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In re Bailey9/15/2005
file an exception to the hearing committee's report and recommendation. Mr. Bailey claims that he filed an exception to the hearing committee's report and recommendation on June 21, 2001, however, there appears to be no record of the filing with the Board. On January 22, 2001, to assist the Board in its review of the matter, the Board ordered the parties to brief the following issues:
(1) What constitutes "property" of clients or third parties within the meaning of Rule 1.15 (a);
(2) Whether the uthorization form (or any other act or instrument) in the record of this case effected an "assignment" of the settlement funds to Dr. Garmon or otherwise conveyed a sufficient "property" interest to him to come within Rule 1.15 (a);
(3) Whether any such "property" interest of Dr. Garmon was sufficiently clear and well established that the use of the funds should not be considered a good faith, negligent mistake of fact or law in view of the Hearing Committee's conclusion that [Ms. Hailed] authorized [Mr. Bailey] to borrow funds; and
(4) Whether, in view of the issues identified above, the presumption of disbarments for in In re Addams, 579 A.2d 190 (D.C. 1990) (en banc), is applicable here.
On February 27, 2003, the Board issued its report and recommendation. It adopted the hearing committee's findings of fact with some modifications. The Board found that Mr. Bailey commingled entrusted funds by using, "as his own, funds that he kept in his trust account with clients' entrusted funds." However, the Board rejected the committee's finding of misappropriation under Rule 1.15 (a). As the Board stated:
Misappropriation is an extremely serious ethical violation, with extremely serious consequences. Where, as here, a contract prepared by a third-party service provider is relied upon to support the charge, the language creating the assignment or lien must be clear - particularly where, as here, the charge requires clear and convincing evidence to be sustained. See In re Anderson, 778 A.2d 330, 335 (D.C. 2001).
We do not find that level of clarity in this case. The uthorization, as written, created neither a lien against the settlement proceeds nor an outright assignment of them to Dr. Garmon. First, there is no language in the uthorization suggesting an assignment of the Funds to Dr. Garmon. Second, the provisions containing lien language relate only to fees for the Doctor's services as an expert witness, and the fees in question were not for those services. Hence, the Funds were Ms. Haile's to lend, and Dr. Garmon's remedies were those of a general creditor. It follows that the Funds were not the "property" of Dr. Garmon, and therefore that the Respondent did not commit misappropriation when he borrowed them from his client.
Furthermore, although the Board found that Mr. Bailey failed to promptly notify Dr. Garmon of Ms. Haile's settlement, which amounted to a violation of Rule 1.15 (b), it did not conclude that Mr. Bailey violated the first sentence of Rule 1.15 (b), "that '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,'" because Dr. Garmon did not have a "sufficient interest" in the settlement and therefore was not "entitled to receive" funds from the settlement. Mr. Bailey's failure to notify was based on Ms. Haile's intention that Dr. Garmon be paid for the medical services he provided. The Board also found that Mr. Bailey violated Rule 1.8 (a) by failing to give Ms. Haile a reasonable opportunity to seek the advice of independent counsel. Neither the hearing committee nor the Board found a violation of Rule 1.8 (b). The Bo
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