In Re a Member of the State Bar of Arizona, Grimble

759 P.2d 594, 157 Ariz. 448, 13 Ariz. Adv. Rep. 33, 1988 Ariz. LEXIS 132

• Court: Arizona Supreme Court
• Decided: July 26, 1988
• Docket: SB-87-0034-D
• Status: Published

Opinions

CAMERON, Justice

I. JURISDICTION

This is a review of the recommendations of the Disciplinary Commission of the Arizona Supreme Court. We have jurisdiction pursuant to Ariz.R.S.Ct. 46 and 53(e), 17A A.R.S.

II. QUESTIONS

We must answer two questions:

A. Was there an “attorney-client” relationship between Respondent, in his capacity as director of the Arizona Drug Control District, and Pima County, his employer?

B. Was there sufficient evidence to find that Respondent violated the Code of Professional Responsibility?¹

III. PROCEDURAL HISTORY

In 1981, the news media reported that Respondent, L. Terry Grimble, Director of the Arizona Drug Control District, had “phonied up” certain travel vouchers and receipts in seeking reimbursement of travel expenses and in justifying draws against travel expenses. Respondent resigned. On 21 October 1985, the state bar lodged a sixteen-count complaint against Respondent. The complaint alleged that Respondent “authorized, ratified and condoned the use and submission of false claims and false expense reports, improperly used government contracts for the purchase of items for personal use and improperly used state funds for rental of an apartment in Phoenix.” Respondent was also charged with failure to maintain complete and accurate records.

After a lengthy hearing, during which approximately twenty witnesses testified, the Local Administrative Committee (“Committee”) filed its Findings of Fact, Conclusions, and Recommendations. In essence, the Committee found that Respondent, while employed as the director of the Arizona Drug Control District (“District”), was often late in filing travel vouchers and related materials that would document expenditures he made in connection with District business. Specifically, Respondent failed to timely account for funds advanced to him by the District.

The Committee then recommended that Respondent be publicly censured. Respondent objected to the findings and the recommended sanction and sought review by the Disciplinary Commission (Commission). Ariz.R.S.Ct. 53(d), 17A A.R.S.

On 24 June 1987, after a formal hearing, the Commission filed its report stating:

The Commission adopts the Local Administrative Committee’s conclusions of law as set forth in its report, filed January 6, 1987 and concludes clear and convincing evidence has been presented to show violations of Sup.CtRules, Rule 29(a), Code of Professional Responsibility, specifically DR 9-102(B)(3) and (4).

A majority of the Commission recommended the sanction of public censure. Two members of the Commission contended that a lesser sanction was appropriate under the circumstances. Respondent objected to the report and appealed to this court. Ariz.R.S.Ct. 53(e), 17A A.R.S.

IV. FACTS

Respondent was appointed director of the Arizona Drug Control District by the Pima County Attorney in the mid-1970’s, and stayed in that position until January 1981. The District was created in an effort to investigate and provide assistance in the prosecution of persons involved in narcotics trafficking. Some established law enforcement agencies did not receive the District with open arms, and although the District was able to gain the acceptance and cooperation of certain agencies, others perceived its creation as an attempt to encroach on their respective “territories.” As director, Respondent was responsible for the District’s efforts to forge successful working relationships with other law enforcement agencies. Ele was also responsible for obtaining and maintaining funding for the District, from both state and federal sources. In addition, Respondent assisted other narcotics-related enforcement agencies and associations nationwide, many of which were patterned after the District. As a consequence of his varied duties, Respondent spent a great deal of time in places other than Tucson. He frequently traveled to Phoenix in order to meet with legislators and other officials. His out-of-state travel schedule was extremely demanding, ultimately resulting in his illness.

From the testimony, it appears that Respondent had failed to submit the appropriate data to the Pima County Finance Department in connection with various travel-related expenditures. As a result in one case, finance personnel contacted Pima County Attorney Stephen D. Neely, who was Respondent’s supervisor, and told him that the paperwork in question was long overdue and had to be submitted immediately. Neely, who had previously received similar complaints regarding Respondent, contacted the District’s administrative personnel and told them to collect and submit the necessary items at once. Respondent was out of town when these events took place. District personnel, apparently misunderstanding Neely’s instructions to “reconstruct” Respondent’s itinerary, obtained and “phonied up” blank hotel and restaurant receipts in an effort to bring Respondent’s paperwork up to date by the use of a dummy voucher.² The hotels and restaurants from which the blank receipts were obtained were those often visited by Respondent during his travels. These receipts were sent to the Finance Department and represented as valid, legitimate expenditures. However, the record reveals that Respondent knew that blank receipts were going to be used in the preparation of claims.

