REPORT OF REFEREE ACCEPTING DISBARMENT ON CONSENT

Transcription

1 IN THE SUPREME COURT OF FLORIDhiä A. A330 (Before a Referee) A 43 THE FLORIDA BAR, Complainant, v. DAVID KARL DELANO OSBORNE, Respondent. Supreme Court Cas No. SC The Florida Bar File Nos ,007(09B)(CES); ,088(09B); ,385(09B); ,992(09B). K. SUPREME COURT REPORT OF REFEREE ACCEPTING DISBARMENT ON CONSENT I. SUMMARY OF PROCEEDINGS Pursuant to the undersigned being duly appointed as referee to conduct disciplinary proceedings herein according to Rule 3-7.6, Rules of Discipline, the following proceedings occurred: On June 2, 2014, The Florida Bar filed its Petition for Emergency Suspension against respondent in these proceedings. All of the aforementioned pleadings, responses thereto, exhibits received in evidence, and this Report constitute the record in this case and are forwarded to the Supreme Court of Florida. II. FINDINGS OF FACT A. Jurisdictional Statement. Respondent is, and at all times mentioned during this investigation was, a member of The Florida Bar, subject to the jurisdiction and disciplinary rules of the Supreme Court of Florida.

2 B. Narrative Summary Of Case. 1. Respondent represented Caroline Chude on a contingency basis in a personal injury matter beginning in Subsequently, in or about July 2013, Ms. Chude advised respondent's firm that she accepted the insurance company's offer of settlement as represented to her by respondent's firm. 3. Thereafter, on or about September 8, 2013, Ms. Chude met with respondent in order to obtain her portion of the settlement proceeds received from the insurance company for her case. 4. Respondent failed to disburse any settlement proceeds to Ms. Chude, despite her requests that he do so. Further, respondent failed to provide Ms. Chude with an accounting of her funds held in trust. 5. Based on respondent's failure to disburse the settlement proceeds to her, Ms. Chude contacted the insurance company to confirm the settlement of her case. At that time, Ms. Chude was told by the insurance company that a settlement check in the amount of $35, had been issued to respondent on her behalf in or around November 2, Ms. Chude never endorsed the check from the insurance company and knew nothing about a $35, settlement regarding her case. 2

3 6. Based on the allegations of misappropriation and misuse of trust funds, The Florida Bar conducted an audit of respondent's trust account at Regions Bank for the period from January 1, 2012 through January 8, The bar's audit confirmed that the $35, settlement check in Ms. Chude's case was deposited into respondent's trust account on November 5, Respondent misappropriated all of Ms. Chude's funds. He disbursed $3, for personal use and disbursed $31, to his non lawyer employee, Ralph Martin. 8. The bar's audit further established that respondent misappropriated client funds pertaining to more than one client during the audit period. Respondent improperly used client funds for a purpose other than that which they were intended in violation of The Rules Regulating The Florida Bar. Respondent failed to maintain his trust account in substantial compliance with the requirements set forth in The Rules Regulating The Florida Bar. 9. The bar's audit also revealed that respondent used client deposits on behalf of Ms. Chude, and other clients as set forth below, to correct personal bank account shortages and overdrafts. Respondent failed to maintain adequate funds in his trust account to meet the liabilities owed to his clients. 10. In late December 2012, respondent undertook the representation 042 of Charles and Felecia Johnson in regard to two matters. The matters involved an 3

4 insurance claim dispute with her employer as well as a separate personal injury matter. 11. Respondent's firm advised Mrs. Johnson that she needed to provide the firm with a check for $4, made payable to the Osborne Law Group because it was necessary for the firm to hold the disputed funds in the insurance claim dispute with her employer in the firm's trust account. Mrs. Johnson's daughter provided this amount to the firm and it was deposited into respondent's operating account at Regions Bank on or about January 7, Mrs. Johnson attended a meeting with her employer's benefits department and was told to repay the disputed amount of $4, to resolve the dispute. Although she had been advised by respondent's firm that Mr. Martin would attend the meeting with her, he failed to appear or to respond to her repeated requests in this regard. 13. Thereafter, Mrs. Johnson called respondent's firm and left several messages directing the $4, be returned to her immediately. She received no response. 14. On or about May 14, 2013, Ms. Johnson called respondent inquiring about the return of the $4, Respondent personally and specifically informed Ms. Johnson that she would get the funds and that the check was in the 4

5 mail. When the check did not arrive in the mail, Ms. Johnson again contacted respondent, who stated that he would check with the bank. 15. Respondent failed to return the $4, to Ms. Johnson, despite his representations that he would do so. 16. Further, during this period of time, Ms. Johnson received no case information from respondent or his firm regarding the status of her personal injury case. 17. The bar's audit revealed that on or around April 1, 2013, two settlement checks were received on behalf of Mr. and Mrs. Johnson from Allstate Insurance Company totaling $10, The checks were deposited into respondent's trust account. Respondent misappropriated all of Mr. and Mrs. Johnson's settlement proceeds by disbursing the total amount to Mr. Martin on April 2, Mr. and Mrs. Johnson were unaware of the existence of these checks and the receipt of settlement funds by respondent. Further, respondent never provided Mr. and Mrs. Johnson any of the proceeds from the afore-referenced settlement checks. 19. In or about January 2013, respondent's firm undertook the representation of Mr. Carmen Vallone in his personal injury case. 5

