Case Number(s): 05-O-01797
In the Matter of: Mark Edward Madison, Bar # 158786, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Suzan J. Anderson, Bar # 160559
Counsel for Respondent: Bar #
Submitted to: settlement judge State Bar Court Clerk’s Office Los Angeles
Filed: July 28, 2006
<<not>> checked. PREVIOUS STIPULATION REJECTED
Note: All information required by this form and any additional information which cannot be provided in the space provided, must be set forth in an attachment to this stipulation under specific headings, e.g., "Facts," "Dismissals," "Conclusions of Law," "Supporting Authority," etc.
1. Respondent is a member of the State Bar of California, admitted June 8, 1992.
2. The parties agree to be bound by the factual stipulations contained herein even if conclusions of law or disposition are rejected or changed by the Supreme Court.
3. All investigations or proceedings listed by case number in the caption of this stipulation are entirely resolved by this stipulation and are deemed consolidated. Dismissed charge(s)/count(s) are listed under "Dismissals." The stipulation consists of 16 pages, not including the order.
4. A statement of acts or omissions acknowledged by Respondent as cause or causes for discipline is included under "Facts."
5. Conclusions of law, drawn from and specifically referring to the facts are also included under "Conclusions of Law".
6. The parties must include supporting authority for the recommended level of discipline under the heading "Supporting Authority."
7. No more than 30 days prior to the filing of this stipulation, Respondent has been advised in writing of any pending investigation/proceeding not resolved by this stipulation, except for criminal investigations.
8. Payment of Disciplinary Costs-Respondent acknowledges the provisions of Bus. & Prof. Code §§6086.10 & 6140.7. (Check one option only):
<<not>> checked. costs added to membership fee for calendar year following effective date of discipline.
<<not>>checked. costs to be paid in equal amounts prior to February 1 for the following two (2) billing cycles following the effective date of the Supreme Court Order (hardship, special circumstances or other good cause per rule 282, Rules of Procedure.)
<<not>> checked. costs waived in part as set forth in a separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. costs entirely waived.
Please see attachment.
Please see attachment
Respondent was admitted to the State Bar of California in June 8, 1992 and has no record of prior discipline
Case Number(s): 05-O-01797
In the Matter of: Mark Edward Madison 158786
<<not>> checked. a. Within days/ months/ years of the effective date of the discipline herein, Respondent must develop a law office management/organization plan, which must be approved by the Office of Probation. This plan must include procedures to (1) send periodic reports to clients; (2) document telephone messages received and sent; (3) maintain files; (4) meet deadlines; (5) withdraw as attorney, whether of record or not, when clients cannot be contacted or located; (6) train and supervise support personnel; and (7) address any subject area or deficiency that caused or contributed to Respondent’s misconduct in the current proceeding.
checked. b. Within days/ 18 months/ years of the effective date of the discipline herein, Respondent must submit to the Office of Probation satisfactory evidence of completion of no less than 6 hours of Minimum Continuing Legal Education (MCLE) approved courses in law office management, attorney client relations and/or general legal ethics. This requirement is separate from any MCLE requirement, and Respondent will not receive MCLE credit for attending these courses (Rule 3201, Rules of Procedure of the State Bar.)
<<not>> checked. c. Within 30 days of the effective date of the discipline, Respondent must join the Law Practice Management and Technology Section of the State Bar of California and pay the dues and costs of enrollment for year(s). Respondent must furnish satisfactory evidence of membership in the section to the Office of Probation of the State Bar of California in the first report required.
Case Number(s): 05-O-01797
In the Matter of: Mark Edward Madison 158786
a. Restitution
<<not>> checked. Respondent must pay restitution (including the principal amount, plus interest of 10% per annum) to the payee(s) listed below. If the Client Security Fund (“CSF”) has reimbursed one or more of the payee(s) for all or any portion of the principal amount(s) listed below, Respondent must also pay restitution to CSF in the amount(s) paid, plus applicable interest and costs.
1. Payee:
Principal Amount:
Interest Accrues From:
2. Payee:
Principal Amount:
Interest Accrues From:
3. Payee:
Principal Amount:
Interest Accrues From:
4. Payee:
Principal Amount:
Interest Accrues From:
<<not>> checked. Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than
<<not>> checked. Respondent must pay the above-referenced restitution on the payment schedule set forth below. Respondent must provide satisfactory proof of payment to the Office of Probation with each quarterly probation report, or as otherwise directed by the Office of Probation. No later than 30 days prior to the expiration of the period of probation (or period of reproval), Respondent must make any necessary final payment(s) in order to complete the payment of restitution, including interest, in full.
1. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
2. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
3. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
4. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
checked.
1. If Respondent possesses client funds at any time during the period covered by a required quarterly report, Respondent must file with each required report a certificate from a certified public accountant or other financial professional approved by the Office of Probation, certifying that:
a. Respondent has maintained a bank account in a bank authorized to do business in the State of California, at a branch located within the State of California, and that such account is designated as a “Trust Account” or “Clients’ Funds Account”;
b. Respondent has kept and maintained the following:
i. A written ledger for each client on whose behalf funds are held that sets forth:
1. the name of such client;
2. the date, amount and source of all funds received on behalf of such client;
3. the date, amount, payee and purpose of each disbursement made on behalf of such client; and,
4. the current balance for such client.
ii. a written journal for each client trust fund account that sets forth:
1. the name of such account;
2. the date, amount and client affected by each debit and credit; and,
3. the current balance in such account.
iii. all bank statements and cancelled checks for each client trust account; and,
iv. each monthly reconciliation (balancing) of (i), (ii), and (iii), above, and if there are any differences between the monthly total balances reflected in (i), (ii), and (iii), above, the reasons for the differences.
c. Respondent has maintained a written journal of securities or other properties held for clients that specifies:
i. each item of security and property held;
ii. the person on whose behalf the security or property is held;
iii. the date of receipt of the security or property;
iv. the date of distribution of the security or property; and,
v. the person to whom the security or property was distributed.
2. If Respondent does not possess any client funds, property or securities during the entire period covered by a report, Respondent must so state under penalty of perjury in the report filed with the Office of Probation for that reporting period. In this circumstance, Respondent need not file the accountant’s certificate described above.
3.
The requirements
of this condition are in addition to those set forth in rule 4-100, Rules of
Professional Conduct.
checked. Within one (1) year of the effective date of the discipline herein, Respondent must supply to the Office of Probation satisfactory proof of attendance at a session of the Ethics School Client Trust Accounting School, within the same period of time, and passage of the test given at the end of that session.
IN THE MATTER OF: MARK EDWARD MADISON
CASE NUMBER(S): 05-0-01797
FACTS AND CONCLUSIONS OF LAW.
Respondent admits that the following facts are true and that he/she is culpable of violations of the specified statutes and/or Rules of Professional Conduct.
GENERAL BACKGROUND
1. At all times mentioned herein, Respondent’s client trust account was account number 177-441338-9 at Washington Mutual ("Respondent’s CTA"), unless otherwise mentioned.
COUNTS ONE. TWO and THREE
FACTS
2. On August 1, 2001, Holly Richards ("Richards") employed Respondent to represent her in a personal injury matter. Respondent and Richards agreed that Respondent would be compensated by a contingency fee of 33 1/3% if the matter settled before filing a complaint and 40% if the matter settled after the complaint was filed. Respondent was aware that Richards’ insurance policy provided for reimbursement of any medical payment made on behalf of Richards.
3. In and before December 2001, Respondent’s wife and father assisted him in handling administrative work of the office. At that time, both had authority to make deposits into Respondent’s CTA.
4. On December 11, 2001, Richards’ insurance company issued a medical payment check payable to Richards and Respondent in the amount of $3,432.00. On January 16, 2002, either the Respondent, his father or his wife, deposited this medical payment check into Respondent’s CTA. At this time, Respondent was using Quicken for Respondent’s CTA bookkeeping. When the funds were deposited, no entry was made in Quicken. Thus, no one in Respondent’s office was aware that the payment had been deposited into Respondent’s CTA.
5. On May 22, 2002, the Respondent filed a lawsuit on behalf of Richards in the Superior Court of California, Southeast District, entitled Holly Richards v. Peter Cruz, IlI, et al., case number 02 C 01429.
6. In January 2004, Richards’ case settled for $8,000.
7. In February 2004, Respondent received the settlement draft and properly deposited the draft into Respondent’s CTA on February 2, 2004.
8. On February 6, 2004, Respondent issued checks in disbursement of the settlement as follows: $230 costs, $2,340 as discounted attorney fees, $2,340 for one of the medical providers and $3,090 for Richards.
