Board of Overseers of the Bar v. Michael S. Haenn, Esq.
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Docket No.: GCF No. 09-380
Issued by: Grievance Commission
Date: December 29, 2011
Respondent: Michael S. Haenn, Esq.
Bar Number: 002051
Disposition/Conduct: Prejudicial to the Administration of Justice
STIPULATED REPORT OF FINDINGS AND ORDER OF PANEL D OF THE GRIEVANCE COMMISSION
On December 29, 2011, with due notice, Panel D of the Grievance Commission conducted a public disciplinary hearing pursuant to Maine Bar Rule 7.1(e)(2)(E), concerning misconduct by the Respondent, Michael S. Haenn, Esq. (Haenn) This disciplinary proceeding had been commenced by the filing of a Disciplinary Petition by the Board of Overseers of the Bar (the Board) on August 19, 2010.
At the hearing, Attorney Haenn appeared pro se and the Board was represented by Assistant Bar Counsel Jacqueline L.L. Gomes. Complainant Robert M.A. Nadeau, Esq. (Nadeau) was also present and addressed the Panel. Prior to the disciplinary proceeding, the parties had submitted, and Nadeau had been provided with a copy of a stipulated, proposed sanction Report for the Grievance Commission Panel’s review and consideration.
Having reviewed the agreed, proposed findings as presented by counsel, the Panel makes the following disposition:
Respondent Michael S. Haenn, Esq. (Haenn) of Bangor, Maine has been at all times relevant hereto an attorney duly admitted to and engaging in the practice of law in the State of Maine and subject to the Maine Bar Rules and the Maine Rules of Professional Conduct. Haenn was admitted to the Maine Bar in 1979 and is currently a sole practioner.
On or about October 5, 2007, Haenn filed a suit to collect on a defaulted loan that Attorney Robert M. A. Nadeau’s law firm, Nadeau & Associates (N&A), had with Ocean National Bank (ONB). In that matter, which was docketed as CV-07-156 (CV-07-156) at the York District Court, Haenn asserted that two N&A trust accounts were subject to a security agreement N&A had executed to secure the loan. Account #33004419 (IOLTA) had been opened at ONB as a “Maine Bar Foundation IOLTA,” and account #33023022 (RE Trust) had been opened as a “Real Estate Account.”
On or about February 7, 2008, Nadeau filed a Chapter 7 Bankruptcy on behalf of N&A. The trust accounts were listed on Schedule B of the Bankruptcy Petition (Petition) and described as containing funds that belonged to clients. According to the Petition, certain funds in the RE Trust account were being held at the time of the filing by ONB without N&A’s permission. When ONB received notice of the N&A bankruptcy, it automatically froze both trust accounts so the Bankruptcy Trustee could establish if any funds belonged to the Bankruptcy Estate. The collection case was stayed during administration of the Bankruptcy.
Nadeau requested that Haenn authorize the release of funds totaling $5920.64 held in escrow in the N&A RE Trust account, as well as the aggregate funds being held in both trust accounts. A Superior Court Order dated February 7, 2008 had directed N&A to disburse $2470.13 from those escrowed funds to N&A and the balance of $3450.51 to a former client. N&A’s Bankruptcy was filed before Nadeau received notice of that Order and he was unable to withdraw funds from the RE Trust account to comply with it.
Despite the fact that Haenn’s client possessed the original trust account records, Haenn insisted that Nadeau prove the account balances on the date(s) the accounts were encumbered. Nadeau was initially unsure of the balances due to his confusion about when each account had been curtailed and how much the bank had subsequently withdrawn for fees. However, he calculated with reasonable certainty that the IOLTA balance had been $15,822.79 and the RE Trust account balance had been $6,427.18. Nadeau was unable to negotiate release of the funds with Haenn and, in the absence of any position on the record from the Bankruptcy Trustee, the Bankruptcy Court declined to release them to Nadeau. On July 24, 2008, the Trustee abandoned any interest in the trust accounts thereby removing them from the property of the Bankruptcy Estate.
Afterward, Nadeau notified the District Court of the Abandonment and, on or about November 5, 2008, CV-07-156 was returned to the active docket wherein Haenn continued to oppose Nadeau’s efforts to obtain release of the trust account funds. Nadeau initiated discovery on or about January 12, 2009. At a pre-trial conference held on February 6, 2009, Haenn was provided with copies of correspondence Nadeau had previously mailed to him containing detailed information about the trust accounts. Haenn indicated he would authorize release of the funds once he received answers to questions generated by his client.
Thereafter, the Court issued a Default Judgment on July 8, 2009 having received no objection to a Motion for Default filed by Nadeau. A revised Judgment was issued on August 11, 2009. Both Judgments dismissed the collection case, ordered Haenn’s client to replace all sums it had withdrawn from the trust accounts and to “immediately release” the fully restored fund balances to Nadeau as counsel for N&A. Additionally, the revised Judgment, docketed August 13, 2009, authorized Nadeau to present it at a local branch of the bank (in order to comply with M.R. Prof Conduct 4.2(a)) “for immediate compliance,” notwithstanding Haenn’s representation. Nadeau’s attempts to obtain the funds directly from the bank were stymied when corporate counsel informed Nadeau on or about August 17, 2009 that the bank would not release the funds without Haenn’s authorization.