6 20. Thereafter, Mr. Vallone repeatedly called respondent's firm seeking updates on the status of his case. Mr. Vallone was informed by the firm that the insurance company refused to settle the matter and that the negotiations were ongomg. 21. The bar's audit revealed that a settlement check in the amount of $10, from Geico Insurance Company in Mr. Vallone's personal injury matter was deposited into respondent's trust account on or about January 31, Respondent misappropriated all of Mr. Vallone's settlement proceeds. The funds were immediately disbursed by respondent. Respondent issued a cashier's check to Mr. Martin in the amount of $8, and disbursed the remaining proceeds to himself for personal use. 22. Respondent failed to notify Mr. Vallone of the receipt of the settlement funds on his behalf. Respondent failed to provide Mr. Vallone any of the proceeds whatsoever from the afore-referenced settlement check. 23. Pursuant to a subpoena dated January 8, 2014, the bar received from Regions Bank the bank statements, deposit slips, images of deposited items, and images of debits for respondent's trust account, operating account, and personal account for the period January 1, 2012 through January 8, Respondent was the only signatory on the account. 6

7 24. Further, respondent was directed to provide trust documents, including closing statements, as required by Chapter 5 of The Rules Regulating The Florida Bar regarding Trust Accounts, pursuant to a subpoena dated February 25, Respondent failed to produce the required trust account documents. Respondent only provided the bar with the trust account bank statements, which included only the fronts of canceled checks. 25. Respondent admitted to The Florida Bar in his deposition on March 13, 2014, that he was the only signatory on the trust account. Respondent further admitted that he paid Mr. Martin from the trust account. 26. Respondent also admitted that he did not maintain a journal, ledger cards, monthly comparisons, or reconciliations. Respondent further stated he was unsure what records were required to be maintained and what procedures were required to be completed regarding trust accounts. 27. During his deposition, respondent identified Mr. Martin as his "law clerk" and "paralegal" and described him as having significant interactions with respondent's clients, without respondent present. C. Aggravation and Mitigation. 1. The following aggravation is applicable in the instant matter: dishonest or selfish motive; a pattern of misconduct; multiple offenses; bad faith obstruction of the disciplinary proceeding by intentionally failing to comply with 7

8 rules or orders of the disciplinary agency; vulnerability of victim; and substantial experience in the practice of law. Fla. Stds. Imposing Law. Sancs. 9.22(b), 9.22(c), 9.22(d), 9.22(e), 9.22(h), and 9.22(i), respectively. 2. The following mitigation is applicable in the instant matter: absence of a prior disciplinary record. Fla. Stds. Imposing Law. Sancs. 9.32(a). III. RECOMMENDATIONS AS TO GUILT I recommend that respondent be found guilty of violating the following Rules of the Rules Regulating The Florida Bar: 4-1.4(a), (b) Communication; Safekeeping Property; 4-5.3(b) Supervisory Responsibility; 4-8.4(a), (c) Misconduct; 5-1.1(b) Application of Trust Funds or Property to Specific Purpose;5-1.1(e) Notice of Receipt of Trust Funds; Delivery; Accounting; 5-1.2(b) Minimum Trust Accounting Records; and 5-1.2(c)(1) Responsibility of Lawyers for Firm Trust Accounts and Reporting. IV. RECOMMENDATION AS TO DISCIPLINARY MEASURES TO BE APPLIED I recommend that respondent be found guilty of misconduct justifying disciplinary measures, and that he be disciplined by: Five-year disbarment. I have considered the following Standards prior to recommending discipline: 4.1 Failure to Preserve the Client's Property 4.11 Disbarment is appropriate when a lawyer intentionally or knowingly converts client property regardless of injury or potential injury. 8

9 5.0 Violation of Duties Owed to the Public 5.11(f) Disbarment is appropriate when a lawyer engages in any other intentional conduct involving dishonesty, fraud, deceit, or misrepresentation that seriously adversely reflects on the lawyer's fitness to practice. I have considered the following case law prior to recommending discipline: In The Florida Bar v. Rousso, 117 So. 3d 756 (Fla. 2013), the court held that embezzlement of trust account funds by non-attorney employee of law firm did not relieve attorneys of responsibility for safekeeping of trust account funds and the attorneys' abandonment of their professional duty to safeguard client funds warranted disbarment. The court noted "that lawyers have a 'unique fiduciary duty,' individually and as a profession. 'Never is an individual's trust in attorneys more evident, or more at risk, than when he places funds or property into the hands of his attorney.'" Id. at 767, quoting The Florida Bar v. Ward, 599 So. 2d 650, 652 (Fla.1992). In The Florida Bar v. Mirk, 64 So. 3d 1180 (Fla. 2011), the Supreme Court of Florida ordered disbarment for an attorney's misappropriation of clients funds held in the attorney's trust account. The attorney made a number of secret withdrawals from the trust account involving the client's funds, without the client's permission or knowledge. In its holding, the court restated its long held position 9

