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Iowa Supreme Court Attorney Disciplinary Board v. Crotty

Supreme Court of Iowa

March 10, 2017


         On review of the report of the Grievance Commission of the Supreme Court of Iowa.

         The grievance commission found an Iowa attorney violated several rules of professional conduct while representing a personal representative in an estate and a claimant in a worker's compensation claim. The commission recommends a ninety-day suspension of the attorney's license. We suspend the attorney's license for sixty days. LICENSE SUSPENDED.

          Tara van Brederode and Wendell J. Harms, for complainant.

          Richard D. Crotty, Omaha, Nebraska, pro se.

          HECHT, Justice.

         The Iowa Supreme Court Attorney Disciplinary Board filed a complaint alleging that an Iowa lawyer violated several disciplinary rules while representing a personal representative in an estate and in handling an appeal of a worker's compensation case. After a hearing, the Grievance Commission of the Iowa Supreme Court found the lawyer violated several rules and recommended his license to practice be suspended for ninety days. Upon our de novo review, we find the lawyer violated various rules, and we conclude his license should be suspended with no possibility of reinstatement for sixty days from the date of this opinion.

         I. Prior Proceedings.

         Richard Crotty was first licensed to practice law in Iowa in 1975. Upon investigation of a complaint lodged against Crotty in 2013, the Iowa Supreme Court Attorney Disciplinary Board (Board) filed a proceeding before the Grievance Commission of the Supreme Court of Iowa (commission) alleging Crotty violated several ethical rules in representing the administrator of an estate and in representing a claimant in a worker's compensation case.

         Following a hearing, the commission filed its findings of facts, conclusions of law, and recommendations with this court on November 17, 2016. The commission found Crotty violated several ethical rules while representing the administrator of the estate when he failed to disclose to the court that certain documents filed with the court in the probate proceeding bore forged signatures and by charging and receiving excessive and unauthorized attorney fees. The commission found Crotty violated ethical rules in the worker's compensation matter by practicing law after his license had been suspended for failing to comply with continuing legal education requirements. The commission recommended Crotty's license to practice law in Iowa be suspended for at least three months and that as a condition of any reinstatement he be required to show completion of at least eight hours of continuing legal education on probate law.

         II. Findings of Fact.

         A. The Cleaver Estate.

         While practicing law in Council Bluffs in 2012, Crotty was contacted by Leonard Cleaver who requested legal representation. Leonard sought Crotty's counsel in enforcing a judgment lien against Nancy Cleaver, the ex-wife of Leonard's father, Richard Cleaver.[1]

         When the marriage of Nancy and Richard was dissolved in 2006, the family residence was awarded to Nancy. Richard was granted personal property and a judgment against Nancy in the amount of $34, 600, payable upon sale of the residence. Richard died intestate in 2007, leaving four sons as his only heirs. Nancy sold the residence in 2012, but the judgment lien was not satisfied at the time of the sale.

         Leonard and Crotty signed an attorney fee agreement on August 21, 2012. The agreement did not include a description of the scope or purpose of Crotty's representation, but it provided for a one-third contingent fee.[2] Crotty sent letters dated August 22 to Leonard's siblings, Richard Jr., Ronald, and Michael, informing them of his representation of Leonard in the effort to enforce the judgment lien against Nancy.[3] Crotty also sent a letter to Nancy demanding prompt payment of the judgment.

         Having concluded that any action against Nancy to enforce the judgment should be brought by Richard Cleaver's estate, Crotty prepared and Leonard signed a petition for administration and appointment of an administrator. A new attorney fee agreement was also signed on September 12 providing Crotty would represent Leonard "in connection with the estate of [Richard Cleaver Sr.]."[4] The court appointed Leonard administrator of the estate and Leonard formally designated Crotty as his attorney for the administration of the estate on September 13.

         Leonard told Crotty that two of his siblings-Richard Jr. and Ronald-were not supportive of the estate's claim against Nancy and wanted nothing to do with it. Relying on Leonard's representation, Crotty prepared renunciation documents for signature by Richard Jr. and Ronald and gave the documents to Leonard on September 19. Leonard left Crotty's office with the documents and brought them back bearing signatures later the same day. Crotty's secretary thought it unusual that Leonard could have secured his brothers' signatures in less than an hour. Yet when Crotty asked Leonard directly about the authenticity of the signatures, Leonard attested that his brothers had signed the renunciations. Relying on Leonard's affirmation of the authenticity of his brothers' signatures, Crotty filed the renunciations with the court.