Despite the unambiguous wording of the August 11, 2009 Judgment, almost eight (8) weeks passed between the date it was final on September 3, 2009 and the date it was effectuated. Instead of timely authorizing his client to release the funds, Haenn sought to negotiate litigation issues he believed were not addressed in the Judgment. On October 19, 2009, he endeavored to secure a release from N&A before he would authorize the funds’ release. In response to Haenn’s efforts to secure a general release prior to complying with the terms of the Judgment, on October 21, 2009, Nadeau filed this grievance complaint and a Motion for Contempt with the District Court. Haenn remitted the full amount due to N&A to Nadeau in a check dated October 27, 2009.
Haenn’s initial response to this grievance complaint was due on November 23, 2009. Bar Counsel’s staff telephoned him on December 3, 2009 to ask him if his failure to file a response had been inadvertent. Upon Haenn’s assertion that it was, he was granted an extension to December 9, 2009. Misunderstanding the focus of the investigation raised by the grievance complaint i.e. his conduct in response to Nadeau’s attempts to secure release the trust account funds, Haenn denied the allegations in his reply and stated that his involvement with the IOLTA had been peripheral.
On March 3, 2010, Bar Counsel specifically requested that Haenn explain (by March 22, 2010) why the account numbers for both trust accounts appeared concurrently on most, if not all, of Haenn’s filings in the State and Bankruptcy courts if his involvement with them was peripheral. Haenn had viewed the underlying litigation in which he had been attempting to collect a debt as his paramount concern. He had perceived Nadeau’s pursuit of release of the trust account funds as a collateral issue. Due to his misapprehension regarding the investigation of the grievance complaint, Haenn did not clarify that in his letter of March 30, 2010. Instead, he reiterated that his involvement with the IOLTA had been “peripheral.”
On April 2, 2010, Haenn requested additional time to provide Bar Counsel with more specific information. He was given until April 16, 2010, but failed to supplement his responses. Later, Haenn indicated that he would supplement the Answer to the Disciplinary Petition he filed on October 15, 2010 but he did not do so. While Haenn’s actions throughout the course of litigation with Nadeau were fractious and potentially dilatory, it was his actions after August 1, 2009 (the date the Maine Rules of Professional Conduct became effective) that constituted misconduct.
Haenn now recognizes that the grievance investigation was concerned with his conduct in response to Nadeau’s attempts to secure release of the trust account funds. He further recognizes that his refusal to timely authorize his client to comply with the August 11, 2009 Court Order, and his attempt to secure a general release from N&A violated M.R. Prof. Conduct 8.4(a)(d). He acknowledges that his failures to timely respond to Bar Counsel’s inquiries and to timely provide information he had earlier affirmed would be forthcoming constituted violations of M.R. Prof. Conduct 8.4(a)(d). Further, he acknowledges that he misapprehended the nature and scope of the grievance investigation which caused him to file responses which did not address Bar Counsel’s inquiries in violation of M.R. Prof. Conduct 8.4(a)(d).
The purpose of bar disciplinary proceedings is not punishment, but rather the protection of the public from attorneys who, by their conduct, have demonstrated that they are unable to properly discharge their professional duties. See M. Bar. R. 2(a). Among the factors to be considered in imposing sanctions are: the duty violated, the lawyer’s mental state, the actual or potential injury caused by the lawyer’s misconduct and the existence of any aggravating or mitigating circumstances. See ABA Standards for Imposing Lawyer Sanctions, 1991 (ABA Standards). See also M. Bar R. 7.1(e)(3)(C).
Haenn intentionally violated duties he owed to the legal system by not timely complying with the District Court’s August 11, 2009 Judgment and abused the legal process causing injury to Nadeau and his clients. Haenn’s failures to timely respond and to submit complete responses to Bar Counsel’s inquiries were negligent. His misunderstanding of the grievance complaint process complicated the investigation and caused injury to the legal system. As then Maine Supreme Judicial Court Justice D. Brock Hornby observed, “The Board of Overseers can fulfill its responsibility to ensure lawyer discipline only if it is assured that it will receive the full cooperation of all lawyers.” Board of Overseers of the Bar v. George S. Hutchins, 1989 Me. LEXIS 213.
The Panel notes that several mitigating factors are present. Haenn has taken responsibility for his transgressions, apologized to Bar Counsel and expressed remorse for his serious violations of the Maine Rules of Professional Conduct. Haenn has practiced law in Maine for thirty-two (32) years with only one instance of minor, unrelated misconduct that occurred over ten (10) years ago.
After weighing all of the factors to be considered in imposing sanctions, the Panel finds that a public reprimand serves those purposes. Therefore, the Panel accepts the agreement of the parties, including Haenn’s separately executed waiver of the right to file a Petition for Review, and concludes that the appropriate disposition of this case is a Public Reprimand to Michael S. Haenn, Esq. which is now hereby issued and imposed upon him pursuant to M. Bar R. 7.1(e)(3)(C)(4).
For the Grievance Commission
William B. Baghdoyan, Esq., Chair
Mary A. Denison, Esq.
Kathleen A. Schulz