IN THE SUPREME COURT OF FLORIDA CASE NO. SC THE FLORIDA BAR, Complainant, vs. JOAQUIN N. FERNANDEZ, Respondent

Transcription

1 IN THE SUPREME COURT OF FLORIDA CASE NO. SC THE FLORIDA BAR, Complainant, vs. JOAQUIN N. FERNANDEZ, Respondent ON REVIEW OF A REPORT OF A REFEREE IN A FLORIDA BAR DISCIPLINARY PROCEEDING AMENDED INITIAL BRIEF OF RESPONDENT JAMES MCGUIRK, P.A. Attorney for Respondent 201 Alhambra Circle Suite 711 Coral Gables, Florida Telephone: Facsimile: By: James McGuirk Sherri A. Romano

2 TABLE OF CONTENTS PAGE Table of Contents i Table of Citations iv Legend vii Statement of the Case A. Statement of the Proceedings B. Statement of the Facts Standard of Review Summary of Argument Argument I. Florida s Interest on Trust Account Program (IOTA) is Unconstitutional on two grounds: the Fifth Amendment Takings Clause and the Vagueness Doctrine A. IOTA Violates the Fifth Amendment Takings Clause Fifth Amendment Takings Clause U.S. Supreme Court Has Declared Trust Account Interest To Be Property Federal Court of Appeals Decisions

3 After Phillips a. Fifth Circuit Court of Appeals Declared IOLTA an Unconstitutional Taking b. The Ninth Circuit Declared IOLTA Constitutional Phillips Effectively Overruled Eleventh Circuit Case Addressing Florida s IOTA Program Phillips Effectively Overruled Florida Supreme Court s Ruling the IOTA Interest Is Not Property B. The IOTA Rule Is Also Void For Vagueness The Vagueness Doctrine The IOTA Rule Contains No Clear Definition of Nominal or Short Term There are No Cases Interpreting Nominal or Short Term The Rule on its Face Prohibits Charging an Ethical Violation based on IOTA II. The Evidence Does Not Support a Finding of Guilt on the IOTA Violation A. No Evidence of Nominal or Short Term Funds B. No Evidence That Respondent Failed To Use His Good Faith Judgment

4 III. ii The Recommendation of Six Month Suspension was Excessive A. The IOTA Violation Should Not Be Considered in Assessing Punishment B. The 180 day Suspension was Excessive for a Technical Violation Florida Standards for Imposing Discipline Florida Case Law in Similar Disciplinary Actions IV. Conclusion Certificate of Service Certificate of Compliance

5 iii TABLE OF CITATIONS CASES PAGE Armstrong v. United States, 364 U.S. 40 (1960) Cone v. The State Bar of Florida, 819 F. 2d 1002 (11 th Cir. 1987) ,12 Florida Bar v. Barbone, 679 So. 2d 1179 (Fla. 1996) ,24 Florida Bar v. Behrman, 658 So. 2d 95 (Fla. 1995) Florida Bar v. Feinberg, 760 So. 2d 933 (Fla. 2000) Florida Bar v. John Doe, 634 So. 2d 160 (Fla. 1994) Florida Bar v. Ross, 732 So. 2d 1037 (Fla. 1998) Florida Bar v. Sweeny, 730 So. 2d 1269 (Fla. 1998) Hall v. Anwar, 774 So. 2d 41 (2 nd DCA 2000) Hall v. State, 568 So. 2d 882 (Fla. 1990) In re Interest of Trust Accounts, 402 So. 2d 389 (Fla. 1981) ,7,12 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) Matter of Interest on Trust Accounts: A Petition to Amend

6 the Rules Regulating the Florida Bar, 528 So. 2d 448 (Fla. 1989) ,12 iv Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999) Papachristou v. City of Jacksonville, 405 U.S. 156 (1972) Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978) Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998) ,10,11,12 Southeastern Fisheries Ass n v. Dept. Natural Resources, 453 So. 2d 1351 (Fla. 1984) State v. Bussey, 463 So. 2d 1141 (Fla. 1985) State v. Glatzmayer, 789 So. 2d 297 (Fla. 2001) Warren v. State, 572 So. 2d 1376 (Fla. 1991) Washington Legal Foundation v. Legal Foundation of Washington, 271 F. 3d 835 (9th Cir. 2001) ,11 Washington Legal Foundation v. Texas Equal Access to Justice Found., 86 F. Supp. 2d 624, 643 (W.D. Tex. 2000) Washington Legal Foundation v. Texas Equal Access to

