IN THE SUPREME COURT
STATE OF NORTH DAKOTA
|IN THE MATTER OF THE APPLICATION|
|FOR DISCIPLINARY ACTION AGAINST||Supreme Court No. 20070108|
|SAMUEL S. JOHNSON, A MEMBER OF|
|THE BAR OF THE STATE OF NORTH DAKOTA|
BRIEF OF SAMUEL S. JOHNSON
|Dated: June 8th, 2007||Ronald H. McLean (#03260)|
|Joseph A. Wetch, Jr. (#05788)|
|SERKLAND LAW FIRM|
|10 Roberts Street|
|P.O. Box 6017|
|Fargo, ND 58108-6017|
|Attorneys for Samuel S. Johnson|
TABLE OF CONTENTS
TABLE OF AUTHORITIES ii
STATEMENT OF THE ISSUES 1
STATEMENT OF THE CASE 2
A. Nature of the Case 2
B. Course of Proceedings 2
C. Disposition by Hearing Panel 4
STATEMENT OF FACTS 5
A. Introduction to Samuel S. Johnson 5
B. Introduction to Wes Bladow and His Family 6
C. Marriage of Wes and Kristine Bladow 6
D. Events in 2003 7
E. Determination to Make Money in Settlement 8
F. Johnson Review of Rules of Professional Conduct 9
G. Events of November 1, 2003 10
H. November 17, 2003 Proposal 11
I. December 1, 2003 Proposal 11
J. Response by Ms. Berg 12
K. Hearings in January and February, 2004 12
L. February Decision by the Court 15
M. Disciplinary Proceedings 15
LAW AND ARGUMENT 15
A. Burden of Proof and Standard of Review 15
B. Mr. Johnson Followed Rule 1.8, North Dakota Rules of Professional Conduct with Respect to the Contemplated Transaction with Wes Bladow 16
1. Mr. Johnson Did Not Violate Rule 1.8(e) 17
2. Mr. Johnson did not Violate Rule 1.8(a), N.D.R. Prof. Conduct 18
C. Mr. Johnson did not Violate Rule 3.3 and 8.4, N.D.R. Prof. Conduct, or Rule 1.2(A) N.D.R. Lawyer Discipl. 20
D. The November 1st Document was Prepared and Signed by Mr. Johnson and Bladow on November 1, 2003 25
E. Johnson Requests Diversion from Discipline, if this Court Agrees Discipline is Warranted 26
F. If Discipline is to be Imposed, a Reprimand is an Appropriate Sanction. In No Case is a suspension Greater than Sixty (60) Days Warranted 29
1. The Duty Violated 30
2. The Lawyer's Mental State 32
3. The Potential or Actual Injury Caused by the Lawyer's Misconduct 33
4. The Existence of Aggravating or Mitigating Factors 33
TABLE OF AUTHORITIES
Disciplinary Bd. v. Giese, 2003 ND 82 ¶ 16, 662 N.W.2d at 255 30, 31
Disciplinary Bd. v. Giese, 2003 ND 82, ¶ 25-27 32
Disciplinary Board v. Boulger, 2001 ND 210, ¶ 14, 637 N.W.2d 710, 714 (N.D. 2001) 32
Disciplinary Board v. Bullis, 2006 N.D. 228 ¶ 20 18
Disciplinary Board v. Bullis, 723 N.W.2d 667, 2006 N.D.228 18
Disciplinary Board v. Buresh, 2007 ND 8, ¶ 6, 726 N.W. 2d 210 16
Disciplinary Board v. Chinquist, 2006 N.D. 107, 714 N.W.2d 469 18
Disciplinary Board v. Chinquist, 714 N.W.2d 469, 2006 N.D. 107 16
Disciplinary Board v. Crary, 2002 N.D. 9, 638 N.W.2d 23 19
Disciplinary Board v. Edwardson, 2002 ND 106, 647 N.W.2d 12623
Disciplinary Board v. Garaas, 2002 N.D. 181, 652 N.W. 2d 919 (N.D. 2002) 15
Disciplinary Board v. Garaas, 2002 N.D. 181, 652 N.W.2d 918 24
Disciplinary Board v. Gray, 544 N.W.2d 168, 172 (N.D. 1966) 32
Disciplinary Board v. Hellerud, 2006 ND 105, ¶ 14, 714 N.W.2d 38 3 2
Disciplinary Board v. Kaiser, 484 N.W.2d 102 (N.D. 1992) 22
Disciplinary Board v. Lamont, 1997 ND 63, 561 N.W.2d 650 22
Di sciplinary Board v. McDonald, 2000 ND 87, 609 N.W.2d 41 8 22
Disciplinary Board v. Peterson, 2004 ND 205, 689 N.W.2d 36423
Disciplinary Board v. Schubert-Madsen, 533 N.W.2d 145 (N.D. 1995)24
Disciplinary Board v. Stensland, 2006 ND 251, 725 N.W.2d 19123
Rule 1.3, N.D. Stds. Imposing Lawyer Sanctions29
Rule 1.8(a), N.D.R. Prof. Conduct 16
Rule 1.8(e), N.D.R. Prof. Conduct 17
Rule 3.0, N.D. Stds. Imposing Lawyer Sanctions 29, 33
Rule 3.3, N.D.R. Prof. Conduct 21
Rule 5.1, N.D.Stds. Imposing Lawyer Sanctions 30
Rule 6.1, N.D. Stds. Imposing Lawyer Sanctions 31
Rule 6.6(b)(1), N.D.R. Lawyer Discipl. 28
Rule 6.6(b)(2), N.D.R. Lawyer Discipl. 28
Rule 6.6(b)(3), N.D.R. Lawyer Discipl. 28
Rule 6.6(b), N.D.R. Lawyer Discipl. 28
Rule 6.6(d), N.D.R. Lawyer Discipl. 28
Rule 6.6, N.D.R. Lawyer Discipl. 26
Rule 6.6, N.D.R. Lawyer. Discipl. 28
Rule 8.4(a), N.D.R. Prof. Conduct 24
Rule 9.3, N.D. Stds. Imposing Lawyer Sanctions 34
Rule 9.32, N.D. Stds. Imposing Lawyer Sanctions 34
Standard 3.0, N.D. Stds. Imposing Lawyer Sanctions 33
Standard 5.13, N.D. Stds. Imposing Lawyer Sanctions 31
STATEMENT OF THE ISSUES
1) Whether clear and convincing evidence supports Mr. Johnson violated Rule 3.3, N.D.R.Prof. Conduct.
2) Whether clear and convincing evidence supports Mr. Johnson violated Rule 8.4, N.D.R.Prof. Conduct.
3) Whether clear and convincing evidence supports Mr. Johnson violated Rule 1.2(A), N.D.R. Lawyer Discipl.
STATEMENT OF THE CASE
A. Nature of the Case
This is a disciplinary proceeding brought against Samuel S. Johnson for alleged violations of the North Dakota Rules of Professional Conduct. The alleged violations arise out of statements made by Mr. Johnson at a January 21, 2004 hearing before the Honorable John T. Paulson.
B. Course of Proceedings
This matter was commenced by Disciplinary Counsel on August 10, 2006 by service of a Petition for Discipline. (App. at 3). The Petition alleged violations of N.D.R. Prof. Conduct 1.8, 3.1, 3.3, 3.4, 8.1, 8.4, 1.2(A) N.D.R. Lawyer Discipl.; and N.D.Cent Code §§ 27-13-01 and 27-14-02. (App. at 5-6). The allegations in the Petition for Discipline stem from Johnson's appearance at a hearing held in connection with a child custody matter. (App. at 3).
