STATE EX REL. OKLAHOMA BAR ASS'N v. TODD

LAVENDER, Justice:

Complainant, the Oklahoma Bar Association (OBA) charged respondent, Kenneth V. Todd with misconduct warranting discipline. We hold the OBA did not prove by clear and convincing evidence Todd engaged in deceitful or fraudulent conduct toward an opposing party, but the OBA did prove he engaged in deceitful or fraudulent conduct in presentation of evidence to a tribunal to obtain a default judgment.1 Such misconduct warrants a six (6) month suspension from the practice of law.

In attorney disciplinary proceedings this Court's determinations are made de novo. State ex rel. Oklahoma Bar Association v. McMillian, 770 P.2d 892, 894 (Okla. 1989). The ultimate responsibility for deciding whether misconduct has occurred and what discipline is warranted if misconduct is found rests with us in the exercise of our exclusive original jurisdiction in bar disciplinary matters. State ex rel. Oklahoma Bar Association v. Lloyd, 787 P.2d 855, 858 (Okla. 1990). Accordingly, neither the findings of fact of a Professional Responsibility Tribunal (PRT) nor its view of the evidence or credibility of witnesses are binding on us and recommendations of a PRT are merely advisory. McMillian, supra at 894. With these principles in mind we turn to a discussion of the matter before us.

Todd was charged with violating Rule 8.4(c) of the Rules of Professional Conduct, 5 O.S. 1991, Ch. 1, App. 3-A. Rule 8.4(c) provides, "[i]t is professional misconduct for a lawyer to ... engage in conduct involving dishonesty, fraud, deceit or misrepresentation []". In that all of the alleged misconduct occurred prior to July 1, 1988, the effective date of the new Rules of Professional Conduct, 5 O.S.Supp. 1988, Ch. 1, App. 3-A, Todd should have been charged under the virtually identical predecessor rule found in the former Code of Professional Responsibility, 5 O.S. 1981, Ch. 1, App. 3, DR 1-102(A)(4). As no issue is raised by Todd in regard to this apparent error on the part of the OBA in charging him and we can discern no prejudice to him in light of the fact Rule 8.4(c) contains no substantive change from the former disciplinary rule we proceed on the basis Todd was properly charged under DR 1-102(A)(4).2

The OBA and Todd entered into written stipulations concerning the issues to be tried at the PRT hearing. The stipulations were as follows:

We held in McMillian, supra, 770 P.2d at 899, DR 1-102(A)(4) is generally geared toward fraudulent conduct and, as such, bad or evil intent or its legal equivalent must be shown by clear and convincing evidence to make out a violation of the rule.3 It was, thus, incumbent on the OBA to prove by clear and convincing evidence Todd, as to one or the other or both of the specific episodes involved, had a purpose to deceive. We deal with the Oswald matter first, providing background as necessary.

On or about July 19, 19854 a judgment was entered in the District Court of Tulsa County against Kenneth Cooper in favor of Tulsa Adjustment Bureau, Inc. (Bureau) in the approximate amount of $3,500.00. In an attempt to satisfy the judgment Bureau issued a garnishment summons to Cooper's employer, McCormick & Co. (McCormick), on or about August 2. On August 8 McCormick sent a memo to Cooper advising of the garnishment and stating it would deduct 25% of his net pay to begin with his next paycheck until the judgment was paid in full. Apparently, Maryland (where McCormick's corporate offices were located) at the time allowed a continuing garnishment on wages based on one summons. Oklahoma did not, although now one may obtain a continuing wage garnishment. 12 O.S. 1991, § 1173.4. McCormick withheld $165.94 for the August 30 pay period apparently in conformity with Oklahoma law, but continued to deduct this same amount from four additional pay periods (September 13 and 27 and October 11 and 25) without having received additional garnishment process. Cooper informed Todd of the situation and in late October Todd telephoned McCormick corporate offices either to simply discuss the matter or to determine who to serve legal papers on. He was not able to talk to anyone with authority in regard to the matter and he apparently left his name, telephone number and that he was calling about the Cooper garnishment.

A petition was filed on October 30 by Todd on behalf of Cooper after the initial call. The first cause of action was against Bureau for wrongful garnishment and prayed for $497.82 actual damages and $50,000.00 punitive damages. The second cause was against Bureau and McCormick for conversion and prayed for $497.82 actual damages and $100,000.00 punitive damages. The third cause was against McCormick for wrongful failure to promote Cooper because of the garnishment matter involving Bureau and it prayed for $50,000.00 actual damages and $250,000.00 punitive damages. A fourth cause sought to enjoin Bureau and McCormick from proceeding further in any garnishment proceedings until further order of the court.

