IN RE SCHMIDT, 1996-NMSC-019, 121 N.M. 640, 916 P.2d 840
IN THE MATTER OF CARL J. SCHMIDT, ESQ.
An Attorney
Suspended From the Practice of Law Before Courts of
the State of New Mexico
SUPREME COURT OF NEW MEXICO
1996-NMSC-019, 121 N.M. 640, 916 P.2d 840
Released for Publication May 8, 1996.
Sally E. Scott, Deputy Chief Disciplinary
Counsel, Albuquerque, New Mexico, For Disciplinary Board.
Carl J. Schmidt, Rio Rancho, NM, (no
appearance).
Richard E. Ransom, Justice, Joseph F.
Baca, Justice, Gene E. Franchini, Justice, Pamela B. Minzner, Justice. Stanley
F. Frost, Chief Justice (not participating).
{*641} DISCIPLINARY
PROCEEDING
{1} For the second
time in less than two years, disciplinary proceedings involving Carl J. Schmidt
came before the Court. For reasons set forth below, Schmidt hereby is disbarred
from the practice of law in New Mexico for violations of various Rules of
Professional Conduct, SCRA 1986, 16-101 to 16-805 (Repl. Pamp. 1995) and Rules
Governing Discipline, SCRA 1986, 17-101 to 17-316 (Repl. Pamp. 1995).
{2} In the prior
proceeding, respondent was found to have engaged in dishonest conduct in
violation of Rule 16-804(C) as well as violations of other Rules of
Professional Conduct. Pursuant to a conditional agreement not to contest and
consent to discipline, respondent was suspended from the practice of law for a
period of three years, effective May 24, 1994. The second and third years of
the suspension were to be deferred in favor of supervised probation, provided
Schmidt complied with certain terms of the consent agreement during the first
year of suspension.
{3} Almost
immediately, respondent failed and refused to comply with the conditions to
which he had agreed. On October 31, 1994, in a show cause proceeding initiated
by the motion of chief disciplinary counsel pursuant to Rule 17-206(G), this
Court revoked the previous deferral and suspended respondent for the entire
three-year period of the original order of discipline.
{4} The proceeding now
before the Court arose out of respondent's representation of Elizabeth
Chalamidas in pursuing claims arising out of the death of her husband, who died
after being injured in a fall in May 1992. In early 1993, respondent collected
$ 10,000 in medical pay benefits on the Chalamidas claim. Upon receipt of the
settlement draft, respondent obtained the endorsement of
{*642}
Chalamidas and deposited the check into his trust account. Despite the
repeated requests of Chalamidas, however, respondent failed to pay her
husband's medical bills, provide an accounting, or remit funds to her.
{5} In November 1994,
Chalamidas filed a disciplinary complaint against respondent. In the course of
investigating the complaint, disciplinary counsel subpoenaed respondent's trust
account records for the period relevant to the Chalamidas settlement. The bank
records revealed that the $ 10,000 settlement was deposited in the trust
account on March 29, 1993, and that by July 26, 1993, the account had a
negative balance. The records also disclosed that during the four-month period
in which Chalamidas' funds were being dissipated, respondent made numerous cash
withdrawals from trust, commingled personal and client funds in the trust
account, maintained his trust account as an interest-bearing account, even
though he was not a participant in the IOLTA program, and, most significantly,
misappropriated the $ 10,000 belonging to Chalamidas.
{6} Respondent made no
response to the complaint, despite receiving two letters from disciplinary
counsel requesting him to respond. The second letter specifically reminded
respondent of his obligation to cooperate in the investigation as set forth in
Rule 16-803(D). Respondent was personally served with the formal specification
of charges in the disciplinary proceeding which followed. He failed to answer
the charges, which resulted in the allegations being admitted pursuant to Rule
17-310(C). Respondent also failed to appear at any of the hearings held in this
proceeding, although notice was provided to him.