7 Justice Foundation, 270 F. 3d 180 (5th Cir. 2001) ,10 Webb s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980) V CONSTITUTIONS, STATUTES AND RULES Article I, Section 9, Florida Constitution , Fla. Stat Rule 4-1.3, Rules Regulating the Florida Bar Rule 4-1.4, Rules Regulating the Florida Bar Rule 4-7.2, Rules Regulating the Florida Bar Rule 4-8.4, Rules Regulating the Florida Bar ,14 Rule 5-1.1, Rules Regulating the Florida Bar ,2,7,8,14,15,16,17,18,19,23 Fla. Stds. Imposing Law. Sancs Fla. Stds. Imposing Law. Sancs Tex. Gov t Code Ann. Tit.2, subtit. G, app. A, art (West Supp. 1995) U.S. Const. amend. XIV U.S. Const. amend. V Washington Rules of Professional Conduct

8 vi LEGEND Tr.VI - Transcript of Final Hearing Volume One Tr.VII - Transcript of Final Hearing Volume Two

9 vii STATEMENT OF THE CASE STATEMENT OF THE PROCEEDINGS The Florida Bar filed a five count complaint against the Respondent, attorney Joaquin Fernandez, in June, 2001, alleging violations of Rules Regulating the Florida Bar, 4-1.3(diligence); 4-1.4(communication); 4-8.4(c)(dishonesty, fraud, deceit, or misrepresentation); 4-8.4(d)(conduct prejudicial to the administration of justice); 5-1.1(a)(nature of money or property entrusted to an attorney); 5-1.1(e)(IOTA). The Honorable Raphael Steinhardt, County Judge of the Eleventh Judicial Circuit County Court of Dade County, was assigned as the referee in this cause. On November 8, 2001 and November 27, 2001, a final hearing was conducted before Referee Steinhardt. The Referee filed his report on December 14, 2001, recommending no guilt as to Count I, Count II and Count IV; recommending guilt as to Count III, a violation of 5-1.1(a) and Count V, a violation of 5-1.1(e); recommending a disciplinary sanction of six months suspension and monthly trust account audits for two years after Respondent resumes practice; and assessing 1

10 $8, in costs against the Respondent. On February 13, 2002, Respondent filed a petition for review with this Court. On March 8, 2001, Respondent filed a motion requesting an extension of time to serve the initial brief and the transcript. On April 2, 2002, the Court granted an extension of time to serve the initial brief until April 18, STATEMENT OF FACTS Two of the Respondent s former clients, Maximo Lopez and Felipe Arnaiz, filed Bar complaints against him. One man was physically and psychiatrically sick (Tr. VII at 20) and the other was a many time convicted felon who is presently a fugitive from justice (Tr. VII at 30). These allegations made up Counts I and II of the case (Compl. at 1-3); after a final hearing the Referee recommended a finding of not guilty on either of these counts. (Tr. VII at 24 and 33). During investigation of the two complaints, the Bar reviewed Respondent s trust account records. (Tr. VII at 24). The Bar cited the Respondent with three additional violations based on its examination of his trust accounts: accounting errors which resulted in temporary shortages (Compl. at 4-5), one specific shortage of over $300,000 (Compl. at 5-6) and failure to maintain an IOTA account (Compl. at 7). These allegations made up Counts III, IV and V of the complaint, respectively. 2

11 The missing $300,000 turned out to be the result of an erroneous seizure by the United States government that was promptly and timely corrected. (Tr. VI at 4). Therefore, at trial the Bar stipulated to summary judgment for the Respondent on Count IV; the Referee recommended a finding of not guilty for the record. (Tr. VII at 27). As to the accounting errors count, the Referee found this was a technical violation of Rule 5-1.1(a) and characterized it as not a material violation in the sense that monies were never taken from the trust account. (Tr. VII at 26). 1 Lastly with respect to Count V, the IOTA charge, the Respondent stipulated that he had not registered his trust accounts with IOTA. (Tr. VI at ). The Respondent filed a motion to dismiss the IOTA count, based on the unconstitutionality of the IOTA Program. (Motion to Dismiss Count V of the Compl.). The Referee expressly declined to rule on the constitutionality of IOTA. (Tr. VII at 29). It was the Respondent s position at the final hearing that although his trust account was not registered with IOTA, there was no proof that the client funds qualified as IOTA funds. (Tr. VII at 14-16) 1 The parties stipulated that there were unintentional bookkeeping errors that created temporary overdrafts, but there was no theft. (Tr. VI at 185). All of Respondent s clients received their funds when they were due. Id. It may be concluded from this fact that Respondent s bank honored Respondent s trust account checks even if there were temporary periods of insufficient funds. 3

