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In re Behles

Supreme Court of New Mexico

September 23, 2019

IN THE MATTER OF JENNIE DEDEN BEHLES

          Anne L. Taylor Albuquerque, N.M. for Disciplinary Board

          Wilfred Thomas Martin, Jr. Carlsbad, N.M. Marion James Craig, III Roswell, N.M. for Respondent

          OPINION

          BARBARA J. VIGIL, Justice

         I. INTRODUCTION

         {¶1} In this opinion we address the failure of Jennie Deden Behles (Behles) to comply with the Rules of Professional Conduct and Rules Governing Discipline related to client trust accounts and reasonable fees. Though Behles has led a long career as a member of the New Mexico bar, this failure and her past disciplinary record demand her disbarment. The Court reviewed Behles's conduct on the recommendation of the Disciplinary Board (the Board) to sustain charges and impose discipline for violations of Rule 16-105 NMRA (fees), Rule 16-115 NMRA (safekeeping property), and Rule 16-804(D) NMRA (engaging in conduct prejudicial to the administration of justice).

         {¶2} The Board adopted the hearing committee's findings of fact that Behles expended client funds she had been ordered to hold in trust, failed to maintain complete records of her client trust account, failed to keep client money separate from her own, and unreasonably charged a contingent fee on the return of her client's court bond. These findings supported the Board's ultimate conclusion that Behles violated the aforementioned rules. Specifically noting that Behles's conduct met a host of aggravating factors-including "prior discipline, a dishonest and selfish motive, a pattern of misconduct, commission of multiple offenses, refusal to acknowledge the wrongful nature of her conduct, and substantial experience in the practice of law"-the Board recommended that this Court disbar Behles.

         {¶3} The Court adopted the Board's findings of fact and conclusions of law in their entirety. Accepting the Board's recommended discipline, the Court permanently disbarred Behles.[1] See Rule 17-206(A)(1) NMRA. Additionally, the Court ordered Behles to pay restitution in the amount of $19, 239.00, plus interest at the statutory judgment rate, to her client, Dubalouche, LLC (Dubalouche), see Rule 17-206(C), as well as to pay costs to the Board for these disciplinary proceedings.

         {¶4} We write to emphasize the longstanding principle that "stealing client funds is perhaps the most egregious violation of a lawyer's ethical responsibilities[.]" In re Zamora, 2001-NMSC-011, ¶ 12, 130 N.M. 161, 21 P.3d 30 (per curiam) (quoting In re Kelly, 1995-NMSC-038, ¶ 8, 119 N.M. 807, 896 P.2d 487 (per curiam)). This Court will not condone misconduct that irreparably erodes the sacred bond of trust shared between attorney and client.

         II. BACKGROUND

         {¶5} Behles has been licensed to practice law in New Mexico for nearly fifty years. Her practice at the Behles Law Firm (BLF) focused largely on bankruptcy and construction law. This is the second time Behles has been subject to discipline from this Court for her failure to properly manage her client trust account.

         {¶6} In 2006, Behles consented to discipline for violating Rule 16-115 (safekeeping property) and Rule 17-204 NMRA (trust accounting). As a result, the Court indefinitely suspended Behles for a minimum of three years. That suspension was deferred so long as Behles complied with certain probationary requirements. The probationary requirements mandated that she meet with a supervising accountant at least once per month to receive instruction on correct record keeping and management of her trust account. Before being reinstated, Behles was required to prove that (1) her trust account was in compliance with Rules 16-115 and 17-204, (2) she understood the requirements of those rules, (3) she adequately supervised all transactions to and from her trust account, and (4) she maintained the required records for her trust account. Having met these requirements, Behles was eventually reinstated, but her conduct underlying these proceedings demonstrates that the lessons once learned were not indelible.

         A. Behles's Representation of Dubalouche

         {¶7} Dubalouche owned and leased out an expensive commercial property in Albuquerque. Dubalouche's tenant hired a general contractor, AIC General Construction, Inc. (AIC), to renovate the building. In turn, AIC hired Precision Service Electric, LLC (Precision) and Floorshield, LLC (Floorshield) as subcontractors. When none of these contractors were paid in full by the tenant, each company filed liens on Dubalouche's property.

         {¶8} Dubalouche sought Behles's legal assistance because Dubalouche intended to sell the building and therefore needed to evict the tenants and remove the liens. Moreover, Dubalouche contended that one or all of the contractors had damaged the building's foundation, devaluing the property. In December 2014, Behles agreed to represent Dubalouche.

