SJC-07188
IN THE MATTER OF WAYNE H. EISENHAUER.
Suffolk. October 7, 1997. - January 14, 1998.
Present: Wilkins, C.J., Abrams, Lynch, Greaney, Marshall, & Ireland,
JJ.
Attorney at Law, Suspension, Disciplinary proceeding, Conflict of
interest, Deceit, Fiduciary duty. Due Process of Law, Administrative
hearing. Administrative Law, Proceedings before agency.
Information filed in the Supreme Judicial Court for the county of
Suffolk on January 24, 1996.
The case was heard by Fried, J.
Earle C. Cooley (Christopher Cunio with him) for the respondent.
Terence McBride Troyer, Assistant Bar Counsel.
ABRAMS, J. This is an appeal from an order of
a single justice of this court suspending the respondent, Wayne H. Eisenhauer,
from the practice of law for four years. The respondent claims error because
(1) the evidence against him was insufficient; (2) bar counsel was biased; (3)
criminal procedures were not followed; and (4) his suspension from the practice
of law was disparate from sanctions imposed on other attorneys for similar conduct.
For the reasons stated in this opinion, we conclude that the respondent should
be indefinitely suspended from the practice of law.
We recite the findings of the hearing committee, which
were adopted by the Board of Bar Overseers (board).1 In 1985, the
respondent drafted reciprocal wills for an elderly couple, Helen Brown Piggott
and Clayton L. Piggott. When Helen Piggott died in May, 1989, Mr. Piggott engaged
the respondent, at an hourly rate, to represent her estate. In July, 1989, Mr.
Piggott became ill and executed a durable power of attorney in favor of the
respondent, entrusting to him control of Mr. Piggott's property. Shortly thereafter,
Mr. Piggott retained the respondent to draft a revocable trust called the Clayton
L. Piggott Trust (trust). On the day that the trust was executed, Mr. Piggott
assigned substantially all his property to it. The trust instrument named the
respondent as trustee and contained a provision giving him veto power over the
naming of any successor trustee. The trust instrument also required that, in
order for Mr. Piggott to exercise his power of revocation, he had to revoke
specifically the previously executed power of attorney.2 After Mr.
Piggott's death on September 14, 1989, the coexecutors of Mr. Piggott's estate
retained the respondent as attorney for the estate.
1 Thus, we treat the findings of fact
by the hearing committee as those of the board.
2 The board found that both these provisions
were "highly unusual" and were included in the trust instrument "solely for
the benefit of the respondent."
Following the death of Mr. Piggott, the respondent served
in three distinct roles: attorney for Mrs. Piggott's estate, attorney for Mr.
Piggott's estate, and trustee to the trust. In total, he was entrusted with
$579,350. At the time of the disciplinary hearing in the fall of 1993, the respondent
had spent $457,378 of that total, including $219,985 he paid to himself for
fees for services allegedly performed in all three roles.3 In addition
he had made no distribution to any of the beneficiaries,4 had filed
no account or inventory for either of the estates, and had prepared only one
of the required annual accounts to the beneficiaries of the trust. In the one
account he did prepare, he understated the fees that he had paid himself by
a third (some $40,000).
3 The respondent paid himself $15,000
in attorney's fees for his work as the lawyer for Mr. Piggott's estate even
though all of Mr. Piggott's assets had been transferred to the trust. The fee
was comprised of $10,000 as a percentage fee and $5,000 for additional work
described by the respondent as necessary. The board determined these to be "grossly
excessive" and "exorbitant and wholly disproportionate to the services performed
so as to shock the conscience." The only work performed was to prepare and file
a petition for probate and to file an estate tax return.
The respondent also paid himself
more than $25,000 to act as attorney for Mrs. Piggott's estate. This fee was
comprised of $15,000 as a percentage fee and $10,000 for additional, allegedly
necessary, work. The board determined the fee to be "clearly excessive" and
"so exorbitant and wholly disproportionate to the services provided as to shock
the conscience." Further, the board determined that the statement the respondent
prepared in support of the fee misrepresented the value of the services provided.