12 At the final hearing, Carlos Ruga, a Florida Bar auditor and expert accountant, testified on behalf of the Florida Bar regarding the IOTA count. (Tr. VI at ). A summary of transactions from one of Respondent s trust accounts for the calendar year 1998 was prepared by this expert and was submitted for the record. (Tr. VI at160). However, no individual deposits were discussed or identified by the expert as specifically qualifying for IOTA. The accountant expert opined generally that the account should have been an IOTA account. (Tr. VI at ). When cross-examined, the expert could not quantify nominal or short-term as used in the IOTA Rule (Tr. VI at 166), could not identify any cases quantifying these terms (Tr. VI at 166) and could not testify whether the Respondent and his clients had a separate agreement concerning trust funds. (Tr. VI at ). The Referee ultimately found Respondent technically violated the IOTA rule while observing, most attorneys in Florida really don t know what s going on with this rule. The Florida Bar really needs to get some information out as to compliance so lawyers are on notice of what the Bar expects them to do. (Tr. VII at 28). In aggravation, the Bar submitted a prior discipline of a 90 day suspension that occurred in 1990, stemming from Respondent s failure to file a report when taking $5,000 in currency out of the country in (Tr. VII at 35-37). Based on 4

13 the two technical violations and the one prior disciplinary action, the Referee recommended a disciplinary suspension of 180 days and monthly trust account audits for two years when the Respondent returns to practice. (Tr. VII at 41-42). STANDARD OF REVIEW A referee s findings of fact regarding guilt should be upheld unless clearly erroneous or without support in the record. The Florida Bar v. Sweeny, 730 So. 2d 1269 (Fla. 1998). In reviewing a referee s recommendation of discipline, the Florida Supreme Court does not pay the same deference to this recommendation as to the guilt recommendation because this Court has the ultimate responsibility to determine the appropriate sanction. The Florida Bar v. Feinberg, 760 So. 2d 933 (Fla. 2000); Sweeny. A referee s recommendation as to discipline will be upheld as long as it has a reasonable basis in existing case law. Id. 5

14 Questions of law are subject to de novo review. State v. Glatzmayer, 789 So. 2d 297 (Fla. 2001). SUMMARY OF THE ARGUMENT IOTA is unconstitutional; there was no evidence showing it was even violated and a 180 day suspension partially based upon any such finding is clearly excessive. ARGUMENT I. Florida s Interest on Trust Accounts Program (IOTA) is Unconstitutional on two grounds: the Fifth Amendment Takings Clause and the Vagueness Doctrine 6

15 A. IOTA Violates the Fifth Amendment Takings Clause 1. Fifth Amendment Takings Clause The Takings Clause of the Fifth Amendment, made applicable to the States through the Fourteenth Amendment, provides: nor shall private property be taken for public use, without just compensation. U.S. Const. amend. V. The Florida Interest on Trust Account Program is unconstitutional because it requires Florida attorneys to deposit client trust funds into an interest bearing account with the interest generated paid not to the client but to the Florida Bar Foundation, which uses the money for legal aid services. Therefore, the IOTA rule takes private property, the interest, without just compensation. In 1981, upon adoption of IOTA as a voluntary program, this Court ruled that IOTA is not a Fifth Amendment taking. In re Interest of Trust Accounts, 402 So. 2d 389, 395 (Fla. 1981). This Court rejected a Fifth Amendment taking concern when adopting the mandatory IOTA Program in Matter of Interest on Trust Accounts: A Petition to Amend the Rules Regulating the Florida Bar, 528 So. 2d 448, 452 (Fla. 1989). The Respondent has been unable to locate any parties in controversy challenging the constitutionality of IOTA in Florida state 7