         Nancy responded quickly through counsel to Crotty's demand letter and agreed to pay the sum of $34, 600 in exchange for satisfaction of the judgment lien. On September 24, Crotty presented Leonard's application to a district court judge for approval of the estate's settlement of the claim against Nancy and Crotty's claim for attorney fees. The application briefly described the factual and legal bases for the estate's claim against Nancy and requested the court's approval of a settlement in the amount of $34, 600 and Crotty's attorney fee. Notably, the application did not disclose to the court the gross amount of the attorney fee claimed by Crotty in connection with the proposed settlement or a formula for its computation; nor did the application itemize the amount of time spent or the work performed by Crotty in achieving the settlement for the estate. The district court signed an order prepared and presented by Crotty, finding the settlement was "reasonable and in the best interests of the estate, " and further finding "[Crotty's] fees hereunder are fair and reasonable and were necessary."[5]

         Crotty prepared and Leonard signed a release which was provided to Nancy in consideration for her payment of $34, 600 to the estate. Crotty retained the sum of $11, 533.33 from the settlement proceeds as his fee. He distributed the remainder of the proceeds to Leonard for distribution to the heirs.

         Leonard made uneven initial distributions of the net settlement proceeds to his brothers: $9033.33 to Michael, $1500 to Richard Jr., and $1500 to Ronald. Richard Jr. and Ronald found it peculiar that the distributions to them were in cash and decided to investigate the terms of the settlement. In the course of their investigation, Richard Jr. and Ronald revealed to Crotty that they had not signed the renunciations. Upon learning this, Crotty sent a letter to Leonard on October 23 revealing Crotty's discovery of the fact that the signatures on the renunciations were forged and demanding that he return the settlement proceeds.

         Although the record does not disclose the substance of Leonard's response to Crotty's letter of October 23, Crotty concedes that, when confronted, Leonard admitted he forged his brothers' signatures on the renunciations. Armed with Leonard's admission of the forgeries, Crotty prepared and Leonard signed an application for the appointment of a successor administrator. The application filed on November 14 alleged that Leonard's actions as administrator had "resulted in less than amicable relationships with the remaining heirs" and that the best interests of the estate would be served by the appointment of his brother, Ronald, as administrator.

         The application for appointment of a successor did not inform the court that the signatures on the two renunciations previously filed in the case were forged, nor did it reveal that Leonard had made uneven distributions of the settlement proceeds to the heirs. However, Crotty testified that he revealed the forgeries in conversations with two district court judges before the order appointing Ronald as the successor administrator was issued on November 14. Both of those judges testified before the grievance commission. One of them did not recall having such a conversation with Crotty; the other judge-the one who signed the order appointing Ronald as successor administrator-recalled having a conversation with Crotty about the fact that the renunciations bore forged signatures but did not recall discussing other measures Crotty might or should take to memorialize the forgeries in the court file.

         After several months of inactivity in the estate, Crotty filed a final report and an accounting which included his request for an ordinary attorney fee of $812.[6] Ronald subsequently objected to the final report on the ground that the accounting attached to it by Crotty inaccurately reported the distributions made by Leonard to the heirs. Neither the final report filed by Crotty nor the attorney fee requested by Crotty were approved by the court. Crotty moved to withdraw as counsel for the administrator, asserting the estate's nonpayment of an attorney fee as the reason. The district court granted Crotty's unresisted motion on April 29.

         The estate remained open. On June 1, the clerk of court issued a delinquency notice informing Ronald, who was unrepresented at the time, of Crotty's failure to file an inventory in the estate.

         On June 11, Crotty filed a small claims case against Ronald asserting a claim in the amount of $812 for attorney fees for legal services rendered in the administration of the estate. Ronald disputed Crotty's claim, but the parties reached a compromise settlement. Ronald paid Crotty the sum of $670 in exchange for a release and dismissal of the small claims case.

         On September 3, the district court ordered Ronald to appear and show cause why he should not be held in contempt for failing to file an inventory report in the estate. Ronald appeared as ordered, and the court directed him to hire counsel to complete the work necessary to close the estate. In compliance with the court's ...

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