Disciplinary Counsel v. Terbeek

[Cite as Disciplinary Counsel v. Terbeek, 135 Ohio St.3d 458, 2013-Ohio-1912.]

DISCIPLINARY COUNSEL v. TERBEEK.

[Cite as Disciplinary Counsel v. Terbeek, 135 Ohio St.3d 458,

2013-Ohio-1912.]

Attorneys—Misconduct—Misappropriation of funds from client trust account—

Permanent disbarment.

(No. 2012-2056—Submitted February 6, 2013—Decided May 16, 2013.)

ON CERTIFIED REPORT by the Board of Commissioners on Grievances and

Discipline of the Supreme Court, No. 12-047.

____________________

Per Curiam.

{¶ 1} Respondent, Jeffrey Lee Terbeek of Columbus, Ohio, Attorney

Registration No. 0033227, was admitted to the practice of law in Ohio in 1973.

{¶ 2} In June 2012, a probable-cause panel of the Board of

Commissioners on Grievances and Discipline certified a complaint filed by

relator, disciplinary counsel, against Terbeek. The complaint alleged that he had

misappropriated funds that he was obligated to hold in escrow for the individual

who sold a business to his client, that he had admitted that he used those funds for

personal purposes, and that he had failed to disclose his misappropriation in his

response to a complaint for breach of contract filed by the seller.

{¶ 3} Although the board caused relator’s complaint to be served on

Terbeek by certified mail, he did not answer it or otherwise appear in this

disciplinary proceeding. Therefore, relator moved for default.

{¶ 4} A master commissioner appointed by the board determined that the

materials submitted in support of relator’s default motion were sufficient, found

by clear and convincing evidence that Terbeek committed the charged

misconduct, and recommended that he be permanently disbarred from the practice

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of law in Ohio. The board adopted the master commissioner’s report in its

entirety. On December 19, 2012, this court issued an order to show cause why the

court should not confirm the board’s recommendation and enter an order of

discipline. No objections have been filed.

{¶ 5} We adopt the board’s findings of fact and misconduct, and having

considered the aggravating and mitigating factors present as well as the sanctions

imposed for comparable misconduct, we agree that permanent disbarment is the

appropriate sanction.

Misconduct

{¶ 6} Terbeek represented Diep Nguyen Vo in the purchase of a tailoring

business from Eugene Pearson in 1994. Diep Nguyen Vo agreed to pay $15,000

for the trade name, equipment, fixtures, and inventory of the business. Because

there were existing liens against the business, the agreement required Terbeek to

hold the entire $15,000 purchase price in escrow until Pearson satisfied the liens.

{¶ 7} Terbeek held the funds in escrow in his client trust account from

approximately December 1994 until December 2001, when he began to withdraw

the funds for his personal use. He withdrew the majority of the funds in two

checks issued to himself—the first for $2,500 on December 29, 2001, and the

second for $12,000 on May 17, 2002. At an investigative deposition conducted

prior to relator’s filing of the disciplinary complaint, Terbeek admitted that he

withdrew the remaining $500 for his personal use, although he did not have

records to document the transaction.

{¶ 8} In a July 6, 2010 letter to Pearson’s counsel, Terbeek stated that

although he could not recall the specific issues surrounding the sale of the

tailoring business, he remembered that the funds were to be held in escrow until

the outstanding tax lien was satisfied. He also stated that the reason for holding

the funds “seems to be still in effect.”

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{¶ 9} In November 2010, Pearson filed a breach-of-contract action

against Terbeek and against a nonparty to the contract, Vuong Hai Vo, based on

the failure to forward the purchase money to him. It is not clear from the record

why Pearson sued Vuong Hai Vo rather than Diep Nguyen Vo, who was the

contracting party. In his answer, Terbeek stated that he had withheld the funds

pending the satisfaction of the liens, which had not yet been paid. Although

Pearson served two separate discovery requests and twice moved the court to

compel discovery and to impose sanctions, Terbeek did not respond. Neither

Terbeek nor Vuong Hai Vo appeared at the pretrial hearing, at which the court

granted Pearson’s motions to compel and set the matter for a sanctions hearing to

be held on the same date as the trial.

{¶ 10} When Terbeek and Vuong Hai Vo failed to appear at the trial,

Pearson voluntarily dismissed the complaint against Vuong Hai Vo and the court

entered a judgment against Terbeek for $15,000, plus interest, attorney fees of

$2,500, and sanctions of $750. Although Terbeek then failed to appear for a

scheduled judgment-debtor examination, he did appear at a January 2012 show-

cause hearing, where he admitted that he had taken the funds held in escrow for

his personal use. Pearson averred that as of August 6, 2012, Terbeek had not paid

any portion of the judgment.

{¶ 11} The board found that Terbeek’s conduct that occurred before

February 1, 2007, violated DR 1-102(A)(4) (prohibiting a lawyer from engaging

in conduct involving dishonesty, fraud, deceit, or misrepresentation), 1-102(A)(6)

(prohibiting a lawyer from engaging in conduct that adversely reflects on the

lawyer’s fitness to practice law), and 9-102(A)(2) (requiring funds belonging in

part to a client and in part to a lawyer, either presently or potentially, to be

deposited in a client trust account and permitting the lawyer to withdraw the

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undisputed portion belonging to him or her).1 The board also found that his

conduct on and after February 1, 2007, violated Prof.Cond.R. 1.15 (requiring a

lawyer to hold funds belonging to a client or third party in a client trust account

separate from his own property), 8.4(c) (prohibiting a lawyer from engaging in

conduct involving dishonesty, fraud, deceit, or misrepresentation), 8.4(d)

(prohibiting a lawyer from engaging in conduct that is prejudicial to the

administration of justice), and 8.4(h) (prohibiting a lawyer from engaging in

conduct that adversely reflects on the lawyer’s fitness to practice law).