10 that there is never a valid reason to misappropriate client funds held in trust. See The Florida Bar v. Valentine-Miller, 974 So. 2d 333, 338(Fla. 2008). In The Florida Bar v. Valentine-Miller, 974 So. 2d 333 (Fla. 2008), an attorney was suspended on an emergency basis for misappropriation of trust funds, abandonment of her law practice, and other related rule violations. The court specifically noted that either act of misconduct, standing alone, warranted disbarment. Ms. Valentine-Miller's poor recordkeeping made it impossible to determine the exact total of client funds she converted. Ms. Valentine-Miller presented significant mitigation in her defense of the bar's disbarment recommendation. During the time period in question, Ms. Valentine-Miller suffered a series of personal difficulties, including the death of her mother and her own diagnosis with cancer, which exacerbated her pre-existing substance abuse problems. After the bar initiated disciplinary proceedings against her, she voluntarily admitted herself to a treatment facility where she demonstrated progress in making a recovery from her problems. In aggravation, there was a pattern of misconduct, multiple offenses, the affected clients were particularly vulnerable because they had not received their settlement funds or had not been able to obtain their files in order to seek new counsel, and there was a selfish or dishonest motive. The mitigation failed to overcome the well established presumption that disbarment is the appropriate sanction for misappropriation. 10

11 In The Florida Bar v. Martinez-Genova, 959 So. 2d 241 (Fla. 2007), the court held that disbarment was the appropriate discipline for an attorney who intentionally misappropriated third-party funds and failed to maintain proper trust accounting procedures, despite mitigation. The attorney had made no attempt at restitution and had some history of misconduct. The court found that "Martinez- Genova 'willfully ignored her responsibilities as an attorney during the period in which she misappropriated money from third-parties.' As a result, Martinez- Genova's misconduct is not analogous to negligent misappropriation cases". Id. at 247. In The Florida Bar v. Brownstein, 953 So. 2d 502 (Fla. 2007), the court rejected the referee's recommendation of a 3-year suspension and instead imposed disbarment despite Mr. Brownstein's evidence that he suffered from clinical depression which impaired his judgment. The court held once again that disbarment is the presumed sanction for the misappropriation of client funds, and the presumption will be overcome only in unique circumstances. Mr. Brownstein was suspended pursuant to an emergency suspension for misappropriation of client funds after he issued checks from his operating account to a bankruptcy trustee that were dishonored due to insufficient funds that should have been drawn on settlement funds held in trust. Mr. Brownstein admitted he did not keep the minimum required trust account records. The bar's audit revealed that Mr. 11

12 Brownstein engaged in commingling by depositing money from his operating account to his trust account and used the two accounts to engage in check kiting. The court found his mitigation, no prior discipline, good faith effort to rectify the problem, good reputation, mental impairment, interim rehabilitation, imposition of other penalties or sanctions, remorse, and participation in Florida Lawyers Assistance, Inc., failed to overcome the presumption that disbarment was appropriate. V. PERSONAL HISTORY AND PAST DISCIPLINARY RECORD Prior to recommending discipline pursuant to Rule 3-7.6(m)(1)(D), I considered the following personal history of respondent, to wit: Age: 42 Date admitted to the Bar: September 25, 2001 Prior Discipline: By court order dated June 6, 2014, respondent was suspended on an emergency basis resulting from the petition for emergency suspension filed in the instant matter. VI. STATEMENT OF COSTS AND MANNER IN WHICH COSTS SHOULD BE TAXED I find the following costs were reasonably incurred by The Florida Bar: Investigative Costs $4, Copy Costs $ Court Reporters' Fees $1, Administrative Fee $1,

13 TOTAL $7, It is recommended that such costs be charged to respondent and that interest at the statutory rate shall accrue and that should such cost judgment not be satisfied within thirty days of said judgment becoming final, respondent shall be deemed delinquent and ineligible to practice law, pursuant to R. Regulating Fla. Bar 1-3.6, unless otherwise deferred by the Board of Governors of The Florida Bar. Dated this 4th day of August, Original To: WILLIAMBRU Referee SMITH Clerk of the Supreme Court of Florida, Supreme Court Building, 500 South Duval Street, Tallahassee, Florida, Conformed Copies to: Barry William Rigby, Respondent's Counsel, Law Offices of Barry Rigby, P.A., 924 North Magnolia Avenue, Suite 350, Orlando, Florida , via at Patricia Ann Toro Savitz, Bar Counsel, The Florida Bar, 1000 Legion Place, Suite 1625, Orlando, Florida , via at Keshara Darcel Davis, Bar Counsel, The Florida Bar, 1000 Legion Place, Suite 1625, Orlando, Florida , via at StaffCounsel, The Florida Bar, Lakeshore Plaza II, 1300 Concord Terrace, Suite 130, Sunrise, Florida 33323, via at this 4th day of August, Ju 570icial Assistant 13