16 courts. 2 This review will consider primarily those federal decisions rendered after this Court s decision adopting IOTA, some of which suggest Florida s IOTA Rule is unconstitutional. But, regardless of the eventual outcome in the federal courts, it is inappropriate and excessive to suspend a Florida attorney for non compliance with a constitutionally suspect rule. 2. U.S. Supreme Court Has Declared Trust Account Interest To Be Property The United States Supreme Court addressed Texas IOTLA program 3 in Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998). In that case the Court held, for purposes of the Takings Clause of the Fifth Amendment, interest 2 This Court s previously cited rulings addressing IOTA stemmed from comments received by the Court when considering the petitions to amend the rules, not cases or controversies brought by litigants before the Court. 3 An attorney... receiving in the course of the practice of law... client funds that are nominal in amount or are reasonably anticipated to be held for a short period of time, shall establish and maintain a separate interest-bearing demand account at a financial institution and shall deposit in the account all those client funds. Tex. Gov t Code Ann. Tit.2, subtit. G, app. A, art. XI 5 (West Supp. 1995). The Texas IOTLA Program is substantially similar to Florida s IOTA Program, Rules Regulating the Florida Bar, Rule 5-1.1(e) which states: [a]ll nominal or short-term funds belonging to clients or third persons that are placed in trust with any member of the Florida Bar practicing law from an office or other business location within the state of Florida shall be deposited into one or more IOTA accounts. 8

17 earned on client funds deposited in demand accounts pursuant to Texas Interest on Lawyers Trust Accounts program is the private property of the client. Id. Having determined the first element of the takings clause was met by declaring this interest private property, the Court remanded the case to the district court for consideration of the next two subparts of the Takings Clause: (1) whether there has been a taking and, (2) if so, what just compensation, if any, is due. Id. 3. Federal Court of Appeals Decisions After Phillips Subsequent federal courts of appeals decisions have disagreed on whether interest on trust account programs constitute a taking, and if they do, whether the taking requires any compensation. a. Fifth Circuit Court of Appeals Declared IOLTA an Unconstitutional Taking On remand from the United States Supreme Court for further proceedings to determine whether the interest had been taken and the amount of just compensation due, the district court found that there was neither a taking nor a compensable loss. Washington Legal Foundation v. Texas Equal Access to Justice Found., 86 F. Supp 2d 624, 643 (W.D. Tex. 2000). This case was returned to the Fifth Circuit on appeal in Washington Legal Foundation v. Texas Equal Access to Justice Foundation, 270 F. 3d 180 (5th Cir. 2001). The Fifth Circuit reversed the district 9

18 court and held the Fifth Amendment was violated. The Fifth Circuit adopted a per se 4 analysis which requires compensation to the owner no matter how minute the intrusion and no matter how weighty the public purpose behind it. Id. at 187. The court reasoned that the State had permanently appropriated the appellant s interest income against his will, instead of merely regulating its use, and there was a per se taking. Id. at 188. Presently, this case has been granted a rehearing en banc, but has not yet been docketed. b. The Ninth Circuit Declared IOTLA Constitutional One month after the Fifth Circuit decided Washington Legal Foundation v. Texas Equal Access To Justice, the Ninth Circuit also addressed the Washington IOTLA program 5 in light of Phillips. Washington Legal Foundation v. Legal 4 The Fifth Circuit adopted the per se analysis as stated in Webb s Fabulous Pharmacies, Inc. V. Beckwith, 449 U.S. 155 (1980) and Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), as opposed to an ad hoc inquiry set forth in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978). Ad hoc analysis is discussed further in section IA3b. 5 Washington Rules of Professional Conduct Rule 1.14 requires lawyers to place client funds that are nominal in amount or expected to be held for a short period of time in either (1) a pooled interest-bearing trust account, the interest from which is paid to the Washington Legal Foundation, (ii) a separate interestbearing trust account for a particular client, or (iii) a pooled interest-bearing trust account with subaccounting that will provide for computation of interest earned by each client s funds and the payment thereof to the client. 10

