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ATTORNEY disciplinary proceeding.
Attorney's license suspended.
¶1 PER CURIAM. We review a report and
recommendation of Referee James J. Winiarski
approving a stipulation filed by the Office
of Lawyer Regulation (OLR) and Attorney
Karene S. Marchan. In the stipulation,
Attorney Marchan stipulated to the facts
underlying the eight counts of misconduct
alleged in the OLR's complaint and joined
the OLR in jointly recommending a six-month
suspension of her Wisconsin law license.
The referee agreed that a six-month
suspension was appropriate.
¶2 Upon careful review of the matter,
we uphold the referee's findings of fact and
conclusions of law and agree that a six-
month suspension is an appropriate sanction
for Attorney Marchan's misconduct. We also
find it appropriate to impose the full costs
of this proceeding, which are $6,953.07 as
of January 19, 2018, on Attorney Marchan.
Since Attorney Marchan has already made
restitution to her client, the OLR does not
seek restitution and we do not impose it.
¶3 Attorney Marchan was admitted to
practice law in Wisconsin in 1996. The most
recent address furnished by Attorney Marchan
to the State Bar of Wisconsin is in Oak
Creek, Wisconsin. Attorney Marchan has no
prior disciplinary history.
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¶4 Attorney Marchan's law license was
suspended, effective March 7, 2016, due to
her willful failure to cooperate in the
OLR's grievance investigation that formed
the basis for this disciplinary proceeding.
Her license has also been administratively
suspended since October 2016 for failure to
pay State Bar dues and failure to file an
OLR trust account certificate.
¶5 On December 13, 2016, the OLR filed
a complaint against Attorney Marchan
alleging eight counts of misconduct.
Attorney Marchan did not file an answer to
the complaint, and the OLR moved for default
judgment. The referee was appointed on
March 22, 2017. Attorney Marchan did appear
at a telephonic scheduling conference in
April 2017, and she subsequently filed a
response and affirmative defenses in May
2017.
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¶6 On August 24, 2017, the parties
filed a stipulation whereby Attorney Marchan
withdrew her response and affirmative
defenses and pled no contest to all eight
counts of misconduct set forth in the OLR's
complaint. Attorney Marchan agreed that the
referee could use the allegations of the
complaint as an adequate factual basis in
the record for a determination of misconduct
as to each of the eight counts.
¶7 In its complaint, the OLR had sought
a nine-month suspension of Attorney
Marchan's law license and had also sought an
order requiring her to pay restitution to
her client in the amount of $76,730.56. The
stipulation noted that since the filing of
the OLR's complaint, Attorney Marchan had
voluntarily made full restitution to the
client. The OLR deemed Attorney Marchan's
voluntary payment of the full amount as a
substantial mitigating factor in assessing
the appropriate level of discipline.
Accordingly, the OLR director modified his
sanction recommendation and sought an order
suspending Attorney Marchan's law license
for six months.
¶8 The stipulation averred that it was
not the result of plea bargaining. Attorney
Marchan verified that she fully understood
the misconduct allegations to which she
stipulated; fully understood her right to
contest the matter; fully understood the
ramifications of her entry into the
stipulation; fully understood that she had
the right to consult counsel; and stated
that her entry into the stipulation was made
knowingly and voluntarily. The referee
agreed that a six-month suspension was an
appropriate sanction for Attorney Marchan's
misconduct.
¶9 The misconduct alleged in the OLR's
complaint arose out of Attorney Marchan's
representation of S.C. S.C. was acquainted
socially with Attorney Marchan. S.C. hired
Attorney Marchan in July 2014 to substitute
as her counsel in a divorce pending in
Milwaukee County circuit court. The divorce
was contentious with allegations of marital
waste on both sides, and it had been pending
for two years. Attorney Demetra
Christopoulos represented S.C.'s husband
from May 2013 through the conclusion of the
case. The Honorable Marshall B. Murray was
the assigned judge.
¶10 Attorney Marchan did not have a law
office, and she met with S.C. either at
S.C.'s home or in parks. Attorney Marchan
was apparently attorney of record in only
one other matter pending in the Wisconsin
court system at the time she represented
S.C.
¶11 S.C. believed that she signed a fee
agreement providing that Attorney Marchan
would be paid at the conclusion of the
divorce, but S.C. was unable to locate a
copy of the agreement. Invoices prepared by
Attorney Marchan charged her time at $200
per hour.