In addition, the board determined that the statement, prepared well after payment
of the fees to the respondent and only after the demand of bar counsel, "grossly
misrepresented" the additional work the respondent claimed to justify his fee.
In fact, the board determined, such work was inherent in the minimum work necessary
to probate the estate.
The respondent paid
himself in excess of $170,000 for services provided to the trust. The board
determined that these fees were "excessive" and "exorbitant and wholly disproportionate
to the services performed."
4 One beneficiary was loaned
$20,000.
The respondent commingled funds from Mrs. Piggott's
estate with funds from the trust so that the funds were under his control as
trustee instead of the control of the coexecutors of Mrs. Piggott's estate.
Solely for his own benefit he vigorously resisted inquiries made by the trust
beneficiaries and intentionally misled them about the status of trust assets
and the terms of the trust. He unnecessarily delayed for almost one year in
selling the Piggott home and other real estate, and he was not truthful in his
explanations to the trust beneficiaries or to the hearing committee about the
delay. He changed his billing records to increase the billing rate of his paralegal
from $60 to $175. Using trust assets, the respondent hired his cousin as caretaker
for the Piggott home, paying him $32,000 over the course of three years. The
respondent also used trust assets to pay $7,275 for real estate commissions
and $11,495 for consulting services to a corporation wholly owned by the respondent
and employing only the respondent's father. The board found that all payments
to the corporation were tantamount to payments to the respondent, since under
the terms of his rental agreement each dollar paid to the corporation reduced
by an equal amount what the respondent had to pay for rent.
The hearing committee determined that the respondent
had violated S.J.C. Rule 3:07, Canon 1, DR 1-102 (A) (4), as appearing in 382
Mass. 769 (1981), by making deceitful representations to the beneficiaries of
the trust for his own benefit and S.J.C. Rule 3:07, Canon 2, DR 2-106, as appearing
in 382 Mass. 772 (1981), by charging excessive fees for his work on the two
estates and the trust. The committee recommended that he be suspended from the
practice of law for one year. The respondent filed an appeal challenging the
committee's findings of fact, conclusions of law, and recommendation. Bar counsel
also appealed, seeking respondent's indefinite suspension. An appeal panel reviewed
the record de novo and heard oral argument. The appeal panel adopted the hearing
committee's findings of fact and affirmed its conclusions of law. The appeal
panel determined that the respondent had committed six additional violations
of the disciplinary rules5 and increased the recommended suspension
to four years. The board adopted the appeal panel's report6 and filed
an information in the county court. After a hearing, the recommendation of the
board was accepted by the single justice and the respondent was suspended from
the practice of law for four years.
5 The appeal panel determined
that the respondent violated S.J.C. Rule 3:07, Canon 1, DR 1-102 (A) (4), (5),
and (6), as appearing in 382 Mass. 769 (1981), by altering billing records to
bill paralegal time at lawyer's rates of $175 per hour; engaged in a conflict
of interest in violation of S.J.C. Rule 3:07, Canon 5, DR 5-101 (A), as appearing
in 382 Mass. 781 (1981), by including in the trust instrument provisions solely
to benefit himself; and, in failing to terminate the trust or the estates and
failing to make distributions to the beneficiaries for more than four years
while paying himself and family members substantial fees, the respondent engaged
in a conflict of interest in violation of DR 5-101 (A), neglected a legal matter
in violation of S.J.C. Rule 3:07, Canon 6, DR 6-101 (A) (3), as appearing in
382 Mass. 783 (1981), and failed to represent a client zealously in violation
of S.J.C. Rule 3:07, Canon 7, DR 7- 101 (A) (1), (2), and (3), as appearing
in 382 Mass. 784 (1981).
6 The board deleted a footnote,
not here relevant, from the appeal panel's report.
1. Sufficiency of the evidence. The respondent
contends that the board's conclusion that he charged excessive fees in violation
of DR 2-106 (A) was unsupported by subsidiary findings because the board failed
to use the specific language of DR 2-106 (B). We reject the respondent's contention.
The board explicitly found that the fees charged were
excessive. There is no requirement that the specific language of the rule be
used. Nor, as the respondent contends, is expert testimony required to prove
an ethical violation. Matter of Saab, 406 Mass. 315, 329 (1989).