19 Foundation of Washington, 271 F. 3d 835 (9th Cir. 2001). Deciding the same questions left open by the United States Supreme Court in Phillips, whether the funds have been taken and the amount of just compensation, the Ninth Circuit held that there was no taking. Id. Unlike the Fifth Circuit, the Ninth Circuit used an ad hoc analysis, not a per se violation approach. In its ad hoc analysis, the Ninth Circuit reasoned that the court may conclude a taking has occurred only if a particular regulation goes so far that it forces some people alone to bear public burdens which, in all fairness and justice should be borne by the public as a whole. Id. at 857, quoting Armstrong v. United States, 364 U.S. 40 (1960). Three factors of particular significance are: (1) the economic impact of the regulation; (2) extent of interference with distinct investment-backed expectations; and (3) character of governmental action. Id. After engaging in this fact-specific ad hoc analysis, the Ninth Circuit found that the IOTLA Program did not take appellants property and even if it were a taking, there would be no Fifth Amendment violation because the value of their just compensation was nil. Id. at 864. On May 7, 2002, a petition for writ of certiorari to the Supreme Court of the United States was filed and is pending. 4. Phillips Effectively Overruled Eleventh Circuit Case Addressing 11

20 Florida s IOTA Program In 1987, the Eleventh Circuit Court of Appeals interpreted Florida s IOTA Program in response to a Fifth Amendment takings challenge that was dismissed at the district court level. Cone v. The State Bar of Florida, 819 F. 2d 1002 (11 th Cir. 1987). The court reasoned that the claim turned on one question, whether the interest earned on the IOTA funds was the property of the client for Fifth Amendment purposes. Id. at The Eleventh Circuit agreed with the district court s conclusion, as a matter of law that the use of [the client s] money had no net value, therefore there could be no property interest for the state to appropriate. Id. at More than ten years later, the United States Supreme Court in Phillips cited a conflict in the circuits on this issue, specifically mentioning Cone. The Court held that interest is property and owned by the client. Phillips at 163. Therefore, Cone was effectively overruled on this issue. At this time, there is no Eleventh Circuit case law addressing the other two subparts of the Takings Clause analysis. 5. Phillips Effectively Overruled Florida Supreme Court s Ruling the IOTA Interest Is Not Property Prior to the Supreme Court s opinion in Phillips, this Court ruled that no client is compelled to part with property by reason of a state directive, since the 12

21 program creates income where there had been none before, and the income thus created would never benefit the client under any set of circumstances. In re Interest on Trust Accounts, at 395. This Court later noted that in Cone, the Eleventh Circuit also rejected a claim that the interest was property for Fifth Amendment purposes. Matter of Interest on Trust Accounts: A Petition to Amend the Rules Regulating the Florida Bar, at 452. The United States Supreme Court in Phillips, specifically noted Florida s In re Interest on Trust Accounts case during the course of rejecting the premise that interest on trust accounts is not property. Phillips at 163. To the extent that this Court held that interest on trust accounts is not property, it has been effectively overruled by Phillips. At this time, there is no Florida case law addressing IOTA with respect to the other two subparts of the Takings Clause analysis. Based on the above detailed uncertainty as to the future of the entire Florida IOTA Program, the alleged IOTA violation should not be factored into determining the proper sanction of this Respondent. Alternatively, the Respondent urges the entire determination of penalty be stayed until the United States Supreme Court fully addresses the issue. B. The IOTA Rule is Also Void For Vagueness 1. The Vagueness Doctrine 13

22 The Fourteenth Amendment to the United States Constitution and Article I, Section 9 of the Florida Constitution guarantee that no person shall be deprived of life, liberty or property without due process of law. The vagueness doctrine was developed to assure compliance with the due process clause of the constitution. Southeastern Fisheries Ass n v. Dept. Natural Resources, 453 So. 2d 1351 (Fla. 1984). The standard for testing vagueness under Florida law is whether the statute gives a person of ordinary intelligence fair notice of what constitutes forbidden conduct. Papachristou v. City of Jacksonville, 405 U.S. 156 (1972). The language of the statute must provide a definite warning of what conduct is required or prohibited, measured by the common understanding and practice. Warren v. State, 572 So. 2d 1376 (Fla. 1991), quoting State v. Bussey, 463 So. 2d 1141, 1144 (Fla. 1985). Because of its imprecision, a vague statute may invite arbitrary or discriminatory enforcement. Southeastern Fisheries, at In two attorney disciplinary cases challenging two different Florida Bar Rules 6, this Court has applied the following vagueness standards: sufficiently specific to put Florida s lawyers on notice as to its meaning The Florida Bar v. John Doe, 634 So. 2d 160 (Fla. 1994), and a person of common intelligence 6 Definition of public service announcement in advertising Rule and dishonesty in Rule 4-8.4(c). 14