9. In that same month, Richards inquired of Respondent as to why he had failed to reimburse the insurance company for the medical payment received in December 2001.
10. It was only then that the Respondent became aware that there had been a deposit made to Respondent’s CTA of $3,432, and that the money had not been maintained in Respondent’s CTA.
11. Thereafter, Richards received letters from the insurance company regarding its reimbursement and she contacted the Respondent on each occasion. It was not until October 2005, that the Respondent reimbursed Richards’ insurance company for the medical payment out of his own funds.
CONCLUSIONS OF LAW
By not maintaining the $3,432.00 on behalf of Richards in Respondent’s CTA for reimbursement of the medical payment, Respondent failed to maintain client funds in trust in wilful violation of Rules of Professional Conduct, rule 4-100(A) an was grossly negligent in wilful violation of section 6106 of the California Business and Professions Code.
By not maintaining a sufficient record that would have revealed the deposit and the sum held on behalf of the client, Respondent failed to maintain proper records of Respondent’s CTA in wilful violation of rule 4-100(C) of the Rules of Professional Conduct.
By his failure to be aware of the funds held on behalf of his client for reimbursement to the insurance company, to advise his client of his receipt of the funds, and by failing to pay out the sum timely on her behalf, thus subjecting her to potential liability, Respondent failed to properly complete the performance on behalf of his client in wilful violation of rule 3-110(A) of the Rules of Professional Conduct.
COUNT FOUR
FACTS
17. The stipulated facts of paragraphs 1 through 16 are incorporated by reference.
18. On September 15, 2004, Richards sent Respondent a facsimile at the facsimile number he had provided to her, requesting the he provide her with her entire file.
19. Although Respondent received the facsimile on the date Richards sent it to him, he failed to forward Richards’ file to her until late 2005.
CONCLUSIONS OF LAW
By failing to release Richards’ file to her promptly upon her request, Respondent failed to release promptly, at the request of the client, all client papers and property in wilful violation of Rules of Professional Conduct, rule 3-700(D)(1).
PENDING PROCEEDINGS.
The disclosure date referred to, on page one, paragraph A.(7), was June 13, 2006.
MITIGATING CIRCUMSTANCES.
FACTS SUPPORTING MITIGATING CIRCUMSTANCES.
Sometime between 2002 and 2004, Respondent’s office was burglarized and several items were taken, including certain bookkeeping items. There were two (2) burglaries during that time frame and his reconciliation problems started shortly thereafter. The burglaries and the failure to post the deposit in Quicken led to the misconduct above. The Respondent reported both burglaries to the police.
On February 23, 2004, Respondent’s 11-year old son Myles was diagnosed with Chronic Myeloid Leukemia and was hospitalized until the end of March 2004. Myles was not able to return to any normal activity until June of 2004. While he is still being closely monitored by his doctors and still taking medication, Myles has returned to school and most of his activities.
In May 2005, Respondent’s wife was diagnosed with breast cancer. Between May 2005 and December 2005, she underwent four surgeries for the breast cancer and completed chemotherapy. She is currently not able to work.
Between the burglaries of the bookkeeping items and the illnesses of his son and wife, Respondent was not spending as much time in his law office as usual and was not paying complete attention to his bank accounts as he knew he should. These factors in mitigation relate more to the discovery of the problem with the medical payment check and the time it took Respondent to correct the problem.
While Respondent is still coping with the illnesses of his son and wife, he has a clear understanding of what steps need to be taken with respect to his bank accounts and management of his office. Respondent is now utilizing the services of an accountant to assist in Respondent’s CTA bookkeeping and monthly reconciliations. Respondent’s wife and father no longer assist in the office.
AUTHORITIES SUPPORTING DISCIPLINE.
STANDARDS
Under Standard 1.3 the primary purposes of discipline are the protection of the public, the courts and the legal profession as well as the maintenance of high professional standards by attorneys and the preservation of public confidence in the legal profession.
There is no doubt that money which should have been maintained in trust for the reimbursement of the medical payment was a misappropriation and the amount was not nominal. Under standard 2.2(a), even in the presence of compelling mitigation, such conduct usually mandates a one-year actual suspension.
Though this grossly negligent failure to maintain funds is wilful misappropriation for the purposes of culpability, and notwithstanding that the Standards for Attorney Sanctions would ordinarily result in at least one year, with compelling mitigation, there is occasional precedent for a deviation imposing only stayed time.
