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In re Farris

Supreme Court of Missouri, En Banc

September 8, 2015

In re: Eric Alexander Farris, Respondent

Page 550

Editorial Note:

Not Final until expiration of the rehearing period. See MO R RCP Rule 84.16 regarding unpublished opinions.

The chief disciplinary counsel was represented by Chief Disciplinary Counsel Alan D. Pratzel and Sam S. Phillips of the chief disciplinary counsel's office in Jefferson City, special representative Randee S. Stemmons, an attorney in Mt. Vernon.

Farris, of Branson, represented himself.

Paul C. Wilson, Judge. Breckenridge, C.J., Fischer and Russell, JJ., concur; Draper, J., dissents in separate opinion filed; Stith and Teitelman, JJ., concur in opinion of Draper, J.

OPINION

Paul C. Wilson, Judge

Page 551

ORIGINAL DISCIPLINARY PROCEEDING

The Office of Chief Disciplinary Counsel (" OCDC" ) filed an Information in two counts charging Respondent Eric Farris (" Farris" ) with various violations of the Rules of Professional Responsibility (the " Rules" ).[1] The Advisory Committee of the Supreme Court of Missouri appointed a disciplinary hearing panel (the " DHP" ) to hear the case. Following a hearing, the DHP found that Farris committed numerous instances of misconduct under the Rules, including misappropriation of client funds, and recommended that Farris be suspended indefinitely with no leave to apply for reinstatement for six months.

Both Farris and the OCDC disagree with the DHP's decision. Farris maintains that he committed no wrongdoing but, if he is to be disciplined, argues that he should be given a stayed suspension and a term of probation. Conversely, the OCDC agrees with the DHP's findings but argues that the proposed discipline is insufficient and that Farris should be disbarred.

After a de novo review of the record, the Court finds that Farris committed the violations alleged in the Information and orders that he be disbarred.

I. The Charges

The two counts in the Information focus on Farris' representation of clients in two cases. The facts relating to these representations are summarized below.

A. Count I -- Client A[2]

In June 2005, Client A hired Farris to represent her in a personal injury action. The case was settled for $197,500, and the check was deposited into Farris' trust account in September 2010. Under a written contingent fee agreement, Farris was entitled to 40 percent of Client A's recovery. Client A was entitled to the remainder (i.e., $118,500), less expenses.

Page 552

Prior to the settlement, the hospital that treated Client A's injuries filed a notice of lien in the amount of $114,604.31. Client A also owed other medical providers in relation to her injuries. As a result, Farris told Client A he would keep her share of the settlement in his trust account and use it to pay the hospital and her other medical creditors. However, Farris told Client A he would negotiate with these creditors to see if they would accept less than the full amount of their bills. If so, Farris told Client A he would distribute the savings to her.

Beginning in November 2010, Client A called Farris many times in an effort to find out when she would receive her share of the settlement. Finally, in January 2011, Farris sent Client A a $50,000 check from his trust account. This check stated that it was for " Client's Partial Recovery." Farris did not tell Client A whether he had paid any of her medical bills and did not tell her what negotiations he had had with those providers. Over the next nine months, Client A tried frequently to contact Farris about the balance of her settlement. Her requests were ignored or prompted only vague replies.

On October 21, 2011, Farris sent Client A a second check from his trust account. This check was in the amount of $31,756.11. Farris provided no explanation for the amount of the check and no information concerning the status of his negotiations with the hospital or the other medical creditors. When Client A tried to deposit this check, however, it was returned due to insufficient funds. Client A immediately sought an explanation from Farris. After several calls and one cancelled meeting, Client A succeeded in meeting with Farris and his then-wife on November 15, 2011, to discuss why this check bounced.

At the November 15 meeting, Farris provided Client A with a summary of how her settlement proceeds had been distributed. This summary shows the total amount of the settlement ($197,500), the amount of Farris' fee ($79,000), the expenses paid from Client A's share ($2,139.58), and the amount of Client A's initial disbursement ($50,000). The remainder of Client A's share, therefore, was $66,360.42.

The summary Farris gave to Client A also showed that the total amount of her " Medical Bills" was $66,360.42. Farris told Client A that, because all of the remaining funds from the settlement had been paid to Skaggs Hospital " in full satisfaction and accord" of her bill, there was nothing left to distribute to her. Client A asked Farris to confirm that the hospital had been paid in full. Farris reassured her and told her there was nothing to worry about.[3]

Farris did not explain -- in November 2011 or at any time since -- why he decided to send Client A this trust account check for $31,756.11. He was supposed to be holding the remainder of Client A's settlement to satisfy the claim of the hospital and Client A's other medical creditors. If the hospital and the remainder of Client A's providers had agreed to settle all of her bills for a total of $34,604.31, Farris would have been justified -- in fact, bound -- to send Client A a check for the

Page 553

$31,756.11 balance of her settlement. Farris knew that this explanation would be untrue, however, and never offered any other.

