Ignoring Court Order Leads To Disbarment

The Utah Supreme Court has affirmed the  disbarment of an attorney who had engaged in a conflict of interest, failed to adhere to the requirements of an injunction in accepting and misusing fees.

Gilbert represented clients when he had a direct personal interest that conflicted with his representation of those clients, he disregarded the Injunction, and he facilitated his client’s violation of the Injunction by accepting funds subject to that order. And Gilbert, to this day, has disregarded the district court’s order requiring that he disgorge the attorney fees he received from his clients. Regardless of the validity of the Injunction and disgorgement order, the Utah Rules of Professional Conduct require that Gilbert not knowingly disregard those orders without making his intentions known to the district court and opposing counsel. While we recognize that disbarment is a severe punishment, it is appropriate here. We affirm the district court’s order and conclude that disbarment is the proper sanction for Gilbert’s misconduct.

The fees involved the attorney’s representation of the Utah Down Syndrome Association against the Utah Down Syndrome Foundation. 

At the time he accepted the checks, Gilbert knew, or should have known, that the funds he received were the subject of litigation and that the bank accounts from which the funds were taken were subject to the Injunction. Nevertheless, Gilbert did not deposit the monies into a trust account or otherwise hold the funds pending the resolution of the dispute between his clients and the Foundation. Nor, as the district court found, did Gilbert “notify the court . . . of his intention to accept the . . . checks based on his position that [the Injunction] was invalid, void, had expired, [and] did not apply to the [funds] he received.” Rather, Gilbert simply cashed the checks and kept the funds.

The Foundation eventually learned that Gilbert had received payments from the bank accounts subject to the Injunction. The Foundation filed a motion to disgorge and requested an order requiring Gilbert to return the funds he had received from the Chapters’ bank accounts. After a hearing on the Foundation’s motion, the district court ordered Gilbert to return the attorney fees to the Foundation.

Despite the district court’s order, Gilbert did not return the legal fees he had received. The Foundation eventually filed a second motion for disgorgement of funds. The court granted the Foundation’s second motion and entered judgment against Gilbert for $30,000, interest, and associated attorney fees. To date, Gilbert has not returned the funds to the Foundation.

The court makes clear the obligations of an attorney subject to a court order who believes the order to be flawed

rule 3.4(c) stands, at a minimum, for the proposition that an attorney must either obey a court order or alert the court that he or she intends to not comply with the order. An attorney may not, as Gilbert did here, ignore a court order while secretly hoping to have a trump card to play if non-compliance later becomes an issue…

Although Gilbert may have harbored reservations about the order’s validity, he, in the district court’s words, “had a duty to openly contest the order by filing a request to stay the order in court, notify the court of his receipt of the . . . checks and at least hold the monies in trust until the court ruled on the issue.” The district court interpreted and applied rule 3.4(c) correctly.

He failed to safeguard the fee

The district court concluded that Gilbert violated rule 1.15(e) in two ways. First, Gilbert failed to place any of the $30,000 in attorney fees in a trust account despite knowing that both the Foundation and his clients claimed ownership of the funds. And second, Gilbert violated rule 1.15(e) by failing to return the $30,000 to the Foundation when ordered to do so by the court.

His subjective good faith as to the validity of the court order was irrelevant 

That comment does not, however, provide an attorney carte blanche to ignore court orders. As explained above, the Utah Rules of Professional Conduct contemplate the situation in which Gilbert found himself: subject to an order he believed to be flawed. The rules instruct an attorney in that situation to either comply or openly refuse to comply. An open refusal permits the district court to assess the attorney’s argument and allows opposing counsel to take action to protect her client from the opposing attorney’s noncompliance. An attorney cannot, consistent with the rules of professional conduct, unilaterally and surreptitiously flout a court order. To the contrary, willful disregard of a district court’s order without an open objection constitutes conduct prejudicial to the administration of justice.

The attorney’s procedural objections also failed to persuade the court that disbarment was not appropriate in these circumstances.

In a related matter also decided today, the court denied Gilbert’s petition for extraordinary relief.

In 2012, the court denied his petition to bring a third-party complaint against the Foundation in his disciplinary case. (Mike Frisch)