23 could be expected to understand the conduct proscribed by the rule. The Florida Bar v. Ross, 732 So. 2d 1037 (Fla. 1998). Under general Florida standards of vagueness and under the specific standards applied by the Court in other Bar cases, the IOTA Rule is unconstitutionally vague. 2. The IOTA Rule Contains No Clear Definition of Nominal or Short-Term Rules Regulating the Florida Bar 5-1.1(e)(2) requires all nominal or shortterm funds belonging to clients placed in trust with any member of the Florida Bar be deposited into one or more IOTA accounts. The Rule leaves the determination of whether the funds are nominal or short term to the good faith judgment of the lawyer. Rule 5-1.1(e). The Rule lists factors the lawyer shall consider when making his determination: the amount of funds to be held, the period of time funds are expected to be held, the likelihood of delay in the transactions or proceedings, the cost of establishing an interest-bearing account for the benefit of the client and the minimum balance requirements or service charges imposed by the institution. Id. How can a lawyer violate a rule that is measured only by his own good judgment? This Rule leaves the decision solely up to the lawyer. A lawyer should 15

24 not be punished for making the determination as required by the Rule itself. This can hardly be considered adequate notice under the Due Process Clause of the United States or Florida Constitutions. Such vagueness may invite arbitrary or discriminatory enforcement. In this case, an IOTA violation was only cited after the Respondent was under investigation for client complaints for which he was ultimately found not guilty. The Respondent submits that this Rule is only enforced against attorneys who are under investigation for other violations. 7 Such admittedly discriminatory enforcement is the epitome of what the vagueness doctrine constitutionally prohibits. 3. There are No Cases Interpreting Nominal or Short Term According to Rule 5-1.1(e), only nominal or short-term funds are required to be deposited in an IOTA account. These two terms are the heart of the determination required under the rule itself. However, the Respondent has been unable to find any cases that interpret or define nominal or short-term. Below, the 7 In response to the Referee s question regarding monitoring attorney compliance with IOTA, does the Bar monitor everybody, Bar Counsel stated, [t]hey don t monitor, your Honor. The Referee asserted, [u]nless there is an allegation of misappropriation. Bar Counsel responded, [e]xactly. (Tr.VI at ). 16

25 Florida Bar conceded that there were no cases to its knowledge defining the terms quantitatively. Nominal and short-term are quantitative terms, i.e. they both can be defined in numeric values. At the final hearing, Bar expert Ruga was questioned about these terms as used in the IOTA Rule. The expert could not quantify the terms or identify any cases interpreting the value of the terms. Further, the expert agreed that two reasonable people could differ in their interpretation of these terms. (Tr. VI at ). Such vagueness is exactly what is prohibited under this Court s standard for lawyers when addressing Bar Rules. On its face and without any case law interpretation, this rule is not sufficiently specific to put Florida lawyers on notice as the meaning of nominal or short-term. 4. The Rule on its Face Prohibits Charging an Ethical Violation based on IOTA Rule 5-1.1(e) specifically states, [t]he determination of whether a client s or third person s funds are nominal or short-term shall rest in the sound judgment of the lawyer or law firm. No lawyer shall be charged with ethical impropriety or other breach of professional conduct based on the exercise of such good faith judgment. The rule on its face recognizes that a lawyer acting in his good faith 17

26 judgment can not be punished for violating IOTA. This rule virtually contradicts itself by first mandating a requirement that all Florida attorneys maintain an IOTA account, while absolving attorneys acting in good faith from being cited for a violation of the rule. This internal inconsistency makes interpretation of the application, the violation and the penalty unclear and therefore, too vague to enforce. Lastly, the Referee himself recognized that Florida lawyers are not aware, i.e. put on notice, of what is required by this Rule. (Tr. VII at 28). Said another way, this rule is vague. II. The Evidence Does Not Support a Finding of Guilt on the IOTA Violation In order to find a violation of IOTA, the Florida Bar must have shown the following elements were not met by the Respondent: (1) client funds were determined by the Respondent in his good faith judgment to be nominal or short term 8 ; (2) the funds were placed in trust with the Respondent; and (3) the funds 8 Rule 5-1.1(e)(3) lists factors the lawyer shall consider when making the determination: (A) the amount of a client s or third person s funds to be held by the lawyer or law firm; (B) the period of time such funds are expected to be held; (C) the likelihood of delay in the relevant transaction(s) or proceeding(s); (D) the cost to the lawyer or law firm of establishing and maintaining an interest-bearing account or other appropriate investment for the benefit of the client or third person; and (E) minimum balance requirements and/or service charges or fees imposed by the 18

