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D.C. Court of Appeals Does Not Impose Reciprocal Discipline in an Attorney-Misconduct Case Where the Original Sanction is “Substantially Different” Than the Sanction Likely to Be Imposed by a D.C. Court

In re Frederick W. Salo
No. 11-BG-1433 (D.C. Ct. App. July 19, 2012)
by Natalie Scurto, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this case, the D.C. Court of Appeals analyzed whether or not to impose reciprocal discipline in an attorney-misconduct case where a New York Court found an attorney to be guilty of misappropriation of funds, but lacking the venal intent necessary to have been charged with the intentional conversion of third-party funds. The Court, in finding the attorney’s conduct to constitute negligent misappropriation as opposed to intentional misappropriation of funds, opted not to impose a reciprocal discipline. The discipline of a one-year suspension with a fitness requirement as imposed by the original disciplining court was “substantially different” from the discipline that a District of Columbia court would likely impose.

On July 27, 2010, the New York Supreme Court Appellate Division, First Judicial Department (“the New York court”) found Frederick W. Salo (“Salo”) guilty of nonvenal misappropriation of funds and related offenses. Salo was suspended from the practice of law in New York for one year and also imposed a fitness requirement. Salo was found guilty of mismanaging settlement funds following a personal injury action on behalf of a client. The New York court found that Salo had impermissibly commingled funds when he transferred $32,000 from his Interest on Lawyer Account (“IOLA account”) to his personal account, before transferring the same amount back into the IOLA account. Additionally, he allowed the balance of his IOLA account to fall as low as $102.88 while the resolution of a $40,000 workers’ compensation lien was pending. Salo contended that he suffered from post-traumatic stress disorder (“PTSD”) and depression. He argued that these ailments precluded him from acting with venal intent as to the misappropriation. At the hearing, Salo presented expert medical evidence of his mental conditions. The New York Court ultimately concluded, in light of the evidence presented as to Salo’s PTSD and depression, that there was “insufficient evidence of venal intent to support a charge for intentional conversion of third-party funds.”

The District of Columbia Office of Bar Counsel recommended the imposition of reciprocal discipline, to which Salo objected. Salo argued that the misconduct established by the New York court would warrant substantially different discipline in the District of Columbia.

In attorney-discipline cases arising as reciprocal matters, there is a rebuttable presumption favoring the imposition of a discipline identical to the discipline imposed by the original disciplining jurisdiction. The presumption is generally applicable, unless the party opposing discipline can demonstrate by “clear and convincing evidence” that an exception should apply, pursuant to one of the provisions stated in D.C. Bar R. XI § 11 (c)(1)-(5). The relevant exception in this case is as follows: “The misconduct established warrants substantially different discipline in the District of Columbia.”

A two-step inquiry is required to determine whether or not the aforementioned exception applies. First, Courts determine whether the conduct in question would not have resulted in the same punishment in the District of Columbia as it did in the disciplining jurisdiction. Second, if the discipline would have been different, the Court must determine if the difference is substantial.

Bar Counsel alleged that the New York Court found Salo guilty of intentional misappropriation of entrusted funds, mitigated by his mental health issues. They argued that in the District of Columbia, this would equate to a finding of reckless or intentional misappropriation warranting disbarment, with Salo’s depression and PTSD ultimately staying the disbarment. Salo argued that the New York Court’s findings equated to negligent misappropriation of entrusted funds, as he was unable to intentionally misappropriate funds due to his mental illness. In the District of Columbia, a finding of negligent misappropriation results in a six-month suspension with no fitness requirement.

Judge Beckwith, writing for the Court, agreed with Salo’s interpretation of the New York Court’s finding. The New York Court stated on numerous occasions that there was a lack of intent to misappropriate funds, and the Court of Appeals was inclined to agree. Thus, Salo’s conduct constituted a finding of negligent misappropriation of funds as opposed to the intentional misappropriation of funds. Negligent misappropriation generally results in a six-month suspension with no fitness requirement, whereas the original disciplining court imposed a one-year suspension with a fitness requirement. The Court found that the difference between the two disciplines was, indeed, substantial, and the “substantially different discipline” exception applied.

For these reasons, the Court opted not to impose a reciprocal discipline and ordered Salo suspended from the practice of law in the District of Columbia for a period of six (6) months, as opposed to one (1) year.