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Iowa Supreme Court Attorney Disciplinary Board v. Theodore Fredrick Sporer

Supreme Court of Iowa

April 28, 2017


         Appeal from the report of the Grievance Commission of the Supreme Court of Iowa.

         Grievance commission recommended six-month suspension of attorney's license. LICENSE SUSPENDED.

          Theodore F. Sporer, Des Moines, pro se.

          Tara van Brederode and Elizabeth E. Quinlan, for appellee.

          APPEL, Justice.

         In this disciplinary case, attorney Theodore Sporer appeals the findings and recommendations of the Iowa Supreme Court Grievance Commission recommending his law license be suspended for a period of six months. The alleged ethical violations occurred in the aftermath of a divorce decree. In a contempt proceeding arising from the divorce decree, the district court found Sporer falsely testified that he rejected the terms of a settlement letter sent by the opposing lawyer by immediately writing handwritten notes on the letter and sending it back to the opposing lawyer on the same day. The district court also found Sporer falsely and frivolously asserted that the secretary's signature on the bottom of a settlement letter bound the client to the terms of a settlement agreement.

         The Iowa Supreme Court Attorney Disciplinary Board filed a complaint alleging various violations of our ethical rules. After a hearing, the commission concluded that Sporer violated Iowa Rule of Professional Conduct 32:3.1 ("A lawyer shall not . . . assert or controvert an issue . . . unless there is a basis in law and fact for doing so that is not frivolous . . . ."), rule 32:3.3(a)(1) ("A lawyer shall not knowingly . . . make a false statement of fact or law to a tribunal . . . ."), rule 32:8.4(c) ("It is professional misconduct for a lawyer to . . . engage in conduct involving dishonesty, fraud, deceit, or misrepresentation[.]"), and rule 32:8.4(d) ("It is professional misconduct for a lawyer to . . . engage in conduct that is prejudicial to the administration of justice[.]"). The commission did not find a violation of rule 32:3.4(a) ("A lawyer shall not . . . unlawfully alter, destroy, or conceal a document . . . .") as alleged by the Board.

         Based upon our review, we affirm the findings of the grievance commission. We also affirm most of the grievance commission's conclusions. We suspend Sporer's license to practice law for six months.

         I. Factual Background and Proceedings.

         A. Introduction.

         Sporer has been licensed as an Iowa attorney for thirty-one years. During this time, he has maintained a law office in Polk County, Iowa. Sporer's primary practice areas are civil litigation and domestic relations.

         Sporer has a disciplinary history. On August 24, 2011, Sporer received a public reprimand from the Board for violating rule 32:1.4(a)(3) and (4) by failing to inform a client of her trial date and respond to her reasonable inquiries, rule 32:1.3 by failing to diligently file documents in a litigated matter, rule 32:8.4(d) by causing delays in litigation, and rule 32:8.4(c) by engaging in deceit or misrepresentation for advising a client that an order for sanctions was the result of a clerical error.

         B. Overview of Factual Record Before the Commission.

         1. Propstein divorce proceedings.

         In 2012, Sporer represented Gary Propstein in a dissolution action against Linda Propstein. Lawyer Timothy Duffy represented Linda in the proceedings. The record before the commission establishes that on March 30, 2012, the district court entered its "Findings of Fact, Conclusions of Law, and Decree" in the Propstein divorce proceeding. At the time of the entry of the decree, both Gary and Linda were fifty-three-years old. Their marriage had lasted twenty-one years.

         In dividing the marital property, the district court noted that dissipation of assets is a proper consideration. The district court found that Gary had unreasonably dissipated marital assets in contemplation of the dissolution. The court concluded Gary had unreasonably spent $139, 000 from a 401(k) account and $30, 000 from the parties' home equity line of credit. The district court stated it would adjust the distribution of the remaining marital property as if these expenditures had not occurred.

         The district court ordered Gary to pay Linda approximately $23, 835 for Linda's share in the marital home. The court also ordered that Linda receive substantial retirement assets through a qualified domestic relations order (QDRO) with a value in excess of $100, 000. In addition, the court ordered that Gary's interest in a defined benefits plan be distributed between the parties according to the formula established in In re Marriage of Benson, 545 N.W.2d 252, 255-57 (Iowa 1996). The district court awarded Linda rehabilitative alimony in the amount of $200 per month for three years.