         {¶9} Behles's misconduct that brings her before the Court arises from two fee agreements she had with her client Dubalouche and her comingling of client money paid under those fee agreements, as well as her improper accounting and retention of client resources with respect to a settlement.

         1. First fee agreement and the $7, 500.00 retainer

         {¶10} Under the original fee agreement, Dubalouche agreed to pay Behles $7, 500.00 as "collateral to secure payment of fees." Behles agreed to charge on an hourly basis and to draw against the retainer only if Dubalouche defaulted on payments. This agreement also provided Behles an attorney's charging lien and a retaining lien "against any funds . . . which [are] recovered, preserved, maintained, released, awarded as a result of Attorneys' efforts." Chad Aldawood paid the full amount of the retainer on December 22, 2014. Though it was client money paid in advance, Behles did not account for this payment in her trust account ledger. Instead, Behles deposited the $7, 500.00 check directly into the BLF operating account. There is no evidence in the record that Behles sent Dubalouche invoices reflecting fees earned in the time between the ratification of the fee agreement and the date she deposited the retainer in her operating account. According to Behles's transaction listing for Dubalouche, Behles did not bill Dubalouche for services until February 6, 2015.

         2. Dubalouche debts and the $25, 000.00 flat fee under the second fee agreement

         {¶11} On July 5, 2015, Behles notified intent to assert an attorney's charging lien and retaining lien in Dubalouche's lawsuit against the contractors to cancel the liens on the property. At the time she gave notice of her intent to assert the liens, Behles claimed Dubalouche owed $28, 176.47. Behles sought to attach a charging lien to "[a]ll accounts, residuals, proceeds, issues, profits, and money payable to, awarded to, or secured by Dubalouche, LLC, by virtue of any claim or settlement agreements or judgments entered with respect" to the lawsuit.

         {¶12} Following Behles's assertion of the liens, Dubalouche made several payments to BLF. By July 13, 2015, Dubalouche had paid a total of $27, 600.00 to BLF, leaving an owing balance of $576.47. That same day, Behles billed Dubalouche for an additional $7, 834.39. On July 31, 2015, Dubalouche paid Behles $8, 000.00, bringing the owing balance to $410.86. On August 3, 2015, Behles billed Dubalouche for $16, 535.70. At this point, it would appear that Dubalouche owed a total of $16, 946.56 to BLF. Dubalouche did not make another payment until after the ratification of a second fee agreement.

         {¶13} On September 9, 2015, Behles and Dubalouche entered into a second fee agreement, in which Dubalouche agreed to pay BLF a flat fee of $25, 000.00 that would cover "all work to be performed from the date of September 9, 2015 forward." On September 14, 2015, Behles informed Dubalouche's out-of-state counsel that the outstanding amounts owed by Dubalouche were "included/forgiven" within the flat fee. On September 16, 2015, the $25, 000.00 flat fee payment was deposited directly into the BLF operating account. Behles's trust account ledger does not account for Dubalouche's payment of the flat fee, even though the payment was explicitly designated for future work under the second fee agreement.

         3. Disbursement of a portion of Dubalouche's court bond

         {¶14} In order to remove the contractors' liens from the building, Dubalouche was required to deposit a bond with the district court to secure the amounts claimed to be owed. Precision claimed it was owed $9, 084.00; Floorshield claimed it was owed $18, 450.00; and AIC claimed it was owed a total of $185, 639.28, which included the amounts owed to its subcontractors, Precision and Floorshield. The district court ordered Dubalouche to deposit a $151, 889.57 bond with the court registry to secure all three liens. From this amount, $20, 812.00 was credited to secure Precision's lien, and $30, 926.00 was credited to secure Floorshield's lien, for a total of $51, 738.00 credited to secure both subcontractors' liens.

         {¶15} In December 2015, Dubalouche, Precision, and Floorshield entered into a settlement agreement in which Dubalouche agreed to pay Precision and Floorshield a combined total of $32, 500.00 to satisfy their respective liens. Under the settlement agreement, Dubalouche, Precision, and Floorshield released all claims or potential claims against each other. This release included Dubalouche's potential counterclaims for the alleged damage to the building. The district court approved the settlement and directed the registry to disburse $32, 500.00 to the trust account of the Moses Law Firm, which represented Precision and Floorshield. The district court ordered that the remaining $19, 239.00 (of the $51, 738.00 credited to secure both liens) be disbursed "to Behles Law Firm Trust Account for Dubalouche, LLC."[2] The balance of Dubalouche's total court bond remained with the court registry pending resolution of the claims between Dubalouche and AIC.

         4. Behles's accounting and retention of the $19, ...


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