The respondent also contends that there is insufficient
factual support for the determination that the unusual provisions in the trust,
see ante at & n.2, constituted a conflict of interest in violation
of S.J.C. Rule 3:07, Canon 5, DR 5-101 (A), as appearing in 382 Mass. 781 (1981),
because the client could have consented to the conflict after full disclosure.
This claim is also without merit. There is no indication in the record that
the respondent disclosed the conflict to Mr. Piggott or that Mr. Piggott affirmatively
consented to it. The respondent's argument that there was no finding that the
provisions of the trust did not reflect Mr. Piggott's wishes is irrelevant.
An attorney who faces a conflict has an affirmative duty to disclose it and
obtain the client's consent. In a disciplinary hearing, the respondent must
prove that the client's consent was obtained after full disclosure of the conflict.
The respondent further argues that because the trust's
beneficiaries were not his clients, the board erred in concluding that by failing
to terminate the trust or the estates and failing to make distributions to the
beneficiaries for more than four years while paying himself and family members
substantial fees, the respondent engaged in a conflict of interest (in violation
of DR 5-101 [A]), neglected a legal matter (in violation of S.J.C. 3:07, Canon
6, DR 6-101 [A] [3], as appearing in 382 Mass. 783 [1981]), and failed to represent
a client zealously (in violation of S.J.C. 3:07, Canon 7, DR 7-101 [A] [1],
[2], [3], as appearing in 382 Mass. 784 [1981]). We do not agree. First, DR
6-101 (A) (3) makes no reference to "clients." Second, although the disciplinary
rules do not define the word "client," in cases involving disciplinary rules
in which the word "client" does appear, the single justices have not construed
the word so narrowly as to exclude the circumstances here. See, e.g., Matter
of Silver, 9 Mass. Att'y Discipline Rep. 295, 298 (1993) (trustee violated
S.J.C. Rule, Canon 5, DR 5-104 [A], as appearing in 382 Mass. 779 [1981]; 5-105,
as amended, 397 Mass. 1216 [1986]; Canon 9, DR 9-102 [B] [3], as appearing 419
Mass. 1303 [1995]); Matter of Mahoney, 9 Mass. Att'y Discipline Rep.
209, 210-211 (1993) (trustee violated S.J.C. 3:07, Canon 9, DR 9-102 [A], as
appearing in 419 Mass. 1303 [1995] and DR 7-101 [A]); Private Reprimand No.
92-36, 8 Mass. Att'y Discipline Rep. 332, 332-333 (1992) (trustee violated
S.J.C. 3:07, Canon 6, DR 6-101 [A] [2] & [3], as appearing in 382 Mass.
783 [1981], and Canon 9, DR 9-102 [B] [3]). Third, the board's findings do not
indicate that these violations were based on the respondent's relationship with
the beneficiaries. The respondent's conduct more than supports a determination
that the respondent violated his fiduciary duties to the trust and the estates.
The respondent also contends that, because of his broad
discretionary powers as trustee, there is insufficient support for the board's
conclusion that by failing to terminate and distribute the assets in the trust,
the respondent engaged in dishonesty, fraud, deceit, and misrepresentation (in
violation of S.J.C. 3:07, Canon 1, DR 1-102 [A] [4], [5], and [6], as appearing
in 382 Mass. 769 [1981]). This claim is without merit. The board explicitly
stated that the deceit arose "not in the [respondent's] failure to end the trust
but in the affirmative misrepresentations made to the beneficiaries about his
handling of the trust and its assets." The record amply supports the board.
2. Bias claim. The respondent argues that his
due process rights were violated because he is being punished for interposing
an aggressive defense based in part on allegations of misconduct and improper
motives of bar counsel. He asserts that bar counsel pursued this complaint in
retaliation for the respondent's refusal to acquiesce to bar counsel's alleged
improper attempt to force him to exercise his discretion as trustee to terminate
the trust and distribute its assets.
