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05/19/92 RICHARD A. MICHEEL RESPONDENT A MEMBER BAR

May 19, 1992

IN RE: RICHARD A. MICHEEL, RESPONDENT, A MEMBER OF THE BAR OF THE DISTRICT OF COLUMBIA COURT OF APPEALS


Before Ferren, Terry, and Schwelb, Associate Judges. Opinion for the court by Associate Judge Terry. Concurring opinion by Associate Judge Schwelb.

The opinion of the court was delivered by: Terry

On Report and Recommendation of the Board on Professional Responsibility

Terry, Associate Judge :Bar Counsel charged respondent Richard A. Micheel with commingling funds, *fn1 misappropriating client funds, *fn2 and dishonesty. *fn3 A hearing committee found, after a hearing, that Micheel was guilty of commingling and misappropriation, but not dishonesty. Concluding that the misappropriation was the result of "simple negligence but no more," the hearing committee recommended that Micheel be suspended for two months.

The Board on Professional Responsibility accepted the hearing committee's Conclusion that Micheel had commingled and misappropriated funds, *fn4 but did not engage in dishonest conduct. The Board concluded, however, that Micheel's misappropriation in this case was the result of recklessness rather than simple negligence. Relying on this court's holding that disbarrment is the appropriate sanction in "virtually all" cases of misappropriation involving more than simple negligence, In re Addams , 579 A.2d 190, 191 (D.C. 1990) (en banc), the Board recommended that Micheel be disbarred. We adopt the Board's recommendation.

I

The pertinent facts are undisputed. Mr. Micheel was retained by Roger Gregory, an acquaintance and fellow attorney, to represent him in connection with the purchase of a house in Silver Spring, Maryland. Micheel collected a total of $144,200.00 from various sources for disbursal at the settlement. These funds included checks for $127,700.00 from the mortgage lender, $9,000.00 from Mr. Gregory, and $7,500.00 from the seller as an adjustment in the price. Because he did not have a client trust account at that time, Micheel deposited all of these checks in his regular office checking account. *fn5

From the funds entrusted to him, Mr. Micheel paid out $141,560.85 to the seller and the mortgage holder, leaving a balance of $2,639.15 still in his possession. That sum was intended to be paid to state and county authorities for taxes and other fees due as a result of the sale. Accordingly, Mr. Micheel wrote two separate checks on his office account. The first, in the amount of $1,317.44, was written on August 27, 1987, but was dishonored for insufficient funds on September 8, 1987. *fn6 The second check, in the amount of $1,345.00, was written on October 5, 1987, but was dishonored for insufficient funds on October 20, 1987. *fn7 Micheel's account was overdrawn by $59.71 at the time this check was presented for payment. The evidence also showed that between October 5 and October 20 Mr. Micheel bounced thirteen other checks drawn on this account and wrote numerous additional checks for business and personal expenses that did not bounce. *fn8 Eventually Mr. Micheel became aware of the shortage in his account and satisfied his obligations with two cashier's checks on December 29, 1987.

Micheel candidly admitted before the hearing committee that he was guilty of commingling and technically guilty of misappropriation, and the hearing committee and the Board found that he had committed these violations. He testified, however, that the shortages in his bank account were merely the result of his own poor accounting practices, not of any intent on his part to misappropriate client funds. The hearing committee credited this testimony and concluded that Micheel did not intentionally misappropriate the funds. Because the charge of dishonesty, in violation of DR 1-102 (A)(4), was based on Bar Counsel's allegation that the misappropriation had been intentional, the hearing committee also found that Micheel was not guilty of conduct involving dishonesty. *fn9

II

The hearing committee and the Board found that Micheel had engaged in commingling and misappropriation, both violations of DR 9-103 (A). Micheel does not challenge these findings, nor could he, for it is clear that his conduct constituted both commingling and misappropriation. Depositing client funds into an attorney's operating account constitutes commingling; misappropriation occurs when the balance in that account falls below the amount due to the client. See, e.g., In re Hessler , 549 A.2d 700 (D.C. 1988). Misappropriation in such situations is essentially a per se offense; proof of improper intent is not required. In re Harrison , 461 A.2d 1034, 1036 (D.C. 1983).

We held in In re Addams that "in virtually all cases of misappropriation, disbarrment will be the only appropriate sanction unless it appears that the misconduct resulted from nothing more than simple negligence." 579 A.2d at 191; see also In re Hines , 482 A.2d 378, 386 (D.C. 1984). In later decisions we have made quite clear that there is a presumption of disbarrment in all cases involving misappropriation resulting from more than simple negligence. See, e.g., In re Cooper, supra note 9, 591 A.2d at 1297; In re Godfrey , 583 A.2d 692, 693 (D.C. 1990); In re Robinson , 583 A.2d 691, 692 (D.C. 1990); In re Thompson , 583 A.2d 1006, 1008 (D.C. 1990). The principal issue in this case is whether Micheel's inadvertent misappropriation of his client's funds was the result of simple negligence or of reckless disregard of his duty to safeguard the funds.

The hearing committee specifically rejected Bar Counsel's contention that Micheel "had a disregard for the security of the settlement funds giving rise to an inference that he intended to use the funds [for his own benefit]." The committee credited Micheel's testimony that any misappropriation was the result of "sloppy bookkeeping" and "bad accounting," rather than any intent to steal the client's funds. "This is not a case," the committee said, "where lassitude in record-keeping sank to the level of a reckless disregard for the state of the account." Rather, in the words of the hearing committee, Micheel "negligently allowed [his office account] to become overdrawn on one or two occasions (within weeks of each other), and immediately made restitution as soon as it was called to his attention." The committee, citing In re Hessler, supra , 549 A.2d at 701, concluded that Micheel's conduct involved "commingling and misappropriation through simple negligence, but no more. . . ."

The Board adopted the hearing committee's Conclusion that Micheel had commingled and misappropriated funds. It deferred to the committee's finding that Micheel did not intentionally misappropriate funds, noting that the committee had credited Micheel's testimony to that effect and that it could not overturn the committee's credibility determinations. The Board nevertheless disagreed with the hearing committee's Conclusion that Micheel's conduct was the result of simple negligence. The Board held that on the undisputed facts, as found by the hearing committee, Micheel's misappropriation "was the consequence ...


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