¶12 At the time Attorney Marchan
substituted as counsel for S.C., S.C.'s
prior attorney was holding over $162,000 in
trust from the sale of a farm owned by the
parties. Each party had received half of
the proceeds to be held in trust by their
respective counsel until the conclusion of
the divorce. S.C.'s prior attorney
transferred the funds she was holding to
Attorney Marchan on July 28, 2014. Attorney
Marchan opened a trust account at PNC Bank
and deposited S.C.'s funds into that
account. No other client funds were
deposited in the account after S.C.'s funds
were placed there.
¶13 At a pretrial conference on July 23,
2014, Judge Murray issued an order setting a
contested hearing date of December 1, 2014.
The order also set dates for the completion
of discovery. Judge Murray allowed each of
the parties to remove $12,000 from the funds
being held in trust for living expenses and
to pay attorney fees. On July 31, 2014,
Attorney Marchan made two cash withdrawals
from the trust account, one in the amount of
$10,000 and one in the amount of $2,000.
Attorney Marchan represented that the
$10,000 disbursement went to S.C. and that
the $2,000 disbursement went to Attorney
Marchan for fees.
¶14 On August 5, 2014, Attorney
Christopoulos served S.C., via Attorney
Marchan, with interrogatories. Attorney
Marchan failed to timely respond. On
September 23, 2014, Attorney Christopoulos
filed a motion for contempt based on S.C.
and Attorney Marchan's failure to respond to
the interrogatories and to otherwise comply
with the scheduling order.
¶15 Judge Murray conducted a contempt
hearing on October 29, 2014. Attorney
Christopoulos informed Judge Murray she had
received some of the requested information
on October 4, 2014, and that Attorney
Marchan had provided some additional
materials the day before the contempt
hearing. Attorney Marchan told the court
she had been meeting with S.C. at S.C.'s
home about three days of every week from
late afternoon until as late as 11:00 p.m.
in an effort to prepare the information
requested by Attorney Christopoulos.
¶16 Judge Murray declined to find S.C.
in contempt and encouraged the parties to
resolve the matter. He warned S.C. and
Attorney Marchan that if they were not
prepared to proceed to trial on the
scheduled date and if they did not comply
with his orders, they may lose the
opportunity to present evidence.
¶17 S.C. subsequently told the OLR that
Attorney Marchan's visits to her home were
not for the purpose of discussing the
divorce but instead were unscheduled social
visits initiated by Attorney Marchan. S.C.
told the OLR she did not need Attorney
Marchan to provide her emotional support and
that Attorney Marchan talked about her own
marital problems during these meetings.
¶18 In mid-November 2014, Attorney
Marchan provided Attorney Christopoulos a
written proposal to divide the marital
assets. The parties and counsel later met
to discuss a settlement but could not reach
an agreement. On November 26, 2014,
Attorney Marchan filed a petition to have a
guardian ad litem appointed for S.C. She
had not discussed the appointment of a
guardian ad litem with S.C.
¶19 On December 1, 2014, Judge Murray
conducted a contested divorce hearing. He
denied Attorney Marchan's petition for the
appointment of a guardian ad litem for S.C.
Attorney Marchan then moved to withdraw as
counsel, but Judge Murray denied that motion
as well. The divorce hearing lasted a full
day but the case was not concluded, and
Judge Murray continued the matter to March
10, 2015.
¶20 Attorney Marchan requested that she
be allowed to disburse an additional $10,000
from the funds she was holding in trust for
payment of her attorney fees. Judge Murray
did not review Attorney Marchan's billing
statement but granted the request and signed
an order on December 5, 2014, allowing each
party to withdraw $5,000 from funds being
held in their respective trust accounts for
living expenses and an additional $10,000
for payment of attorney's fees. Attorney
Marchan disbursed $10,000 for her fees from
the trust account and also disbursed $5,000
to S.C.
¶21 Immediately after the December 1,
2014 hearing, Attorney Marchan provided S.C.
a billing statement charging $34,813.85 in
legal fees but told S.C. the amount was
negotiable. This was the first bill
Attorney Marchan had provided to S.C.,
despite her normal practice of billing
clients on a monthly basis. S.C. told the
OLR that if she had been aware of the amount
of fees Attorney Marchan was charging she
would have terminated the representation.
¶22 Between December 1, 2014 and the
continued hearing date of March 10, 2015,
Attorney Marchan did not contact S.C. to
prepare for the hearing. S.C. tried to
contact Attorney Marchan via email numerous
times but received no response.
