In re Rheinstein

1

In the Matter of Jason Edward Rheinstein, Esquire, Respondent. In re: JASON EDWARD RHEINSTEIN, Appellant. LYDIA E. LAWLESS, Court-Assigned Amicus Counsel.

Nos. 20-9505, 21-1176

United States Court of Appeals, Fourth Circuit

January 4, 2023

UNPUBLISHED

Argued: October 27, 2022

Appeal from the United States District Court for the District of Maryland, at Baltimore. James K. Bredar, Chief District Judge. (1:20-mc-00053)

Lydia E. Lawless, ATTORNEY GRIEVANCE COMMISSION OF MARYLAND Annapolis, Maryland, for Court-Assigned Amicus Counsel.

Jason E. Rheinstein, Severna Park, Maryland, for Respondent.

Before DIAZ, THACKER, and QUATTLEBAUM, Circuit Judges.

Unpublished per curiam opinion imposing reciprocal disbarment in No 20-9505 and affirming district court decision to impose reciprocal discipline in No. 21-1176.

Unpublished opinions are not binding precedent in this circuit.

PER CURIAM

Jason Edward Rheinstein, who was disbarred from the practice of law in Maryland, appeals the district court's decision reciprocally disbarring him in that court. We consolidated his appeal with an original action in this court, in which we consider whether we should impose our own reciprocal disbarment. Finding no due-process violation, infirmity of proof, or other "grave reason" for ignoring the state bar's decision, Selling v. Radford, 243 U.S. 46, 51 (1917), we reciprocally disbar Rheinstein. And we hold that the district court didn't abuse its discretion in doing the same.

I.

A.

We begin by summarizing Rheinstein's disciplinary proceedings in Maryland.

1.

On April 22, 2016, Rheinstein was served with the Attorney Grievance Commission's Petition for Disciplinary or Remedial Action. The Commission filed the Petition in Maryland's Court of Appeals (now named the Supreme Court of Maryland), and that court assigned the matter to the Circuit Court for Anne Arundel County, per Maryland's disciplinary procedures. We discuss the Petition in some detail because the Maryland courts found that Rheinstein admitted its allegations by default.

Before they became Rheinstein's clients, Charles and Felicia Moore executed a loan agreement with Imagine Capital, Inc. The Moores defaulted and Imagine enforced a "confessed judgment" clause that entitled it to practically automatic judgments. At first the Moores tried to challenge the confessed judgments and Imagine's collection efforts pro se, but they eventually hired Rheinstein.

According to the Petition, Rheinstein soon "developed an elaborate conspiracy theory involving Imagine, its principals, attorneys, lenders and other associates," and then "embarked on a crusade to prove his theory. His conduct exceeded the bounds of zealous advocacy." J.A. 109-10.

Rheinstein first filed a complaint with the Attorney Grievance Commission against Imagine's counsel. Citing Rheinstein's grievance, that counsel withdrew from representing Imagine, which then hired new outside counsel.

Later, the Maryland trial court in the confessed-judgment action held a hearing. "During the hearing [Rheinstein] interjected irrelevant and unsubstantiated accusations against Imagine and its members regarding an elaborate fraud scheme. [Rheinstein] leered at [Imagine's officer] during the proceeding and led the court to believe that Imagine and its officers were under investigation by the Department of Justice." J.A. 110. Imagine's officer then "invoked his Fifth Amendment right to remain silent. At the conclusion of the hearing, the court vacated the confessed judgments." Id.

Imagine hired new counsel once again, Matthew Hjortsberg of the firm Bowie &Jensen, to appeal. Rheinstein repeatedly emailed Bowie &Jensen personnel, threatening to sue the firm, Hjortsberg, and another attorney, and to report them to the Attorney Grievance Commission if they didn't drop the confessed-judgment appeal. As a result, Bowie &Jensen notified its insurance carrier and hired outside counsel.

Over the next months, Rheinstein filed various rule-violating documents in the confessed-judgment appeal, including a "frivolous Petition for Writ of Certiorari," "a frivolous motion to dismiss the appeal," a "second frivolous Motion to Dismiss Appeal," multiple "frivolous" briefs and exhibits, and a "frivolous 'Motion to Resume Proceedings and Renewed Motion to Dismiss Appeal.'" J.A. 111-14.

Rheinstein also "filed a [separate] frivolous complaint," naming 28 defendants and alleging that "Imagine, acting in concert with other defendants, engaged in an elaborate fraud scheme." J.A. 115. The next month, Rheinstein filed a federal qui tam action on behalf of Mr. Moore under the False Claims Act, alleging that Imagine's officer engaged in mortgage fraud.