27 were deposited by Respondent in an IOTA account. The Bar failed to show any evidence of the first element. The Referee s guilt recommendation on this count should be not be upheld because it is without support in the record. A. No Evidence of Nominal or Short Term Funds In this case there was no evidence in the record that the funds in question were determined to be nominal or short-term. The Bar and Respondent stipulated the funds in question were trust funds and that the account in question was not an IOTA account. The issue that remained was whether the funds were nominal or short term, therefore required to be placed in an IOTA account. The Bar provided no evidence of this. At the final hearing, Bar expert Ruga was questioned specifically by the Referee 9 and by Bar counsel 10 about the nature of the funds deposited into the eligible institution. 9 Referee asked, [w]hy from an accounting standpoint did these funds not I guess qualify or violate the rule? (Tr. VI at 157). Ruga replied, [i]f the funds are nominal or short term, those funds go into an account, an interest-bearing account for the benefit of IOTA. Id. 10 Bar counsel asked, can you be more precise about what actual amounts of money we are discussing here? (Tr. VI at 159). Ruga replied, [o]n this particular account, personal injury cases, 10,000, 50,000. Sometimes it was a hundred thousand. Id. Bar counsel asked later, did you prepare any charts or summaries to assist 19

28 Respondent s trust account. However, the expert never identified any deposit that in his opinion qualified as nominal or short-term. Moreover, the expert could not even quantify, i.e. put numeric values on the terms nominal or short-term. The expert testified in general that the account should have been registered with IOTA. Indeed, we suggest the Bar could not specifically identify any nominal or short term funds from the Respondent s account because these terms are unascertainable, even taking into account the factors listed in Rule 5-1.1(e)(3). Conversely, if it is suggested these factors are sufficiently specific to provide enough guidance to attorneys, no such fact specific inquiry was conducted by the Bar expert at the final hearing. Therefore, the evidence was not sufficient to find the funds in question did in fact qualify as nominal or short term. B. No Evidence That Respondent Failed To Use His Good Faith Judgment The IOTA Rule further requires that the attorney use his good faith judgment upon receipt of the funds to determine whether those funds are required to be placed in an IOTA account. The Respondent can find no case law specifically the Court in determining what accounts and what moneys we re discussing? Ruga replied, [y]es, I did... that was an account that was used primarily for all, almost exclusively for personal injury cases, moneys that just came in and went out almost immediately, all of them. Sometimes they were substantial, but they were short term. They left almost immediately. (Tr. VI at ). 20

29 addressing this good faith standard as used in the rule. Therefore, the Respondent submits that this good faith standard be analogized to the standard of care an attorney is held to in a professional negligence action. In such an action, the law imposes a duty to perform in accordance with the standard of care used by similar professionals in the community under similar circumstances. Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999), citing Florida Standard Jury Instructions (Civil) 4.2c (Negligence of a lawyer, architect, other professional). In order to show the Respondent violated this good faith standard, the Bar must show some evidence establishing the standard in the legal community and the Respondent s failure to meet the standard. No such evidence was elicited at the final hearing. At the final hearing, the Bar presented Ruga, a Bar auditor, as its only expert. This expert opined that in his opinion the Respondent s account should have been an IOTA account. However, Ruga was only qualified as an expert in the field of accounting, not law. It is generally accepted that a witness may only testify as an expert in areas of his expertise. Hall v. State, 568 So. 2d 882 (Fla. 1990); Hall v. Anwar, 774 So. 2d 41 (2 nd DCA 2000); see , Fla. Stat. Therefore, in order to show that Respondent violated an attorney standard requiring good faith judgment, an expert attorney would be required to testify to the standard - not an 21

