FOR THE RESPONDENT FOR THE INDIANA SUPREME COURT
DISCIPLINARY COMMISSION
Frederick T. Work Donald R. Lundberg, Executive
Secretary
504 Broadway Avenue Dennis K. McKinney, Staff Attorney
Gary, IN 46402 115 West Washington Street, Suite
1060
Indianapolis, IN 46204
IN THE
SUPREME COURT OF INDIANA
IN THE MATTER OF )
) Case No. 45S00-9705-DI-308
CHARLES H. GRADDICK )
DISCIPLINARY ACTION
November 19, 1999
Per Curiam
The Indiana Supreme Court Disciplinary Commission and the respondent,
Charles H. Graddick, agree that he violated the Rules of Professional
Conduct for Attorneys at Law by failing diligently to represent his
clients, failing to return unearned fees to a client after being
discharged, and failing to hold funds collected on behalf of a third party
in a trust account.
This case is now before us for approval of a Statement of
Circumstances and Conditional Agreement for Discipline entered into by the
parties pursuant to Ind.Admission and Discipline Rule 23, Section 11(c).
Our jurisdiction here arises from the respondent's admission to this
state's bar on April 9, 1974.
Under Count I, the parties agree that a client hired the respondent in
August 1989 to represent her in a claim against her employer, a city school
system. The respondent filed a notice of claim with school officials in
September 1989. In April 1991, the respondent filed suit against the
school alleging, on behalf of his client, breach of contract and
retaliatory firing. In the spring of 1993, the respondent's office
notified the client that the school had scheduled her deposition for May
18, 1993. The respondent did not attend the deposition with the client;
instead, an attorney associate of the respondent attended. On March 18,
1994, the client's case was dismissed pursuant to Ind.Trial Rule 41(E). In
September 1994, the respondent wrote to the client, advising her that,
after reviewing her deposition, he concluded that she had no legal grounds
to pursue her claim. The respondent was unaware that the case had been
dismissed and therefore did not inform the client that her case had been
dismissed.
We find that the respondent violated Ind.Professional Conduct Rule
1.2(a)[1] by failing to abide by his client's decision to prosecute the
case; and Prof.Cond.R.1.3[2] by failing to act with reasonable diligence
and promptness in representing the client.
Under Count II, the parties agree that in 1989, a client hired the
respondent to represent her in a personal injury claim. In 1994, the
client's case settled for $57,500. The respondent did not deposit the
settlement check into his trust account. Instead, he negotiated the check,
kept $19,166 in attorney fees pursuant to a contingency fee agreement, paid
the client a $10,000 advance and retained $28,334 of the settlement
proceeds to satisfy the client's outstanding medical expenses in a series
of money orders. At that time, the client's medical claims were more that
the amount the respondent had retained. However, the respondent was able
to negotiate settlements with the client's medical providers such that the
aggregate of their claims was less than the amount of the money retained.
After payment to the medical providers, the respondent distributed the
remaining amount to the client's heirs, since by that time the client had
passed away.
Indiana Professional Conduct Rule 1.15(a) provides, in relevant part,
that funds of a client or third party held in a lawyer’s possession in
connection with a representation shall be held in a separate account
maintained in the state where the lawyer’s office is situated, or elsewhere
with the consent of the client or third person. The comment to that rule
states that client or third party funds in the possession of the lawyer
should be held in one or more trust accounts. There is nothing in the
record before us indicating that the medical creditors or his client
consented to the settlement funds being held by the respondent outside of
an account. Accordingly, we find that the respondent violated Prof.Cond.R.
1.15(a) by failing to hold the funds earmarked for payment of medical
creditors in such an account.
Under Count III, the parties agree in 1994 a guardianship was opened
in LaPorte Superior Court No. 3 for an elderly woman. Due to problems with
the original guardian, the LaPorte County Council on Aging’s Guardianship
Program was appointed as successor guardian. The program was overseen by
its director and represented in the matter by counsel of record. The
program petitioned the court to sell the ward’s personal property, which
motion the court granted.
The ward’s niece hired the respondent to request a hearing on the sale
of the ward’s property. At that time, the respondent employed in his
office a disbarred lawyer.[3] After the respondent filed his appearance on
behalf of his client, the disbarred lawyer called the director of the
guardianship program and identified himself as an employee of the
respondent's law firm. The disbarred lawyer told the director that if the
guardian program continued to pursue selling the ward's personal property
it would be in direct violation of the law. At no time during the
conversation did the disbarred lawyer disclose to the director that he was
no longer licensed as an attorney. After the telephone conversation, the
director delayed the sale, although the property was eventually sold. The
disbarred lawyer was later found to be in contempt of this Court, inter
alia, for his telephone call to director. See Matter of Contempt of
DeLoney, 689 N.E.2d 431(Ind. 1997). The evidence at the contempt hearing
indicated that the disbarred lawyer made the telephone call to the director
at the instigation of someone other than the respondent. The parties also
agree that the respondent had no knowledge of the disbarred lawyer’s
telephone contact with the director.
The disbarred lawyer, over whom the respondent had directly
supervisory authority, called the director of the program to speak to him
about the guardianship matter instead of speaking with the attorney of
record for the program. Professional Conduct Rule 4.2 provides that, in
representing a client, a lawyer shall not communicate about the subject
matter of the representation with a party the lawyer knows to be
represented by another lawyer in the matter, unless the lawyer has the
consent of the or is authorized by law to do so. Professional Conduct Rule
5.3(c) imputes the conduct of a lawyer’s nonlawyer employees to the lawyer
under certain circumstances, and that is in essesnce the commission’s
charge against the respondent.[4] Under Prof.Cond.R. 5.3(c)(2), a
nonlawyer employee’s acts are imputed to the supervising attorney, but only
if the attorney “knows of the conduct at a time when its consequences can
be avoided or mitigated but fails to take reasonable remedial action.”