Specifically, the Petition alleged that Johnson represented Mr. Wesley Bladow in a divorce from Kristine Bladow, n/k/a Kristine Berg, (herein referred to as Berg) and that in connection with settlement activities, Mr. Johnson wrote Ms. Berg's attorney stating that Mr. Johnson would agree to "advance Wes some money to settle various issues" in connection with the case and that Mr. Johnson "would pay" certain sums. (App. at 3). The Petition alleged that at a hearing on January 21, 2004, Mr. Johnson represented to the court that he had made a settlement offer under Rule 408, N.D.R. Civ. P., and that sums used to fund the offer would be coming from Mr. Johnson, not Mr. Bladow. (App. at 3). The Petition also alleged that Mr. Bladow had not been advised to seek independent counsel about the transaction. (App. at 4-5).
The Petition further alleged that Mr. Johnson submitted a response to the Inquiry Committee which was inconsistent to the extent that Mr. Johnson either "lied" to the Inquiry Committee or to the Court at the hearing on January 21, 2004. (App. at 5).
Mr. Johnson filed his timely response to the Petition and asserted that in 2002 he did represent Mr. Bladow in connection with his divorce proceedings and specifically in connection with Ms. Berg's motion regarding custodial issues. (App. at 9). The motion was concerned with where the oldest child would attend school.(1) (App. at 9). Thereafter, hearings took place. Prior to the evidentiary hearings, Mr. Bladow sought an agreement that all the parties' children would live with him and attend the Hankinson school Ms. Berg would have visitation rights. (App. at 10). Mr. Bladow contemplated making a money payment to Ms. Berg to resolve these pending and potential future issues. (App. at 10). However, Mr. Bladow had substantial debt.
Mr. Johnson and Mr. Bladow grew up together and have been friends for a long time. (App. at 10). Mr. Johnson agreed to assist Mr. Bladow by guaranteeing indebtedness that he would take on from a local financial institution. (App. at 10). Mr. Johnson reviewed Rule 1.8, N.D.R. Prof. Conduct and determined that he was allowed to guarantee a contemplated loan and therefore he prepared an "agreement to guarantee loan." (App. at 10). In accordance with Rule 1.8, N.D.R. Prof. Conduct, the agreement provided that Mr. Bladow had consulted with another attorney in connection with the transaction or waived his right to consult with another attorney.(2) (App. at 10). Mr. Bladow executed the "agreement to guarantee loan" on November 1, 2003. (App. at 10). The loan was never taken out. Proposals were made to Ms. Berg's lawyer on November 7, 2003 (App. at 10) and December 1, 2003. (App. at 10). They were never accepted. (App. at 10).
C. Disposition by Hearing Panel
A hearing was held before a Hearing Panel of the Disciplinary Board of the Supreme Court on February 6 and 7, 2007. (App. at 13). After hearing the testimony of Mr. Johnson, Mr. Bladow, Ms. Berg, and others and after receiving post-hearing briefs from both disciplinary counsel and Mr. Johnson, the Hearing Panel issued a report on April 18, 2007 concluding that Mr. Johnson had violated Rules 3.3 and 8.4, N.D.R. Prof. Conduct, and Rule 1.2(A), N.D.R. Lawyer Discipl, "in that Johnson knowingly made a false statement to Judge Paulson on January 21, 2004 when he said that the Rule 408 settlement offer was an offer made by Johnson, individually, and not by Bladow at a time when Johnson knew that Rule 1.8 of the [N.D.R. Prof. Conduct] prevented him from advancing money on behalf of his client and Mr. Johnson and his client had entered into an agreement whereby Mr. Johnson would guarantee a loan taken out by his client." (App. at 20).
The Hearing Panel concluded that the remaining allegations of the Petition were not supported by clear and convincing evidence. (App. at 21).
The Hearing Panel concluded that Mr. Johnson acted "knowingly" and after consideration of aggravating and mitigating factors, determined a sixty (60) day suspension was appropriate under the North Dakota Standards for Imposing Lawyer Sanctions, and recommended the sanction be imposed. (App. at 21). It is noteworthy that the Hearing Panel did not consider Mr. Johnson's participation in the Lawyer Assistance Program as a mitigating factor.
Mr. Johnson and Disciplinary Counsel filed timely objections to the report under Rule 3.1F(2), N.D.R. Lawyer Discipl. (App. at 23, 26). As this matter is now going to be reviewed on a de novo basis, Mr. Johnson urges the Court that there was no violation of the Rules of Professional Conduct. Mr. Johnson urges that if the Court disagrees he respectfully urges that he be diverted into the Lawyer Assistance Program. If the Court finds discipline is appropriate, Mr. Johnson submits that sanction of a public reprimand is adequate, or if the Court determines a reprimand is not appropriate, that a sixty (60) day suspension (as recommended by the hearing panel) is a sufficient sanction.
STATEMENT OF FACTS
A. Introduction to Samuel S. Johnson
Mr. Johnson was born on July 26, 1963. He grew up in Hankinson, North Dakota. He secured both his undergraduate degree (1986) and his law degree (1989) from the University of North Dakota. (App. at 46(T. 73)) (For the Court's convenience, when referring to specific pages of the Hearing Panel transcript, citation has been made to the Appendix page, immediately followed by the specific hearing transcript page found on that specific Appendix page.) Mr. Johnson and his wife Denise live in Wahpeton where he has maintained a busy law practice since 1989. (App. at 46(T. 74)).
Mr. Johnson began his legal career with the Smith & Strege Law Firm in Wahpeton. (App. at 46(T. 75)). He practiced with that firm for five years. (App. at 46(T. 75)). In 1994, Mr. Johnson left that firm and started his own practice. (App. at 46(T. 77)). Since 1994 he has been a sole practitioner. (App. at 46(T. 76)). He primarily practices criminal and family law. (App. at 46(T. 75-76)).
B. Introduction to Wes Bladow and His Family
Wes Bladow is the son of Nancy and Willard Bladow. (App. at 105(T. 309)). He grew up on a farm north of Hankinson. He has two brothers and one sister. (App. at 105(T. 309)). The Bladow family and the Johnson family have been friends for many years. (App. at 105(T. 309)).
Mr. Bladow presently works for Wilkin County, Minnesota performing road maintenance. (App. at 105(T. 310)). He has had that job for most of his adult life. (App. at 105(T. 310)). In addition, Mr. Bladow operates a cattle farm. (App. at 105(T. 310)). Over the years Mr. Johnson has assisted Mr. Bladow on various legal issues and had continuing social contacts. (App. at 105(T. 311)).
C. Marriage of Wes and Kristine Bladow
Mr. Bladow married Kristine Bladow (now Berg) on September 9, 1996. (App. at 105(T. 311)). They lived on the family farm north of Hankinson. (App. at 105(T. 311)). They had three children; Robert, Amy and Ashlyn. (App. at 105(T. 311)). Ultimately on October 31, 2002, Ms. Berg left the Bladow home. (App. at 105(T. 311)). The three children were left with Mr. Bladow. (App. at 105(T. 312)). His mother Nancy moved in shortly thereafter to assist with the children. (App. at 105(T. 312)). During the months of November and December 2002, Mr. Bladow and Ms. Berg shared visitation of the children. (App. at 105(T. 312)).
Near the end of the year, both parties negotiated a resolution regarding their marital issues. (App. at 105(311-312)). Mr. Johnson represented Mr. Bladow. (App. at 105(T. 311), 142-146). Contemporaneously, a property settlement agreement was finalized and executed. (App. at 148). Pursuant to that property settlement agreement a judgment and order for judgment were entered. (App. at 168). The most relevant provision of the parties agreement was that the parties were to share custody of the children. Once the children reached school age it was "contemplated the children may attend school in the Hankinson Public School System." (App. at 165).