         Sporer filed a motion to amend, requesting that either Gary be given at least eighteen months to pay Linda her equity share in the home or, alternatively, be allowed to transfer his interest in an IRA valued at $23, 313 to Linda.

         While the motion to amend was pending, the lawyers engaged in settlement negotiations. Consistent with the motion to amend, Sporer proposed that Gary provide Linda with additional retirement funds to offset Linda's equity share in the marital home. The parties, however, were not able to finalize the agreement, the district court overruled the motion to amend, and Sporer filed a notice of appeal on Gary's behalf on July 30, 2012.

         Sporer did not file a supersedeas bond or seek a stay of the district court order. As a result, the filing of the notice of appeal did not stay enforcement of the district court decree. Gary, however, did not pay Linda the $23, 835 for her equitable share in the marital residence within thirty days as required by the district court. On August 30, 2012, Duffy filed a contempt application on behalf of Linda. The district court set a hearing for October 10.

         Cumulatively, the district court's order, Gary's motion to amend, his settlement posture, his failure to post a supersedeas bond, and his failure to timely pay Linda the $23, 835 as required by the divorce decree, suggest that Gary was strapped for cash in the aftermath of the divorce proceeding.

         2. September settlement communications.

         Against the backdrop of Linda's contempt application and the October 10 hearing date, the parties renewed settlement negotiations. On September 21, Sporer sent Duffy a letter proposing settlement. In the September 21 settlement letter, Sporer proposed that Gary pay Linda $27, 000 by cashier's check within twenty-one days, that Linda execute a quit claim deed on the house, that Gary dismiss the pending appeal, that the parties exchange releases of all claims, and that each party remain responsible for their own attorney's fees. The September 21 settlement letter did not expressly discuss the distribution of Gary's retirement assets and benefits or the execution of an appropriate QDRO.

         On September 24, Duffy responded with a settlement letter of his own. In his September 24 settlement letter, Duffy responded that the offer from Sporer was acceptable, but with certain changes. Duffy then specifically indicated that he needed information necessary to prepare a QDRO in the matter and asked for any instructions or model language the plan administrator might have to assist in the preparation of the QDRO. From Duffy's September 24 settlement letter, it was apparent that Duffy did not regard Linda's entitlement to her share of Gary's retirement assets and benefits as within the scope of the proposed mutual releases.

         According to Sporer, he received Duffy's September 24 settlement letter on September 27. Sporer claimed that on September 27, he took a red Sharpie, drew large Xs through the last paragraph related to the QDRO, and wrote the following undated note in his hand: "Duffy- Pardon the informality. No-complete release all claims! No $ w/o release! TFS." Sporer further claimed that he sent Duffy a copy of the marked-up September 24 settlement letter on September 27 via facsimile, hand delivery, and regular mail.

         Duffy, however, denied receiving the marked-up version of his September 24 settlement letter from Sporer. Sporer's billing records for September 27 do not contain any entry for either reviewing Duffy's letter or communicating with Duffy on that date. Although Sporer's office had procedures in place to retain confirmation of faxed messages and to document hand deliveries that were sent out of the office, Sporer did not produce any such documents related to the September 24 settlement document with Sporer's handwritten notes.

         Further, on September 27, Sporer received an email from Gary, asking, "Any confirmation yet? From [D]uffy or [L]inda?" On September 28, Sporer relied, "Yes, we are settled. I am working on papers to finalize early next week. Keep you posted." Sporer made no mention of Duffy's September 24 settlement letter in his September 28 email to Gary.

         3. Secretary signs bottom of attorney's letter.

         On October 9, 2012, Duffy learned that a $27, 000 check was available for Linda at Sporer's office. The record does not reveal the details of how the availability of the check was communicated to Duffy. In any event, Duffy dispatched his secretary, Teresa Young, to pick up the check at Sporer's office. When she arrived at Sporer's office, Young was provided with the check, a letter dated October 9 which repeated verbatim the terms contained in Sporer's September 21 settlement letter, and a six-page, single-space document entitled "Settlement and Release of Claims." According to Young, when she turned to leave Sporer's office with the documents in hand, she was told by Sporer's staff that she needed to sign something.

