Iowa Supreme Court Attorney Disciplinary Board Vs. David John Isaacson

• Court: Supreme Court of Iowa
• Decided: June 6, 2008
• Docket: 57 /08–0070
• Status: Published

Opinion

IN THE SUPREME COURT OF IOWA No. 57 /08–0070

Filed June 6, 2008

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,

Complainant,

vs.

DAVID JOHN ISAACSON,

Respondent.

On review of the report of the Grievance Commission.

Grievance Commission report in disciplinary proceeding

recommends imposition of a public reprimand. LICENSE SUSPENDED.

Charles L. Harrington and David J. Grace, Des Moines, for

complainant.

David L. Brown and Alexander Wonio of Hansen, McClintock &

Riley, Des Moines, for respondent. 2

HECHT, Justice.

This matter comes before the court on the report of a division of

the Grievance Commission of the Supreme Court of Iowa. See Iowa Ct.

R. 35.10. The Iowa Supreme Court Attorney Disciplinary Board alleged

the respondent, David J. Isaacson, violated ethical rules by failing to

deposit a client’s funds in a trust account, converting the client’s funds,

failing to keep records of transactions with the client, and making misrepresentations to the Iowa Supreme Court Disciplinary Board, the

Iowa Supreme Court Client Security Commission, and the law firm

partnership of which he was a member. The grievance commission

found Isaacson violated the Iowa Code of Professional Responsibility by

failing to deposit a client’s funds in a trust account, and failing to keep

proper records of transactions pertaining to those funds, but concluded

the board failed to meet its burden of proof as to the other allegations.

The majority of the commission recommends the imposition of a public

reprimand.1 Upon our respectful consideration of the commission’s

findings of fact, conclusions of law, and recommendation of the

commission, we find the respondent committed several of the charged

ethical violations and suspend his license to practice law for six months. I. Standard of Review.

We review de novo the commission’s findings. Iowa Supreme Ct.

Att’y Disciplinary Bd. v. Gottschalk, 729 N.W.2d 812, 815 (Iowa 2007).

We give the commission’s findings and recommendations respectful

consideration, but we are not bound by them. Id. It is the board’s

burden to prove attorney misconduct by a convincing preponderance of

the evidence. Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Lett, 674

1One member of the commission found the board met its burden on other charges and recommended Isaacson’s license be suspended for at least eighteen months. 3

N.W.2d 139, 142 (Iowa 2004). If we find the board has proved its

allegations of attorney misconduct, we “may impose a lesser or greater

sanction than the discipline recommended by the grievance commission.”

Iowa Ct. R. 35.10(1).

II. Factual Findings.

Isaacson, a partner in a Des Moines law firm, represented Kelly

Belz in an action to collect rent owed by Belz’s tenant, Robert Young. An agreement was reached on September 30, 2003, in which Young agreed

to make a series of payments to settle the case: $1500 on or before

October 15, 2003; $1500 on or before November 15, 2003; and the

balance of $5100 on or before December 31, 2003.

Young paid the first settlement installment by delivering to

Isaacson a check in the amount of $1500. Isaacson deposited the check

in his personal bank account, withdrew $1300 in cash, and delivered

$684 in cash to Belz.2

Young delivered to Isaacson a check in the amount of $3000 on or

about November 18, 2003. When Isaacson deposited this check in his

personal account on that date, the account had a negative balance of

$155.52. It is undisputed that Isaacson subsequently delivered to Belz the sum of $3000 in cash, but neither Isaacson nor Belz maintained

records that could establish when this occurred.