The Local Administrative Committee made the following findings of fact:

1. Beginning as far back as 1978 and extending through March, 1981 when Mr. Grimble left the Strike Force, he poorly accounted for and ignored his client’s requests for proper accounting of travel advances which he took from Pima County. The County grants travel advances and then requires accountings filed by the traveler with the appropriate receipts attached which provide information on how the travel advance was spent. Then, the County reconciles the advance to the money spent to determine whether the traveler is entitled to a refund or the traveler should repay some of the funds advanced.

2. Mr. Grimble was notoriously late in filing his accounting reports. He took his travel advances from the county but failed on numerous occasions to provide the documentation to the county which was necessary for the reconciliation. Exhibit 3 before the Committee, a Memorandum to Stephen D. Neely, County Attorney, from Peter A. Larsen, Administrative Officer, dated July 2, 1979, points out that Mr. Grimble had repeatedly neglected to make the settlement required after travel had been performed. As of the time of that Memorandum, Mr. Grim-ble had repeatedly neglected to make the settlement required after travel had been performed. As of the time of that Memorandum, Mr. Grimble had seventeen ad-vanees outstanding, amounting to $2,420. Mr. Larsen’s July 1979 Memorandum goes on to say that Mr. Grimble had travel as far back as 1978 which had not yet been documented and, therefore, Mr. Larsen was requesting an investigation regarding the travel advances.

3. Exhibit 1 provided to the Committee was a Memorandum to Stephen D. Neely as Arizona Drug Control District Administrator from Andrew Migala, the Finance Director of Pima County, regarding travel advances. Mr. Migala pointed out, as of the date of his Memorandum, May 30, 1980, that the Drug Control District had thirty-eight travel advances outstanding which needed reconciliation. Of those, nine belonged to Terry Grimble, one as far back as December 21, 1979.

4. Exhibit 2 presented to the Committee was a Finance Department memorandum to Stephen D. Neely from Lindell Jones of the Pima County Finance Department dated 8/6/80 attached to eleven separate memoranda regarding non-filed travel advances for the Drug Control District. Mr. Grimble’s memorandum showed that nine advances were still due from him. Each of these memorandum points out that the requirement was that travel advances were to be settled within five days after completion of the trip for which the advance was made.

Respondent purchased a desk and credenza from Walsh Brothers through the Drug Control District. The desk was shipped to Mr. Grimble’s apartment in Phoenix which he had leased as an official work location.³ However, Mr. Grim-ble testified that it was always his intention to treat this desk as his personal property. He did not, however, pay for this desk initially. It was paid for by the Drug Control District, and it was only after he received letters from the accounting department of the Drug Control District that he submitted his personal check to pay for the desk. Respondent also purchased a matching credenza which was delivered to Mr. Grimble’s apartment several months later because it was not initially available. Like the desk, it was billed to the Drug Control District.

The Committee found that “Mr. Grimble inappropriately took advantage of his offir cial position to purchase property for his personal use with his client’s funds, and although it was done without fraudulent or dishonest intent, it did result in inappropriate use of client funds as a source of personal credit for some period of time.” The Committee did admit, however, that there was no dishonesty on the part of Mr. Grimble in these activities, and at no time did he steal money from the County or the Drug Control District. The Commission agreed.

V. ATTORNEY-CLIENT RELATIONSHIP

The Committee and the Commission found that Respondent violated the attorney-client relationship as proscribed by the Code of Professional Responsibility, and specifically by DR 9-102(B)(3) and (4) which read:

(B) A lawyer shall:

(3) Maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to his client regarding them.

(4) Promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive.

In Bar Discipline matters, it is the duty of the Supreme Court to make an independent determination of the facts from the record. In the Matter of Lurie, 113 Ariz. 95, 546 P.2d 1126 (1976). We do not believe that there was an attorney-client relationship. See Matter of Neville, 147 Ariz. 106, 111-112, 708 P.2d 1297, 1302-1303 (1985). The job did not require that Respondent be an attorney and his work did not require that he perform the duties and responsibilities of an attorney. This canon, cited above, is concerned with the special obligation an attorney has to preserve the property of the client and to provide the client with prompt accounting. It does not apply to other obligations that an attorney also has to preserve and account for the property of others which comes into the attorney’s possession. We find no violation of DR 9-102(B)(3) and (4).

VI. DID RESPONDENT VIOLATE THE CODE OF PROFESSIONAL RESPONSIBILITY?

That the attorney-client relationship did not exist, does not in this case, excuse Respondent from bar discipline.

