In the Matter of the Discipline of A. Paul Schwenke, DOB: 10-12-51, ADM:
05-09-83.
Nos. 900136, 910095
SUPREME COURT OF UTAH
849 P.2d 573;
1993 Utah LEXIS 53;
208 Utah Adv. Rep. 3
March 12, 1993, Filed
SUBSEQUENT HISTORY:
[**1] Released for Publication April 8, 1993.
PRIOR HISTORY: Disciplinary Matter from the Bar
COUNSEL: Wendell K. Smith, Ralph Adams, Salt Lake City, for Utah State Bar.
A. Paul Schwenke, Salt Lake City, for himself.
JUDGES: HOWE, Hall, Stewart, Durham, Zimmerman
OPINIONBY: HOWE
OPINION:
[*574] HOWE, Associate Chief Justice:
In this
disciplinary matter, we are asked to approve the petition of the Utah State Bar to
disbar attorney A. Paul Schwenke from the
practice of law in Utah. The Bar's petition is grounded in findings and
recommendations of a
special master appointed by the Bar. For the reasons stated below, we deny the petition.
Because these proceedings were protracted over several years and involved
unrelated
disciplinary matters that were consolidated for the purpose of the
recommendation for disbarment, a rather lengthy introduction is in order.
CASE NO. F-241
Schwenke has been the subject of two separate
disciplinary matters before the Bar. In case No. F-241, Gentle Shepherd Child
Placement Services, Inc., employed Schwenke to place Samoan children. He was to secure
immigration visas and adoption documents that complied with relevant national and state
laws. Furthermore, he was to
bring
[**2] those children to the United States from Samoa. In return, Schwenke would
receive $ 5,000 for the
placement of each child. He undertook the
placement of five children, but completed only three of the adoptions. Although the
first adoption went smoothly, the second two took almost eighteen months due to
difficulties that arose during the court proceedings.
Schwenke received payment for the
placement of two more adoptions, neither of which he completed. Some of the problems
Schwenke encountered in those two cases were traceable to typical bureaucratic
complications involved in international adoptions, as well as to changes in
immigration rules for processing and securing travel visas. However, for several months
he failed to communicate with Gentle Shepherd regarding these difficulties.
Gentle Shepherd eventually completed the two adoptions through the efforts of a
social worker. Ronald Rundberg, an owner of Gentle Shepherd, then filed
a complaint with the Bar stating that an additional $ 1,200 had been expended
above the amount paid to Schwenke to complete the
[*575] adoption work. The complaint sought reimbursement of that sum.
In 1988, on the Bar's
recommendation, we placed Schwenke
[**3] on a
one-year supervised probation for neglect in failing to complete the adoptions. We
also ordered him repay the $ 1,200 before the conclusion of the
probationary period and, if
restitution was not made by that time, to show cause why he should not be
suspended from the
practice of law for thirty days, with
reinstatement
conditioned on
restitution. However, Schwenke did not make
restitution of the $ 1,200 before the end of the
one-year
probationary period.
In 1990, the Bar issued an order to show cause why further sanctions should not
be imposed on Schwenke for his
failure to comply with the terms of the 1988 order of
discipline. The original order to show cause, advising Schwenke of a February 5 hearing,
was dated
January 26, 1990, and was sent to a
post office box. Apparently, copies were also given to the constable, whose return shows that
the order to show cause was served on February 8. The February 5 hearing was
never held. Another order to show cause, this one dated February 6, 1990, set a
hearing for February 21, 1990. On both returns, the constable
correctly shows Schwenke's place of business as 165 South West Temple, Salt Lake City,
Utah, but then shows service on
[**4] A. Paul Schwenke at 221 East 300 South. Schwenke asserts that this was the
restaurant where his namesake son worked, and it is possible that the order to show cause
was served on him. In any event, Schwenke did not appear at the order to show
cause hearing.
Consequently, on the Bar's
recommendation, we
suspended Schwenke from the
practice of law for thirty days and required him to pay $ 1,200 to
bar counsel
"to be held for Mr. Ronald Rundberg" and to pay the Bar's costs. We
conditioned
reinstatement on
restitution. A copy of the order was sent to Schwenke by
certified mail and was received by a
receptionist at his business address.