¶23 On March 9, 2015, one day prior to
the continued hearing date, Attorney Marchan
hand-delivered a letter to Judge Murray
asking that the case be adjourned due to her
illness. Attorney Marchan charged S.C. for
mileage to the court to deliver the
adjournment request. Judge Murray granted
the adjournment request and rescheduled the
final divorce hearing for June 22, 2015.
¶24 On May 15, 2015, Attorney Marchan
emailed S.C. proposing that they meet "to go
over a budget for the remainder of your
case." Attorney Marchan acknowledged that
their original agreement called for her to
be paid at the conclusion of her case, but
said "as the case has continued so long we
need to set up payment arrangements." At
this point, Attorney Marchan had been
representing S.C. for less than one year.
Attorney Marchan said that she was owed over
$30,000 by S.C. and that having such a large
account receivable was hurting her ability
to join a good law firm.
¶25 In mid-May 2015, S.C. sent a
communication to Attorney Marchan attempting
to terminate her representation due to her
failure to communicate with S.C., failure to
respond to S.C.'s questions, and failure to
prepare for the final hearing. S.C.
subsequently emailed Attorney Marchan
raising numerous concerns about the billing
and saying they needed to discuss it. No
meeting ever took place.
¶26 On June 12, 2015, Attorney Marchan
emailed S.C. saying she would be filing a
motion to withdraw as counsel. On June 15,
2015, Attorney Marchan sent S.C. via email
the motion to withdraw that she had filed,
along with two invoices. One invoice was
dated June 12, 2015, indicating that $31,429
was due. An updated invoice was dated June
15, 2015, adjusting the total amount owed to
$35,257.75. The June 15 invoice included
$2,520 in additional charges for "trial
preparation" or "file preparation" that
Attorney Marchan claimed to have performed
prior to June 12, 2015, but which did not
appear on the June 12 bill. Both invoices
also included numerous charges in connection
with Attorney Marchan's withdrawal from the
representation, including researching her
ethical obligations and traveling to the
Milwaukee County courthouse to file the
motion to withdraw. The motion to withdraw
as counsel that Attorney Marchan filed with
the court requested that Judge Murray issue
an order allowing her to withdraw $35,247.75
from S.C.'s funds being held in trust.
¶27 Attorney Marchan appeared for the
June 22, 2015 final divorce hearing. Judge
Murray met with Attorney Marchan and
Attorney Christopoulos in chambers about
Attorney Marchan's motion to withdraw. S.C.
was late getting to court for the hearing
and was not present for Judge Murray's
consideration of the motion to withdraw.
Judge Murray allowed Attorney Marchan to
make a statement on the record. Attorney
Marchan said:
. . . in my motion, I asked for
payment of
my attorney fees at that point. It is my
understanding we have come to an agreement
with opposing counsel that I would be paid
$20,000 right now out of the funds in my
firm's trust account and the remainder of
that would be decided, depending upon
outcome of the case and I also discussed
with you under the terms of my retainer
payment agreement, I will be, we will go to
either the binding arbitration through the
State Bar of Wisconsin or the Milwaukee Bar
Association for the remaining issues.
¶28 Judge Murray signed an order
allowing Attorney Marchan to withdraw and
reduced the amount to be paid to Attorney
Marchan to $20,000. Attorney Marchan then
had an exchange with Judge Murray about the
funds she was still holding in trust and
Judge Murray directed that the funds be
transferred to Attorney Christopoulos.
¶29 Attorney Marchan never submitted the
fee dispute for any remaining claimed amount
to either the State Bar of Wisconsin Fee
Arbitration Program or the Milwaukee Bar
Association's Committee on Resolution of Fee
Disputes.
¶30 Once S.C. arrived for the divorce
hearing, Judge Murray reconvened the case
and took testimony. Since Attorney Marchan
had just been permitted to withdraw, S.C.
was forced to proceed pro se. She was also
forced to proceed without any exhibits or
documentary evidence because Attorney
Marchan did not leave any of S.C.'s trial
materials for her use during the contested
hearing.
¶31 At the conclusion of the hearing,
Judge Murray ruled that the remaining
property would be divided equally and that
there had not been marital waste by either
party. S.C. was awarded the marital home,
which required that she make an equalizing
payment to her ex-husband. Judge Murray
reiterated that Attorney Marchan would be
paid $20,000 for attorney fees from S.C.'s
funds being held in trust. S.C. did not
dispute that amount because it was her
understanding that it would be the last
amount that she would have to pay Attorney
Marchan. The findings of fact, conclusions
of law, and judgment of divorce entered on
July 20, 2015, reflected Judge Murray's
ruling that Attorney Marchan would receive
$20,000 for attorney fees from the funds
held in trust. The divorce judgment also
directed Attorney Marchan to disburse
$38,556.14 to S.C.'s former husband from the
parties' funds Attorney Marchan was holding
in trust. Judge Murray awarded S.C. the
remaining funds held by Attorney Marchan in
trust after those two disbursements.