D. Events in 2003
In 2003 Ms. Berg moved to Horace, North Dakota. (App. at 106(T. 315)). Robert was school age at this time and would be, by the original Judgment, attending school in Hankinson. Thereafter, Ms. Berg hired attorney Tracey Lindberg of Breckenridge, Minnesota to reopen the matter seeking custody and to allow Robert to attend school in Horace. (App. at 165).
Ms. Lindberg filed a motion to amend the Judgment. (App. at 183). As the start of the school year was fast approaching, Mr. Johnson secured an ex parte order from Judge Paulson enforcing the status quo. (App. at 185, 200). The order required Robert to attend school in Hankinson until further ordered by the court. (App. at 200). Tension between the parties was evident.(3)
At the same time, Judge Paulson conducted a hearing regarding the motion to reopen on September 4, 2003. He made a preliminary determination during a telephone conference on September 9th that Robert would attend school in Hankinson and live with his father and the two daughters would live with their mother. (App. at 108(T. 321)). The girls were not yet school age.
Judge Paulson left open the issue of where the children would attend school for future litigation. Mr. Johnson acknowledged that by this time he had become emotionally involved.(4) (App. at 107(321-323)).
E. Determination to Make Money in Settlement
Mr. Bladow and Nancy Bladow were convinced that Ms. Berg would agree to accept the original arrangement regarding shared custody and for Robert to attend the Hankinson School District in exchange for a payment of money. (App. at 97(T. 279), 109(T. 327)). Nancy told Mr. Johnson "all Kristine wants is money." (App. at 97(T. 279)). Mr. Bladow's financial situation was near bankruptcy in the fall of 2003. (App. at 109(T. 328), 129(T. 407)). He had substantial debt on his farmland. He had substantial debt with his various lenders. (App. at 109(T. 328)). There was no way that he could secure a loan in his own name. (App. at 109(T. 328)). Mr. Johnson gave Mr. Bladow names of attorneys Dave Johnson and Jon Brakke who could assist him on his farm debt problem. (App. at 110(T. 330)).
Mr. Johnson described himself at the disciplinary hearing as "emotionally over the edge" at this point as he believed the best interest of the children was to live with their father and grandmother in Hankinson, North Dakota on the family farm. (App. at 110(T. 330)). Nancy and Mr. Bladow convinced Mr. Johnson that, as Ms. Berg had left the family home previously without the children, she would be agreeable to a money settlement offer to go back to the original agreement. (App. at 109(T. 327)). Additionally, Mr. Johnson believed that splitting the three children up was a bad idea. (App. at 108(T. 323)). The Bladow's believed that it would take approximately $25,000 to persuade Ms. Berg to abide by the original arrangement. (App. at 110(T. 330-331)).
F. Johnson Review of Rules of Professional Conduct
Mr. Johnson reviewed Rule 1.8, N.D.R. Prof. Conduct. (App. at 111(T. 335)). He determined that the rule allowed him to act as a guarantor for a loan to Mr. Bladow. The client had to remain primarily liable and had to be under financial pressure. Mr. Johnson made contact with Ramsey National Bank. (App. at 111(T. 333)). Ramsey National Bank was told that Mr. Johnson would be the guarantor and that Mr. Bladow would be the maker of a note. (App. at 111(T. 333)). It was contemplated by all that Mr. Johnson would be making the monthly payment. (App. at 111(T. 333-334)). Mr. Johnson believed the rule did not set out any prohibition about who initially made the payments. (App. at 111(T. 334)). At all times, Mr. Johnson believed that Mr. Bladow would ultimately pay him back. (App. at 111(T. 334)). Both Nancy and Mr. Bladow confirmed that ultimately Mr. Johnson would be paid back. (App. at 99(T. 285), 130(T. 140)). The contemplated loan was only discussed after Mr. Johnson was employed as an attorney for Mr. Bladow and was therefore compliant with Rule 1.8 (App. at 110(T. 332)). The loan was in no way hinged upon the outcome of the litigation. (App. at 110(T. 332)). Mr. Johnson required that Mr. Bladow to see an attorney about the transaction. (App. at 111(T. 335)). This was done before the agreement to guarantee was executed.(5) (App. at 111(T. 335)). Mr. Johnson believed that Mr. Bladow's situation fit within the language of Rule 1.8 because of financial pressure.(6) (p. 336).
Mr. Johnson was aware that engaging in further litigation would be very expensive. (App. at 111(T. 336)). Mr. Bladow also risked other issues being re-opened, including a different division of the property and increased child support. Under those set of facts Mr. Johnson determined that win or lose, Mr. Bladow was probably looking at an "immense amount of attorneys fees," all of which would put pressure on Mr. Bladow to compromise his claim. (App. at 112(T. 337)).
Noteworthy is the loan transaction, which ultimately never occurred, was a completely one-sided transaction and completely detrimental to Mr. Johnson.
G. Events of November 1, 2003
November 1, 2003 was a Saturday. (App. at 112(T. 338)). Nancy and Wes Bladow saw Mr. Johnson that day to finalize a financial proposal to Ms. Berg and her lawyer. On that day, Mr. Johnson prepared a document regarding the guarantee. (App. at 204). Johnson drafted the document pursuant to the requirements of Rule 1.8. Mr. Bladow executed it that day. (App. at 112(T. 340)).
The document was prepared on November 1, 2003. Jeanette Novotny (Mr. Johnson's then assistant), Mr. Johnson, Nancy Bladow, and Mr. Bladow all testified to that fact. (App. at 125(T. 392-393), 112(T. 340), 98(T. 284), 130(T. 409-410)). Rich Miller, a certified computer technician, testified that he reviewed the computer records and the hard drive and confirmed the document was prepared on November 1, 2003, and has not been altered at any time. (App. at 104(T. 305)). These facts were uncontradicted and the hearing panel did not conclude otherwise.
H. November 17, 2003 Proposal
By letter of November 17, 2003, Mr. Johnson then proposed a payment of $3,900 (October 31 payment paid in full) and $765 (direct merchant credit card paid in full). (App. at 207, 113(T. 344)). At this time there were issues surrounding the payment of marital debt and attorney's fees. Mr. Johnson proposed the money payments set out therein. The issue regarding custody and visitation was left open.
In this letter, Mr. Johnson wrote to Ms. Lindberg, "I have agreed to advance Wes some money." (App. at 207). Mr. Johnson testified that this was completely consistent with the loan guarantee agreement. (App. at 114(T. 345)). Mr. Johnson was going to be making the payments as he was required to do under the loan guarantee agreement. It was always understood that he was going to make the payments. (App. at 114(T. 345)).
I. December 1, 2003 Proposal
By letter dated December 1, 2003, (App. at 209), Mr. Johnson wrote to Ms. Lindberg a second time:
Since Wes cannot afford to pay any significant sums of money to Kristine, I have agreed to advance Wes some money to settle various issues in relation to this matter. In that regard, I would pay Kristine the sum of $20,000 by December 15, 2003.
The payment never took place. (App. at 114(T. 347)). Mr. Johnson testified that his language, "I have agreed to advance some money" was consistent with what was contemplated in the loan guarantee agreement as Mr. Bladow couldn't make the payments. (App. at 114(T. 347)). Mr. Johnson agreed to make the payments as he was going to be paid back. "I'm agreeing to advance the money because I'm going to make those payments." (App. at 114(T. 346-347)).
J. Response by Ms. Berg
Ms. Berg was interested in settling this matter by a payment of a sum of money to her. She would accept $50,000. (App. at 114(T. 348)). That offer was not accepted by Mr. Bladow. No money was ever borrowed. (App. at 114(T. 348)).
