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Stanford v. The Mississippi Bar

Supreme Court of Mississippi, En Banc

January 17, 2019

M. REID STANFORD
v.
THE MISSISSIPPI BAR

          ATTORNEYS FOR APPELLANT: ANDREW J. KILPATRICK, JR. B. SEAN AKINS.

          ATTORNEY FOR APPELLEE: MELISSA SELMAN MARTIN

          COLEMAN, JUSTICE

         ¶1. Attorney M. Reid Stanford filed the instant petition for reinstatement pursuant to Rule 12 of the Rules of Discipline for the Mississippi State Bar following his suspension from the practice of law. While the Mississippi Bar supports Stanford's petition for reinstatement, its support is conditioned upon the Court's determination of whether "restitution by a third party, such as an insurance company, satisfies the Benson requirement that an attorney petitioning for reinstatement must make full amends/restitution[.]"[1] Because Stanford's petition fails to satisfy the jurisdictional requirements necessary for reinstatement, we deny his petition for reinstatement.

         FACTS AND PROCEDURAL HISTORY

         ¶2. In September 2017, the Complaint Tribunal of the Supreme Court of Mississippi entered an agreed opinion and judgment in the case of Mississippi Bar v. M. Reid Stanford, No. 2011-B01390 (Miss. 2011), wherein M. Reid Stanford received a "three year suspension to be composed of a six month suspension with two and half years of probation[.]" According to the opinion, the basis for Stanford's suspension was as follows:

Mr. Stanford owned a 40% interest in MREC, Inc., a real estate closing company. MREC, Inc. held a 40% interest in Mississippi Real Estate Closings of Hattiesburg, LLC . . . . MREC, Inc. also held a 40% interest in Mississippi Real Estate Closings of Columbus, LLC; Mississippi Real Estate Closings of Greenwood, LLC; Mississippi Real Estate Closings of Grenada, LLC; Mississippi Real Estate Closings of Hernando, LLC; Mississippi Real Estate Closings of Oxford, LLC; Mississippi Real Estate Closings of Senatobia, LLC; Mississippi Real Estate Closings of Southaven, LLC and Mississippi Real Estate Closings of Tupelo, LLC.
With the approval of Stewart Title Guaranty Company . . ., Mr. Stanford elected to use a sweep account for all of the real estate closing businesses' escrow accounts. All of the available funds in each escrow account were "swept" from the accounts daily following the close of business and placed into an investment account. When a check payable on any individual account was presented for payment[, ] funds sufficient to pay the check were "swept" back into the account without regard as to which loan closing company had deposited the funds.
On March 6, 2009, Grand Bank for Savings, FSB ("Grand Bank") entered into a transaction with SP Properties and Russell Roberts ("Roberts") to purchase certain property in Lamar County, Mississippi. During the transaction, a dispute arose over the availability of parking. Roberts and Grand Bank contacted Mr. Stanford and asked if $100, 000.00 of the loan proceeds could remain in the escrow account of [Mississippi Real Estate Closings of Hattiesburg, LLC]. The settlement statement for the transaction between Grand Bank and the Roberts reflects the $100, 000.00 from the sale proceeds to be held in escrow by [Mississippi Real Estate Closings of Hattiesburg, LLC, ] related to the parking issue. When Grand Bank and Roberts failed to resolve the parking issue, [Mississippi Real Estate Closings of Hattiesburg, LLC, ] attempted to interplead the escrowed funds on April 29, 2009; however the escrowed funds were not available to deposit with the Chancery Court.
Between March 6, 2009, when the $100, 000.00 from the Grand Bank transaction was deposited[, ] and April 29, 2009, when [Mississippi Real Estate Closings of Hattiesburg, LLC, ] attempted to interplead the funds, an employee at [Mississippi Real Estate Closings of Tupelo, LLC, ] failed to make a deposit of approximately $587, 000.00[, ] making the [Mississippi Real Estate Closings of Tupelo, LLC, ] account deficient to cover the checks and wires from the closing. When checks and wires for the Tupelo closing were presented for payment, the [Mississippi Real Estate Closings of Tupelo, LLC, ] account had insufficient funds to pay the proceeds from the closing. As a result, the sweep account automatically used money from the other real estate closing businesses' accounts to cover the Tupelo error, again without regard as to which company had deposited the funds. This necessarily included the $100, 000.00 held in escrow by [Mississippi Real Estate Closings of Hattiesburg, LLC, ] for Grand Bank and Roberts.
Upon learning of the problem, Mr. Stanford closed the sweep account, but at that point, neither Mr. Stanford nor anyone else was able to determine what portion of the remaining funds belonged to which real estate closing business or any party to any real estate transactions being conducted by those businesses. Eventually, $80, 000 was found in the account of Mississippi Real Estate Closings of Southaven, LLC, but the distribution of the full $100, 000[.00] has still not been accounted for to date.

         Based on Stanford's conduct, the Complaint Tribunal concluded that he violated Mississippi Rules of Professional Conduct 1.15(a), 1.15(b), 5.3, and 8.4. In determining the appropriate discipline, the Complaint Tribunal noted that "the Supreme Court of Mississippi has not extended leniency to attorneys who mishandle the funds of others. The Court has repeatedly disbarred lawyers for as little as one instance of misappropriation." The Complaint Tribunal found that Stanford "should be suspended for three years to be comprised of a six month suspension and two and a half years of probation effective as and from September 1, 2017." Additionally, Stanford had to pay costs and expenses incurred by the Bar, notify all clients with active matters, parties opposite, and courts and agencies with active cases of his of his suspension. Finally, the suspension prohibited Stanford from the practice of law or holding himself out as a lawyer until he sought and was granted reinstatement from the Court. Stanford agreed to the discipline imposed by the Complaint Tribunal.

         ¶3. In April 2018, Stanford filed a petition for reinstatement with the Court. In his petition, he explained the underlying conduct for which he was disciplined. He also represented that he had complied with the requirements imposed upon him by the agreed order. Stanford submitted twelve letters of recommendation in support of his reinstatement. The Mississippi Bar conducted an investigation into Stanford's petition for reinstatement and concluded that it supported Stanford's reinstatement, conditioned upon the Court answering one question, whether "restitution by a third party, such as an insurance company, satisfies the Benson requirement that an attorney petitioning for reinstatement must make full amends/restitution," in the affirmative.

         ANALYSIS

         ¶4. In matters "pertaining to attorney discipline, reinstatement, and appointment of receivers for suspended and disbarred attorneys[, ]" the Court has exclusive and inherent jurisdiction. In re Reinstatement of Watkins, 849 So.2d 843, 845 (¶ 8) (Miss. 2002). Reinstatement to the practice of law is governed by Rule 12 of the Rules of Discipline for the Mississippi State Bar, and Rule 12(a) provides that "no person . . . suspended for a period of six months or longer shall be reinstated to the privilege of practicing law except upon petition to the Court." The Court applies a de novo standard when reviewing attorney reinstatement petitions. Watkins, 849 So.2d at 845 (¶ 8).

         ¶5. The Court has provided the following jurisdictional requirements that a petitioner ...


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