Similarly, under Prof.Cond.R. 5.3(c)(1), the acts are imputed only if the
attorney orders the offending conduct or, with knowledge of it, ratifies
it. The parties in this case agree that the respondent knew nothing of the
disbarred lawyer’s telephone call. Further, the tendered agreement
provides that the telephone call was made at the instigation of someone
other than the respondent. Accordingly, we decline to find that the
respondent violated Prof.Cond.R. 5.3(c) under the agreed facts of Count
III.[5]
The parties agree that under Count IV, the respondent was hired in
1995 to defend a client against a series of traffic charges filed in
Hammond City Court. The client paid the respondent $500 as partial payment
towards the balance of the respondent's fee. During the next year, the
respondent failed to appear for at least six trial settings. Additionally,
the respondent continued the client's case at least three times on short
notice, one to three days before trial. In May 1996, the client discharged
the respondent and requested that the respondent refund her $500 and return
to her case file materials which she was entitled. The respondent did
neither.
The respondent's failure to defend diligently his client's case and
his subsequent failure to return unearned fees and the client's file after
being discharged violated Prof.Cond.R.1.3 and Prof.Cond.R.1.16(d).[6]
The Commission and the respondent agree that the respondent's conduct
warrants a public reprimand. Among the factors this Court weighs when
considering an appropriate disciplinary sanction are mitigating and
aggravating circumstances. Matter of Christoff and Holmes, 690 N.E.2d 1135
(Ind. 1997). The parties agree on a number of mitigating factors. With
respect to Count I, they agree that the respondent was not personally on
notice of the case’s dismissal until after he wrote to the client. Under
Count II, the respondent and the Commission stipulate that, even though the
respondent did not keep the $28,334 in settlement proceeds in a trust
account, he did keep it separate from his personal funds. All of the
settlement proceeds were distributed to the appropriate recipients. After
the events leading to that count, the respondent voluntarily attended a
course on trust account management. Finally, during his neglect of the
client's traffic matters in Count IV, the respondent had been hospitalized
and was recovering from heart problems.
Despite these factors, the respondent's actions warrant sanction. The
respondent’s action in Count I resulted in his client’s case being
dismissed. The respondent then proceeded to make a bad situation even
worse by providing his client erroneous information as to the status of the
case. His other acts under Counts II and IV reveal similar instances of
poor case management and negligent treatment of this clients and their
concerns. Accordingly, conclude that his conduct deserves public
reprimand.
It is, therefore, ordered that Charles H. Graddick, is hereby publicly
reprimanded and admonished for his conduct.
The Clerk of this Court is directed to provide notice of this order in
accordance with Admis.Disc.R.23(3)(d) and to provide the clerk of the
United States Court of Appeals for the Seventh Circuit, the clerk of each
of the United States District Courts in this state, and the clerk of each
of the United States Bankruptcy Courts in this state with the last known
address of the respondent as reflected in the records of the clerk.
Costs are assessed against the respondent.
Shepard, C.J., and Dickson, Sullivan and Boehm, JJ., concur.
-----------------------
[1] Indiana Professional Conduct Rule 1.2(a) provides, in relevant
part, that a lawyer shall abide by a client's decision concerning the
objectives of representation and shall consult with the client as to the
means by which they are to be pursued.
[2]Indiana Professional Conduct Rule 1.3 provides that a lawyer shall
act with reasonable diligence and promptness in representing a client.
[3] The disbarred lawyer’s employment in the respondent’s law office
predated this Court’s 1998 amendment to Admis.Disc.R. 23(26)(b), which now
provides that a disbarred lawyer shall not maintain a presence or occupy an
office where the practice of law is conducted.
[4]Indiana Professional Conduct Rule 5.3(c) provides that with respect
to a nonlawyer employed or retained by or associated with a lawyer, a
lawyer shall be responsible for conduct of such a person that would be a
violation of the Rules of Professional Conduct if engaged in by a lawyer
if: (1) the lawyer orders, or with the knowledge of the specific conduct,
ratifies the conduct involved or (2) the lawyer is partner in the law firm
in which the person is employed, or has direct supervisory authority over
the person, and knows of the conduct at a time when its consequences can be
avoided or mitigated but fails to take reasonable remedial action.
[5] It may be that the agreed facts constitute a violation of
Prof.Cond.R. 5.3(a), which provides that a partner in a law firm shall make
reasonable efforts to ensure that the firm has in effect measures giving
reasonable assurance that nonlawyer employees’conduct is compatible with
the professional obligations of the lawyer, or Prof.Cond.R. 5.3(b), which
provides that a lawyer having direct supervisory authority over the
nonlawyer shall make reasonable efforts to ensure that the person’s conduct
is compatible with the professional obligations of the lawyer. However,
since the verified complaint in this case charged only a violation of
Prof.Cond.R. 5.3(c), we are precluded from making such a finding.
[6]Indiana Professional Conduct Rule 1.16(d) provides that upon
termination of representation, a lawyer shall take steps to the extent
reasonably practicable to protect a client's interests such as giving
reasonable notice to the client, allowing time for employment of other
counsel, surrendering papers and property to which the client is entitled
and refunding any advance payment of fee that has not been earned. The
lawyer may retain papers relating to the client to the extent permitted by
other law.