¶32 Following the final hearing, S.C.
requested that Attorney Marchan return her
file materials to her. Attorney Marchan
refused to give S.C. her file unless S.C.
paid for a copy that Attorney Marchan could
keep for her own records. On June 22, 2015,
Attorney Marchan issued a check payable to
herself in the amount of $20,000 in payment
of her fees as ordered by Judge Murray. On
August 15, 2015, Attorney Marchan issued a
check payable to Attorney Christopoulos's
trust account in the amount of $38,556.14.
After those disbursements, $76,730.56
remained from the S.C. funds deposited in
Attorney Marchan's trust account. Despite
repeated requests from S.C., Attorney
Marchan did not disburse the remaining
funds.
¶33 In August 2015, S.C. contacted the
City of Oak Creek Police Department to
report her fear that Attorney Marchan had
stolen her funds. S.C. filed a grievance
against Attorney Marchan in September 2015.
Attorney Marchan requested an extension of
time to respond and said she planned to
offer S.C. an opportunity to settle the fee
dispute. The OLR authorized an extension of
time for Attorney Marchan to respond.
Attorney Marchan never did respond, and the
OLR subsequently filed a motion requesting
this court to order Attorney Marchan to show
cause why her law license should not be
suspended for willful failure to cooperate
in the OLR's investigation. This court
issued the requested order to show cause.
Attorney Marchan failed to respond to it,
and on March 7, 2016, this court issued an
order temporarily suspending Attorney
Marchan's license.
¶34 The OLR's complaint alleged that in
total, Attorney Marchan paid herself $32,000
from the funds she held in trust in
connection with S.C.'s divorce. The billing
invoices that Attorney Marchan produced did
not support fees in that amount, and
Attorney Marchan failed to produce evidence
to substantiate that she earned those fees
or that she was entitled to additional fees
beyond the $20,000 approved by Judge Murray
for Attorney Marchan's representation of
S.C. As of the date of filing of the OLR's
complaint, $76,730.56 in S.C.'s funds
remained on deposit in Attorney Marchan's
client trust account.
¶35 The OLR's complaint alleged the
following counts of misconduct:
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Count One: By making two cash
withdrawals from her client trust account on
July 31, 2014, Attorney Marchan violated
former SCR 20:1.15(e)(4)a.
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Count Two: By failing to take any
action to resolve S.C.'s divorce between
December of 2014 and June of 2015, Attorney
Marchan violated SCR 20:1.3.
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Count Three: By failing to
communicate or consult with S.C. regarding her
case from December of 2014 through June of
2015 despite S.C.'s repeated requests,
Attorney Marchan violated SCR 20:1.4(a)(2) and
SCR 20:1.4(a)(3).
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Count Four: By failing to deliver
to S.C.
funds held in trust which, per the Judgment of
Divorce entered July 31, [sic] 2015, S.C. was
entitled to receive, and which funds S.C.
repeatedly requested, Attorney Marchan
violated former SCR 20:1.15(d)(1).
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Count Five: By failing to abide by
Judge
Murray's order awarding to S.C. the funds
remaining in Attorney Marchan's trust account
after the disbursements to S.C.'s ex-husband
and to Attorney Marchan for her fees, Attorney
Marchan violated SCR 20:3.4(c).
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Count Six: By claiming she was
entitled to additional fees, which included
charges to the client for activities that
advanced her interests rather than the
client's, charges that were retroactively
billed despite not appearing on earlier
invoices, and after having already received
$32,000 for a divorce representation that
lasted less than one year and nevertheless
being unprepared to proceed in that
litigation, Attorney Marchan violated SCR
20:1.5(a).
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Count Seven: By failing upon
termination of the representation to return
S.C.'s file materials to her, Attorney Marchan
violated SCR 20:1.16(d).
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Count Eight: By failing to
cooperate with the OLR's investigation of
the S.C. grievance, Attorney Marchan
violated SCR 22.03(2) and SCR 22.03(6),
enforceable via SCR 20:8.4(h).
¶36 The referee's report and
recommendation found that the OLR met its
burden of proof with respect to the eight
counts of misconduct set forth above. With
respect to the appropriate level of
discipline, the referee noted that prior to
entering into the stipulation, Attorney
Marchan had made full payment of the
remaining funds in her trust account to S.C.
as ordered by Judge Murray. Based on that
payment, the referee noted the OLR reduced
their request for a suspension of Attorney
Marchan's law license from nine months to
six months.