The third and final installment of the settlement was paid on or

about December 26, 2003, when Young delivered to Isaacson a check in

the amount of $2600. Isaacson deposited the instrument in his personal

account on December 30, 2003, and failed to promptly deliver the funds

2Isaacson explained in his testimony before the commission that Belz, a used car dealer, preferred to receive the settlement proceeds in cash. Isaacson withheld from the first installment the sum of $816 for services rendered to Belz in achieving the settlement. 4

to Belz. Several months passed. After being informed by a third party in

late June of 2004 that Belz believed Isaacson had failed to account for

the third settlement installment, Isaacson’s law partner reviewed the law

firm’s trust account. Finding no evidence of Belz’s settlement proceeds,

the partner confronted Isaacson who denied he was in possession of the

proceeds and claimed Belz was mistaken.3 In his initial written response on June 13, 2005, to the board’s

inquiry, Isaacson represented that although Young was to have made all

payments under the settlement with Belz by December 31, 2003, “the

monies were received at a considerably later time period.” Isaacson also

assured the board that he could provide “a proper accounting for the

settlement [funds].” Both of these representations made by Isaacson to

the board were false. Young made all payments required under the

settlement agreement before the end of 2003, and Isaacson could not

properly account for the settlement funds because he commingled them

with his personal funds and failed to maintain records from which an

accurate accounting could be demonstrated.

Isaacson subsequently prepared, and Belz signed, an affidavit in

response to the board’s inquiry. In the affidavit, Belz asserted that

Isaacson cashed the settlement checks at Belz’s direction and delivered

to Belz all funds to which Belz was entitled.4 The affidavit also alleged

3Isaacson suggests his denial was truthful because by the time the partner expressed his concern about the matter, the funds had been delivered to Belz. Neither Isaacson nor Belz maintained records that could confirm or refute Isaacson’s version of the facts.

4The affidavit also avers Belz “approved extensions of the times provided for payment.” We are unable to discern from the record any extensions of time granted to Young. As neither Isaacson nor Belz kept records documenting when the payments were made by Young, we are unable to determine when the first settlement installment due October 15, 2003, was received by Isaacson. The check representing the second installment, due on November 15, 2003, was deposited by Isaacson on November 18, 2003. The third installment due December 31, 2003, was paid on December 26, 2003. 5

Belz was satisfied with Isaacson’s representation in connection with the

Young matter, and asserted Belz subsequently consulted Isaacson on

other matters and referred relatives to Isaacson for legal services.

The board filed a complaint on April 30, 2007, alleging Isaacson

committed numerous ethical violations. The board asserted Isaacson’s

failure to deposit the settlement funds in a trust account, and his failure

to respond truthfully to the board violated DR 9–102 (preserving identity of client’s funds), DR 9–103(A) (maintaining books and records sufficient

to demonstrate compliance with DR 9–102), and DR 1–102(A)(1) (violating

a disciplinary rule), (4) (dishonesty, fraud, deceit, or misrepresentation),

(5) (conduct prejudicial to the administration of justice) and (6) (conduct

adversely reflecting on fitness to practice law). In an amendment to its

complaint, the board subsequently alleged Isaacson also violated DR 1–

102(A)(4) and (6) by failing to deposit in the firm’s office account fees paid

by several other clients, and by drawing a check on the law firm’s

partnership account to compensate his daughter for labor and

reimbursing the firm with a check on his personal account that was

returned for insufficient funds.

III. Ethical Violations. A convincing preponderance of the evidence establishes that

Isaacson violated DR 9–102(A) by failing to deposit Belz’s funds in a trust

account. Isaacson contends this violation should be viewed as a mere

technical violation of the rule because he fully complied with his client’s

instructions and delivered the settlement proceeds in cash. We disagree.

Belz’s preference to receive his funds in cash did not vitiate Isaacson’s

duty under the rule to deposit the settlement checks in a trust account

and properly account for them. We find implausible Isaacson’s claim

that he believed Belz’s preference to receive the settlement funds in cash 6

rendered DR 9–102(A) inapplicable. A lawyer’s duty under the rule to

deposit a client’s funds in a trust account is not constrained by a client’s

instruction or preference. Iowa Supreme Ct. Bd. of Prof’l Ethics &

Conduct v. Sullins, 648 N.W.2d 127, 134 (Iowa 2002) (“Even if a client

tells her attorney to withhold funds from a trust account, the attorney’s

failure to deposit the funds into a trust account would result in an ethics

violation.”). Although Belz confirmed by his affidavit and deposition testimony

that he eventually received all of the settlement proceeds to which he was

entitled, the record in this case aptly illustrates the types of perils DR 9–

102 seeks to avoid. Isaacson’s personal bank account balance was from

time to time insufficient to cover checks drawn on the account during the

relevant time periods.