It is undisputed Oswald telephoned Todd on October 31. Other than that fact and that Todd did not inform Oswald a lawsuit had been filed the day before, the testimony was extremely conflicting as to the substance of the conversation. Oswald testified she specifically informed Todd reimbursement would be made for the four wage deductions not in compliance with Oklahoma law and that Todd specifically informed her reimbursement would settle the matter. The substance of Todd's testimony was he merely generally discussed the matter with Oswald, he told her McCormick was withholding money it was not allowed to withhold, and that she did not tell him there would be any reimbursement, but merely said she would look into the matter. Todd also testified he had no authority from Cooper to settle at the time of the October 31 conversation. Todd's testimony was basically corroborated by Cooper who testified he was present at the time of the conversation, that he had given no authority to settle and Todd did not tell Oswald the matter would be settled if reimbursement was made.5

The evidence also showed on October 31 McCormick issued a check to Cooper for $663.76 representing reimbursement for the four September and October withholdings along with a letter explaining the mistake and apologizing for any inconvenience caused to Cooper.6 Cooper received the letter and check, which he endorsed and cashed on November 5. McCormick was served with process and the petition in early November, but for some unexplained reason, not associated with any misconduct of Todd or anyone acting on his behalf, failed to file an answer.7 No further contact was had between Todd and McCormick between October 31 and November 27, the date default judgment was entered, the circumstances of which will be explained shortly. This concludes the necessary factual matters in relation to the misconduct charged against Todd in relation to the Oswald telephone episode.

In our view neither the evidence detailed above or any other contained in the record proved by clear and convincing evidence fraudulent or deceitful conduct in violation of DR 1-102(A)(4) by Todd relating to his dealings with Oswald, as representative of McCormick. In the first instance, the OBA appears to assert Todd had some duty to inform Oswald a lawsuit had been filed against McCormick the day before the conversation. We are aware of no such duty and the OBA points to no statute, disciplinary rule or anything else which would require an attorney to so inform upon pain that if he does not discipline is warranted. Although it may have been courteous we know of no mandate which required it.8

We also do not find clear and convincing evidence of purpose or intent to defraud or deceive. Surely the proof adduced before the PRT identifies no logical fraudulent purpose existing at the time of the telephone conversation. This is so given the fact Todd had filed the lawsuit the day before and he had taken proper steps to serve process on McCormick, which service was in fact accomplished a few days later. In other words, at the time of the conversation there would have been absolutely no fraudulent purpose served by either concealing the filing of the lawsuit or informing Oswald immediate reimbursement would settle the matter because at such time Todd had no way of knowing McCormick or its agents would for some unexplained reason (not of Todd's doing) fail to answer the petition. Had this unexplained event not occurred any alleged concealment or misrepresentation as to settlement would have been useless because it would have been uncovered in a matter of days without any apparent benefit to Todd or his client. Given the lack of any logical reason or purpose to defraud or deceive at the time of the phone call, coupled with Todd's unequivocal denial that he told Oswald the matter would be settled if reimbursement was made, we simply cannot find the OBA proved by clear and convincing evidence a violation of DR 1-102(A)(4) occurred based solely on Oswald's testimony and the fact reimbursement was made. We, however, view the situation concerning the hearing on the default judgment differently.

On November 27 Todd and Cooper appeared before Special District Judge Allen Klein ex parte to obtain a default judgment against McCormick for its failure to answer the petition. Neither informed Judge Klein of the reimbursement, even though the evidence clearly and convincingly showed Todd knew Cooper had received and negotiated the check representing the reimbursement prior to the hearing before Judge Klein.9 The record indicates Todd and Judge Klein questioned Cooper about the allegations in the petition and default judgment was granted against McCormick in a form drafted by Todd for $400,497.82, which amount includes the sum Todd knew had been reimbursed. In essence, the record shows Todd presented Cooper to Judge Klein and falsely indicated McCormick owed $497.82 in actual damages, when the damages had already been reimbursed.

Thereafter, Bureau was dismissed from the lawsuit and no action was taken to collect on the default judgment until December 1987, when Todd had garnishment process issued to certain McCormick customers. One paid over $18,000 into court which was withdrawn by Todd, who disbursed 60% to Cooper and kept 40% under his contingency fee arrangement with Cooper.10 Also in December 1987 McCormick filed a motion and petition to vacate the default judgment which was vacated, after hearing, by former District Judge Robert E. Caldwell by order filed May 27, 1988. The vacation was upheld on appeal by an unpublished memorandum opinion of the Court of Appeals, Division 1, Case No. 71,082, Kenneth Cooper v. Tulsa Adjustment Bureau, Inc. and McCormick & Company, Inc. filed December 26, 1989, as corrected February 16, 1990. We denied certiorari in the matter by order of June 12, 1990.

Boiled down, Todd's explanation for his failure to inform Judge Klein at the default judgment hearing about the reimbursement was he did not believe it was significant nor did he believe it to be a defense to the overall claim(s) plead in the petition against McCormick and a default judgment would have been warranted in any event as to the claim the wrongful garnishments caused Cooper to lose a promotion. Todd also appeared to assert the only money at issue here was the $497.82 and he basically argues it would have been ludicrous for him to jeopardize his license to practice law for such a little amount of money when he could have gotten a default judgment for the other portion of his claim. We believe, like the PRT did, such explanation is a fairly incredible one coming from a practicing attorney.