Instead of explaining why he sent Client A a second trust account check for such an odd amount, Farris focused solely on trying to explain why that check bounced. Farris stressed -- to Client A and, later, to the OCDC -- that he had fulfilled his obligation to Client A by sending the remaining settlement funds (i.e., $66,360.42) to Skaggs Hospital in " full satisfaction and accord" of Client A's bill. Farris insists that the only reason his (unexplained) trust account check to Client A was returned for insufficient funds is that he sent it to Client A before learning that his wife had sent the $66,360.42 check to the hospital.

The DHP characterized this " explanation" as " bordering on the disingenuous." DHP Decision at p. 15. That characterization is generous because Farris' explanation is illogical, inconsistent and demonstrably false. Despite Farris' claims, the timing of the two checks was not the cause of the problem. If Farris knew he had gotten the hospital to agree to accept $66,360.42 as full payment of Client A's debt, then he also knew there was nothing left of the settlement proceeds to send to Client A -- and certainly not enough to cover the check for $31,756.11 he sent her.

But this is not what happened, and Farris knew it. He knew that the hospital never agreed with him to accept this sum in satisfaction of Client A's debt because he knew he had never had any discussions (let alone agreements) with the hospital on that subject or any other. Accordingly, Farris knew he had no justification for sending Client A any more of the settlement proceeds and no basis for telling Client A that he had " taken care" of her hospital bill.

Not only was Farris' explanation to Client A and to the OCDC illogical and inconsistent, the evidence also showed that it was false. In an effort to bolster his explanation that the trust fund check to Client A bounced solely because the entire balance of the settlement had been paid to Skaggs Hospital, Farris produced to the OCDC a photocopy of that $66,360.42 check. Upon investigation, however, the OCDC learned that the hospital never received this check and, therefore, never presented it for payment.

Because Farris never sent the $66,360.42 check to the hospital and the hospital never presented it for payment, that check played no role in causing Client A's check to bounce. Instead, the evidence showed that the check bounced because -- by November 2011 -- all of the money Farris was supposed to be holding in his trust account for Client A and her medical creditors was gone. It had been transferred to Farris' office account and spent for his benefit.

Farris lied to cover up this misappropriation. When Client A asked Farris at the November 15, 2011, meeting to confirm that her hospital bill had been paid in full, he lied and told her she did not need to worry about it. In truth, Farris never paid any of this debt. So, at the moment Farris assured her that she no longer needed to worry about her hospital bill, Client A still owed the hospital more than $106,000. By then, however, there was no money left from her settlement to help pay it.

To summarize, after deducting his reduced fee ($64,000), expenses ($2,139.58), and payments to Client A ($65,000),[4] Farris

Page 554

held $66,360.42 in his trust account for the benefit of Client A and her medical creditors. They never received any of this money. Instead, all (or nearly all) of this $66,360.42 was transferred to Farris' office account, where it was used to pay his personal and business expenses.[5] The available evidence shows that Farris knew all of this by November 2011. To date, he has not paid or promised to pay any of this money to its rightful owners.

B. Count II -- Client B[6]

When Farris' trust account check to Client A bounced in October 2011, the bank automatically notified the OCDC under Rule 4-1.15(g)[7] and related regulations adopted by the Advisory Committee. The OCDC conducted an audit and learned that Farris not only had misappropriated funds from Client A's settlement, but he also had misappropriated settlement proceeds belonging to Client B under nearly identical circumstances.

In September 2010, Client B settled their personal injury claims for $90,500, which was deposited in Farris' trust account. After deducting Farris' fee ($30,000) and expenses ($773.70), Client B was entitled to the remaining $59,726.30. Like Client A, however, Client B owed various medical creditors in connection with their injuries. The total of their combined bills was $27,132.20. No liens were filed, but the terms of Client B's settlement required that their medical providers be paid from the settlement proceeds. Farris agreed to indemnify the defendant's insurer if this was not done.

Farris wrote Client B a check from his trust account for $32,594.10 and told Client B he would use the remaining settlement funds (i.e., $27,132.20) to satisfy their medical providers. As he did with Client A, Farris promised Client B he would try to negotiate discounts with these providers. To the extent he succeeded, Farris told Client B he would distribute the savings to them.

