Heard in the Court of Appeals: November 18, 2014.
The North Carolina State Bar, by David R. Johnson and Katherine Jean, for plaintiff-appellee.
Sigmon, Clark, Mackie, Hanvey & Ferrell, P.A., by Jason White, for defendant-appellant.
STROUD, Judge. Judges CALABRIA and McCULLOUGH concur.
Appeal by defendant from order of discipline entered 3 February 2014 by the North Carolina State Bar Disciplinary Hearing Commission,
No. 13 DHC 17.
Robert W. Adams (" defendant" ) appeals from an order of discipline entered by the North Carolina State Bar Disciplinary Hearing Commission (" the DHC" ). The DHC
found that defendant had mismanaged his trust account and ordered that defendant's law license be suspended. Defendant argues that (1) the DHC erred in admitting evidence of prior audits' results; (2) substantial evidence does not support the DHC's findings of fact; (3) the DHC's findings of fact do not adequately support its conclusions of law; and (4) the DHC's findings and conclusions do not adequately support its level of discipline. We affirm the DHC's order of discipline.
Defendant was licensed by the North Carolina State Bar in 1972. On or about 10 November 1991, the Grievance Committee of the State Bar reprimanded defendant for mismanagement of his trust account. On or about 5 May 1994, the Grievance Committee admonished defendant for failure to file proper accountings in an estate and failure to handle a refinancing transaction properly. On or about 9 August 1996, defendant was reprimanded for failure to respond to a grievance filed by a client. On or about 23 September 1996, pursuant to a random audit, a State Bar auditor examined defendant's trust account and informed defendant of several deficiencies in defendant's management of the account. On or about 30 April 1997, the Grievance Committee censured defendant for failure to notify his clients of a deposition, failure to appear for the deposition, and failure to inform his clients of sanctions ordered.
On or about 6 November 1997, the DHC imposed a two-year stayed suspension on defendant for his neglect of a client's case, failure to communicate with a client, and failure to respond to the grievance. On 7 June 1999, the DHC extended defendant's stayed suspension. On 10 May 2000, based upon defendant's failure to file North Carolina individual tax returns for three prior years, the DHC imposed a three-year suspension with an opportunity for defendant to apply for a stay of the remaining period of the suspension after nine months. On or about 10 October 2008, pursuant to another random audit, a State Bar auditor examined defendant's trust account and informed defendant of several deficiencies in defendant's management of the account.
From 1 January 2012 to 1 July 2012, defendant practiced law in Hickory and held client funds in his trust account. Among his areas of practice, defendant represented clients in Social Security Administration cases. Defendant (1) commingled his personal funds with client funds in the trust account, (2) failed to ensure that checks drawn on the trust account showed the client balance, (3) failed to reconcile the trust account quarterly, (4) failed to maintain a record related to the electronic transfers from the trust account showing the name of the client or other person to whom the funds belong, and (5) failed to maintain a ledger containing a record of receipts and disbursements for each person from whom and for whom funds were received and showing the current balance of funds held in the trust account for each such person. See Revised Rules of Professional Conduct of the North Carolina State Bar R. 1.15-2(a), 1.15-2(f), 1.15-2(h), 1.15-3(b)(2), 1.15-3(b)(3), 1.15-3(b)(5), and 1.15-3(d)(1) (2012).
Defendant gave Alltel Wireless (" Alltel" ), a cell phone company, bank account information for his trust account in order to pay a former client's cell phone bill. Alltel made drafts from the trust account on 30 January 2012, 16 February 2012, 13 March 2012, and 2 April 2012. On 24 May 2012, Alltel attempted to draft approximately $1,458.98 from the trust account, while the account held client funds, but the transaction was unsuccessful because the trust account held insufficient funds to cover the draft. Defendant's bank issued a notice of non-sufficient funds to the State Bar. On 25 May 2012, Alltel made a successful draft from the trust account for a much lower amount. But defendant did not misappropriate any client funds, since the attempted 24 May 2012 draft was unsuccessful.
On 10 July 2013, the State Bar filed a complaint against defendant alleging that defendant had mismanaged his trust account from 1 January 2012 to 1 July 2012. Defendant failed to file an answer or any responsive pleading. On 10 December 2013, the DHC entered a default judgment against
defendant, thus admitting the State Bar's allegations at the adjudicatory phase. On 10 January 2014, the DHC held a hearing on the disposition phase to determine the appropriate level of discipline. On 3 February 2014, in its order of discipline, the DHC imposed a four-year suspension with an opportunity for defendant to apply for a stay of the remaining period of the suspension after two years if he complies with certain conditions. On 27 February 2014, defendant gave timely notice of appeal.
II. Admission of Evidence
Defendant contends that the DHC erred in admitting the results of two prior audits, in contravention of North Carolina Rules of Evidence 404(b) and 403. N.C. Gen. Stat. § 8C-1, Rules 403, 404(b) (2013).
A. Standard of Review
We review de novo the DHC's decision to admit evidence under Rule 404(b). See State v. Beckelheimer, 366 N.C. 127, 130, 726 S.E.2d 156, 159 (2012) (discussing Rule 404(b) in the context of a criminal trial); N.C. Gen. Stat. § 8C-1, Rule 404(b). But we review the DHC's Rule 403 determination for an abuse of discretion. See Beckelheimer, 366 N.C. at 130, 726 S.E.2d at 159; N.C. Gen. Stat. § 8C-1, Rule 403. " An abuse of discretion results where the court's ruling is manifestly unsupported by reason or is so arbitrary that it could not have been the result of a reasoned decision." State v. Ward, 364 N.C. 133, 139, 694 S.E.2d 738, 742 (2010) (quotation marks omitted).
Attorney discipline cases have two phases: (1) an adjudicatory phase in which the DHC determines whether the defendant committed the misconduct; and (2) a disposition phase in which the DHC determines the appropriate discipline. N.C. State Bar v. Talford, 356 N.C. 626, 634, 576 S.E.2d 305, 311 (2003). In a hearing before the DHC, the North Carolina Rules of Evidence govern the admissibility of evidence. 27 N.C. Admin. Code § 1B.0114(t) (2014); N.C. State Bar v. Mulligan, 101 N.C.App. 524, 527, 400 S.E.2d 123, 125 (1991). Rule 404(b) provides in pertinent part:
Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake, entrapment or accident.
N.C. Gen. Stat. § 8C-1, Rule 404(b). This list of permissible purposes is not exclusive, and evidence of other crimes, wrongs, or acts is admissible so long as it is relevant to any fact or issue other than the defendant's character to act in conformity therewith. State v. Gordon, __ N.C.App. __, __, 745 S.E.2d 361, 364, disc. rev. denied, 367 N.C. 255, 749 S.E.2d 859 (2013).
Defendant argues that the prior audits' results, which indicate several deficiencies in defendant's management of his trust account, were inadmissible under Rule 404(b). Defendant asserts that this evidence was not proffered to show intent, knowledge, or absence of mistake, because, in its default judgment at the adjudicatory phase, the ...