Disbursement Delay Draws Suspension Without Automatic Reinstatement

The West Virginia Supreme Court of Appeals affirmed a hearing panel subcommittee’s findings of misconduct but rejected a proposed three-month suspension in favor of a  suspension for nine months.

The sanction requires the attorney to petition for reinstatement. 

The complainant was a law firm located in Omaha, Nebraska. 

The Bishop Matter was referred to Mr. Atkins’s law office by Mr. Brumbaugh’s office. During his sworn statement on September 12, 2017, Mr. Atkins described the relationship between his firm and the Brumbaugh & Quandahl firm as follows: Brumbaugh & Quandahl was a “clearing house in the debt collection industry” whose “job is [sic] take the large portfolio of cases that [a national bank] might have and to go and find attorneys that are in the network” and “farm out the cases that happen to be in those states or those regions.” Although Mr. Atkins’s client would be the named plaintiff (i.e., the bank), Mr. Atkins “answered” to Brumbaugh & Quandahl, and the client would deal with Brumbaugh & Quandahl.

At issue was the failure to remit settlement funds

The Bishop Matter was referred by Mr. Brumbaugh’s firm to Mr. Atkins’s firm in 2007. There was difficulty in locating the debtor from 2007-2013. However, the debtor was eventually located, and a judgment was entered against the debtor for $14,807.55 in approximately 2013. This matter stalled again until 2015 when the debtor attempted to refinance her home and wanted to settle the judgment. The bank instructed Mr. Brumbaugh’s office to accept the settlement of the debt, and this instruction was communicated to Mr. Atkins’s law firm by email dated November 13, 2015. Four days later, on November 17, 2015, this instruction was confirmed, and an employee of Mr. Atkins indicated that the letter regarding the acceptance of the $14,807.55 would be faxed on that same date. Approximately one and a half months later, on January 5, 2016, Mr. Brumbaugh’s office reached out to Mr. Atkins’s office to inquire as to the status of the settlement funds. On the following day, Mr. Atkins’s office responded by noting that it would be close to February before they would receive the funds.

The bank records from Mr. Atkins’s firm show that a check for $14,807.55 was deposited in Mr. Atkins’s “Client Account” on January 20, 2016. Neither Mr. Atkins nor anyone at his office informed Mr. Brumbaugh about the receipt of the settlement funds from January through October of 2016 despite sixteen requests from Mr. Brumbaugh’s office for information via emails and voicemails. It is undisputed that Mr. Atkins did not personally get involved until November of 2016. In December of 2016, Mr. Brumbaugh sent one of his associates to Mr. Atkins’s office to complete an audit and close out the file at issue in this case.  Although there is some disagreement about what transpired during that meeting, it is clear that the settlement funds were not paid to Mr. Brumbaugh’s associate at that time. In fact, the settlement funds were not remitted to Mr. Brumbaugh for at least another month. Specifically, the funds were remitted by Mr. Atkins when he filed his response to the complaint on or about January 25, 2017, which was over one year after the funds had been deposited into Mr. Atkins’s “Client Account.”

The court

In November of 2016 Mr. Atkins became personally aware that the settlement funds had not been properly remitted. Despite this knowledge, he did not remit the funds until almost two months later in late January of 2017 after the filing of the complaint against him. The remittance of these funds was made a year later than it should have been made.

…Although this Court is the “final arbiter of legal ethics problems,” “[t]here is no ‘magic formula’ for this Court to determine how to weigh the host of mitigating and aggravating circumstances to arrive at an appropriate sanction; each case presents different circumstances that must be weighed against the nature and gravity of the lawyer’s misconduct.” Lawyer Disciplinary Board v. Sirk, 240 W. Va. 274, 282, 810 S.E.2d 276, 284 (2018). After considering all of the relevant factors in this matter, we agree with the HPS that the facts of this case indicate that a reprimand is not appropriate. We further conclude that the three month suspension recommendation with automatic reinstatement submitted by the HPS is too lenient. In light of the seriousness of Mr. Atkins’s conduct, we cannot conclude that a suspension that permits an automatic reinstatement is adequate particularly given the fact that he misappropriated his client’s funds and failed to be truthful in the investigation of this matter. Instead, we impose a nine month suspension on Mr. Atkins’s law license, which will require him to petition for the reinstatement of his law license pursuant to Rule 3.32 of the Rules of Lawyer Disciplinary Procedure, followed by one year of probation. Further, we adopt the remaining recommendations made to this Court by the HPS.

(Mike Frisch)