In the first instance, as we read the petition of respondent the $497.82 in actual damages supported a judgment of $100,000.00 in punitive damages. This is the amount of punitive damages requested in the petition in the second cause which went along with the prayer for the $497.82 actual damages. We have held it is error to render a default judgment upon a petition claiming damages without hearing evidence upon which to assess damages. Atchison, T. & S.F. Ry. Co. v. Lambert, 31 Okl. 300, 121 P. 654, 656 (1912); See also Graves v. Walters, 534 P.2d 702, 704 (Ct. App.Okla. 1975); 12 O.S. 1981, § 688 and 12 O.S.Supp. 1984, § 2008(D) [now 12 O.S. 1991, § 2008(D)] (averments in a pleading to which a responsive pleading is required, other than those as to the amount of damages, are admitted when not denied in the responsive pleading). Although there is no dispute Todd or Judge Klein himself did elicit testimony from Cooper concerning damages in the form of the asserted wrongful paycheck withholdings it is almost ludicrous for us to have to say to a member of the practicing bar that when those damages have been paid one cannot merely go before a court and get a judgment for the damages that have already been paid.11 We have further held without some actual damages there can be no recovery for punitive or exemplary damages. Moore v. Metropolitan Utilities Co., 477 P.2d 692, 694 (Okla. 1970). It is, thus, highly questionable whether Judge Klein would have awarded punitive damages in the amount of $100,000.00 had he known the actual damages prayed for in the second cause of the petition had been reimbursed to Cooper about three weeks earlier.12 Thus, the matter involved not merely a few hundred dollars, but directly involved the propriety of over $100,000.00 of the default judgment.

Todd also argued before the PRT it should be significant in this disciplinary proceeding that even without the judgment in regard to the $497.82 (and presumably the $100,000.00 punitive damages that went along with it) he still would have been entitled to a substantial judgment on his third cause in regard to loss of career opportunity in the form of a promotion. Although he may be correct that had he actually been honest with the trial court he may indeed have been entitled to a substantial default judgment on his third cause we do not believe such argument is sufficient to overcome the clear and convincing evidence shown by this record, both direct and circumstantial, that Todd engaged in purposeful deceitful conduct in presentation of the default judgment matter to Judge Klein.13 Accordingly, we hold Todd guilty of professional misconduct in violation of DR 1-102(A)(4) and we must now determine the appropriate discipline.

The primary purpose in disciplinary proceedings is to inquire into a practitioner's continued fitness to practice law in an effort to protect the interests of the public, the legal profession and the courts, not to punish the involved attorney. McMillian, supra, 770 P.2d at 899. Another purpose is to deter the respondent from similar future conduct and to act as a restraining vehicle on others who might consider committing similar acts. Id. We have also held in deciding the appropriate discipline we may look at the good character and reputation of the respondent. With these principles in mind we determine the appropriate discipline in this case is a six (6) month suspension from the practice of law.

In State ex rel. Oklahoma Bar Association v. Graham, 781 P.2d 829 (Okla. 1989) we imposed a one (1) year suspension from the practice of law for fraudulent conduct involving a tribunal and other lesser misconduct. In McMillian, supra, we imposed public censure for deceitful conduct toward a tribunal and opposing counsel, but we specifically noted in said case we were taking into consideration respondent's unblemished professional record for 15 years and other mitigating evidence in the form of numerous character witnesses. See also State ex rel. Oklahoma Bar Association v. Stubblefield, 766 P.2d 979 (Okla. 1988) (30 day suspension for intentional misrepresentations on court documents given evidence of good character and reputation). As to the instant matter we consider as mitigating evidence a statement by Judge Klein in his testimony which essentially vouched for Todd's general honesty. We also consider the testimony of former Judge Caldwell to the effect it was his view respondent was merely negligent in regard to this matter, rather than acting with any willful intent. Considering these mitigating statements and no previous conduct warranting discipline has been brought to our attention, we believe the conduct involved here falls between that found to exist in Graham, supra and McMillian, supra and a six (6) month suspension from the practice of law is warranted.14

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED by this Court Todd is suspended from the practice of law in the State of Oklahoma for a period of six (6) months from the date this opinion becomes final and he is further ordered to pay the costs of this matter in the amount of $958.10 within 90 days from the date this opinion becomes final.

HODGES, V.C.J., and HARGRAVE, ALMA WILSON, KAUGER and SUMMERS, JJ., concur.

OPALA, Chief Justice with whom WATT, J., joins, concurring in part; dissenting in part.

I concur in the court's finding that Todd engaged in fraudulent conduct when pressing the motion for default judgment; I dissent from imposition of milder-than-recommended discipline. I would visit a one-year suspension recommended by the Professional Responsibility Tribunal.

HODGES, Vice Chief Justice, concurring.

I concur with the majority opinion on the imposition of a six (6) month suspension for the respondent Todd instead of a one (1) year suspension as suggested by the dissents for the following additional factors: (1) The Professional Responsibility Tribunal's recommendation for a one year suspension was based on the finding of two counts of misconduct instead of this court's unanimous finding of misconduct in only one of two counts, (2) Judge Caldwell, the trial judge, who set aside the default judgment after an adversary hearing, testified in the disciplinary hearing below that in his opinion Respondent Todd's misconduct was a matter more of neglect rather than of willful intent and (3) there was no finding of prior misconduct.