The respondent has a constitutionally protected interest
in his license to practice law and he is entitled to due process in bar discipline
proceedings. In re Ruffalo, 390 U.S. 544, 551 (1968). Matter of Kenney,
399 Mass. 431, 435 (1987). On the record before us, the respondent has failed
to demonstrate how these rights have been violated. There is no evidence in
the record that bar counsel was biased or engaged in misconduct. Nor is there
any evidence that either the appeal panel, the board, or the single justice
was biased. The respondent was afforded notice and the opportunity to be heard,
to present evidence, and to challenge evidence against him. He has had the opportunity
to appeal to a panel of the board, the board, a single justice, and the full
court. See Matter of Kenney, supra at 436 (respondent in bar discipline
proceeding entitled to fair notice and an opportunity for explanation and defense).
3. Claims based in criminal procedure. The respondent
claims several errors premised on the theory that criminal procedure applies
to bar discipline proceedings. We reject these claims because bar discipline
cases are not criminal. See Matter of Jones, 425 Mass. 1005, 1007 (1997).
Bar discipline is an "administrative process under the authority of the justices
of the Supreme Judicial Court." Matter of Pressman, 421 Mass. 514, 517
(1995). The primary purpose of a disciplinary proceeding is to protect the public
and ensure the public's confidence in the integrity of the bar. Matter of
Gordon, 385 Mass. 48, 55 (1982). Matter of Keenan, 314 Mass. 544,
547 (1943). Therefore, the special protections afforded a criminal defendant
whose liberty is at stake are not applicable. See Walker v. State
Bar, 49 Cal. 3d 1107, 1116 (1989); Matter of Peters, 332 N.W.2d 10,
17 (Minn. 1983). The respondent is not entitled to the full panoply of rights
afforded to a criminal defendant. Ainsworth v. State Bar, 46 Cal.
3d 1218, 1230 (1988), cert. denied, 489 U.S. 1081 (1989); State v. Harfmann,
638 P.2d 745, 747 (Colo. 1981).
The respondent first claims, as he did below, that he
was denied his right to effective assistance of counsel because of alleged actual
or potential conflicts of interest faced by the lawyers who represented him
before the hearing committee.7 The respondent asserts that his lawyers
may have compromised his defense in order to curry favor with bar counsel.
7 The respondent was represented
by new counsel before the appeal panel, and yet other counsel before the single
justice and the full court.
The respondent's claim fails because there is no right
to counsel in bar discipline proceedings and "the constitutional right to counsel
has not been applied to bar disciplinary matters as a matter of due process."
Matter of Jones, supra at 1007. Further, contrary to the respondent's
assertion § 3.4(b) of the Rules of the Board of Bar Overseers (1997) does
not create the right to counsel.8
It merely sets forth the rules of service in the event a respondent is represented
by counsel in a formal proceeding before the board. Nor does any other board
rule, or rule of the court create such a right. Moreover, the fact that the
board assists an indigent attorney in obtaining pro bono counsel does not establish
a right to representation in a bar discipline proceeding.
8 Section 3.4 of the Rules of the Board
of Bar Overseers was amended in September, 1997. Because this case came before
the board prior to the amendment, the amendment does not govern this case. We
note that § 3.4(d) as amended now provides: "If a respondent in a formal
proceeding desires counsel and cannot afford to retain counsel, then, upon application,
the Board will seek to assist the respondent to obtain counsel either at a reduced
or no cost. Nothing in this subsection (d) accords any substantive right to
the respondent with respect to the appointment or payment of counsel."
The respondent next claims that his questioning of bar
counsel's motives and actions was used against him by the board when it adopted
the appeal panel report that added six disciplinary violations and increased
the recommended suspension by three years. The respondent asserts that this
increase was presumptively vindictive. See North Carolina v. Pearce,
395 U.S. 711 (1969); Commonwealth v. Hyatt, 419 Mass. 815 (1995).
We do not agree.
It is the board, not the hearing committee or the appeal
panel, that is responsible for making a recommendation to the court. S.J.C.
Rule 4:01, § 8 (4), as amended, 394 Mass. 1109 (1985). We look to the board's
recommendation, its experience, and its expertise to try and dispose of disciplinary
matters uniformly. We have accepted the board's recommendation of a sanction
more severe than that recommended by the hearing committee and appeal panel.