CASE NO. F-281
In case No. F-281, the Bar filed a complaint against Schwenke for
unprofessional conduct involving fraud and misrepresentation. Schwenke was
charged with initiating bankruptcy proceedings on behalf of a client to prevent
foreclosure on property that Schwenke had purchased from the client. Schwenke
filed an answer to the complaint but then failed to respond to the Bar's
discovery requests. As a result of his
failure to comply, the Bar asked this court to strike the answer and impose sanctions. At that
time, we ordered that Schwenke
[**5] be
suspended from the
practice of law for one year and
conditioned
reinstatement on his completing fifteen hours of legal education, including
five hours of legal ethics. He was also ordered to reimburse the Bar for its
costs. Schwenke objected to the striking of the answer on the ground that he
had responded but the Bar lost the pleadings. Schwenke was present at the
order-to-show-cause hearing. In January of 1991, two months before the order was entered against
him, Schwenke left Utah for Samoa. The order was not mailed to him at his Salt
Lake address until March of that year. Schwenke did not return to Utah until
April of 1992.
CONSOLIDATED ORDER TO SHOW CAUSE
The
order-to-show-cause proceedings that bring the instant matter before us took place in the summer
of 1992. In F-241, we asked Schwenke to show cause why further sanctions
should not be imposed for his continued
practice of law during the
thirty-day
suspension and for his failure to make
restitution and pay costs as ordered. In F-281, we asked Schwenke to show cause why further sanctions should not be
imposed for his
failure to comply with rule XVIII(a) of the Procedures of
Discipline of the Utah State Bar following
[**6] the
one-year
suspension beginning in 1991. Schwenke appeared at the
order-to-show-cause hearing to present his defenses. The
special master thereafter recommended that Schwenke be disbarred.
[*576] STANDARD OF REVIEW
We begin our analysis with the applicable standard of review. We treat factual
findings by the
special master much the same as findings of administrative agencies and sustain them so long
as they are supported by substantial evidence.
Recommendations for
discipline are not binding on this court, which alone has the power to
disbar attorneys. Procedures of
Discipline R. VII(a). We reject unreasonable
recommendations; we accept and approve reasonable
recommendations. See
In Re Calder, 795 P.2d 656, 657 (Utah 1990).
In this case, the
findings of the
special master pose some problems in that they confuse the dates of the
disciplinary proceedings, discuss rules of
discipline applicable to some violations in the context of the wrong proceeding, and in
general, afford too little attention to the chronology of Schwenke's problems.
We acknowledge that the parties appear to have been of little help to the
master in sorting things out. The result,
[**7] however, is that the findings lack the evidentiary support needed to be
sustained. We are therefore compelled to resort to the record in each
proceeding.
ANALYSIS
Our decision to deny the Bar's
recommendation of disbarment is driven by two primary considerations, one procedural and the
other substantive. We address each in turn.
We begin with the Procedures of
Discipline of the Utah State Bar. Proceedings on formal committee complaints are
governed by rule XI; the
disciplinary hearing before the board is governed by rule XII. In F-241, Schwenke opposed
the 1990 contempt charge on the basis that there was
no
personal service of the
order-to-show-cause
notice and the
suspension order. The
special master responded that under rule XI(b) and (h),
personal service is not required:
"Service shall be made personally upon the attorney in question or by registered
or
certified mail to the
last known address as shown by the official roster of attorneys of the Bar." Rule XI(b). Even under these lenient requirements, however, the Bar's service
was deficient. The
order-to-show-cause
notice in F-241 was mailed to a
post office box, not to Schwenke's
last known business address. The
discipline
[**8] order, although showing the proper business address, was served at a
restaurant which employed Schwenke's namesake son. In addition, rule XII(d) requires
personal attendance by an attorney at
disciplinary hearings. Schwenke was not
correctly served, nor was he
present at the F-241 hearing that resulted in an order of a
thirty-day
suspension, with
reinstatement
conditioned upon
restitution of $ 1,200.
We have grave concern about the irregularities in these proceedings. The
notice of order to show cause was not served as required by the rules, and the order
of
discipline was imposed upon Schwenke in his absence. Significant licensing procedures
are in place to assure that only qualified attorneys are admitted to the
practice of law in this state. We think that
suspension and
disbarment proceedings call for adherence to minimum requirements of procedural due process,
including
notice of a hearing and
notice that the attorney's license has been restricted or withdrawn. We therefore
hold that service by certified or registered mail must be on the attorney
personally and cannot be accomplished by delivery to a common-area
receptionist at the address of the attorney's office.
