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Iowa Supreme Court Attorney Disciplinary Bd. v. Clarity

Supreme Court of Iowa

October 18, 2013

James A. CLARITY III, Respondent.

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[Copyrighted Material Omitted]

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Charles L. Harrington and Nicholas Trè Critelli III, Des Moines, for complainant.

Edward W. Bjornstad of Edward W. Bjornstad, LLC, Spirit Lake, for respondent.

WATERMAN, Justice.

An experienced Iowa attorney, James A. Clarity III, neglected his clients and mishandled their cases and money while struggling with alcoholism. He has been under disability suspension since May 25, 2012. The Iowa Supreme Court Attorney Disciplinary Board brought a complaint against Clarity, alleging he violated ten rules of professional conduct during his representation of seven clients in five different matters. Clarity stipulated to most of the underlying facts, nine of ten rule violations, and mitigating and aggravating

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circumstances. He contested the Board's allegation that he charged an unreasonable fee in a criminal case. A division of the Grievance Commission of the Supreme Court of Iowa found Clarity violated all ten rules and recommended his license be suspended for three years from May 25, 2012. Based on our de novo review, we find Clarity violated all ten rules and impose a one-year disciplinary suspension from the date of this opinion.

I. Scope of Review.

We review attorney disciplinary proceedings de novo. Iowa Supreme Ct. Att'y Disciplinary Bd. v. Rhinehart, 827 N.W.2d 169, 171 (Iowa 2013). We give the commission's findings respectful consideration, but we are not bound by them. Id. The Board must prove attorney misconduct by a convincing preponderance of the evidence. Id. In determining the appropriate sanction, we can impose a more or less severe sanction than that recommended by the commission. Id.

The parties are bound by their stipulations of fact. Iowa Supreme Ct. Att'y Disciplinary Bd. v. McCarthy, 814 N.W.2d 596, 601 (Iowa 2012). " However, a stipulation is not binding as to a violation or a sanction. We will determine whether a violation occurred and the appropriate sanction based upon the facts we find from the stipulation and our review of the record." Id. (citations omitted).

II. Background Facts and Proceedings.

We find the following facts using the parties' stipulation and our own review of the record.

Clarity was admitted to practice law in Iowa in 1976. At all times relevant to the Board's complaint, Clarity resided in Dickinson County, Iowa. His practice was approximately forty percent criminal matters and sixty percent civil matters. Before his issues with alcoholism, Clarity had an unblemished career and enjoyed a reputation as a zealous advocate for his clients. He was a member of several prestigious trial lawyer organizations.

Clarity, by his own admission, became an alcoholic after his sister died in 2009. He received inpatient treatment for alcohol abuse from July 15 through August 13, 2010, at the Hazelden Treatment Center in Center City, Minnesota. After relapsing, Clarity entered inpatient treatment a second time on February 12, 2011. During this second phase of treatment, on March 8, our court temporarily suspended Clarity's license to practice law due to his disability and implemented a trusteeship. He was released from inpatient care on April 14. We held a hearing on April 26 on whether to lift his disability suspension. Clarity provided medical evidence of his successful treatment. He testified as follows:

I am asking the court to end this suspension so that I can go back to what I love doing. I have taken the necessary steps to put my life in order as would a cancer patient, patient with MS or any other patient with a treatment of a disease. Alcoholism is chronic, progressive, and it's fatal. To that and in that there is no doubt. If I drink again, I will die. Simple.

We lifted his temporary suspension the next day.

Clarity relapsed again a year later. On May 25, 2012, we imposed another temporary disability suspension on Clarity's license to practice law. Clarity consented to continuing this suspension, and it has remained in effect since that date. We now describe the matters giving rise to the Board's complaint.

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A. Easton Representation.

David and Jane Easton retained Clarity on January 20, 2010, to represent them in threatened federal criminal and civil charges relating to Medicare prescription fraud. The Eastons paid Clarity a $75,000 retainer and agreed to pay his hourly rate of $300. Clarity had previously handled similar matters. Shortly after retaining Clarity, David was indicted in federal court on 1080 criminal counts, and a federal civil suit was filed against the Eastons.

The Eastons paid Clarity's retainer in two installments: $50,000 on January 21 and $25,000 on February 10. Clarity deposited these funds in his trust account at The State Bank in Spirit Lake, Iowa. At the time these funds were deposited, the account contained no other client funds and had a prior balance of $118.93. Over the next several months, Clarity transferred $69,317.08 to his general firm account for the payment of legal fees and costs and paid the balance to a third party for chartered air travel. Clarity failed to contemporaneously notify the Eastons of these withdrawals or provide them with any accounting. By May 3, their retainer was depleted, leaving $119.93 in the trust account.