         Young signed the presented document without reading it. The document she signed was the October 9 letter that summarized the terms of Sporer's original September 21 settlement letter to Duffy. At the bottom of the October 9 letter, however, an additional sentence was added in a font different from the body of the letter: "Payment and terms accepted by Linda Propstein, by and through her attorney Timothy Duffy." A line was provided for a signature. The October 9 letter did not mention Duffy's September 24 settlement letter discussing the need for information to prepare a QDRO or the annotated version of the September 24 letter that Sporer claimed he sent to Duffy on September 27.

         The next day, October 10, Linda and Duffy reviewed the terms of the "Settlement and Release of Claims." Duffy was concerned that the language of the document could be construed to release Linda's award of retirement assets in the divorce decree. As a result, Duffy modified the document by inserting the handwritten phrase "except pending QDRO concerning pet. retirement accounts per decree" in three places on the "Settlement and Release of Claims." Linda initialed each handwritten change, and she signed the document before a notary. Also on October 10, Linda cashed Gary's check for $27, 000.

         On October 11, 2012, Duffy dismissed the contempt complaint with prejudice. On October 22, Sporer dismissed his appeal in the divorce proceeding. On October 23, Sporer testified he received a letter from Duffy dated October 18, along with the modified "Settlement and Release of Claims" with Duffy's handwritten alterations.

         Remarkably, Sporer did not respond to the modified "Settlement and Release of Claims." He did not advise Duffy that the changes were unacceptable. On the other hand, Sporer did not have his client sign the document.

         On October 29, Duffy sent Sporer a quitclaim deed for the marital residence. In the letter, Duffy stated, "I am still needing the information on your client's 401k so I can prepare the Qualified Domestic Relations Order." Sporer did not respond. On November 8 and November 30, Duffy again wrote to Sporer regarding QDRO information. Again, Sporer did not respond.

         On December 10, 2012, however, Duffy's assistant received a phone call from Sarah Gelbowitz, Sporer's paralegal. Duffy's assistant wrote a message about the call, which stated that Gelbowitz advised her that "Ted [Sporer] is meeting w/Gary on Friday and will get QDRO info to us by Next Tues. or Weds." The QDRO information, however, was not provided to Duffy.

         4. Court filings and unsuccessful mediation.

         On January 17, 2013, Duffy filed what he styled as an "Application for Hearing on Implementation of Terms of Decree of Dissolution of Marriage, " seeking to obtain the assistance of the district court in implementing the terms of the divorce decree in light of Sporer's failure to respond to his repeated inquiries regarding the QDRO. Sporer still did not respond, either to Duffy or to the district court. On March 6, Duffy filed his second contempt application against Gary. When the parties appeared before the district court on March 20, the court ordered Sporer to file a response to Duffy's filings within twenty days, ordered the parties to mediate the contempt action, and ordered the parties to exchange exhibits at least five days prior to the hearing. The district court set the pending matters for hearing on April 23.

         On April 17, the parties participated in mediation with mediator Joseph Seidlin. During the mediation, Sporer took the position that under the circumstances, there was a binding settlement agreement between the parties which released any claims that Linda might have under the divorce decree with respect to Gary's retirement assets.

         Also on April 17, Sporer filed a resistance to Duffy's "Application for Hearing on Implementation of Terms of Decree of Dissolution of Marriage." In that resistance, Sporer asserted that the parties "reached a full, final and written settlement of all issues described in the Application." Sporer also pled that Linda had "accepted the benefits of the settlement and has thereafter attempted to enforce the original terms of the [divorce] Decree." Sporer further pled that Linda's claims were "barred by the doctrines of estoppel, waiver, [and] accord and satisfaction." As a result, Sporer on behalf of Gary asked that the application be denied with prejudice.

