or when that condition no longer predisposes him to commit acts of sexual violence. Protection of the community is also well-served by this statutory scheme because the danger to the public has necessarily dissipated when treatment has progressed sufficiently to warrant an individual's release.

Id. The court obviously was not disturbed by the possibility of indefinite confinement, in light of these safeguards, even though the statute does not require the first periodic reexamination to occur until six months after an initial commitment and only requires subsequent reviews to take place once a year. See Wis. Stat. § 980.07(1). If due process required "imminent danger," we doubt that the court would have found acceptable the length of time between reviews.

¶ 10. We now turn to Olson's contention that Wis. Stat. ch. 980 is impermissibly vague because it fails to limit itself to the "reasonably foreseeable future." Olson concedes that five to ten years constitutes a "reasonably foreseeable future" but complains that the State’s expert also attempted longer-term predictions of dangerousness, namely fifteen years and Olson's lifetime. We do not see how any of these timeframes is necessarily a more "foreseeable" future. As we mentioned above, "[T]he only certain thing that can be said about the present state of knowledge and therapy regarding mental disease is that science has not reached finality of judgment." See Post, 197 Wis. 2d at 311 (citation omitted). What may be a "foreseeable" period based on one psychiatric assessment might differ from what is reasonably predictable using different methodologies. Moreover, each case has its own facts that might influence how far into the future one can predict a likelihood of dangerous behavior. The legislature had no obligation to ignore this reality.

¶ 11. Our supreme court has had many opportunities to invalidate Wis. Stat. ch. 980. We assume it has not done so because it does not find the statutory definition of "dangerous" objectionable. Moreover, in the context of Wis. Stat. ch. 51 commitments, it has rejected precisely the "imminence" requirement that Olson advocates. Because mentally disordered sex offenders present a much greater threat to the public than those committed under ch. 51, the State has an even greater interest in rejecting an "imminence" requirement in the ch. 980 context. We further hold that the statute is not vague just because the legislature did not limit the "foreseeable future" to an arbitrary period of time. We affirm.

By the Court. — Judgment and order and order affirmed.

       All subsequent references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted. The parties observe that the current version of Wis. Stat. ch. 980 is different from the version under which Olson was committed, but the changes are not pertinent to the issues here.

       Olson does not challenge any of the psychiatric testimony or other evidence informing the jury's verdict. He simply attacks the validity of Wis. Stat. ch. 980. Although he does not state which provisions of the Wisconsin Statutes he finds objectionable, we assume he means Wis. Stat. § 980.02(2)(c).

        See also Minnesota ex rel. Pearson v. Probate Court of Ramsey County, 309 U.S. 270 (1940). In Pearson, the State conceded that commitment under the relevant statute was "without term and subject to the right of the patient, or any one interested in him, to petition the committing court for release at any time." Id. at 276. Although the court did not reach the issue, it did note that "[t]he applicable statutes are not patently defective in any vital respect." Id. at 277.


text:
    Victoria Black, Plaintiff-Appellant, v. Metro Title, Inc., Defendant-Respondent.
    Court of Appeals

      No. 2005AP1423.

      Submitted on briefs January 6, 2006.

      Decided February 15, 2006.

    2006 WI App 52
    (Also reported in 712 N.W.2d 395.)

      On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Brad L.F. Hoeschen of Greenberg & Hoeschen, LLC of Milwaukee.
    On behalf of the defendant-respondent, the cause was submitted on the brief of John G. Goller of von Briesen & Roper, S.C. of Milwaukee.
    Before Brown, Nettesheim and Anderson, JJ.
   BROWN, J.

¶ 1. Victoria Black agreed to sell her interest in a house jointly owned by her and her former husband in return for half of the equity, as per a marital settlement agreement. The former husband went to a lender to refinance the house, presumably to obtain liquidity in the equity, and the closing on the refinance took place before Metro Title, Inc. as escrow agent. After Victoria signed the quitclaim deed, Metro refused to pay her one-half of the equity. She left the closing, and her former husband Gunnard Black apparently received the full amount of the equity. Then he squandered most of it. Victoria now claims that Metro was negligent in its duties as an escrow agent and owes her damages. But she has not shown that she was a party to the agency, and Metro's summary judgment affidavit, undisputed by Victoria, is that Victoria was only an incidental beneficiary. An escrow holder is an agent and fiduciary of only the parties to the escrow. We affirm the summary judgment in favor of Metro.