See, e.g., Matter of Palmer, 423 Mass. 647, 649 (1996) (four-year suspension
raised to disbarment); Matter of Kondel, 11 Mass. Att'y Discipline Rep.
148, 152 (1995) (indefinite suspension raised to disbarment).
The primary purpose of a disciplinary proceeding is
to protect the public and ensure the public's confidence in the integrity of
the bar. See ante at . Therefore, the board must consider a respondent's
lack of candor, lack of remorse, and lack of awareness of wrongdoing in formulating
a recommendation for discipline. See, e.g., Private Reprimand No. PR-93-21,
9 Mass. Att'y Discipline Rep. 391, 392 (1993); Matter of Friedman, 7
Mass. Att'y Discipline Rep. 100, 103 (1991).
The respondent contends that the board's recommended
suspension is, in part, punishment for presenting a vigorous defense, and cannot
stand because it would chill the right to a defense. See Commonwealth
v. Coleman, 390 Mass. 797, 808 (1984) (stating that it would impermissibly
burden defendant's right to plead not guilty and testify for sentencing judge
to take into account the judge's belief that defendant perjured himself). We
do not agree.
The respondent was not disciplined for defending himself.
The board adopted findings that the respondent was not credible in his testimony
before the hearing committee. See Matter of Tobin, 417 Mass. 81, 85 (1994),
citing S.J.C. Rule 4:01, § 8 (3), as appearing in 381 Mass. 784 (1980)
(hearing committee sole judge of credibility). The respondent's candor and trustworthiness
both directly affect his capacity to practice law. See Matter of Efron,
7 Mass. Att'y Discipline Rep. 89, 90 (1991) ("respondent's lack of forthrightness
and truthfulness before the committee does not bode well for the respondent's
ability to perform legal work in a professional manner"). His failure to show
remorse and his lack of awareness of wrongdoing were proper for the board to
consider in formulating a recommendation for discipline. See Matter of Clooney,
403 Mass. 654, 657-658 (1988) ("[R]espondent's persistent assertions that he
did nothing wrong . . . demonstrated that he 'continues to be unmindful of certain
basic ethical precepts of the legal profession' . . . . In cases such as this,
disciplinary measures are necessary to deter future misconduct on the part of
all members of the bar and to preserve public confidence in the bar").
4. Appropriateness of the term of suspension.
The respondent's final claim is that the four-year suspension he received is
markedly disparate from sanctions imposed in similar cases. See Matter of
Alter, 389 Mass. 153, 156 (1983). He argues that, at most, a one-year suspension
would be appropriate.
In Matter of Schoepfer, ante 183, 188
(1997), we said that "[t]he uneven disposition of past disciplinary cases concerning
the misuse of clients' funds requires us not to try to decide whether the sanction
we impose is reasonably consistent with sanctions heretofore imposed in similar
cases." We also stated that where "an attorney intended to deprive the client
of funds, permanently or temporarily, or if the client was deprived of funds
(no matter what the attorney intended), the standard discipline is disbarment
or indefinite suspension." Id. at 187. In addition, where there are "aggravating
circumstances, such as other violations of disciplinary rules established in
the same proceeding or earlier," a greater sanction than otherwise appropriate
might be warranted. Id. at 188.
In this case the board determined that the respondent
"plucked" the trust and estates, consumed nearly 80% of their value, and spent
much of it for his and his family's benefit. It determined that his churning
was exacerbated by his deceit and misrepresentations in attempting to conceal
his inappropriate actions, by the value of the assets consumed and the size
of the fees taken, and by his failure to make any restitution. The board found
that the cumulative nature of the respondent's misconduct and his lack of candor
before the hearing committee further compounded his transgressions.
Neither bar counsel nor the board has appealed. However,
in view of the board's findings and consistent with Matter of Schoepfer,
supra, we conclude that the respondent should be indefinitely suspended
from the practice of law.
The case is remanded to the single justice for an order
indefinitely suspending the respondent from the practice of law.
So ordered.
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