The record also overwhelmingly establishes that Isaacson violated

DR 9–103 by failing to maintain books and records sufficient to

demonstrate compliance with DR 9–102. As he failed to deposit Belz’s

funds in a trust account, Isaacson necessarily violated DR 9–103.

The record establishes that on several occasions Isaacson collected

fees from other clients, and deposited them in his personal account rather than the partnership’s account. As a consequence of this, the

firm billed some clients who had already paid Isaacson for legal services.

Isaacson contends his conduct was not dishonest, deceitful, or

fraudulent because the partnership agreement did not require him to

share his legal fees with his partner. Although Isaacson had no

contractual obligation to share his fees with his partner, we conclude

this fact is not dispositive as to the board’s claim he violated DR 1–

102(A)(4). We find persuasive the testimony of Isaacson’s partner who

explained the partnership agreement required the partners to deposit all 7

fees collected in the partnership account to assure each partner’s share

of the firm’s overhead would be paid before the partners’ “draws” were

distributed. Isaacson violated this agreement by depositing several fees

in his personal account, and, as a consequence, soon fell behind in the

payment of his share of the overhead. His partner repeatedly requested

payment of the arrearage after the partnership was dissolved in 2004.

Notably, Isaacson failed to respond to his partner’s requests with reasons why he did not owe approximately $15,000 as his share of the firm’s

overhead. Although Isaacson claimed in his testimony before the

commission that he disputed whether he owed the arrearage claimed by

his partner, we find his testimony wholly unpersuasive. We conclude

Isaacson violated DR 1–102(A)(4) when he deceitfully failed to deposit

fees in the partnership account to avoid paying his share of the firm’s

overhead.

Isaacson also violated DR 1–102(1) and DR 1–102(4) when he filed

his 2004 Combined Statement and Questionnaire with the Iowa Supreme

Court Client Security Commission. In that questionnaire, Isaacson

represented that he kept “all funds of clients for matters involving the

practice of law in Iowa in separate interest bearing trust accounts.” As we have noted, Isaacson did not deposit Belz’s settlement funds in such

an account. Isaacson violated the same rules when he misrepresented to

the board that he could provide an accounting of the Belz transactions

when in fact he had no records that would document when the cash

transactions occurred. An attorney is prohibited from engaging in

conduct involving dishonesty, fraud, misrepresentation, and deceit. In

connection with this fundamental principle, we have stated that a

“casual, reckless disregard for the truth” warrants discipline. Iowa 8

Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Daggett, 653 N.W.2d 377,

380 (Iowa 2002).

Finally, we find the board has failed to prove by a convincing

preponderance of evidence that Isaacson violated DR 1–102(A)(4) and (6)

by drawing a check on the partnership account payable to his daughter

for services rendered to the firm, and by reimbursing the firm with a

check drawn on his personal account. We find Isaacson’s daughter did provide services to the firm for which she was compensated, and the

evidence in this record does not sustain the board’s claim that Isaacson’s

actions in this transaction were characterized by dishonesty, or that they

reflect adversely on his fitness to practice law.

IV. Sanction.

Isaacson contends the commission’s recommendation of a public

reprimand is appropriate in this case. The board urges this court to

suspend Isaacson’s license. “There is no standard sanction for a

particular type of misconduct, and though prior cases can be instructive,

we ultimately determine an appropriate sanction based on the particular

circumstances of each case.” Iowa Supreme Ct. Att’y Disciplinary Bd. v.

Earley, 729 N.W.2d 437, 443 (Iowa 2007). “When deciding on an appropriate sanction for an attorney’s misconduct, we consider the

nature of the violations, protection of the public, deterrence of similar

misconduct by others, the lawyer’s fitness to practice, and [the court’s]

duty to uphold the integrity of the profession in the eyes of the public.