¶ 2. This is a review of a summary judgment. The methodology is well known and need not be discussed at length here. It is sufficient that we simply cite to Preloznik v. City of Madison, 113 Wis. 2d 112, 116, 334 N.W.2d 580 (Ct. App. 1983), where the more extended discussion is found. We apply the methodology set forth in Preloznik to this case. As we see this case, the facts are not disputed and the question is one of law. Therefore, the case before the trial court was ripe for summary judgment and we will review the case on that basis.

¶ 3. The complaint alleged that when Victoria was divorced from Gunnard, a marital settlement agreement was incorporated in the order of the court. Both the divorce judgment and the marital settlement agreement were appended to the complaint. Victoria was listed as the petitioner in that divorce action and Gunnard was the respondent. In pertinent part, the marital settlement agreement read as follows:

Petitioner and Respondent feel it is in the minor childrenfs] best interest to continue to allow the minor children to reside at the permanent residence. Petitioner agrees to allow the Respondent and children to continue occupancy ... for a period of time ....
Notice of the decision to sell the residence ... shall be made by notifying the Respondent by registered mail.... Respondent shall have a right of first refusal to purchase said property. The price of the property for the right of first refusal... will be agreed upon by the Petitioner and Respondent....
Upon the sale of the property, the remaining mortgage and all costs and expenses shall be paid off and the resulting balance shall be split between the Petitioner and Respondent as follows: fourteen thousand one hundred dollars ($14,100) will be given to the Petitioner and then the remainder will be split equally between the Petitioner and the Respondent. (Emphasis added.)

¶ 4. The complaint next alleged that on or about March 22, 2001, Victoria took part in a transaction where she was to sell her interest in the property to Gunnard, that the equity at the time of this sale was approximately $96,200 and that Metro acted as the closing agent for this transaction. Victoria's complaint also alleged that, per the marital settlement agreement, her portion of the remaining equity was $41,050. Victoria further alleged that Metro had her execute a quitclaim deed, transferring her interest in the property to Gunnard, that she signed the quitclaim deed believing she would receive the equity and then was informed by Metro's agent that she would only be receiving the $14,100 portion of the settlement and not her equity portion.

¶ 5. Upon being informed that she would not be receiving her portion of the equity, Victoria claimed that she refused to sign the real estate transfer tax return and left with that unexecuted return. She alleged that, thereafter, Metro created a new real estate transfer return and had Gunnard sign as both grantor and grantee. Victoria further alleged that she only received $14,100 from Metro, that Gunnard eventually sold the property for $125,000 and that the remaining equity at that time was less than $10,000. She claimed she was forced to amend the divorce findings to get an additional judgment against Gunnard and that the family-court acknowledged that she was entitled to her equity at the time of the sale.

¶ 6. Victoria asserted in her complaint that the above facts showed negligence on the part of Metro. She alleged that she had an interest in the property by reason of the divorce judgment and marital settlement agreement, that she was entitled to her half of the equity, that Metro failed to inform her prior to the execution of the quitclaim deed that it would not distribute her portion of the equity to her and also failed to inform her of the "financial ramifications" of the sale of her interest. She concluded that Metro was negligent in not carrying out the terms of the marital settlement agreement. As damages, she claimed that Metro should pay her the equity she is owed.

¶ 7. Metro raised several alternative affirmative defenses to the complaint. The trial court chose one of them. On appeal we choose not to rely on the affirmative defense relied upon by the trial court. Since this is de novo review, we do not have to discuss our reasons why we choose to disregard the reason given by the trial court. And we will not. Suffice it to say, it is not necessary to discuss each of the affirmative defenses that will support summary judgment when one will do.