Clarity contacted David on July 14 to notify him for the first time that the $75,000 was depleted. Clarity asked for an additional $15,000 to continue his work on the case. Clarity told David he needed the funds to travel to Washington, D.C. so that he could negotiate a settlement with the United States Department of Justice. At Clarity's request, David met him in a grocery store parking lot and gave him a check for the requested amount. The next day, July 15, David went to Clarity's law office to obtain a receipt, but was informed by Clarity's secretary that he was home sick and that she knew nothing about the $15,000. David heard rumors the next day that Clarity had been committed for alcohol addiction and stopped payment on his check. No one from Clarity's office notified the Eastons that Clarity would be unavailable for weeks. The Eastons retained new counsel, who required them to pay another retainer. Clarity's office did not respond to multiple requests to transfer his file to the new attorney until mid-August. Clarity, despite repeated requests for a refund or explanation, also failed to provide any accounting of how the $75,000 was spent until after the Eastons filed a complaint with the Board on November 5. On November 12, Clarity sent to the Eastons his first and only statement describing his services rendered from January through June.

According to Clarity, due to record-keeping problems, he had to re-create his November statement by perusing his file. He said he originally handwrote his time entries during his representation of the Eastons and his legal assistant entered the information into the billing system. She destroyed the handwritten time entries after entering the data.[1] Clarity testified a computer virus compromised the electronic time records. Clarity hired a computer technician to address the problem, but the data could not be recovered. His reconstructed statement dated November 12 included five pages of entries listing services performed without the date or time spent on any specific entry. At the end of the statement, aggregate figures were provided: " TOTAL TIME: 225 HOURS x $300.00 = $72,000[sic]" followed by " TOTAL

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COSTS ADVANCED: $3,299.32" and a final line stating, " TOTAL TIME AND COSTS ADVANCED: $75,299.32."

Clarity never refunded any of the Eastons' $75,000. David Easton, represented by another attorney, ultimately was sentenced to prison.

B. Buettner, Clark, and Leiss OWI Matters.

Clarity represented three clients— Kenley Martin Buettner, Nichole Marie Clark, and Anthony Peter Leiss— in criminal and administrative proceedings arising from charges of operating while intoxicated (OWI). Buettner retained Clarity to represent him on May 12, 2010, after he was arrested for a third offense OWI and driving while barred. Buettner paid Clarity a $15,000 retainer by three credit card payments in March and June. These payments went into the firm's general account and were not transferred into Clarity's client trust account. Clark and Leiss, who were each charged with first offense OWI, also retained Clarity. Clark's grandmother and Leiss each paid Clarity a retainer of $2500 in September and October, respectively. Clarity did not transfer these retainers into his client trust account.

On his 2011 " Client Security Commission Combined Statement and Questionnaire," Clarity responded " yes" to a question that asked whether all retainers, regardless of their size, had been deposited into a client trust account. Although Clarity later asked how to correct his misstatement, he never filed an amended questionnaire with the Office of Professional Regulation.

Clarity advised all three clients at the outset of his representation they did not need to attend any hearing unless he specifically told them to do so. Arraignments were held for Clark and Leiss on November 4, 2010, but Clarity failed to appear or notify his clients of the need to appear. The court continued the arraignments until November 18. Clarity again failed to inform Clark or Leiss of the new date and failed to attend or continue their arraignments. As a result, the court issued bench warrants for Clark and Leiss, who were arrested and jailed. Clark and Leiss each had to post bond to secure their release. Clarity also failed to notify Buettner he needed to attend his pretrial conference scheduled for January 24, 2011. Because neither Clarity nor Buettner attended the pretrial conference, the court issued a bench warrant for Buettner's arrest. Buettner too was jailed and had to post bond to secure his release.

Clarity entered his second inpatient treatment on February 12, again without notifying these clients, the court, or the county attorney he would not be practicing during that period. Buettner, Clark, and Leiss each retained new counsel. Clark sued Clarity in small claims court and obtained a default judgment for her $2500 retainer with interest and $110 in court costs. As of the time of the commission's hearing, Clarity had not yet satisfied the judgment. Clarity also had not refunded any part of the Buettner or Leiss retainers.

C. Rodrick and Jurine Williams Representation.

Clarity represented Rodrick and Jurine Williams as plaintiffs in a civil action filed in the Iowa District Court for Emmet County. The court granted summary judgment in favor of the defendants on September 13, 2010. Clarity filed a timely notice of appeal on October 11. But, because Clarity failed to file the combined certificate and to pay the filing fee, the clerk of this court sent Clarity a " Notice of Default and Assessment of Penalty" on November 2. Clarity failed to cure the default. As a result, we entered an order dismissing the appeal on December 8. Clarity moved to reinstate the appeal, alleging

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he had not received the notice of default because the post office would not deliver mail addressed to his street address. We denied the motion to reinstate on January 11, 2011, stating:

The order dismissing the appeal and the default notice were sent to the exact same address. Despite his earlier contentions that no mail will be delivered using that address, attorney Clarity states he received the order dismissing the appeal on December 8, 2010. The court also notes the notice and the order dismissing the appeal were sent to the same address used by Clarity on his letterhead and previous documents filed with the district court and the appellate court. Finally, Clarity offers no explanation for why he failed to comply with Iowa Rules of Appellate Procedure 6.702(1)(a) (the filing fee for the notice of appeal shall be paid ...

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