{7} Rule 16-803(D)
requires a lawyer to "give full cooperation and assistance to the highest
court of the state and to the disciplinary board, hearing committees and
disciplinary counsel in discharging their respective functions and duties with
respect to discipline and disciplinary procedures." Embodied in this rule
is the obligation to respond to disciplinary counsel's request for a response
to a complaint and the duty to provide additional information to disciplinary
counsel, if asked to do so. Failure to provide information needed to complete
investigation of a disciplinary complaint can constitute a violation of Rule
16-803(D).
{8} If formal charges
are filed, Rule 16-803(D) constrains the lawyer to answer the charges and
appear before the hearing committee. Similarly, if hearings are scheduled in
the proceeding by the disciplinary board and this Court, the lawyer is
obligated to appear. A license to practice law is a privilege, which must be
respected and protected.
See SCRA 1986, 17-205;
In re Reid, 116
N.M. 38, 40,
859 P.2d 1065, 1067 (1993). Failure to participate in the
disciplinary process, in effect, constitutes abandonment of the privilege a
lawyer has been granted to practice law in New Mexico.
{9} Respondent's
conduct in this matter violated Rule 16-115(A), by failing to hold client funds
separate from his own; Rule 16-115(B), by failing to remit to the client funds
she was entitled to receive; Rule 16-115(B), by failing to provide an
accounting to the client of the funds in his possession which belong to her;
Rule 16-115(D), by maintaining an interest-bearing trust account, even though
he was not a participant in the IOLTA program; Rule 17-204(A), by making cash
disbursements from his trust account; Rule 16-804(C), by engaging in conduct
involving dishonesty, fraud, deceit, or misrepresentation; Rule 16-803, by
failing to cooperate with disciplinary counsel; and Rule 16-804(H), by engaging
in conduct that adversely reflects on his fitness to practice law.
{10} This Court has
made clear that "disbarment is the appropriate sanction" for the
wilful conversion of trust account funds.
In re Kelly, 119 N.M. 807,
809,
896 P.2d 487, 489 (1995). Rule 17-214(A) provides that a disbarred
attorney may not apply for reinstatement without the prior approval of this
Court and that a motion seeking permission to apply for reinstatement may not
be filed for at least three (3) years from the effective date of the
disbarment, unless stated otherwise in the order of disbarment. Both the
hearing committee and disciplinary board panel that considered this case
recommended permanent disbarment for respondent. While we decline to order
permanent disbarment, we exercise our discretion under Rule 17-214(A)
{*643} and order that respondent may not seek
permission to apply for reinstatement until at least three years after May 24,
1997, the date on which the previously imposed period of suspension would have
expired.
{11} NOW, THEREFORE,
IT IS ORDERED that effective March 6, 1996, Carl J. Schmidt is disbarred from
the practice of law in all courts in New Mexico pursuant to SCRA 1986,
17-206(A)(1);
{12} IT IS FURTHER
ORDERED that no application for reinstatement may be made until a minimum
period of three (3) years has elapsed after May 24, 1997, the expiration date
for respondent's previously ordered suspension, and that any application must
be accompanied by a showing that respondent took and passed the Multistate
Professional Responsibility Examination, paid all costs and restitution, and
satisfied all conditions of suspension;
{13} IT IS FURTHER
ORDERED that respondent shall reimburse the Disciplinary Board its costs in the
amount of $ 447.63 within thirty (30) days of March 6, 1996, plus interest of
fifteen percent (15%) per annum on any amount not paid within the thirty-day
period and that said costs shall be reduced to a Transcript of Judgment;
{14} IT IS FURTHER
ORDERED that respondent shall make restitution to Elizabeth Chalamidas in the
amount of $ 10,000.00 within thirty (30) days of March 6, 1996, plus interest
of fifteen per cent (15%) per annum on any amount not paid within the
thirty-day period;
{15} IT IS FURTHER
ORDERED that respondent shall satisfy all conditions of suspension as described
in the October 31, 1994 order; and
{16} IT IS FURTHER
ORDERED that this opinion be published in
New Mexico Reports and
Bar
Bulletin.
Richard E. Ransom, Justice
Gene E. Franchini, Justice
Pamela B. Minzner, Justice
Stanley F. Frost, Chief Justice