K. Hearings in January and February, 2004
Hearings took place in October 2003, November 2003, January 20-21, 2004 (App. at 221-228) and February 5, 2004. Mr. Bladow's ability to pay attorneys fees was raised at the January 21, 2004 and February 5, 2004 hearings by Ms. Lindberg. Ms. Lindberg argued that since Mr. Bladow was able to make a cash proposal through a loan with Mr. Johnson, this evidenced his ability to pay attorneys fees. The Court determined to hear the testimony regarding that issue even though the December 1, 2003 letter had been marked as a settlement offer under Rule 408, N.D.R. Civ. P. At the January hearing while objecting, Mr. Johnson stated "that was a Rule 408 Settlement Offer and that was an offer made by menot Mr. Bladow." (App. at 223). Mr. Johnson testified that he believed the statement was truthful and consistent with the guaranteed loan transaction. Mr. Johnson testified to the hearing panel (App. at 115(T. 350)):
"Well, I mean that's the same thing. It's similar to the 408 settlement offers. I mean we all know that even though there's a guarantee agreement, I'm the one that's going to be making the payment. I'm the one that's going to be advancing the money. It's my bank, my loan officer. It's going to be my credit. I'm going to make the payments. And so I'm telling the Judge, you know, "Judge, to be truthful, I'm the one here that is going to make these payments." This was an offer made by me. If you look at the 408 settlement offers, they confirm exactly that."
Had the settlement offers been received by the Court, instead of being sealed, Mr. Johnson and Mr. Bladow would have explained the contents of the offers to the Court including their agreement that Mr. Johnson would be making the payment.
At the hearing on February 5, 2004. (App. at 229-239). Mr. Bladow was questioned and asked by Ms. Lindberg about whether he had been told to seek the advice of "independent counsel". Mr. Bladow had already made a statement that he had. (App. at 204). Nevertheless, at the hearing he answered "no" to the question whether he was told to seek independent counsel. (App. at 238). Mr. Johnson testified that knowing Mr. Bladow all of his life and being present at the hearing, he believed that Mr. Bladow did not understand the question or what "independent counsel" meant (App. at 116(T. 353)):
Absolutely not. I mean you got to remember, this was such a quagmire because she's trying to introduce a 408 settlement offer, which isn't suppose to be offered; Wes is on the witness stand; and, you know, we are having our own little battles and wars, you know. I'm trying to say -- you know, I'm objecting to it, she's trying to get it in or whatever.
And basically what happened was Kristi had previously -- I believe at this point Kristi had previously testified that there was this offer to try and circumvent the 408, and so, of course, I objected at that point to try and keep that out of evidence because that was part of the 408 settlement offer, and I didn't feel it was appropriate under the Rules of Evidence that she could simply -- instead of introducing the written exhibit, that she could have her client just testify about it. To me that's one and the same.
Well, I mean if you met Wes for five minutes, you would understand that he doesn't understand what independent counsel meansHe has no clue what's going on here.
Mr. Bladow testified regarding his 2004 testimony about independent counsel. Mr. Bladow stated:
"Well, when she asked me independent counsel, I mean the word counsel to me does not mean attorney. I guess I was under the impression counsel would be to me like a counselor, like you would see up in Fargo at The Village or in Hankinson, where Robert goes to a counselor for his school. I just did not think counsel meant attorney."
(App. at 130(T. 411)). Mr. Bladow testified specifically that Mr. Johnson told him to see an attorney about the transaction:
Q: Did he tell you to see a lawyer?
A: Sam did, yes.
(App. at 130(T. 411)). Mr. Johnson testified that Bladow's confusion was further confirmed by Judge Paulson stating, "I don't know if he would even know what that would be." (App. at 238). The proof that he was confused is that Mr. Bladow had signed the "Agreement to Guarantee Loan" and he and his mother testified that he was told to seek an attorney and that he did so.
Ms. Lindberg also asked Mr. Bladow whether he had been told to see another attorney about this matter. Mr. Bladow testified, "Not that I recall, no." (App. at 238). Mr. Johnson addressed this at the hearing:
"Well, what Wes was referring to was he now thinks that I mean he doesn't know what's going on. All this jargon's going on about 408 settlement, objections, and"
(App. at 116(T. 355)). Most interestingly, Mr. Bladow testified at Mr. Johnson's disciplinary hearing regarding the issue about "this matter":
"Well, when she said, "Did you see an attorney about this?" I thought she meant about this, I mean what was on the table in front of us right now, the custody hearing, whatever. So that I had not seen a different attorney on."
(App. at 130(T. 412)).
L. February Decision by the Court
The Court submitted its written Memorandum Decision. (App. at 240). The Court determined that Robert would continue to live with his father and the two daughters would live with their mother. Mr. Bladow determined to appeal the matter. Ms. Berg appealed the child support issue.
M. Disciplinary Proceedings
Subsequently, a complaint was filed with the disciplinary board by Ms. Berg, which eventually resulted in a petition for discipline (App. at 3) being served on Mr. Johnson and the hearing panel issuing its recommended sanction of a sixty (60) day suspension for violations of Rules 3.3 and 8.4, N.D.R. Prof. Conduct and 1.2(A), N.D.R. Lawyer Discipl. (App. at 13).
LAW AND ARGUMENT
A. Burden of Proof and Standard of Review
In an attorney disciplinary proceeding, disciplinary counsel bears the burden of proving each alleged violation of the disciplinary rules by clear and convincing evidence. Disciplinary Board v. Garaas, 2002 N.D. 181, 652 N.W. 2d 919 (N.D. 2002). This Court's review of disciplinary matters is de novo on the record. Disciplinary Board v. Buresh, 2007 ND 8, ¶ 6, 726 N.W. 2d 210. While due weight is given to the findings and conclusions of the hearing panel, the Court does not act as a mere rubber stamp. Id. Moreover, each disciplinary matter is considered on its facts to decide which sanction, if any, is appropriate. Id.
This Court reviews disciplinary proceedings against attorneys de novo on the record. In Re Chinquist, 2006 ND 107, ¶ 7, 714 N.W.2d 469. The Court decides each case on its own facts, and although it gives due weight to the findings, conclusions, and recommendations of a hearing panel, it does not act as a rubber stamp. Id.
B. Mr. Johnson Followed Rule 1.8, North Dakota Rules of Professional Conduct with Respect to the Contemplated Transaction with Wes Bladow
The Hearing Panel was not clear as to whether Mr. Johnson violated Rule 1.8 N.D.R. Prof. Conduct. (App. at 17-20). The Hearing Panel states that Mr. Johnson "knowingly made a false statement" at a time "when Mr. Johnson knew that Rule 1.8 of the N.D.R. Prof. Conduct" prevented him from advancing money to Mr. Bladow when Mr. Johnson had agreed to guarantee a loan. (App. at 20-21). Nevertheless, given the de novo review by this Court, Mr. Johnson submits that he did not violate Rule 1.8, N.D.R. Prof. Conduct.
Rule 1.8(a), N.D.R. Prof. Conduct provides as follows:
Except for standard commercial transactions involving products or services that the client generally markets to others, a lawyer shall not enter into a business, financial, or property transaction with a client unless:
(1) the transaction is fair and reasonable to the client; and
(2) after consultation, including advice to seek independent counsel, the client consents to the transaction.
In addition, Rule 1.8(e), N.D.R. Prof. Conduct, provides as follows:
A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter;
(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client; and
(3) a lawyer may guarantee a loan reasonably needed to enable the client to withstand delay in litigation that would otherwise put substantial pressure on the client to settle a case because of financial hardship rather than on the merits, provided that the client remains ultimately liable for repayment of the loan without regard to the outcome of the litigation and, further provided that no promise of financial assistance was made to the client by the lawyer, or by another in the lawyer's behalf, prior to the employment of that lawyer by the client.
