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In re Disciplinary Proceeding Against Fossedal

Supreme Court of Washington, En Banc

August 17, 2017

In the Matter of the Disciplinary Proceeding Against DANA KRISTIN FOSSEDAL, an Attorney at Law.

          OWENS, J.

         Dana K. Fossedal misappropriated more than $117, 000 in client funds for which she was convicted of first degree theft. The Washington State Bar Association (WSBA) charged her with five violations of the RPCs stemming from this misconduct. After a disciplinary hearing, the hearing officer noted that the presumptive sanction for theft of client funds is disbarment, but nevertheless recommended a three-year suspension. On review, the WSBA Disciplinary Board (Board) modified the hearing officer's decision and unanimously recommended disbarment instead of suspension.

         Fossedal asks us to reject the Board's unanimous recommendation of disbarment. However, she is unable to identify any clear reason to depart from the Board's recommendation. Accordingly, we disbar Fossedal from the practice of law.

         FACTS

         Fossedal has been a licensed attorney in Washington since 1998. In 2005, she opened her own law office, focusing on family law. As of 2009, she employed an associate and a paralegal. Fossedal personally maintained the firm's finances, and was the only person in the office who handled financial matters and signed checks.

         By the end of 2009, Fossedal was almost never in the office. By 2011, Fossedal spent "essentially no time" there. Findings of Fact & Conclusions of Law (FF/CL) at 4.

         i. Theft of Brian Schoof's Funds

         Around this time, Brian Schoof, a part-time King County Metro bus driver, hired Fossedal to represent him in the dissolution of his marriage. He and Fossedal entered into a fee agreement for an hourly fee of $250 and an advance fee deposit of $5, 000. Fossedal assigned the matter to her associate, Misty Hayes, a recent law school graduate. Hayes managed the client file, including attending a mediation. In December 2009, the court entered a "Decree of Dissolution" in the Schoof matter. It awarded $117, 225.17 to Schoof as an equalization payment for his interest in the family residence.

         On January 20, 2010, Fossedal received a check for $117, 225.17 on behalf of Schoof. Fossedal personally endorsed the check and deposited it into her KeyBank trust account. She did not tell Schoof that she had received his funds and did not disburse any of the money to him.

         Fossedal moved all her business and personal accounts, including her trust account, from KeyBank to Chase Bank later that year. On September 3, 2010, she issued a check for $122, 434.96 from her KeyBank trust account and deposited it into her new Chase Bank trust account. That check included the $117, 225.17 of Schoof s funds.

         Over the next year, Fossedal made many withdrawals from the Chase Bank trust account. Most of her withdrawals from trust were wire transfers to her general account or personal account. She testified that she made these transfers based on estimates rather than by keeping track of hours worked. By September 16, 2011, the trust account balance had dropped to a mere $24.74.

         Fossedal never disbursed any of Schoof s funds to him. Instead, she used Schoof s funds "for her own benefit, directly or indirectly, without authorization to do so." Id. She used his funds for daily business and personal expenses such as payroll, office supplies, rent, symphony and Mariners tickets, groceries, pet food, restaurants, and manicures. Fossedal never sent Schoof any billing statements or accountings before removing his funds from trust.

         ii. Letter from Misty Hayes

         In March 2011, Fossedal's firm was fifteen months delinquent on billing. Hayes, her associate, sent Fossedal a letter expressing her concerns about the firm's financial management and her ethical obligations to its clients, writing:

I am more than a little concerned about the status of my clients' funds in trust since we have not billed in such a long time. Logic suggests if we are not billing, we cannot be transferring monies out of trust. If we are working on cases, we are earning our fees and that money cannot stay in trust. This creates quite an ethical conundrum. Further, if we are not billing then we are not receiving any payments from our clients. With such high overhead and no incoming funds, I am unclear how you can sustain this firm.

Ex. 9; FF/CL at 6; 1 Verbatim Report of Proceedings (VRP) (Mar. 7, 2016) at 74. Hayes then requested the most recent trust account statements and reconciliations for the client accounts on which she had been working.

         Fossedal responded by e-mail the following week, informing Hayes that "you have absolutely no access nor any responsibility as pertains to any of the office financial accounts, " and that failure to turn over documents relating to the firm's financial accounts within 24 hours "shall be considered insubordination and cause for possible termination." Ex. 10. In closing, she added that "[t]his letter is intended to relieve you of any ethical obligations regarding the firm's financial business, including the trust accounts." Id; FF/CL at 6; 1 VRP (Mar. 7, 2016) at 86. Hayes left the firm soon thereafter.

         iii. Schoof's Efforts To Recover His Funds: WSBA Grievance and Civil Suit

         In April 2010, Schoof learned from Hayes that his settlement proceeds had been transferred to Fossedal. He made several attempts to contact Fossedal and recover the funds.

         Schoof called Fossedal's office on a monthly basis, seeking disbursement. He was never able to speak with Fossedal, and she never returned his calls. Fossedal either failed to respond to his e-mails or, when she did, failed to provide substantive information or stated that she was sick and "needed time to get back to him with regard to the funds." FF/CL at 7; Ex. 28 (Certification for Determination of Probable Cause at 3).

         Schoof filed a grievance with WSBA in May 2012. Fossedal never filed a response.

         In July 2012, Schoof hired a lawyer, Hans Mil, to collect his funds from Fossedal. Juhl unsuccessfully tried to contact Fossedal about the money. However, after getting in touch with Hayes, he obtained a copy of the disbursement check from the title company.

         Schoof, through Juhl, sued Fossedal and obtained a default judgment for $161, 186.75, which included the amount that Fossedal stole from Schoof, the advance fees Schoof paid, attorney fees, and interest. Juhl tried to get in touch with Fossedal to set up a plan for repayment, to no avail. Ultimately, Schoof was able to collect less than $4, 000 by garnishing Fossedal's husband's wages. That money went toward attorney fees to Juhl.

         Fossedal filed for bankruptcy in 2014, She listed the default judgment she owed Schoof as an unsecured debt on her bankruptcy schedules. Schoof hired another lawyer to bring an adversary proceeding to contest the dischargeability of the debt based on fraud and defalcation. After Fossedal's husband got a job that paid enough to avoid bankruptcy, Fossedal later abandoned the bankruptcy without obtaining a discharge. Schoof s adversary proceeding was dismissed without prejudice.

         In August 2015, the WSBA's Lawyers' Fund for Client Protection (LFCP) made a $117, 225.17 gift to Schoof.[1] FF/CL at 9.

         iv. Fossedal's First Degree Theft Conviction

         On March 5, 2014, the King County Prosecuting Attorney's Office charged Fossedal with first degree theft, with an aggravating factor of abuse of trust.

         Fossedal pleaded guilty as charged on July 16, 2014. She filed a "Statement of Defendant on Plea of Guilty" that read, "[W]ith intent to deprive another of property . . ., I executed unauthorized control over money belonging to Brian Schoof. ... I used my position of trust, confidence, and fiduciary duty as his attorney to facilitate the commission of the theft." Id. at 8.

         At sentencing, the prosecutor argued for an exceptional sentence of 12 months. She noted that during the time frame that Fossedal was spending Schoof s money, Schoof was financially destitute, sleeping on a friend's couch, and waiting for his divorce settlement funds to help get him back on his feet. The court sentenced Fossedal to a six-month jail term, later amended to nine months of electronic home monitoring.

         The court also ordered Fossedal to pay restitution of $131, 065.07, to be applied against Schoof s default judgment. In March 2015, Fossedal began working part time caregiving for a friend's mother, earning $20 per hour. As of March 8, 2016 (the time of the ...


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