Respondent first contends that he was not acting in the capacity of an attorney, but merely as a fellow-businessman along with the other two parties. We state at the outset that it makes no difference whether he was acting as an attorney or as a businessman. There is nothing to prevent an attorney from engaging in business or other activities, but when he does so he does not abandon his professional ethics if he wishes to remain a member of his profession.

Matter of Lurie, 113 Ariz. 95, 97-98, 546 P.2d 1126, 1128-29 (1976); See also, Matter of Zussman, 86 Ariz. 272, 344 P.2d 1021 (1959). A rule in existence at the time of Respondent’s conduct provided for jurisdiction over Respondent because he was a member of the bar. That rule stated that grounds for discipline were:

Any action or omission, either related or unrelated to the practice of law, indicating mental or moral unfitness to continue the practice of law.

Arizona R.S.Ct. 29(b)(9).

We believe that Respondent violated DR 1-102(A)(6) which provides that an lawyer shall not:

Engage in any other conduct that adversely reflects on his fitness to practice law.

It can be reasonably expected that a person trained as a lawyer will keep his books and records in such order as to not cast doubt on his competency and his honesty. In the instant case, Respondent, by his slip-shod and sloppy accounting practices, did just that, and in doing so, raised questions on his fitness to practice law. We are, for example, most troubled by the manner in which he purchased items for personal use. Having a state agency pay for personal purchases and then reimbursing the agency is a risky business at best. Admittedly, Respondent did reimburse the District, but this does not excuse Respondent’s conduct in using the state as a “credit card” for his personal purchases. We believe that this is the sort of conduct that can lead to trouble and is not acceptable conduct for an attorney in any capacity-

We find Respondent violated DR 1-102(A)(6).

VII. SANCTION

Both the Committee and a majority of the Commission recommended that Respondent be censured.

The evidence showed that Respondent took a very serious, perhaps almost fanatic, approach to his substantive responsibilities as director. Because of the manner in which he approached his job, he had very little time and energy to devote to some of his administrative obligations. There can be little question that Respondent failed to maintain adequate contact with or supervision of these matters.

Because Respondent did not act with criminal intent, we believe, as did both the Committee and the Commission, that public censure is the appropriate sanction.

VIII. COSTS AND EXPENSES

Respondent objects to the bar’s statement of costs and expenses. The bar seeks reimbursement in the amount of $8,639.80 and has filed an itemized statement of costs. See In re Davis, 129 Ariz. 1, 4, 628 P.2d 38, 41 (1981). Respondent argues that since he was not found guilty of the more serious charges, any costs should be “drastically reduced” or not assessed at all. We note that the Bar Disciplinary Commission initially reacted to items reported by the press and others which indicated that Respondent was guilty of serious infractions of discipline involving felony criminal misconduct. Most of the efforts (and costs) of the committee was directed to these matters, which later proved to be unfounded. We have noted:

The State Bar found Respondent guilty of four counts of unethical conduct and we agree with these findings. Although the State Bar submitted a very detailed itemized list of costs and expenditures, this list was not categorized by counts. We do not think, however, that categorization by counts is necessary. Respondent was found guilty of four ethical violations and is therefore responsible for costs and expenses incurred during this proceeding. See in re Kleindienst, 132 Ariz. 95, 644 P.2d 249 (1982) (attorney found guilty of two out of nine charges ordered to pay costs and expenses of the proceeding)____ Rule 37(g), supra, does not expressly state that costs and expenses must be allocated to separate counts. We have reviewed the Bar’s itemized list of costs and expenses and have determined that they were necessary and reasonable. We also believe that the Bar pursued the investigation of each count in good faith. The Respondent should pay the amount assessed.

Matter of Riley, 142 Ariz. 604, 616, 691 P.2d 695, 707 (1984).

That Respondent failed to keep good books and proper records is apparent, and this appears to have caused the initial complaint. We cannot say that Respondent should not be charged with payment of expenses in proving he was not guilty of the more serious allegations, when the more serious allegations were the direct result of Respondent’s unprofessional and neglectful conduct.

The Respondent is censured and assessed costs in the amount of $8,639.80.

GORDON, C.J., and HOLOHAN and MOELLER, JJ., concur.

1 . The conduct in question occurred prior to the adoption of the Model Rules of Professional Conduct of the American Bar Association as amended, Rule 42, Arizona Rules of Professional Conduct, effective 1 February 1985. Thus, the Respondent was charged under the previous Code of Professional Responsibility, Ariz.R.S.Ct. 29(a), 17A A.R.S., effective 1 November 1970.

2 . Dummy voucher was defined as a receipt that was not made at or near the time that the expense was incurred for the place in which it was actually incurred.

3 . In actuality, however, the apartment was not rented for official purposes, and the funds used for rentals were to be repaid by Respondent.