CASE LAW
Palomo v. State Bar (1984) 36 Cal.3d 785. An attorney with one prior instance of discipline was found culpable of(1) endorsing client’s name on a $3,000 check without the client’s consent; (2) depositing the proceeds in his payroll account; (3) failing to notify client and pay over the funds promptly; and (4) misappropriating and commingling the funds. The attorney had endorsed the client’s name to the check, but the remaining misconduct resulted from errors by the attorney’s office staff rather than any deliberate intent by the attorney to misappropriate the money. The attorney’s lax office management practices did not just affect one client, but pervaded his practice for a period of time. Attorney was given one year stayed suspension and one year probation, with no actual suspension.
Waysman v. State Bar (1986) 41 Cal.3d 452. An attorney with no prior record was found culpable of commingling and misappropriating $24,000 from a single client. The funds were the proceeds of a settlement draft which arrived while the attorney was out of town. The attorney told his secretary to obtain the client’s signature, and to deposit the check into the general office account rather than the trust account because it would clear faster than in the latter. When the attorney returned to the office, he found that his secretary had quit, and her departure combined with other circumstances had left his office finances in considerable disarray. In the confusion, $24,000 in client funds had been spent. At the time of the incident, the attorney suffered from alcoholism. The attorney received a six month stayed suspension, and probation for one year and until restitution was made.
Notwithstanding the fact of the unposted/unregistered deposit and the failure to keep and to reconcile the kind of records that would have alerted the Respondent to the status of the funds he had received on behalf of Richards, there was a confluence and sequence of circumstances outside of the Respondent’s control that arguably distracted him from correcting what began as a mistake and, because of unreliable office procedures, resulted in a wilful loss of funds. There is no indication that the funds of more than one client were affected, as was true of Palomo, who received lenient treatment and like Waysman, the conduct appears to have been aberrational and not likely to be repeated.
SIGNATURE OF THE PARTIES
Case Number(s): 05-O-01797
In the Matter of: Mark Edward Madison 158786
By their signatures below, the parties and their counsel, as applicable, signify their agreement with each of the recitation and each of the terms and conditions of this Stipulation Re Facts, Conclusions of Law and Disposition.
Signed by:
Respondent: Mark Edward Madison
Date: 7/5/06
Respondent’s Counsel:
Date:
Deputy Trial Counsel: Suzan J. Anderson
Date: 7/20/06
Case Number(s): 05-O-01797
In the Matter of: Mark Edward Madison 158786
Finding the stipulation to be fair to the parties and that it adequately protects the public, IT IS ORDERED that the requested dismissal of counts/charges, if any, is GRANTED without prejudice, and:
checked. The stipulated facts and disposition are APPROVED and the DISCIPLINE RECOMMENDED to the Supreme Court.
<<not>> checked. The stipulated facts and disposition are APPROVED AS MODIFIED as set forth below, and the DISCIPLINE IS RECOMMENDED to the Supreme Court.
<<not>> checked. All Hearing dates are vacated.
The parties are bound by the stipulation as approved unless: 1) a motion to withdraw or modify the stipulation, filed within 15 days after service of this order, is granted; or 2) this court modifies or further modifies the approved stipulation. (See rule 135(b), Rules of Procedure.) The effective date of this disposition is the effective date of the Supreme Court order herein, normally 30 days after the file date. (See rule 953 (a), California Rules of Court.)
Signed by:
Judge of the State Bar Court: Robert M. Talcott
Date: 7/28/06
[Rule 62(b), Rules Proc.; Code Civ. Proc., § 1013a(4)]
I am a Case Administrator of the State Bar Court of California. I am over the age of eighteen and not a party to the within proceeding. Pursuant to standard court practice, in the City and County of Los Angeles, on July 28, 2006, I deposited a true copy of the following document(s):
STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND ORDER APPROVING
in a sealed envelope for collection and mailing on that date as follows:
checked. by first-class mail, with postage thereon fully prepaid, through the United States Postal Service at Los Angeles, California, addressed as follows:
MARK E. MADISON, ESQ.
1440 N HARBOR BLVD #900
FULLERTON CA 92835
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
SUZAN ANDERSON, A/L, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on July 28, 2006.
Signed by:
Rose M. Luthi
Case Administrator
State Bar Court