[**9] Such delivery does not amount to constructive
notice. Nothing in the
record or in the findings disputes Schwenke's claim that the signature on the
return receipt was not that of his personal agent. We acknowledge that actual
personal service will often be required when service by mail is ineffectual. However, in
suspension or
disbarment proceedings, actual
notice is essential.
The
special master also found that Schwenke had violated rule XVIII(a). This rule requires an
attorney
suspended for more than six months to notify clients, co-counsel, and opposing counsel
of the
suspension; to deliver records and refund
[*577] fees; and to file proof with this court within forty days after
suspension that those acts have been completed. Under the rule, in F-281 Schwenke would
have had to file the required proof by May of 1991, which he failed to do. He
left this state in January of 1991 and did not return until April of 1992. On
his return, he complied with the requirements of the rule though the compliance
was untimely. We agree with the
special master that
Schwenke violated the rule, but that violation, standing alone, is not
sufficient grounds to
disbar Schwenke from the
practice of law.
[**10] Schwenke did not practice law during the year of
suspension because he had gone to his native Samoa, and he did comply with the
substantive mandate of the
suspension order.
We next address Schwenke's argument that the Bar may not hold him in contempt
for failing to repay a debt that was
discharged in bankruptcy. He asserts that the order to show cause in F-241 was invalid
because it was made after his debt to Gentle Shepherd had been
discharged in bankruptcy.
The
special master found that the
"discharge of debtors" that Schwenke offered as evidence showed Gentle Shepherd as a named creditor
but that Schwenke did not name Mr. or Mrs. Rundberg as creditors. The master
therefore rejected Schwenke's argument. However, a review of the record shows
that Schwenke acted properly. He
correctly listed the $ 1,200 debt
in his bankruptcy schedule of creditors as owed to Gentle Shepherd, his client.
It is true that his correspondence refers to Gaye Rundberg, Ron Rundberg, and
Gentle Shepherd interchangeably. In addition, the formal complaint refers to
Gaye Rundberg of Gentle Shepherd, and the order of
suspension requires payment to Ronald Rundberg. Nonetheless, the agreement signed by
[**11] Schwenke and his client was executed by Gentle Shepherd, and all checks paid
to Schwenke were issued by Gentle Shepherd. Gentle Shepherd therefore was
Schwenke's creditor.
Schwenke argues that the Bar may not refuse to reinstate him for failure to pay
a debt that was
discharged in bankruptcy. He relies on sections 524(a)(2) and 525 of 11 U.S.C.A.
Relevant portions of those statutes read as follows:
§ 524. Effect of discharge
(a) A discharge in a case under this title--
. . . .
(2) operates as an injunction against the commencement or continuation of an
action, the employment of process, or any act, to collect, recover or offset
any such debt as a personal liability of the debtor, or from property of the
debtor, whether or not discharge of such debt is waived. . . .
§ 525. Protection against discriminatory treatment
. . . [A] governmental unit may not deny, revoke, suspend, or refuse to renew a
license . . . of . . . a person that is or has been a debtor under [the
Bankruptcy Act] . . . solely because such bankrupt or debtor . . . has not paid a debt . . .
that was
discharged under the
Bankruptcy Act.
11 U.S.C.A. §§ 524(a)(2), 525
[**12] (1984).
Schwenke also relies on a section in the Historical and Statutory Notes that
states,
"This section permits further development to prohibit actions by governmental or
quasi-governmental organizations that perform licensing functions, such as a
State bar association . . . that can seriously affect the debtors' livelihood
or fresh start. . . ."
11 U.S.C.A. § 525 (1984) (emphasis added).
We agree with Schwenke that his
reinstatement may not be
conditioned upon his payment of the $ 1,200 obligation to Gentle Shepherd that was
discharged in bankruptcy. In our opinion, section 525 of 11 U.S.C.A. does not permit us
to do that.
We conclude that the Bar's request to have Schwenke disbarred is
disproportionate to the misconduct thus far shown and therefore deny the Bar's
petition. We direct the Bar to reinstate Schwenke forthwith.
---
WE CONCUR:
Gordon R. Hall, Chief Justice
I. Daniel Stewart, Justice
Christine M. Durham, Justice
Michael D. Zimmerman, Justice