We also consider aggravating and mitigating circumstances present in

the disciplinary action.” Iowa Supreme Ct. Att’y Disciplinary Bd. v.

Walker, 712 N.W.2d 683, 685 (Iowa 2006) (internal quotations and

citations omitted). 9

We have imposed sanctions for violations of DR 9–102 ranging

from a suspension of one year to a revocation. Compare Iowa Supreme

Ct. Bd. of Prof’l Ethics & Conduct v. Gottschalk, 553 N.W.2d 322, 325

(Iowa 1996) (lawyer’s license suspended for one year for misappropriation

of fees from trust account where no client funds were lost), with Comm.

on Prof’l Ethics & Conduct v. Rowe, 225 N.W.2d 103, 104 (Iowa 1975)

(revocation ordered where constellation of lawyer’s violations included failure to deposit client’s funds in a trust account, misappropriation, and

eventual restitution). We conclude a sanction less than revocation is

appropriate in this case because the board failed to prove Isaacson

intended to convert the third installment of the Young settlement.

Although Isaacson’s failure to deposit those funds in a trust account was

a clear violation of DR 9–102, and the long delay of approximately six

months in the delivery of the third settlement installment evidences

deplorable inattention to Belz’s interests, we find the delay was

substantially attributable to Belz’s casual attitude about receiving the

funds. The board did not controvert Isaacson’s testimony suggesting

that Belz exhibited a somewhat cavalier attitude about the delivery of the

third installment, urged Isaacson not to make a “special trip” to effect its delivery, and represented that the delivery could be accomplished at a

future date when Belz would consult Isaacson on other matters.

Isaacson’s violation of DR 9–102 does not stand alone, however.

Dishonesty, deceit, and misrepresentation are “abhorrent concepts to the

legal profession, and can give rise to the full spectrum of sanctions,

including revocation.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Hall,

728 N.W.2d 383, 387 (Iowa 2007). Isaacson’s lack of candor in his

responses to the board and the client security commission, and the 10

deceit he practiced in the relationship with his law partner also demand

a significant suspension in this case.

This court has indicated “prior disciplinary action is properly

considered as an aggravating circumstance . . . .” Iowa Supreme Ct. Bd.

of Prof’l Ethics & Conduct v. Gallner, 621 N.W.2d 183, 188 (Iowa 2001);

accord Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. McKittrick, 683

N.W.2d 554, 563 (Iowa 2004). Isaacson’s license to practice was suspended for six months in 1997 for violations of DR 1–102(A)(4)

(engaging in conduct involving dishonesty, fraud, deceit or

misrepresentation); DR 5–104(A) (entering a business transaction with

client without full disclosure of differing interests); DR 5–105(B)

(accepting employment where exercise of independent judgment likely to

be affected); and DR 5–105(C) (continuing multiple employment where

exercise of independent judgment likely to be adversely affected). Iowa

Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Isaacson, 565 N.W.2d 315,

318 (Iowa 1997).

As we determine the appropriate sanction, “[i]t is also proper to

consider . . . that [the Respondent] is an experienced lawyer. . . .”

Gallner, 621 N.W.2d at 188. As a practicing lawyer with more than thirty years of experience as a practitioner, Isaacson clearly knew of his

obligation to deposit his client’s funds in a trust account, his duty to

keep records of such transactions, and his responsibility to be truthful in

his responses to the board, the client security commission, and his law

partner.

We suspend Isaacson’s license to practice law in Iowa indefinitely,

with no possibility of reinstatement for a period of six months from the

date of filing of this opinion. The suspension imposed applies to all 11

facets of the practice of law as provided by Iowa Court Rule 35.12(3), and

requires notification to clients as provided in Iowa Court Rule 35.21.

Upon any application for reinstatement, Isaacson shall have the

burden to show he has not practiced law during the period of

suspension, and that he meets the requirements of Iowa Court Rule

35.13. Costs are taxed to Isaacson pursuant to Iowa Court Rule

35.25(1). LICENSE SUSPENDED.

All justices concur except Wiggins and Baker, JJ., who take no

part.