{¶ 12} We adopt these findings of fact and misconduct.

Sanction

{¶ 13} When imposing sanctions for attorney misconduct, we consider

relevant factors, including the ethical duties that the lawyer violated and the

sanctions imposed in similar cases. Stark Cty. Bar Assn. v. Buttacavoli, 96 Ohio

St.3d 424, 2002-Ohio-4743, 775 N.E.2d 818, ¶ 16. In making a final

determination, we also weigh evidence of the aggravating and mitigating factors

listed in BCGD Proc.Reg. 10(B). Disciplinary Counsel v. Broeren, 115 Ohio

St.3d 473, 2007-Ohio-5251, 875 N.E.2d 935, ¶ 21.

{¶ 14} In this case, Terbeek misappropriated funds that he was obligated

to hold in escrow for a third party and used them for personal purposes. When

confronted by that third party about the status of those funds, he advised that the

condition precedent for their release had not been satisfied. But while that

statement may have been true, it also effectively concealed the fact that Terbeek

had already misappropriated the funds. In addition to this misappropriation and

misrepresentation, Terbeek failed to provide requested discovery, failed to appear

1. Because Terbeek’s misconduct occurred both before and after the adoption of the Rules of

Professional Conduct on February 1, 2007, relator charged him under the applicable rules of both

the former Code of Professional Responsibility and the current Rules of Professional Conduct. To

the extent that both the former and current rules are cited for the same acts, the allegations

comprise a single continuing ethical violation. Disciplinary Counsel v. Freeman, 119 Ohio St.3d

330, 2008-Ohio-3836, 894 N.E.2d 31, ¶ 1, fn. 1.

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at scheduled court hearings, and failed to respond to the disciplinary complaint

filed against him.

{¶ 15} The board found that three of the aggravating factors identified in

BCGD Proc.Reg. 10(B)(1) are present—a dishonest or selfish motive, lack of

cooperation in the disciplinary process, and the failure to make restitution. See

BCGD Proc.Reg. 10(B)(1)(b), (e), and (i). The only evident mitigating factor is

the absence of a prior disciplinary record. See BCGD Proc.Reg. 10(B)(2)(a).

{¶ 16} Recognizing that the misappropriation of client funds carries a

“presumptive sanction of disbarment,” Cleveland Bar Assn. v. Dixon, 95 Ohio

St.3d 490, 2002-Ohio-2490, 769 N.E.2d 816, ¶ 15, and citing several cases in

which we have imposed that ultimate sanction for comparable misappropriation

offenses, the board recommends that we permanently disbar Terbeek. See Greene

Cty. Bar Assn. v. Saunders, 132 Ohio St.3d 29, 2012-Ohio-1651, 968 N.E.2d 470

(permanently disbarring an attorney who converted more than $40,000 that his

client had entrusted to him to pay taxes due on her mother’s estate, neglected

other client matters, and failed to cooperate in the resulting disciplinary

investigation); Cleveland Metro. Bar Assn. v. Freeman, 128 Ohio St.3d 421,

2011-Ohio-1483, 945 N.E.2d 1034 (permanently disbarring an attorney who

misappropriated client funds, engaged in multiple instances of neglect, and failed

to cooperate in the ensuing disciplinary investigation); Disciplinary Counsel v.

Zumstein, 93 Ohio St.3d 544, 757 N.E.2d 327 (2001) (permanently disbarring an

attorney who misappropriated funds from the escrow account of a title agency,

causing checks issued to the agency’s clients to be dishonored).

{¶ 17} Terbeek did not object to the board’s recommendation. After the

deadline for filing objections had passed, however, he tendered his application for

retirement or resignation to the Office of Attorney Services. In re Retirement or

Resignation of Terbeek, case No. 2013-0069. We have stated:

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Gov.Bar R. VI(6)(C) permits lawyers who are the subject

of disciplinary proceedings to resign from the practice of law with

the designation “resigned with disciplinary action pending.” This

rule does not exist to allow lawyers to exhaust the participants and

procedures of the disciplinary system in hope of ultimately evading

the recommended sanction. Lawyers resorting to resignation

during disciplinary proceedings should therefore resign at the

beginning of the proceedings. This immediately removes the

lawyer from the practice of law, thereby protecting the public and

sparing the disciplinary process the time and expense of the

proceedings. Rarely will this court accept a resignation tendered at

the end of the proceedings, when the benefit to the public and the

disciplinary process no longer remains.

Disciplinary Counsel v. Lentes, 120 Ohio St.3d 431, 2008-Ohio-6355, 900 N.E.2d

167, ¶ 6, citing Akron Bar Assn. v. Holder, 112 Ohio St.3d 90, 2006-Ohio-6506,

858 N.E.2d 356.

{¶ 18} Terbeek waited until his disciplinary proceedings were almost

complete before tendering his application for resignation. At this late stage of the

proceedings, the public will not benefit from his resignation. Therefore, we find

that he has forfeited his opportunity to resign. See Lentes at ¶ 5. And in the

absence of mitigating evidence that would warrant a deviation from the

presumptive sanction of permanent disbarment, we agree that this ultimate

sanction is appropriate here.

{¶ 19} Accordingly, Jeffrey Lee Terbeek is permanently disbarred from

the practice of law in Ohio. Costs are taxed to Terbeek.

Judgment accordingly.

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O’CONNOR, C.J., and PFEIFER, O’DONNELL, LANZINGER, KENNEDY,

FRENCH, and O’NEILL, JJ., concur.

____________________

Jonathan E. Coughlan, Disciplinary Counsel, and Heather Hissom

Coglianese, Assistant Disciplinary Counsel, for relator.

________________________

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