         Sporer additionally filed a resistance in the contempt action on April 17. In the resistance, Sporer denied that Gary had engaged in contemptuous behavior. He further asserted two affirmatives defenses- the first alleging that the application fails "to state a prima facie claim of contempt." For his second affirmative defense, Sporer asserted that Linda's claim, "if any, is barred by the doctrine of accord and satisfaction.

         5. Testimony offered in contempt proceedings before the district court.

         The contempt matter was continued from April 23 to allow Sporer to retain an attorney. The matter came to hearing on June 5, 2013, and July 19, 2013, before Judge Douglas Staskal. The record of the district court proceedings was made part of the record before the commission.

         At the contempt hearing, Gary, Duffy, and Sporer testified as witnesses. On June 5, Gary testified that he was told the matter was settled and to bring to Sporer's office a check. Gary further testified that after the check was received by Linda, "we waited ten days . . . to see if there were any aftershocks from the settlement agreement." Gary also told the district court he had spent all the money in the retirement funds in any event.

         The next witness to testify in the contempt proceeding on June 5 was Duffy, who was examined by other counsel. Duffy testified that Young had authority to pick up the check but not to settle the case. He testified that the fighting issue on October 10 was payment of the $23, 835 in cash ordered by the district court. Duffy further testified that he never intended to settle or dismiss Linda's claim to the retirement assets under the district court's order.

         The last witness in the contempt hearing on June 5 was Sporer. Sporer testified regarding exhibit 4, the September 24 settlement letter with handwritten annotations by Sporer. Sporer testified that he wrote the notations "literally the moment [he] saw the September 24 letter." He testified that he used handwritten notions on the September 24 settlement letter to communicate with Duffy because "[he] was in a hurry." With respect to whether the September 24 settlement letter with Sporer's notations was sent to Duffy, Sporer testified, "I know it was mailed. I believe it was faxed. And I also believe that it was hand delivered." Sporer further testified that Linda cashed the check on October 10 and that "[he thought] there was a complete meeting of the minds."

         On redirect examination, Sporer was asked when the parties achieved an agreement. Sporer responded, "When the signature of Teresa Young appeared that says, Payment and terms accepted by Linda Propstein by and through her attorney, Timothy Duffy." On recross-examination, Sporer dug in further. He testified, "[I]t is unfathomable to me that Ms. Young would be anything other than a full agent, as I would expect my staff-anything that your staff signs on your behalf, you're stuck with, unless it's a legal pleading." According to Sporer, Linda sought to avoid the risks of an appeal and was willing to accept $27, 000 in exchange for a full release of claims, including the retirement benefits.

         Sporer presented a brief closing argument to the district court. In closing, Sporer asserted, "[W]e had a complete settlement. They intended exactly what happened in this case. The evidence overwhelmingly shows that." Addressing the issue specifically of whether Gary was in contempt, Sporer asserted, "[Gary] didn't do anything intentionally. We have been acting under the belief that we have a settlement. That it was clear. And this [-] this later attempt is just-was just a trick."

         After oral argument, the district court continued the hearing. The district court ordered Gary to produce all records showing funds taken from Gary's retirement accounts. The court also ordered Gary not to dispose of property in his possession other than for food, clothing, and living expenses until the district court issued a ruling in the matter.

         The district court found there was no agreement for Linda to release her property under this dissolution decree. The court found Duffy's secretary did not have authority to bind Linda to such an agreement, nor was there, in fact, such an agreement. The district court characterized Sporer's argument that Duffy manipulated the situation in order to get the appeal dismissed and led Sporer to believe he was giving up his client's rights was "ludicrous" and unbelievable.

         The district court reconvened the hearing on the contempt action on July 19. The court began the hearing by summarizing the prior proceedings and then asking questions of counsel. The court asked Duffy whether he had ever seen exhibit 4, the version of his September 24 settlement letter with handwritten notes written by Sporer. Duffy responded, "[Neither] I nor anybody on my staff has ever seen that document." The district court then turned to Sporer and asked him whether it was his testimony that exhibit 4 had been mailed, faxed, and hand delivered to Duffy's office. Sporer replied, "That is correct, " but qualified his response ...

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