1. Mr. Johnson Did Not Violate Rule 1.8(e)
Mr. Johnson secured an "agreement to guarantee loan" executed November 1, 2003 (before any settlement offers were transmitted to Ms. Berg) (App. at 204) wherein Mr. Bladow acknowledged that he was informed to contact an attorney of his choice to consult with in regard to the loan agreement. (App. at 204-205). The "agreement to guarantee loan" also specifically stated that Mr. Johnson would guarantee a loan to Bladow to enable Bladow to withstand a delay in litigation that would otherwise put substantial pressure on him to settle his case because of financial hardship. (App. at 204).
These facts are exactly what Rule 1.8(e) contemplates. The evidence is not to the contrary. Rule 1.8(e) is silent with request to who is actually obligated to make the initial payments under a loan. It is also silent as to when a lawyer is entitled to make payments under a guarantee arrangement to protect his financial situation. It is only contemplated that the client remain ultimately responsible for repayment of the loan. Mr. Johnson therefore was permitted to suggest that even though he would initially be making the payments, Mr. Bladow would pay him back and therefore remain ultimately responsible for the loan. This is consistent with the term "advance" that Mr. Johnson used in his November 17, 2003 letter. (App. at 207).
2. Mr. Johnson did not Violate Rule 1.8(a), N.D.R. Prof. Conduct
There is also no violation of Rule 1.8(a). The agreement was not unfair and unreasonable to Mr. Bladow. Mr. Bladow was told to and did see independent counsel. Most importantly, the loan never happened.
This matter is unlike Disciplinary Board v. Bullis, 2006 N.D.228, 723 N.W.2d 667, where Bullis was suspended for, among other things, a violation of Rule 1.8(a). In Bullis, this Court found that Bullis was aware of a client's financial situation and in that regard represented a company, in which he had a stake, to purchase an investment asset that the client had. Moreover, in Disciplinary Board v. Bullis, 2006 N.D. 228 ¶ 20, the Court found that Bullis used his knowledge of the client's investment strategy to his advantage and failed to adequately advise the client to seek independent counsel.
In the present case there is no use of investment strategies or finances which Mr. Johnson used to his advantage. In fact, the transaction, to the extent it would occur, would have been completely one-sided in favor of Mr. Bladow and detrimental to Mr. Johnson.
The present case is also unlike Disciplinary Board v. Chinquist, 2006 N.D. 107, 714 N.W.2d 469. In Chinquist, the attorney was disciplined for capitalizing on a client's sympathy for a criminal defendant that Chinquist was defending by having her pay the criminal defendant's legal fees without advising her to seek independent counsel concerning that financial transaction. Here, while there was no advantage gained by Mr. Johnson, the transaction would have been detrimental to Mr. Johnson. His financial status and reputation were at stake, not Mr. Bladow's.
This case is also unlike Disciplinary Board v. Giese, 2003 N.D. 82, 662 N.W.2d 250, where Giese was disciplined for obtaining a warranty deed from a client and recording the deed without advising the client to seek independent counsel when the deed was executed in favor of Attorney Giese.
Moreover, in Disciplinary Board v. Crary, 2002 N.D. 9, 638 N.W.2d 23, Crary was disciplined for facts quite unlike the present case. In that case, Attorney Crary was loaned $3,500 by a client without being advised to seek advice from another attorney about the transaction. Crary did not repay the $3,500 loan and this was held to be a violation of the Rules of Professional Conduct, Rule 1.8(a).
As the cases above demonstrate, all of these transactions occurred to the detriment of the client and without advising the client to seek advice from another attorney regarding the transaction and having the client consent for the transaction. In this case, Mr. Johnson did advise the client to seek advice from another attorney (which he did do) and Mr. Bladow did consent to the transaction (as evidenced by his agreement to guarantee loan dated November 1, 2003(App. at 204)). The transaction was all to the benefit of Mr. Bladow and to the detriment of Mr. Johnson.
As such, under these facts and circumstances, there is no violation of Rule 1.8.
C. Mr. Johnson did not Violate Rule 3.3 and 8.4, N.D.R. Prof. Conduct, or Rule 1.2(A) N.D.R. Lawyer Discipl.
The Hearing Panel found that Mr. Johnson made a false statement to Judge Paulson at the January 21, 2004 hearing or to the Inquiry Committee Southeast. Disciplinary Counsel objected because the Hearing Panel did not find or conclude that Mr. Johnson mislead the Inquiry Committee Southeast in his response to the informal complaint, in that he did not reveal that in addition to the written agreement between himself and his client that he would guarantee a loan for the client, there was also an oral agreement that Johnson would make any payments owed on the loan until such time in the future the client could repay Mr. Johnson.
The response to the Inquiry Committee was limited in scope to the allegation that Mr. Johnson had not complied with Rule 1.8, N.D.R. Prof. Conduct. Disciplinary Counsel acknowledges that Mr. Johnson complied with Rule 1.8. (p. 6 of Disciplinary Counsel's Post-Hearing Brief). Ms. Berg's initial Complaint made no mention of any issue of testimony at the hearings, so it wasn't even addressed. (App. at 300, 302). Her Complaint addressed solely whether Johnson tried to buy her children by his December 1st letter. (App. at 209). The focus was on Rule 1.8 issues only. No evidence was presented at the hearing which was inconsistent with the information contained in Johnson's initial response to the Inquiry Committee. Mr. Johnson always recognized that he would be responsible for making the payments to the bank if the loan ever occurred.
Simply put, any sums that were used to fund the agreement with Ms. Berg would have come from Ramsey Bank. Mr. Johnson did contact Ramsey Bank with regard to obtaining a loan for Mr. Bladow, which he would guarantee. His statements in court came in the context of a highly emotional and heated series of hearings and in the context of an evidentiary dispute regarding a Rule 408 Offer of Settlement. It was contemplated between Mr. Bladow and Mr. Johnson that it was unlikely that Mr. Bladow would be able to make the loan payments. Mr. Johnson expected Mr. Bladow to pay him back. Therefore, Mr. Johnson's statement that he was actually making the loan is consistent with his belief that Mr. Bladow would not make the initial payments to the bank and Mr. Johnson would be the responsible party to the bank but Mr. Johnson would be repaid by Mr. Bladow. Furthermore, if the settlement offer would have been admitted by the Court, Mr. Johnson and Mr. Bladow would have explained their arrangement to the Court. Because the offer was sealed, the issue was immediately disposed of. The Court asked no questions about the transaction. Noteworthy are Mr. Johnson's comments:
"First of all, I win the objection, number one, ultimately, and, number two, you know, this isn't a 1.8 ethical hearing. This is a custody trial. I mean I'm in the middle of a custody trial, not I'm not dealing with issues of guarantee agreements and advancements of I mean I'm talking about a 408 settlement conference in regard to this matter, and I'm, you know, trying to win kids for my client, not discuss Rule 1.8 with you know, in the middle of a custody battle." (App. at 117(T. 357)).
The words spoken were not intended to be false statements and when examined in their proper context, they were not false statements.
Rule 3.3, N.D.R. Prof. Conduct was not violated. That rule provides:
(a) A lawyer shall not knowingly:
(1) Make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.
Rule 3.3, N.D.R. Prof. Conduct has been interpreted and applied on several occasions in North Dakota. A review of those cases discloses that clear and convincing evidence did exist regarding false statements of law and fact. In Disciplinary Board v. Kaiser, 484 N.W.2d 102 (N.D. 1992), Kaiser self reported his perjury. At all times during the proceedings continued to admit to having committed perjury.