¶ 8. One of Metro's contentions raised before the trial court and one that is advanced again on appeal is that an escrow agent has no duty toward incidental beneficiaries to an escrow and that Victoria was an incidental beneficiary. Metro cites Dorsett Bros. Concrete Supply, Inc. v. Safeco Title Insurance Co., 880 S.W.2d 417 (Tex. App. 1993), as support. In response, Victoria argues that other cases impose a greater duty. She cites, for example, Talansky v. Schulman, 770 N.Y.S.2d 48, 53 (N.Y. App. Div. 2003), which says: "It is settled law that an escrow agent owes his or her beneficiary a fiduciary duty." She also quotes a case which she interprets to say that not only does the escrow agent owe a fiduciary duty to all parties involved in the contract, it also must act with good faith and avoid self-dealing that places its interest in conflict with its obligations to beneficiaries. See Gonzales v. American Title Co. of Houston, 104 S.W.3d 588 (Tex. App. 2003). She further quotes a case that says an escrow agent must use ordinary skill and diligence and must act with scrupulous honesty. See Denaxas v. Sandstone Court of Bellevue, L.L.C., 63 P.3d 125 (Wash. 2003).

¶ 9. This is all fine and good. But Victoria has not bothered to explain the facts in those cases and how the fact situations in those cases apply here. Had she done so, she would have discovered that, in each case where a duty was found, the plaintiff was a party to the escrow contract. We have reviewed the case law and conclude that, in general, the plaintiff must be a party to the contract. The law does recognize exceptions to this general rule. For example, an escrow agent may be held accountable where a third party is the victim of fraud on the part of the escrow agent. An escrow agent may also be held responsible if he or she engages in self-dealing or shows a conflict of interest. The problem here for Victoria is that she has in no way shown that she is a party to the contract or that any exception applies to her. Absent those facts, we must fall back on the general rule that an escrow holder's obligations are limited to compliance with the parties' instructions.

¶ 10. We get good instruction from Bell v. Safeco Title Insurance Co., 830 S.W.2d 157 (Tex. App. 1992). We quote it at length.

An escrow is a written instrument that imports a legal obligation. Wilson v. Carver Fed. Sav. & Loan Ass'n, 774 S.W.2d 106, 107 (Tex. App — Beaumont 1989, no writ). In accordance with the escrow agreement, the grantor deposits the funds or property with a neutral third party. Id. The purpose of requiring a grantor to place funds or property in escrow is to protect the promisee by having a neutral third party hold the item until the performance of a condition or the happening of a certain event, and then the escrow agent delivers the item to the grantee. Vector Indus., Inc. v. Dupre, 793 S.W.2d 97, 101 (Tex. App.—Dallas 1990, no writ).
The escrow relationship is a stakeholder relationship that carries special duties. Wilson, 774 S.W.2d at 107. Bell, Jr., argues that an escrow agent owes each party the obligation to explain the consequences of interlineations, but cites this Court to no relevant authority for this proposition. An escrow agent acts as a neutral third party. Vector Indus., Inc., 793 S.W.2d at 101. The escrow agent owes a fiduciary duty to both parties of the escrow contract. Trevino v. Brookhill Capital Resources, Inc., 782 S.W.2d 279, 281 (Tex. App.—Houston [1st Dist.] 1990, writ denied). The fiduciary duty consists of (1) the duty of loyalty, (2) the duty to make full disclosure, and (3) the duty to exercise a high degree of care to conserve the money and pay it only to those persons entitled to receive it. Id. A fiduciary must act with utmost good faith and avoid any act of self-dealing that places his [or her) personal interest in conflict with his [or her] obligations to the beneficiaries. Trevino, 782 S.W.2d at 281.

Bell, 830 S.W.2d at 160-61 (emphasis added). Further, the California Supreme Court explained in Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co., 41 P.3d 548, 552 (Cal. 2002), that the escrow holder has " 'no general duty to police the affairs of its depositors'; rather, an escrow holder's obligations are 'limited to faithful compliance with [the depositors'] instructions.'" (Citations omitted.) See also id. at 549, 552 (holding an escrow holder owes no duty of care to a nonparty to the escrow; recognizing fraud exception to the limited duty to merely follow parties' instructions).

¶ 11. Having found the law, we now apply it to the facts in the summary judgment record. The affidavit of Wanda Brooks, then the agent of Metro, averred that the parties to the transaction were First State Mortgage Corporation, Metro and Gunnard. She further averred that the closing instructions did not require or permit her, as closing agent, to pay Victoria half of the equity in the home.