In the meantime, Rheinstein emailed Hjortsberg and Bowie &Jensen's outside counsel, requesting that Imagine settle the lawsuits Rheinstein filed for $5 million. Rheinstein also asked Hjortsberg and his firm to withdraw from representing Imagine, alleging that they were conspiring with Imagine to commit crimes and fraud. Rheinstein sent one particularly profanity-laced email in which he again threatened to sue Hjortsberg, accused him of fraud, and requested a $5 million "global settlement." J.A. 118. After Bowie &Jensen's outside counsel told Rheinstein his email was unacceptable, Rheinstein "apologize[d] for the unprofessional tone" and said that "the profanity, while regrettable, was a figure of speech." J.A. 119.

Rheinstein also sent a 16-page letter to the Chief Judge of the Maryland Court of Special Appeals, accusing Hjortsberg and his firm of improper ex parte communications to "manipulate the trial court record" and "manufacture arguments." J.A. 121.

The Moores subsequently filed for bankruptcy. Their filing stayed the confessed-judgment appeal and made it part of the bankruptcy estate. But Rheinstein still contacted Hjortsberg to set up depositions of Imagine's officers, not mentioning that his clients had filed for bankruptcy or that the appeal was stayed.

Rheinstein also filed five proofs of claim against the Moores' bankruptcy estate, for attorney's fees and costs, totaling $85,604.61. The trustee and the Moores objected to Rheinstein's claims. The trustee then agreed to assign the qui tam claims to Rheinstein in exchange for withdrawing his bankruptcy claims.

Based on Rheinstein's conduct, the Commission's Petition alleged that he violated Maryland Lawyers' Rules of Professional Conduct 1.1 (Competence); 3.1 (Meritorious Claims and Contentions); 3.2 (Expediting Litigation); 3.4(c) and (e) (Fairness to Opposing Party and Counsel); 4.4(a) (Respect for Rights of Third Persons); and 8.4(a), (c), and (d) (Misconduct).

2.

Rheinstein moved to dismiss the Petition and removed the case to federal court. But the district court granted the Commission's motion to remand, holding that it lacked subject-matter jurisdiction and that even if it had jurisdiction, it "would nevertheless have abstained and remanded the case to proceed in the state court." Att'y Grievance Comm'n v. Rheinstein, No. CV MJG-16-1591, 2017 WL 1035831, at *3 (D. Md. Mar. 17, 2017). The state court denied Rheinstein's motion to dismiss.

At the motion-to-dismiss hearing, there was a long colloquy about Rheinstein's failure to respond to the Commission's discovery requests, which were served with the Petition. The court directed that all discovery be completed within 60 days after the hearing, and that any motions to compel be filed before that deadline. It also set a six-day trial beginning in September 2017.

Before the 60-day deadline, the Commission moved for sanctions and an order of default because Rheinstein still hadn't answered the Petition or responded to the discovery requests. The Commission requested that all the Petition's allegations be deemed admitted and that Rheinstein be precluded from presenting documents or witnesses at trial. The next day, Rheinstein filed a 99-page answer and affirmative defenses to the Petition, but he didn't respond to the Commission's discovery requests. A few days later, he propounded his own discovery requests on the Commission. Rheinstein also opposed the motion for sanctions, arguing that the Commission's discovery requests were "nullified" when he tried to remove the case to federal court. J.A. 547.

The court denied the Commission's motion for a default since Rheinstein had filed his answer the next day. The court said it would take up the motion for sanctions at trial. The next week, the Commission served its responses to Rheinstein's discovery requests.

Four days before the trial was to begin, Rheinstein filed a new notice of removal. This time, he asserted that the Commission's discovery responses showed an "illicit strategy" to discipline him for uncharged conduct and litigate the merits of his qui tam case. J.A. 1672. The district court granted the Commission's emergency motion to remand, again finding no grounds for removal.

Rheinstein appealed that decision and we affirmed. See Att'y Grievance Comm'n v. Rheinstein, 750 Fed.Appx. 225 (4th Cir. 2019) (per curiam). Rheinstein then unsuccessfully petitioned for certiorari.

Back in state court, the original presiding judge had retired, and in June 2019, a new judge set a trial for the next month. The Commission filed a "Motion for Sanctions and/or Motion in Limine," again asserting Rheinstein's continued failure to respond to the discovery requests that were served more than three years ago. The Commission again asked for a sanction of default and an order precluding Rheinstein from presenting trial evidence.

The next day, Rheinstein served written responses to the discovery requests. In response to one interrogatory, he provided what the Maryland Court of Appeals later called "an extensive list of...