Five years later, in Disciplinary Board v. Lamont, 1997 ND 63, 561 N.W.2d 650 the Supreme Court noted that Lamont's testimony at the trial regarding his relationship with the Defendant doctor's competitor, Trinity Hospital, was deceptive, misleading, and evasive. The Court noted that the letter documents uncovered in the disciplinary investigation process "clearly" made Lamont's testimony deceptive, misleading, and evasive. A review of Lamont's testimony failed to disclosed the true facts that Trinity Hospital was fronting all Plaintiff's attorney's time and expenses. Clearly, it was deceptive. Lamont answered the question that he had not spoken to Trinity Medical Center to obtain their approval for the arrangement, when in fact, the letter documents disclosed "Trinity Medical Center will compensate me at an hourly rate and reverse all expenses to be billed and paid on a monthly basis." Lamont's testimony was contradicted by written documentation. This does not even approach Mr. Johnson's situation.
In Disciplinary Board v. McDonald, 2000 ND 87, 609 N.W.2d 418, the Supreme Court found McDonald was claiming to use a form that did not even exist in 1993 and created a forgery of an envelope to falsely suggest mailing of a lapse of mineral interest to meet certain statutory requirements. The documentary evidence also disclosed that the affidavit of publication, a document prepared by McDonald's office, was actually subscribed and sworn on August 16, 1993, which is seventeen (17) days after McDonald said the envelope had earlier been mailed. Clearly, the record disclosed forgeries and significant wrongful representations of fact. It can hardly be said that Mr. Johnson's statement regarding advancing money on behalf of Mr. Bladow where he would make the payments, rises to the same level of the forgeries and false statements of McDonald. The statement was true and if the offer would have been admitted into evidence, certainly Mr. Johnson and Bladow would have fully explained their agreement. The issue regarding the 408 settlement offer was immediately disposed of and the offer was sealed.
In Disciplinary Board v. Edwardson, 2002 ND 106, 647 N.W.2d 126, the attorney had claimed in an affidavit that her delay in responding to certain discovery was "unintentional due to numerous factors, including illness of counsel." At the hearing it was "made clear on this record that her failure to comply with the discovery requests in the Court's Order for Compliance was not unintentional or due to illness, but rather was a calculated trial strategy to avoid revealing that her client had previously withheld documents in his possession." Not surprisingly, the Supreme Court concluded that the clear and convincing evidence proved a false statement.
In Disciplinary Board v. Peterson, 2004 ND 205, 689 N.W.2d 364, attorney Peterson was disbarred for, among other things, a violation of Rule 3.3, N.D.R. Prof. Conduct. In that case the conduct was outrageous; Mr. Peterson had allegedly forged a client's signature on an affidavit. Id. at ¶ 10. Here, Mr. Johnson's conduct does not compare. Mr. Johnson always sought to be truthful and candid with the Court.
In Disciplinary Board v. Stensland, 2006 ND 251, 725 N.W.2d 191, the attorney "either signed the documents or at his direction had another individual sign the documents with Stukey's name." This was done without authorization or disclosure to the bankruptcy court that it was not Stukey's signature. Stukey's signature was required on these documents and the documents were ultimately falsely represented to the bankruptcy court as having been signed by Stukey when they were not. This hardly equates to the situation with Mr. Johnson.
These cases show how the facts here do not support a violation of Rule 3.3. In all the cases cited above, none of the them would support a finding that Mr. Johnson lied to the Court or Inquiry Committee wherein he would actually be the one making the payments as a guarantor of the loan and was ultimately looking to be repaid by Mr. Bladow.
With respect to the conclusion that Mr. Johnson violated Rule 8.4, by knowingly making a false statement of fact, this conclusion is contrary to the evidence insofar as the preceding clearly demonstrates that Mr. Johnson did not knowingly make a false statement of fact either to the Court or in his submissions to the Inquiry Committee. His statements in his letters and to the Court are consistent and were truthful.
Rule 8.4(a), N.D.R. Prof. Conduct, states:
It is professional misconduct for a lawyer to violate or attempt to violate these Rules, knowingly assist or induce another to do so, or do so through the acts of another;
This set of facts is unlike Disciplinary Board v. Schubert-Madsen, 533 N.W.2d 145 (N.D. 1995) where Attorney Schubert-Madsen was suspended under Rule 8.4(a) skimming client money from a trust account.
Moreover, Disciplinary Board v. Garaas, 2002 N.D. 181, 652 N.W.2d 918, involved dissimilar facts. In Garaas, a Rule 8.4(e) violation was found because Garaas made statements that failed to mention request from the courts. Here, at all times Mr. Johnson was respectful and truthful to the court. The statements made were truthful and made without any intent to deceive.
Mr. Johnson's testimony as to how his statements in court are consistent with the loan guarantee document fits with the character evidence offered in this matter. Many witnesses previously testified as to his good character: Police Officer Daniel Nordick (App. at 262); Cherie Clark(App. at 268); Narcotics Officer Dustin Hill (App. at 277); Attorney Russell Myhre (App. at 283).
Particularly noteworthy is the character evidence offered by Mary Jo Schneider (App. at 285). Russell Myhre, an attorney who Mr. Johnson regularly has cases with, testified that Mr. Johnson's word is good. (App. at 284). Mark Giddings, a CPA expert witness Mr. Johnson regularly works with, testified that he has always found Mr. Johnson to be truthful. (App. at 295).
D. The November 1st Document was Prepared and Signed by Mr. Johnson and Bladow on November 1, 2003
The Petition alleges that Mr. Johnson "submitted false documents to the [Inquiry] Committee when he filed his response, copies of the 'agreement to guarantee loan', purportedly signed by Mr. Johnson and Bladow on November 1, 2003 and the 'affidavit of Wesley Charles Bladow'." (App. at 4). There is no evidence in the record to support that the November 1 agreement was a false document or that the affidavit of Wesley Charles Bladow was a false document. The Hearing Panel did not find otherwise, and it's decision should not be disturbed in that regard. Disciplinary Counsel did not object to this conclusion.
E. Johnson Requests Diversion from Discipline, if this Court Agrees Discipline is Warranted
Diversion from discipline pursuant to Rule 6.6, N.D.R. Lawyer Discipl. is a recent remedy available in the lawyer discipline process. It is urged that the Court divert Mr. Johnson into that program should it find a violation of the rules of professional conduct. Through counseling, Mr. Johnson has identified a problem that exists in his law practice: he "over-identifies" with his clients cause. (App. at 136(T. 433)). He also seeks validation through his clients' cause. Mr. Johnson now recognizes that he has acted impulsively in the past and has to change that behavior. Mr. Johnson has worked with two psychologists on these issues. George O'Neil (App. at 59(T. 126)) and Dr. Ascano (App. at 136(T. 434), 63(T. 141-142)). The assessment can be summarized as follows:
Mr. Johnson feels a perpetual need to satisfy or obtain the approval of his clients and cannot give clients bad news. (App. at 137(T. 439)).
Mr. Johnson over-identifies with his clients and needs to create psychological space between clients and himself. (App. at 136(T.435), 138(T. 444)).
This problem effects his physical wellbeing. (App. at 135(T. 431), 62(T. 140)).
Not only has Mr. Johnson been involved with psychological consulting to change his behavior, he has also retained the services of Dwain Fagerlund (a consultant to lawyers on practice issues) to identify problem behaviors and to implement changes. (App. at 134(T. 426)). Mr. Fagerlund has noted various problems that Mr. Johnson had to work with:
Learning to delegate. (App. at 136(T. 434)).
Over identifying with clients. (App. at 136(T. 433)).
Slowing down, thinking legally. (App. at 137(T. 439)).
Adding staff. (App. at 137(T. 440)).