Farris never paid any of Client B's medical bills, nor did he pay these funds to Client B. Instead, nearly all of the $27,132.20 that he was supposed to be holding in trust for Client B was transferred to Farris' office account and spent. The available evidence shows that Farris knew of this since November 2011. To date, he has not paid or promised to pay any of this money to its rightful owners.

II. The DHP Findings and Conclusions

The DHP found that Farris committed the Rule violations alleged in the Information. The specific violations and pertinent portions of the DHP's decision are set forth below:

(1) Farris violated Rule 4-1.4 by failing promptly to comply with Client A's reasonable requests for information. The DHP found:

Page 555

Respondent failed to comply with [Client A's] reasonable requests for information. [Client A] testified that she contacted Respondent many times requesting status reports. Respondent failed to comply with these requests.
After Respondent issued a trust account check to [Client A] for $31,756.11, and the check was returned marked " insufficient funds," [Client A] tried to contact Respondent several times unsuccessfully before Respondent would meet with her. The Panel believes the Respondent knew or should have known that he was dealing with the client improperly by failing to adequately communicate with her. The failure to communicate resulted in a two year delay from the time [Client A] should have received information and was instead receiving excuses from Respondent. In that time there was not sufficient money in Respondent's trust account to pay the obligations on behalf of [Client A].

DHP Decision at pp. 9-10 (citations omitted).

(2) Farris violated Rule 4-1.15(i)[8] by failing promptly to deliver to Client A (or her medical creditors) and to Client B (or their medical creditors) the settlement funds to which they were entitled. Regarding Client A, the DHP found:

As to Count I, Respondent failed to promptly deliver to [Client A] or third person medical providers funds that she or third person medical providers were entitled to receive. Respondent told [Client A] he would take care of the medical bills but did not pay them. By the date of the hearing, Respondent still could not account for the money that was otherwise due to [Client A] or her third party medical providers.
... The Panel believes that Respondent knowingly failed to maintain funds in his trust account to pay medical bills of [Client A]. He knowingly failed to negotiate with the health care providers. The money he kept in his trust account to pay the health care providers of [Client A] disappeared. It was not paid to [Client A] or to her health care providers.

DHP Decision at p. 10. Regarding Client B, the DHP found:

Particular note must be made about Respondent's own Exhibit D, page 24, which was [Client B's] " Personal Injury Settlement Distribution Worksheet." It notes in the bottom starred paragraph that Respondent was withholding $11,847.41[9] in his trust account in order to negotiate and pay outstanding medical bills, and after doing so, " a Final Distribution Worksheet authorizing payment of said negotiated amount and the savings from said negotiation will be paid over to" [Client B]. Such was not done as promised by Respondent. Nonetheless he closed his file and destroyed file documents. No excuse or explanation was offered for this failure to complete

Page 556

the job the clients hired him to do.

DHP Decision at p. 11.

(3) Farris violated Rule 4-8.4(c) by engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation in his representation of Client A and Client B. The DHP found:

As to Count I, Respondent engaged in conduct involving dishonesty, fraud, deceit or misrepresentation by continuing to produce a series of various excuses, rather than valid explanations for his failure to account for the missing funds. He also produced a check to Skaggs Hospital on his trust account and claimed that he attempted to pay [Client A's] hospital lien. In fact the check was never delivered to Skaggs or presented for payment.
... As to Count II, the Panel believes that Respondent's conduct regarding [Client B] was dishonest or fraudulent. It does not appear that he attempted to negotiate with the medical providers. The money owed to them, or to [Client B], disappeared from the trust account.

DHP Decision at p. 12

(4) Farris violated Rule 4-8.1(c) by failing to comply with OCDC's requests for complete copies of Farris' expense receipts and communications with Client A's medical creditors. The DHP found:

The disciplinary authority requested that Respondent provide a complete copy of his expenses, receipts and communications with Skaggs Hospital regarding the [Client A] matter. Similar requests were made regarding the [Client B] matter. Respondent failed to comply with the requests and never provided the information sought.... Respondent has a duty to respond to the disciplinary authority promptly and completely. Respondent failed in that duty. He was asked to provide documentation from his file to the disciplinary authority and failed to do so. Respondent was asked to provide documentation regarding his communication with [Client A's] and [Client B's] medical providers and failed to do so.

DHP Decision at pp. 12-13.

(5) Farris violated Rule 4-1.15(m)[10] by failing to maintain the files from Client A's and Client B's representations for the required length of time. The DHP found:

The disciplinary authority requested information from the [Client A] file and the [Client B] file. Respondent stated he was unable to comply because he could not locate the file. Respondent failed to maintain the files and supporting documents as required. At the hearing, Respondent was not able to explain why the files could not be located. ...

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