Disciplinary Counsel v. Zumstein

[This decision has been published in Ohio Official Reports at 93 Ohio St.3d 544.]

OFFICE OF DISCIPLINARY COUNSEL v. ZUMSTEIN.

[Cite as Disciplinary Counsel v. Zumstein, 2001-Ohio-1619.]

Attorneys at law—Misconduct—Permanent disbarment—Engaging in illegal

conduct involving moral turpitude—Engaging in conduct involving

dishonesty, fraud, deceit, or misrepresentation—Engaging in conduct

prejudicial to the administration of justice—Engaging in conduct

adversely reflecting on fitness to practice law—Failing to carry out

contract for professional employment—Prejudicing or damaging client

during course of professional relationship—Commingling client funds

with personal funds—Failing to promptly deliver to client funds to which

the client is entitled.

(No. 01-750—Submitted June 20, 2001—Decided October 31, 2001.)

ON CERTIFIED REPORT by the Board of Commissioners on Grievances and

Discipline of the Supreme Court, No. 00-80.

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Per Curiam.

{¶ 1} In 1998, First American Title Insurance Company (“First American”)

began an audit of Capital Title Agency, Inc. (“Capital Title”), an Ohio corporation

that operated as a title insurance agent for First American and whose president was

respondent, R. William Zumstein of Columbus, Ohio, Attorney Registration No.

0020944.

{¶ 2} In March 1999, Tracy L. Daugherty obtained a mortgage loan from

City Mortgage Company/Washtenaw Mortgage Company to pay off his existing

mortgage with Atlantic Mortgage and Investment Corporation (“Atlantic

Mortgage”) of Jacksonville, Florida, pay off some credit card debts, and provide

funds for new windows for his house. The loan was to close at Capital Title, and

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Daugherty engaged respondent to represent him during the closing. Respondent

assured Daugherty that following the closing his existing mortgage would be paid

off by Capital Title. Although the new mortgagee transferred sufficient funds into

the escrow controlled by Capital Title, the check respondent drew on the escrow

account that was payable to Atlantic Mortgage was dishonored for insufficient

funds.

{¶ 3} Atlantic Mortgage then indicated that it was contemplating beginning

foreclosure proceedings against Daugherty, who then sued Capital Title and First

American. The suit was settled, and as part of the settlement respondent was

personally to pay $8,000 in damages to Daugherty in two $4,000 installments.

Against the express instructions of First American’s Vice-President and Ohio

manager, respondent withdrew the funds for these two checks from Capital Title’s

escrow accounts.

{¶ 4} In April, July, and August 1999, respondent caused checks from

Capital Title’s newly opened escrow account to be issued to Kim Anderson in the

amounts of $800, $1,870, and $2,000. These checks were unrelated to any real

estate transactions in which Capital Title was involved. In December 1999,

respondent wrote a check for $15,000 to Nawal K. Pandey from Capital Title’s new

escrow account unrelated to any real estate transaction in which Capital Title was

involved. In April 1999, respondent also made cash withdrawals of $6,000, $706,

and $1,294 from the new escrow account for his own benefit. He also withdrew

$4,000 from the new escrow account for his own benefit in October 1999. During

the period in question, respondent’s misuse of the Capital Title escrow accounts

resulted in more than fifty overdraft situations.

{¶ 5} The “Good Funds Law,” R.C. 1349.21(B)(5), provides that, in certain

situations applicable here, no escrow or closing agent shall accept a personal check

in excess of $1,000. Nevertheless, on March 28, 2000, respondent accepted four

separate personal checks from Carlysle W. Coleman in the amounts of $15,411.56,

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January Term, 2001

$16,339.45, $14,796.57, and $16,957.38 for deposit in the Capital Title escrow

account in connection with a real estate purchase by Coleman. All four of the

checks were dishonored for insufficient funds.

{¶ 6} In June 1998, respondent made a $14,500 loan to Sonny Yinger. The

Vice-President for First American discovered the note for this loan in Capital

Title’s records. When asked at his deposition whether he had ever loaned money

out of the Capital Title escrow account, respondent said that he had not.

{¶ 7} In February 2000, respondent prepared a deed transferring real estate

from “A-Corp., an Ohio Corporation,” to Fred M. Slade for $66,000. “A-Corp.” is

not and was not ever an Ohio corporation. Capital Title then issued checks in the

amount of $7,000 and $10,716.49 payable to “A-Corp. or Kim Anderson,” which

Kim Anderson cashed.

{¶ 8} In April 2000, respondent prepared a deed transferring real estate

from “PSI Group, Inc., a corporation organized and existing under the laws of the

state of Ohio,” to Fred Slade. The deed was executed for PSI Group by “Kim

Anderson, its President,” although PSI was not an Ohio corporation and Kim

Anderson was not its president. Earlier, in October 1999, respondent prepared a

deed transferring real estate from “PSI Group, Inc., an Ohio Corporation,” to Kim

Anderson. The deed indicated that it was executed for PSI Group by “Kim

Anderson, President.”

{¶ 9} Based on a grievance filed against respondent, Office of Disciplinary

Counsel (“relator”) began an investigation of respondent’s activities in connection

with Capital Title, which included taking respondent’s deposition. On August 14,

2000, relator filed a complaint charging the respondent with the activities outlined

above and alleged that they constituted violations of the Code of Professional

Responsibility. Respondent failed to answer, and the matter was submitted by the

Board of Commissioners on Grievances and Discipline of the Supreme Court

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(“board”) to Master Commissioner Harry W. White for ruling on relator’s motion

for default, pursuant to Gov.Bar R. V(6)(F)(2).

{¶ 10} The Master Commissioner found the facts as stated and concluded

that respondent violated DR 1-102(A)(3) (engaging in illegal conduct involving

moral turpitude), 1-102(A)(4) (a lawyer shall not engage in conduct involving

dishonesty, fraud, deceit, or misrepresentation), 1-102(A)(5) (a lawyer shall not

engage in conduct prejudicial to the administration of justice), 1-102(A)(6) (a

lawyer shall not engage in conduct adversely reflecting on the lawyer’s fitness to

practice law), 7-101(A)(2) (a lawyer shall not fail to carry out a contract for

professional employment), 7-101(A)(3) (a lawyer shall not prejudice or damage his

client during course of professional relationship), 9-102(A) (a lawyer shall not

commingle funds of a client with personal funds), and 9-102(B)(4) (a lawyer shall

promptly deliver to the client funds or property to which the client is entitled). The

Master Commissioner recommended that respondent be permanently disbarred

from the practice of law in Ohio. The board adopted the findings, conclusions, and

recommendation of the Master Commissioner.

{¶ 11} We have reviewed the record and adopt the findings, conclusions,

and recommendation of the board. As we noted in Cleveland Bar Assn. v. Belock

(1998), 82 Ohio St.3d 98, 100, 694 N.E.2d 897, 899, “The continuing public

confidence in the judicial system and the bar requires that the strictest discipline be

imposed in misappropriation cases.” Accordingly, respondent is hereby

permanently disbarred from the practice of law in Ohio. Costs are taxed to

respondent.

Judgment accordingly.

MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK and

LUNDBERG STRATTON, JJ., concur.

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January Term, 2001

Jonathan E. Coughlan, Disciplinary Counsel, and Lori J. Brown, First

Assistant Disciplinary Counsel, for relator.

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