Didn't appear to be any boundary between Johnson's personal life and Johnson's professional life. (App. at 136(T. 433-434)).
Too involved with his client's cases. (App. at 136(T. 433)).
Mr. Fagerlund has been working with Mr. Johnson to change these behaviors. Mr. Johnson has been receptive to the changes. (App. at 137(T. 438-439)). Mr. Fagerlund also provides mentoring services and has additionally put Mr. Johnson in contact with a mentoring service available through the Minnesota Trial Lawyers Association and the Minnesota Bar Association. (App. at 136(T. 436)). Mr. Johnson recognizes his past behavior patterns have negatively affected his health negatively and he must make changes.
In addition to working with a psychologist and Mr. Fagerlund, Mr. Johnson has been open to his associates and friends about the behavior changes that he has to make. His former assistant, Jeanette Novotny, is aware of the behaviors that need to be changed. (App. at 127(T. 398)). Mr. Meyer, who has an office in Mr. Johnson's building, is working as a mentor and is helping with behavior changes that Mr. Johnson is making. (App. at 136(T. 436-437)).
Mr. Johnson has been making behavior changes. He's been working with Mr. Fagerlund since January 2005. (App. at 135(T. 430-431). Mr. Johnson does suffer from over identification and personal-professional boundary issues that are being addressed. If discipline is warranted, these can be best addressed through diversion not through typical discipline.
Mr. Johnson has been accepted into the diversion program. The language of Rule 6.6, N.D.R. Lawyer. Discipl., itself supports Mr. Johnson's diversion. Diversion under Rule 6.6 is to offer a remedy to those situations where questions about a lawyer's moral fitness or integrity are not in question. Rule 6.6(b)(1), N.D.R. Lawyer Discipl. The rule states that the purpose of diversion from discipline is to provide "remedial and rehabilitative" programs to members of the association. Rule 6.6(b), N.D.R. Lawyer Discipl. The rule recognizes that diversion from lawyer discipline often times is the best remedy for "the prevention of similar ethical violations by identified lawyers by altering the circumstances which caused the violation." Rule 6.6(b)(2), N.D.R. Lawyer Discipl. The rule is meant to cover cases involving "poor practice skills" or other deficiencies in professional capabilities. Rule 6.6(b)(3), N.D.R. Lawyer Discipl. The rule is also intended to cover those situations where "diversion from discipline can reasonably be expected to treat, educate or alter the respondent's behavior or otherwise address the underlying problem so as to minimize the risks that the respondent will commit the same or similar acts of misconduct in the future." Rule 6.6(b)(3), N.D.R. Lawyer Discipl. Factors that are to be considered for lawyer diversion include the weighing of the nature of the violation, the duty involved, whether the respondent was involved in self dealing, dishonest conduct or breach fiduciary duty, whether harm resulted, and the absence or presence of aggravating or mitigating factors. Id. A review of these factors all support diversion in this matter. Mr. Johnson has been interviewed and accepted into the program. Rule 6.6(d), N.D.R. Lawyer Discipl., establishes the creation of an Individual Assistance Plan. Mr. Johnson has already self referred himself to the Lawyer Assistance Program and will continue with it as long as required. (App. at 63(T. 143-144)).
Mr. Johnson respectfully requests that if discipline is warranted, this Court accept his participation in the Lawyer Assistance Plan and monitor his compliance with the Individual Assistance Plan. Mr. Johnson is agreeable to paying all costs of the individualized assistance program. It is Mr. Johnson's request under Rule 6.6(e), N.D.R. Lawyer Discipl., that his participation in the Lawyer Assistance Program be a condition of diversion from the discipline system.
F. If Discipline is to be Imposed, a Reprimand is an Appropriate Sanction. In No Case is a suspension Greater than Sixty (60) Days Warranted
In general, the "standards are designed for use in imposing a sanction or sanctions following a determination by clear and convincing evidence that a member of the legal profession has violated a provision of the North Dakota Rules of Professional Conduct." Rule 1.3, N.D. Stds. Imposing Lawyer Sanctions. The Standards are designed to promote consideration of factors relevant in imposing an appropriate level of sanction in an individual case and consideration of the appropriate weight of such facts in light of the stated goals of lawyer discipline. Finally, the Standards provide for consistency in disciplinary sanctions for the same or similar offenses within and among jurisdictions.
Rule 3.0, N.D. Stds. Imposing Lawyer Sanctions, provides that in imposing a sanction after a finding of lawyer misconduct, a Court should consider the following factors: A) The duty violated; B) The lawyer's mental state; C) The potential or actual injury caused by the lawyer's misconduct; and D) The existence of aggravating or mitigating factors.
1. The Duty Violated
The Hearing Panel concluded Mr. Johnson violated N.D.R.Prof. Conduct 3.3 and 8.4, and 1.2(A), N.D.R. Lawyer Discipl. Those rules contemplate candor and honesty. Accordingly, Rules 5.7 and 6.4, N.D. Stds. Imposing Lawyer Sanctions are the appropriate rules to analyze whether the recommended discipline is appropriate.
Rule 5.1, N.D.Stds. Imposing Lawyer Sanctions provides:
5.1 Failure to Maintain Personal Integrity
Absent aggravating or mitigating circumstances, upon application of the factors set out in Standard 3.0, the following sanctions are generally appropriate in cases involving commission of an act that reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects, or in cases with conduct involving dishonesty, fraud, deceit, or misrepresentation:
5.12 Suspension is generally appropriate when a lawyer knowingly engages in conduct which does not contain the elements listed in Standard 5.11 but that seriously adversely reflects on the lawyer's fitness to practice.
5.13 Reprimand is generally appropriate when a lawyer knowingly engages in any other conduct that involves dishonesty, fraud, deceit, or misrepresentation and that adversely reflects on the lawyer's fitness to practice.
"Knowledge" is defined by the Standards as the "conscious awareness of the nature or attendant circumstances of the conduct but without the conscious objective or purpose to accomplish a particular result."
Mr. Johnson's conduct clearly falls short of the attorney in Disciplinary Bd. v. Giese, 2003 ND 82 ¶ 16, 662 N.W.2d at 255, who was suspended by this Court. In that case, Giese failed to advise his client to obtain independent legal advice about a business transaction entered into by the client and Giese. Id. Mr. Johnson did advise his client appropriately.
Moreover, no serious adverse reflection on Mr. Johnson's fitness to practice is implicated here under Standard 5.12. The statements made to Judge Paulson were truthful and came in the context of a heated debate about the appropriateness of admitting a settlement offer into evidence. At most, the comments can be taken to "adversely" reflect on Mr. Johnson's fitness to practice under Standard 5.13. Under Standard 5.13, N.D. Stds. Imposing Lawyer Sanctions, a reprimand would be appropriate.
The Hearing Panel also considered Rule 6.1, N.D. Stds. Imposing Lawyer Sanctions. That Rule provides:
Absent aggravating or mitigating circumstances, upon application of the factors set out in Standard 3.0, the following sanctions are generally appropriate in cases involving conduct that is prejudicial to the administration of justice or that involves dishonesty, fraud, deceit, or misrepresentation to a court:
* * *
6.12 Suspension is generally appropriate when a lawyer knows that false statements or documents are being submitted to the court or that material information is improperly being withheld, and takes no remedial action, and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding.
6.13 Reprimand is generally appropriate when a lawyer is negligent either in determining whether statements or documents are false or in taking remedial action when material information is being withheld, and causes injury or potential injury to a party to the legal proceeding, or causes an adverse or potentially adverse effect on the legal proceeding.