¶ 12. From this affidavit, we glean that the grantor was likely First State Mortgage and the grantee, the other party to the lending transaction, was Gunnard. Metro served as the neutral third-party stakeholder to the transaction. In line with the teaching in Bell, this means that First State Mortgage, Gunnard and Metro were parties to the escrow but not Victoria.

¶ 13. Victoria's counteraffidavit does nothing to dispel this assertion of the facts. At the most, she tells how she was present at the closing and thus was a party to the "transaction." But being present at the transaction in contemplation of a payout does not make her a party to the agency agreement, and that is the key ingredient missing from her summary judgment papers.

¶ 14. We note again that the exception to the general rule is found where there is some kind of fraud on the part of the escrow holder or some dishonesty or absence of good faith in a case alleging self-dealing. Evidence along those lines may expose the escrow holder to liability to beneficiaries outside of the escrow contract. But there is no evidence in the summary judgment record that Wanda Brooks or Metro was guilty of such conduct.

¶ 15. On this appeal, we deem the sole issue to be whether there is a cause of action for negligence and a duty on the part of Metro to disclose to Victoria that its instructions did not include giving her half of the equity. We have held that there was no such duty. We cannot, however, leave this discussion without noting that, in her complaint, Victoria also alleged causes of action sounding in intentional misrepresentation and interference of contract. Both of those claims alleged some species of fraud on Metro's part, but both were dismissed by partial summary judgment and are not appealed. This is for good reason because Victoria produced no facts in the summary judgment record to show fraud. This is more the pity because we suspect Victoria got snookered. We just do not know the extent of Metro's involvement, if any. There was no discovery of the people involved in this transaction who were at First State Mortgage, so we do not know what they knew about the equity payout and what, if anything, they instructed Metro to do regarding it. Nor do we know what Gunnard told First State Mortgage or Metro or what they told Gunnard. There is simply a complete lack of adequate discovery. Victoria backhandedly claims that she was denied further discovery by the trial court before summary judgment, but Metro points out that Victoria never invoked the Wis. Stat. § 802.08(4) (2003-04) procedure to ask for further time to do discovery. On the record, we have no choice but to affirm.

By the Court. — Order affirmed.

       All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.

       While it is not important to our decision, we must state our distaste for the lack of candor exhibited by Victoria's counsel in her brief-in-chief. In that brief, counsel alleged that the trial court improperly granted Metro's motion to strike Victoria's affidavit, filed in opposition to the motion for summary judgment, because it was rendered in an untimely manner contrary to Waukesha County Local Court Rule. This led us to believe that the trial court had not, in fact, considered it. It was not until reading the respondent's brief and reviewing the record that we discovered that the trial court did ultimately decide to consider the affidavit because it wanted to act on the side of "caution." The trial court made this choice even though it had agreed with Metro that the affidavit was untimely. In reply, rather than own up to the lack of candor, counsel attempted to justify raising the issue by reasoning that since the trial court had initially ruled in favor of Metro's motion to strike, the issue was still tenable. We are at a loss to understand why when the end result is that the affidavit was considered. But more to the point, counsel fails to understand that any reasonable person reading the appellant's brief would come away with the understanding that, as a matter of fact, the trial court did not consider Victoria's affidavit. This is simply a falsity. In Wisconsin Natural Gas Co. v. Gabe's Construction Co., 220 Wis. 2d 14, 18 n.3, 582 N.W.2d 118 (Ct. App. 1998), this court explained that false and misleading statements in briefs filed in court contravene not only Wis. Stat. § 802.05(1)(a), but also SCR 20:3.3, which requires candor toward tribunals. In this case, the brief-in-chief was made suspect by Metro's response, and the record is revealing. We admonish counsel that good appellate argument requires complete candor when reciting what occurred in the trial court.

       Metro has moved for attorneys fees and costs on grounds that this appeal is frivolous pursuant to Wis. Stat. Rule 809.25(3)(c)2. We deny the motion. To be frivolous, the appeal must be without any basis in law. The issue of what duties escrow agents have toward parties to an escrow transaction has never been the subject of an appellate decision in Wisconsin. While we are less than enamored with appellant's presentation of this issue on appeal, or indeed its presentation in the trial court, that is not a ground upon which to find the appeal frivolous.