¶37 The referee noted that the OLR
argued in its memorandum in support of a
six-month suspension that Attorney Marchan
had essentially abandoned S.C. in the
divorce case, and the OLR cited several
cases dealing with the issue of abandonment
in support of the request for a six-month
suspension. Although the referee did not
agree that Attorney Marchan "abandoned"
S.C., he nevertheless agreed that a six-
month suspension was appropriate.
¶38 The referee said he could reasonably
infer that Attorney Marchan lacked
experience in divorce cases, had a limited
legal practice, and used poor judgment in
becoming involved in a complicated divorce
on behalf of someone she knew socially. The
referee said that Attorney Marchan failed to
keep her client advised of substantial
charges for legal services and failed to
communicate with her client for long periods
of time. The referee noted Attorney Marchan
was also experiencing her own personal
difficulties at the time she was
representing S.C., which caused the referee
concern about Attorney Marchan's fitness to
practice law in a professional manner.
¶39 The referee said he was particularly
concerned about the need to protect the
public, the courts, and the legal system
from the repetition of Attorney Marchan's
misconduct, and he agreed with the OLR that
a six-month suspension was appropriate
because it would require Attorney Marchan to
petition for the reinstatement of her
license and prove that she was then fit to
practice law. The referee further
recommended that Attorney Marchan be
responsible for the full costs of the
disciplinary proceeding.
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¶40 This court will adopt a referee's
findings of fact unless they are clearly
erroneous. Conclusions of law are reviewed
de novo. See In re Disciplinary
Proceedings
Against Eisenberg, 2004 WI 14, ¶5, 269
Wis.
2d 43, 675 N.W.2d 747. The court may impose
whatever sanction it sees fit, regardless of
the referee's recommendation. See In
re
Disciplinary Proceedings Against Widule,
2003 WI 34, ¶44, 261 Wis. 2d 45, 660 N.W.2d
686.
¶41 We adopt the referee's findings of
fact and conclusions of law that Attorney
Marchan violated the supreme court rules as
alleged in the eight counts set forth above.
We further agree with the referee that a
six-month suspension of Attorney Marchan's
license to practice law in Wisconsin is an
appropriate level of discipline. Since no
two cases are precisely the same, there is
no standard sanction for any particular
misconduct. We note that in In re
Disciplinary Proceedings Against Joset,
2008
WI 41, 309 Wis. 2d 5, 748 N.W.2d 778, an
attorney's license was suspended for six
months for ten counts of misconduct
involving three clients. The misconduct
included failing to advance the clients'
interests, failing to respond to the
clients' requests for information, and
failing to comply with court orders. In
addition, in In re Disciplinary
Proceedings
Against Christnot, 2004 WI 120, 275 Wis.
2d
289, 685 N.W.2d 788, an attorney's license
was suspended for six months for failing to
keep a client reasonably informed about the
status of a matter, failing to promptly
comply with reasonable requests for
information, and failing to cooperate with
the OLR's investigation of the grievance.
We find the misconduct at issue here to be
somewhat analogous to that in Joset and
Christnot, and we find a similar
suspension
to be appropriate. We also deem it
appropriate, as is our usual custom, to
impose the full costs of this disciplinary
proceeding on Attorney Marchan. Since
Attorney Marchan has already made full
restitution to S.C., we order no further
restitution.
¶42 IT IS ORDERED that the license of
Karene S. Marchan to practice law in
Wisconsin is suspended for a period of six
months, effective the date of this order.
¶43 IT IS FURTHER ORDERED that within 60
days of the date of this order, Karene S.
Marchan shall pay to the Office of Lawyer
Regulation the costs of this proceeding,
which are $6,953.07.
¶44 IT IS FURTHER ORDERED that the
temporary suspension of Karene S. Marchan's
license to practice law, which was effective
March 7, 2016, due to Karene S. Marchan's
willful failure to cooperate in the Office
of Lawyer Regulation's grievance
investigation which gave rise to this
disciplinary proceeding, is hereby lifted.
¶45 IT IS FURTHER ORDERED that, to the
extent that she has not already done so,
Karene S. Marchan shall comply with the
provisions of SCR 22.26 concerning the
duties of a person who is licensed to
practice law in Wisconsin has been
suspended.
¶46 IT IS FURTHER ORDERED that
compliance with all conditions of this order
is required for reinstatement. See SCR
22.28(3).
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