"Negligence" is defined by the Standards as the "failure of a lawyer to heed a substantial risk that circumstances exist or that a result will follow, which failure is a deviation from the standard of care that a reasonable lawyer would exercise in the situation. In cases where the lawyer is alleged to have been negligent, as here, Courts generally impose a reprimand when the lawyer's conduct has resulted in no overreaching injury to the client. Unlike Disciplinary Bd. v. Giese, 2003 ND 82, ¶ 25-27, where the lawyer knew his actions in failing to advise his client to obtain independent counsel was wrong, Mr. Johnson's conduct, at most, was negligent in failing to take remedial action to correct Mr. Bladow's testimony. Disciplinary Board v. Boulger, 2001 ND 210, ¶ 14, 637 N.W.2d 710, 714 (N.D. 2001) (reprimanding lawyer for negligent conduct), Disciplinary Board v. Hellerud, 2006 ND 105, ¶ 14, 714 N.W.2d 38 (reprimanding lawyer and citing Disciplinary Board v. Gray, 544 N.W.2d 168, 172 (N.D. 1966), for proposition that "[t]here is no bright line between the mental state of 'knows or should know' and that of 'negligence'.")
No potentially adverse effect on a legal proceeding occurred because of Mr. Johnson's conduct. Judge Paulson eventually ordered that Mr. Bladow pay attorney's fees, which was one issues in the hearings before him and was the context for the comments made by Mr. Johnson. It is thus urged that under Standard 6.13, the appropriate discipline, at most, would be a reprimand.
2. The Lawyer's Mental State
Mr. Johnson's mental state was described in Section E, supra pertaining to diversion. All of the issues described therein must be considered when contemplating discipline. Mr. Johnson has implemented life and law practice changing measures since these events. He recognizes the effect his past behavior has had on his life, health, and law practice. The impact of these measures cannot be overstated in terms of the effect they have had on Mr. Johnson's life and practice now.
Contrasted with his practice when these events occurred, Mr. Johnson has made considerable progress. It is urged that the Court consider Mr. Johnson's mental state when these events occurred.
3. The Potential or Actual Injury Caused by the Lawyer's Misconduct
Standard 3.0, N.D. Stds. Imposing Lawyer Sanctions, also provides that a Court should, after a finding of lawyer misconduct, consider the potential or actual injury caused by the lawyer's misconduct. In this case, there is no actual injury caused by Mr. Johnson. A common thread that runs through the disciplinary measures outlined in Standard 6.1 is effect on the lawyer's fitness to practice and injury or potential injury to a party.
No injury or potential injury was caused by Mr. Johnson and none was proven. The Hearing Panel did not find contrary. Another common thread is "adverse or potentially adverse effect on the legal proceeding." In the underlying divorce case it was ultimately held by Judge Paulson that Mr. Bladow was capable of paying attorney's fees, which is the issue which gave rise to the statements in court by Mr. Johnson. No adverse effect occurred because of that fact.
4. The Existence of Aggravating or Mitigating Factors
Rule 3.0, N.D. Stds. Imposing Lawyer Sanctions, also provides that a court should, after a finding of lawyer misconduct, consider the existence of aggravating or mitigating factors. Rule 9.3, N.D. Stds. Imposing Lawyer Sanctions, lists factors that are to be considered in mitigating the degree of discipline to be imposed on a lawyer. Factors which may be included in mitigation are set out in Rule 9.32, N.D. Stds. Imposing Lawyer Sanctions. They include, in relevant part:
b. Absence of dishonest or selfish motive;
* * *
e. Full and free disclosure to Disciplinary Board or cooperative attitude towards proceedings;
* * *
f. Character or reputation.
Mr. Johnson has been fully cooperative and forthright in the disciplinary process. There was no selfish motive; Mr. Johnson stood to gain nothing from the transaction with Mr. Bladow.
Furthermore, several witnesses provided testimony about Mr. Johnson's character and reputation as being exemplary. Dan Nordick (App. at 262), Cherie Clark (App. at 262), Dustin Hill (App. at 276), Russell Myhre (App. at 282), Mary Jo Schneider (App. at 286), and Marie Giddings (App. at 291) all testified to Mr. Johnson's good character and ethical behavior. Rule, 9.32(g), N.D. Stds. Imposing Lawyer Sanctions.
In short, there are substantial mitigating factors here should not be overlooked as the hearing panel did, at least with respect to Mr. Johnson's participation in the Lawyer Assistance Program.
The purpose of disciplinary proceedings is not to punish an attorney but to determine what is in the public interest. Id. Mr. Johnson respectfully suggests that under the particular facts of this case that if the Court finds that there has been a violation of the Code of Professional Conduct he should be diverted to the Lawyer Assistance Program. If the Court determines that discipline is warranted, Mr. Johnson submits that under the standards for imposing lawyer sanction, a reprimand is warranted and is in the public's interest. In no case is a suspension greater then sixty (60) days warranted.
At all times, Mr. Johnson sought to be truthful and candid with the Court and the inquiry committee. His comments in court came during a heated evidentiary debate. Judge Paulson questioned him no further on the specifics of the transaction Mr. Johnson would at that time explained the details. No violation of the rules of professional conduct or lawyer discipline occurred.
If the Court determines that there was a violation of the rules of professional conduct, Mr. Johnson urges that he be diverted into the lawyer assistance program. If discipline is to be imposed, a reprimand is an appropriate sanction, and no event is a suspension for a greater time that what the hearing panel recommended appropriate.
Respectfully submitted this 8th day of June, 2007.
|Ronald H. McLean (#03260)|
|Joseph A. Wetch, Jr. (#05788)|
|SERKLAND LAW FIRM|
|10 Roberts Street|
|P.O. Box 6017|
|Fargo, North Dakota 58108-6017|
|ATTORNEYS FOR RESPONDENT|
|SAMUEL S. JOHNSON|
1 In 2003, the Court determined that the oldest child would reside primarily with Mr. Bladow and attend school in Hankinson and the two youngest children would reside primarily with Ms. Berg during the week. The Court reserved the issue about the choice of school for the two youngest children.
2 Mr. Bladow did talk to a Fargo attorney about the event.
3 Ms. Berg said she was the victim of certain abuse during an exchange of the children. (App. at 109(T. 325)). Tracy Lindberg made application to the Cass County District Court for a restraining order alleging physical abuse by Mr. Bladow during this visitation exchange. Judge Cynthia Rothe-Seeger reviewed the evidence and determined that Ms. Berg was not credible. (App. at 203).
4 Mr. Johnson absolutely believed that the best place for the children was living with their grandmother and father on the farm, which they knew as their home. (App. at 107(T. 319-320)). Mr. Johnson described the children as incredibly attached to their grandmother. (App. at 107(T. 319)). Mr. Bladow testified his farm provided a stable home that had been the family home for all the children's lives and there was not a better person than his mother to care for the children. (App. at 129(T. 407)). Mr. Johnson felt devastated by the decision and felt responsible for the decision. (App. at 107(T. 319-320)). Johnson now recognizes that he became psychologically over involved and had boundary issue problems. (App. at 107(T. 320-321)).
5 Johnson again gave Mr. Bladow the names of Dave Johnson and Jon Brakke. (App. at 111(T. 335)). Bladow contacted both of them and discussed the matter. (App. at 111(T. 335), 129(T. 408)). (Mr. Bladow executed a document dated November 1, 2003, swearing that he had either seen an attorney or had been advised to see an attorney. (App. at 204). Nancy Bladow confirmed these contacts. (App. at 98(T. 282)).
6 Mr. Bladow's cattle operation was suffering from declining beef prices because of mad cow disease. The price of corn and beans were very low. It had been an extremely wet season and prices were static. Mr. Bladow had substantial credit card debt and debt to his farm lenders. (App. at 109(T. 328-329)).