4Jul, 2022
Colorado Supreme Court weighs discipline for divorce attorney: ‘I’ve never seen anything like that’ | Subscriber-Only Content

Prominent family law attorney Brenda L. Storey said she was wrongly punished for simply asking a client in a divorce case to pay her, and for ultimately using money from the marriage toward her bill — a common practice in such proceedings.

The Office of Attorney Regulation Counsel, which prosecutes lawyer-discipline cases, took a vastly different view of Storey’s decision to accept a $47.578.43 tax refund check — unknown to the husband in the case — and use it to pay her own law firm for Storey’s representation of the wife.

“Ms. Storey did not engage in the generally accepted practice,” Assistant Regulation Counsel Justin P. Moore told the Colorado Supreme Court last week. He referred to the decision of a three-member disciplinary boardwhich concluded Storey acted with “a selfish and dishonest motive.”

The justices heard the rare oral arguments in an attorney-discipline case on June 21, in which Storey is appealing to the board’s finding of multiple violations of the rules of professional conduct. Last year, the board determined Storey had disregarded her duties to her client, Cynthia Sullivan, and concealed the existence of the Internal Revenue Service check to her client’s husband, Patrick Caldwell Sullivan.

The board’s ruling suspended Storey from the practice of law for one year plus one day.

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Storey’s attorney Michael T. McConnell characterized the hearing board’s decision as disciplining Storey based on the opinions of a single expert witness, with no precedent putting his client on notice that using the IRS check to pay her legal fees was unethical.

“What’s hard for me in thinking about that argument,” countered Justice Melissa Hart, “is the board, when it encounters a new set of facts, is going to adopt standards we’ve never applied before, because we’ve just never heard this set of facts before. Are you saying a lawyer can only be disciplined under circumstances we’ve already considered?”

It was undisputed in Storey’s disciplinary proceedings that she had a positive reputation among Colorado’s family law attorneys and no disciplinary history. Lawyers who testified against her during the hearing acknowledged they had referred clients to her or sought her expertise in the past. They expressed surprise about Storey’s behavior in the Sullivans’ divorce case.

Cynthia Sullivan hired Storey in June 2018. Although there was substantial marital property at stake — $3.3 million, Storey said — Patrick Caldwell Sullivan was the sole earner. Virtually all of the assets were marital, meaning they would ultimately be divided between the Sullivans by a judge.

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Storey’s agreement with Cynthia stated the client would pay Storey monthly, and that Storey had the right to cease work on or withdraw entirely from the case for nonpayment. Cynthia Sullivan initially paid Storey through the marital assets, which Caldwell Sullivan provided.

In late May 2019, Caldwell Sullivan placed a cap on the American Express card Cynthia Sullivan was using to pay her attorney fees. She was now delinquent in her payments to Storey.

If Caldwell Sullivan “does not pay my bill by the 20th, please start selling furniture and furnishings,” Storey directed her client in a June 18 email. Two days later, she ordered Cynthia Sullivan to advertise furniture on Facebook and Craigslist. Storey also threatened Caldwell Sullivan’s attorney Jordan Fox with contempt over the decision to cut off Cynthia Sullivan’s credit.

By July 20, Cynthia Sullivan owed Storey more than $37,000. Storey advised Cynthia Sullivan she would withdraw from the case, and once again told her to sell the couple’s possessions. Only after a hearing before Arapahoe County District Court Judge Peter Michaelson did Caldwell Sullivan authorize $25,000 for his wife to pay Storey. But a balance remained, and Storey once again vented to her client.

“You do not have a choice as to whether you pay me in full. To me, my bill is the highest priority over your sprinkler bill, school supplies, or otherwise. It should be for you as well, as I will cease representing you ,” Storey told her.

The night of Aug. 1, 2019, Cynthia Sullivan sent Storey an apologetic email, but mentioned a possible solution that had arrived in her mailbox: a $47,000 check from the IRS that she could bring to Storey to pay her bill.

The following morning, Cynthia Sullivan delivered the check, which was payable to both of the Sullivans, to Storey’s office, where it was deposited into a trust account. A few days later, Storey told Cynthia Sullivan via email that there was “no reason for him (Caldwell Sullivan) to find out about the tax refund just yet.” The same day, Storey directed the money from the IRS check be moved from the trust account to the law firm’s operating account.

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However, the situation between Cynthia Sullivan and Storey did not improve, and Storey filed a motion to withdraw from the case. Another attorney, Jennifer Alldredge, took over for Storey in early September. In a detailed conversation with Alldredge about the case, Storey revealed the existence of the IRS check, and mentioned she had not disclosed it to Caldwell Sullivan.

Once Alldredge told Caldwell Sullivan’s attorney about the check, he filed a motion in court asking for the return of the funds. Michaelson ordered the money’s return on Sept. 27, giving Storey 48 hours to comply. She did not, instead waiting for a hearing more than a week later. Michaelson ended up overturning his order, deciding he did not have jurisdiction over Storey.

It was not until March 2 that Storey reached an agreement with the Sullivans’ lawyers to return the funds. Six months later, her attorney-discipline case began. Proceedings before the hearing board in April 2021 focused on a series of misconduct allegations: that Storey’s priority on being paid represented a conflict of interest, that she mishandled and concealed the couple’s marital property, and that she disobeyed the judge’s order to relinquish the funds.

The board determined Storey had committed multiple violations in the case. Specifically, they found Storey put her own payment ahead of her client’s best interest by failing to advise Cynthia Sullivan about the risks of selling furniture; namely, the risk of violating a provision of family law.

“I’ve never seen anything like that where a lawyer told the client to sell furniture. That’s extraordinary,” Steven Lass, an expert witness for the prosecution, testified.

The board also decided Storey violated Michaelson’s order to return the check, and she had “closed her eyes” to her duty to disclose the check.

Alldredge “testified that any trust that remained between the Sullivans was ‘decimated’ by respondent’s handling of the IRS check. Alldredge estimated that each party paid ‘well over $50,000’ in attorney’s fees to force respondent to return the funds from the IRS check,” wrote then-presiding disciplinary Judge William R. Lucero in the board’s opinion.

Storey appealed to the Supreme Court, where multiple justices were uneasy about the board labeling a broad swath of Storey’s conduct as unethical.

“It feels at times as if you’re asking us to have her pilloried in front of the court for using language that most of us would find unacceptable,” said Justice William W. Hood III to the prosecution, referring to Storey’s emails.

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Hart was the most vocal critic of Storey’s behavior, emphasizing Storey’s failure to disclose the IRS check was the bigger issue, even though Caldwell’s decision to cut off his wife’s credit was “disgusting.”

“Why was it acceptable for Ms. Storey to tell her client, ‘You’re not talking to your husband about this tax payment’?” she asked. “What reason could an attorney have for thinking, under our system, that undisclosed marital assets could be used to pay” legal bills.

McConnell replied that as long as marital assets are disclosed before the division of property, “it’s OK.”

Although Storey had multiple opportunities to disclose the check during August 2019, including at a hearing with the trial judge, she had not done so. Another key opportunity of possible disclosure was a settlement proposal Storey sent to Caldwell’s attorney, which included tax information. McConnell justified the omission there by calling the proposal simply “an attempt to start dialogue.”

“But to start it without full information,” Hart said.

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