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In re Bailey

September 15, 2005; as amended October 5, 2005


The opinion of the court was delivered by: Reid, Associate Judge

On Report and Recommendation of the Board on Professional Responsibility. (BDN 442-92 & BDN 483-92).

Argued April 8, 2004

Before SCHWELB and REID, Associate Judges and FERREN, Senior Judge.

Concurring opinion by Associate Judge SCHWELB at page 34.

A majority of the Board on Professional Responsibility ("the Board") has recommended that Samuel Bailey, Jr. be suspended from the practice of law for nine months and be required to complete a course in ethics and a course in trust accounting as a condition of reinstatement, due to his violation of the District of Columbia Rules of Professional Responsibility. The Board found that Mr. Bailey had commingled funds,*fn1 failed to maintain complete trust account records,*fn2 failed to notify a physician of a client's settlement,*fn3 and entered into an impermissible business transaction with a client.*fn4

The Board majority rejected the hearing committee's finding of misappropriation.*fn5 Because the hearing committee automatically recommended disbarment*fn6 after having found that Mr. Bailey engaged in misappropriation, the Board conducted its own sanctions analysis and concluded that a nine-month suspension was appropriate. Bar Counsel and Mr. Bailey noted exceptions to the Board's report and recommendation.

Bar Counsel contends that the Board erred when it rejected the hearing committee's finding of misappropriation. Specifically, Bar Counsel asserts that the authorization gave Dr. Franklin Garmon an interest in the settlement funds thus obligating Mr. Bailey to "safeguard and promptly pay funds belonging to [Dr. Garmon]." Therefore, when Mr. Bailey "failed to honor Dr. Garmon's [a]uthorization, and instead spent the doctor's share on [his] personal and business expenses without Dr. Garmon's authority, he engaged in misappropriation in violation of Rule 1.15 (a). His failure to notify or promptly pay Dr. Garmon, constituted a violation of Rule 1.15 (b)." Bar Counsel notes exception to the recommended nine-month suspension, insisting that disbarment is warranted. Mr. Bailey contends that the authorization did not give Dr. Garmon a property interest in the settlement funds,*fn7 and therefore the Board did not err when it found no misappropriation. Mr. Bailey, however, disagrees with the Board's recommended sanction and argues that because he made an "honest mistake" he should only be given a six-month suspension.


The record before us, which includes the findings of the hearing committee, shows that Mr. Bailey*fn8 represented Almaz Haile, an immigrant from Eritrea.*fn9 Ms. Haile sustained an injury in 1989, at a Giant Food store, when she slipped and fell. She retained Mr. Bailey, then a member of Lee & Harvey, to represent her in a personal injury action.*fn10

In the course of his representation, Mr. Bailey referred Ms. Haile to Dr. Garmon, who treated her injuries. On June 19, 1989, an "[a]uthorization" form provided by Dr. Garmon to Ms. Haile and Mr. Bailey was executed. The section of the "[a]uthorization" under which Ms. Haile's signature appears, provided in pertinent part:

I hereby authorize and direct you, my attorney, to pay directly to said doctor such sums as may be due and owed to him for medical services rendered to me, my son, or daughter, and any other bills that are due his office which shall include fees for his appearance in court on my behalf (including those accrued after he has been placed on alert for purposes of court appearance, whether or not he actually makes that appearance).

If required as an expert witness, whether he testifies or not for reports made or depositions given in this matter, I further authorize you my attorney, to withhold such sums from any settlements, judgments or verdicts as may be necessary to adequately protect said doctor and compensate him for his time and efforts on my behalf and also to institute a lien on this case to the said doctor against any and all proceeds for me, my son or daughter until the said doctor's medical bills for treatment of me, my son or daughter, fees for court appearance(s) (or time awaiting that appearance), deposition(s) are paid or he is compensated for his efforts on behalf of me, my son or daughter in connection herewith.

I fully understand that I am directly responsible to said doctor for all medical bills submitted by him for services rendered and that this agreement is made solely for said doctor's additional protection. I fully understand that such payments are not contingent on any settlement, judgment or verdict form which I eventually recover damages, compensation or said fee.

The section signed by Mr. Bailey read as follows: "The undersigned, being attorney of record for the above patient/client does hereby agree to observe all the terms of the above and agrees to withhold such sums from any settlement(s), judgment(s) or verdicts due said patient/client as may be necessary to adequately protect said doctor."

On September 27, 1991, Mr. Bailey deposited a $25,000 settlement check from Giant Foods' insurance company into an account with City National Bank under the name "Samuel Bailey Jr Atty at Law Client Trust Account" ("Trust Account"). Prior to the deposit of that check, the account had a balance of $931.38.

A settlement disbursement sheet, dated September 26, 1991, was signed by Ms. Haile and Mr. Bailey. It stated, "[p]ursuant to your instruction, [w]e have settled your personal injury claim of March 28, 1989, and the following constitutes all fees and charges. Further, your authorization has been given for my office to borrow the funds awarded to use as deemed appropriate." The disbursement sheet showed that Ms. Haile was owed $9,122.13.*fn11

The disbursement sheet also revealed that the total cost of Ms. Haile's medical expenses was $5,425.86, which included $2,420.30 owed to Dr. Garmon. The final paragraph of the settlement disbursement sheet specified: "I, Almaz Haile, have read the above disbursement and agree with all payments."

In addition, a promissory note was executed by Mr. Bailey on September 26, 1991. It provided as follows:

For value received, the undersigned [Mr. Bailey] promises to pay to Almas Haile, the sum of $5,425.86, the amount of medical expenses in her case, with interest at a rate of 5% per annum, or to pay outstanding medical expenses directly to medical providers listed on the settlement sheet after satisfactory negotiations.

If [Mr. Bailey] is able to negotiate a discounted payment to any of the listed medical expenses, such discount will be paid to Almas Haile. All monies owed to Ms. Haile under this agreement must be paid within a four year period from the date of this note.

Ms. Haile testified that "she reviewed the note with Mr. Bailey, but she nevertheless expected that the doctors were 'going to be paid' and that Mr. Bailey 'was going to take care of it.' Though she did not have a specific notion of when he would do so." Mr. Bailey did not inform Dr. Garmon or any of the other medical providers about this agreement.

Mr. Bailey testified that he prepared and executed the promissory note and reviewed the terms with Ms. Haile. Although English was not Ms. Haile's first language, Mr. Bailey testified that they "were able to communicate," and that he thought "she understood."*fn12 Mr. Bailey did not advise Ms. Haile to consult legal counsel regarding the loan, nor did he provide Ms. Haile with the prevailing interest rate. An expert for Bar Counsel testified that if Mr. Bailey had received a loan from a bank, the interest rate would have been higher than what was provided in ...

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