30 accountant. It is clear when the elements of the violation are broken down that there is insufficient evidence to uphold the Referee s recommendation of guilt on this count. III. The Recommendation of Six Month Suspension was Excessive A. The IOTA Violation Should Not Be Considered in Assessing Punishment As discussed above, the constitutional uncertainty of the IOTA Rule, the vagueness of this Rule and the lack of evidence presented in this specific case to support a finding of guilt on the IOTA count, all suggest this Court rule that the IOTA violation should not be considered in assessing punishment in this case. Without IOTA there remains one violation, which was characterized by the Referee as technical and one prior 1990 disciplinary action which stemmed from an event that occurred about twenty years ago. This remaining violation warrants an admonishment at most. B. The 180 day Suspension was Excessive for a Technical Violation 1. Florida Standards for Imposing Discipline According to the Florida Standards for Imposing Lawyer Sanctions, [s]uspension is appropriate when a lawyer knows or should know that he is 22

31 dealing improperly with client property and causes injury or potential injury to the client. Fla. Stds. Imposing Law. Sancs (emphasis added). In this case the Referee found that no money was taken from any client and no client was injured. Therefore, this violation should not warrant a suspension under the Standards. Section 4.14 of the Florida Standards for Imposing Lawyer Sanctions states that admonishment is appropriate when a lawyer is negligent in dealing with client property and caused little or no actual or potential injury to a client or where there is a technical violation of trust account rules or where there is an unintentional mishandling of client property. This is exactly what the referee found happened in this case. There was a technical violation of the rules by an unintentional mishandling of the accounting and there was no actual client injury. Therefore, it is clear that an admonishment is the appropriate sanction. The Standards do not provide guidelines for how to calculate a prior disciplinary action into the aggravation of a technical violation. But, in this case, the one prior disciplinary action was not the same type of misconduct and the event occurred almost twenty years ago. This factor also should not raise an admonishment to a six month suspension. 2. Florida Case Law in Similar Disciplinary Actions Two Florida cases, Behrman and Barbone, addressing punishment for trust 23

32 account violations, can be compared to the instant case and demonstrate that the recommended sanction is excessive. In The Florida Bar v. Behrman, 658 So. 2d 95 (Fla. 1995), the attorney was found guilty of violating Rule 5-1.1(a) and three record keeping violations. The referee similarly found that there was no crime or fraud. This attorney only received a 90 day suspension. Attorney Behrman had more violations than the Respondent; however, the Respondent received double the suspension. In The Florida Bar v. Barbone, 679 So. 2d 1179 (Fla. 1996), the attorney was found guilty of violating Rule 5-1.1(a) for many substantial shortages and overages in his trust account and various record keeping violations, including failing to maintain 6 years worth of trust account records. This attorney also had two prior disciplinary actions and was still on probation for similar violations at the time the action arose. Barbone received a 6 month suspension. When the facts of the Barbone case are compared to the instant case it is clear that Barbone s trust problems were more substantial and repeated over a number of years. Moreover, Barbone was already on probation and still failed to manage his trust account properly. Conversely, the Respondent had never before been cited for any trust violation and his actions were clearly not as egregious as Barbone s. However, the Referee recommended the same exact punishment, a six 24

33 month suspension. The Respondent clearly should not be put in the Barbone category of punishment. A punishment recommendation of six months suspension for the Respondent s violations is excessive under the Florida Standards for Imposing Lawyer Sanctions and under similar case law. There is no reasonable basis for this Referee s excessive disciplinary recommendation and it should not be adopted by this Court. IV. Conclusion Respondent requests this Court enter a finding of not guilty on the IOTA violation based on the unconstitutionality of the rule and insufficiency of evidence of a violation presented by the Bar, and impose, at most, an admonishment as discipline for the remaining count. 25

34 Respectfully submitted, JAMES MCGUIRK, P.A. Attorney for Respondent 201 Alhambra Circle Suite 711 Coral Gables, Florida Telephone: Facsimile: BY: James McGuirk FBN: Sherri A. Romano FBN: CERTIFICATE OF SERVICE I HEREBY CERTIFY that the original and seven (7) copies of this brief have been provided by U.S. Mail to Honorable Thomas D. Hall, Clerk, Supreme Court of Florida, 500 South Duval Street, Tallahassee, Florida 32399; and a true and correct copy was furnished by U.S. Mail to Carlos Leon, Counsel for the Florida Bar, Rivergate Plaza Suite M100, 444 Brickell Avenue, Miami, FL 33131, 26

35 this day of, Sherri A. Romano FBN CERTIFICATE OF COMPLIANCE size The undersigned counsel of record for Respondent certifies that this type and style in this brief comply with Florida Rules of Appellate Procedure Rule Sherri A. Romano FBN: