Ligon v. Dunklin

Tom Glaze, Justice,

dissenting. The majority opinion sets forth the facts fairly well, but it is the application of the law to those facts that troubles me. The special judge found that Mr. Dunklin violated Model Rule 3.4(c) when, during a deposition, he denied having represented Mark Kimbrough in any criminal proceedings. Because testifying falsely is prohibited by Ark. R. Evid. 603, and Rule 3.4(c) provides that a lawyer shall not “knowingly disobey an obligation under the rules of a tribunal,” the judge concluded that Dunklin had violated Model Rule 3.4(c). Dunklin changed his testimony later when he admitted having previously represented Kimbrough in a criminal case. Dunklin further changed his earlier testimony by conceding that he represented Kimbrough in four real estate transactions. The special judge concluded that Dunklin was untruthful in these matters.

The special judge also found that Dunklin violated Model Rule 8.4(c), which provides that it is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. Again, the special judge found ample evidence to hold that Dunklin knowingly violated a tribunal rule. Regarding these two violations of the Model Rules, the special judge was correct on these two counts.

At this point, however, I take issue with Dunklin and the special judge’s suggestion that Dunklin did not violate Rule 8.4(c) in handling his IOLTA or trust account by writing checks on that account to pay his personal obligations. The special judge made the following findings:

Count VIII charges a violation of Model Rule 8.4(c) by Dunklin issuing check number 1304 on his IOLTA account to pay a personal car loan. Specifically paragraphs 43 and 44 use the same words “knowing that he did not have $433.60 of his personal funds in the account... .”
Who did Dunklin target with dishonesty, fraud, deceit, or misrepresentation?
Since there was no evidence either directly or indirecdy that Dunklin had knowledge, it must be concluded that a violation of Model Rule 8.4(c) was not proved.

The majority opinion reflects the special judge’s finding that the Committee failed to prove that Dunklin had knowledge that he did not have $433.60 of his personal funds in the account when he wrote the check in that amount, but Dunklin conceded this fact. In addition, Nancy Hollis, Vice President of Corporate Investigations at Bank of America, testified regarding Dunklin’s trust account for the period from June 1, 1999, through June 30, 1999. Hollis said that the balance during this period was a negative $23.38. Dunklin failed to show why his trust account had a negative balance. Hollis further examined Dunklin’s trust account and noted that there were four deposits in the account. Again, Dunklin made no attempt to explain how or why unidentified funds were in the account. Most important, Dunklin conceded that, through June 23, 1999, he wrote four personal checks: 1) to the Gans Building Partnership “for rent,” in the amount of $1,335.60; 2) for $1,000 to Walker & Dunklin for “overhead”; 3) for $2,200 made out to “cash”; and 4) for $433.60 made out to Pulaski Bank and Trust for a personal auto loan. The total amount of the checks written on or before June 24, 1999, when Dunklin wrote the auto loan check, clearly exceeded the balance maintained in the account. And indeed, Dunklin testified that, based on the evidence presented at the hearing, he did not have sufficient funds to cover the four checks. (Dunklin testified, “I would say that, prior to June 23, 1999, ... I did not have sufficient funds in my account to pay for the overhead of $1,335.60, overhead of $1,000, the cash withdrawal of $2,200, and the car payment of $433.60.”) In fact, Dunklin repeatedly testified as to how he unlawfully misused his trust account; that testimony was clearly contrary to the judge’s findings, and it is reason to reverse this case.

The majority opinion countenances these plain violations and misuses of Dunklin’s trust account by saying that the Committee failed to show that Dunklin knew, at the time that he wrote the $433.60 check for his personal loan, that he did not have that amount in personal funds in his IOLTA account. How this satisfies Dunklin’s trust account problems, I cannot fathom, as an attorney is not supposed to be writing personal checks out of his trust account. That account is for the purpose of holding monies for third parties, not to pay personal obligations or debts.

The Committee further argues that the special judge was wrong to exclude some eight exhibits, comprised of various checks written by Dunklin, that were offered by the Committee to show a pattern of Dunklin’s use of money from his IOLTA trust account to pay his personal obligations and to show that Dunklin did not simply make an inadvertent error. Dunklin testified that the checks written in June 1999 were for personal obligations and must have been due to a mistake. Dunklin also claimed that the Committee never provided him with copies of the other checks, which Dunklin had written during a period from February of 1999 through December of 1999, and that these checks were written in a time period not covered by the complaint.

The problems with Dunklin’s arguments are several. First, the checks are indisputably from his trust account; consequently, he cannot claim to have been surprised by their existence when the Committee proffered them. Second, the checks were offered in a composite exhibit under Ark. R. Evid. 404(b) to show a pattern of abuse by which Dunklin unlawfully used his trust account to pay his personal obligations. Dunklin testified that he knew he had a duty to clients or third parties to account for funds that came into his possession. Third, Dunklin, by his own testimony, opened the door for the Committee to prove that Dunklin continued his unlawful use of his trust account. Dunklin testified that the June 1999 checks written to the Gans Building or to Walker & Dunklin for overhead out of the trust account “must have been through some error of mine.” The Committee should have been permitted to question Dunklin about the checks from months other than June 1999 to show that the checks written in June were not the result of a mistake or inadvertence. Under Rule 404(b), evidence of other bad acts is admissible to show “absence of mistake.” The special judge simply erred when he wrongly excluded these additional checks.1 Dunklin also admitted his personal money should not have been in his trust account, but he nonetheless knowingly wrote checks from that account to pay his debts.

Finally, I take issue with this court’s decision to suspend Dunklin for only three years. The violations that the special judge found to have occurred are serious ones. Had the special judge recommended disbarment, I would have agreed that such a punishment would have been appropriate. When an attorney has violated Model Rule 8.4(c) by being untruthful to the court, and has also been shown to have converted a client’s funds for the attorney’s personal use, it is my belief that the attorney should be disbarred, or at the least, be suspended from the practice of law for five years. See Ark. S. Ct. P. Regulating Prof'l Conduct of Att’ys at Law § 17B; see also Neal v. Hollingsworth, 338 Ark. 251, 992 S.W.2d 771 (1999) (where the evidence demonstrated a pattern of misconduct in which attorney misappropriated clients’ funds and concealed his wrongdoing, such misconduct could only be characterized as serious, substantial, and egregious, and disbarment was the “only appropriate sanction”); Ligon v. Newman, 365 Ark. 510, 231 S.W.3d 662 (2006) (disbarment appropriate where evidence showed a pattern of abuse involving the misappropriation of funds as well as deceit, dishonesty, and misrepresentation). Such a result would comport with the spirit of our Rules of Professional Conduct, which require an attorney to conduct his affairs so as to “inspire the confidence, respect, and trust of clients and the public.” See Ark. R. Prof'l pmbl. 13A.

The Committee presented evidence that Dunklin had a negative balance at the end of July 1999 to show that Dunklin continued his pattern of abuse of his trust account.