Iowa Supreme Court Attorney Disciplinary Bd. v. Marzen

949 N.W.2d 229

IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant,

v.Jesse Michael MARZEN, Respondent.

No. 20-0472

Supreme Court of Iowa.

Submitted July 14, 2020

Filed September 11, 2020

Tara van Brederode and Crystal W. Rink, Des Moines, for complainant.

James Steadman Blackburn of the Finley Law Firm, Des Moines, for respondent.

OXLEY, Justice.

The Iowa Supreme Court Attorney Disciplinary Board (the Board) brought a complaint against attorney Jesse Marzen arising out of his representation of a couple involving two different matters. The first matter involved his work in preparing income tax returns for the couple's business, and the second matter involved his transfer of an estate matter to another attorney without the client's prior consent. The Iowa Supreme Court Grievance Commission (the commission) found the Board proved Marzen violated most, but not all, of the cited rules.

The commission recommends we publicly reprimand Marzen, a discipline Marzen supports. The Board urges us to suspend his license for some period of time. On our de novo review, we conclude Marzen violated our ethical rules. We agree with the Board that his conduct justifies more than a public reprimand. Therefore, we suspend Marzen's license for thirty days.

I. Background Facts and Proceedings.

Attorney Jesse Marzen was admitted to practice law in Iowa in 2005. He was previously disciplined in 2010 after he had a sexual relationship with a client and disclosed confidential information about the client during his campaign for county attorney, which resulted in a six-month suspension of his license. Marzen resumed practice in March of 2012. Currently, Marzen is not practicing law or taking on clients, but his license is still active.

The complaint in this case arose from Marzen's representation of Lloyd and Linda Pierson. The Piersons started a business buying and reselling classic cars after Lloyd received a large inheritance from his stepfather. Lloyd knew Marzen's father for many years, so he asked Marzen for help with the business. In 2014, Marzen set up three limited liability companies for the Piersons. The Piersons later asked Marzen to do other work for them, including tax work for their business and work on Lloyd's biological father's estate.

A. Estate Work. Lloyd Pierson hired Marzen to handle the estate of his biological father, Cecil Pierson, in 2015. The estate involved a small amount of property and a Medicaid lien. Marzen did not timely file the estate inventory report and received a delinquency notice from the court dated June 1, 2015. Faced with this delinquency notice, Marzen contacted Roger Sutton, another Charles City attorney, about handling Cecil Pierson's estate. Marzen testified he communicated primarily with Amy Medlin, Sutton's paralegal. He then sent a letter, dated June 8, 2015, to the Piersons explaining that someone named "Amy" would be assisting on the case. The letter said,

Marzen Law Office has expanded. D[ue] to this exp[ansion], we have hired Amy to assist Marzen Law Office with some of our files. Cecil's estate has been one of those files she will be assisting with.

In the near future, Amy will be in touch with you regarding the estate. Please answer any and all questions she may have concerning Cecil's Estate.

Marzen testified he originally intended to hire Medlin to work for his office on a contract basis. When this arrangement did not work out, Marzen testified he transferred the case to Sutton, who entered an appearance and finished the estate work.

The same day Marzen sent a letter to the Piersons, he sent a flash drive containing his file on Cecil Pierson's estate to Sutton's office, directed to Amy Medlin. The flash drive contained "what Mr. Marzen had in his file up to that point."

Marzen testified he told either Sutton or Medlin that Lloyd consented to transferring the estate case to Sutton's office. Sutton testified that Marzen told him he had Lloyd's written consent to transfer the file. Yet, no such consent appears in the record, Sutton never saw any evidence of it, and Lloyd disputes ever having given consent to the transfer. Indeed, Sutton was leery about whether Lloyd had consented to the transfer based on Sutton's previous work on Lloyd's stepfather's estate. Lloyd had hired Sutton to handle the large estate and was unhappy when Sutton sought, and was granted, the statutory attorney fee award. After receiving Cecil Pierson's estate file from Marzen on June 8, 2015, Sutton contacted the Piersons, who were surprised the file had been transferred. Lloyd testified he was not happy about the transfer but "didn't think there was anything [he] could do about it." Lloyd ultimately consented to Sutton handling the estate work, which was completed without further issue.

B. Tax Work. In September 2016, the Piersons approached Marzen about completing their personal and business tax returns for 2014 and 2015, which had not been filed and were delinquent. The Piersons had hired a certified public accountant and were frustrated he had not begun work on the project. Marzen agreed to complete the Piersons’ delinquent 2014 and 2015 tax returns and to prepare their 2016 returns. The fee agreement authorized Marzen to charge $200 per hour but did not authorize interest on overdue amounts.

Marzen quickly realized the project would take a lot more time than anticipated. The Piersons failed to keep detailed records for their business and used the same bank accounts and credit cards for both personal and business activities. Over time, they brought boxes of documents that Marzen and his assistant, his wife Kari Marzen, combed through in an attempt to recreate the Piersons’ nonexistent books. Marzen requested additional records to fill gaps identified from the records, but the Piersons failed to provide all the documents to support the needed information, including the cost of some of the vehicles purchased for resale and numerous expenses.

In January 2017, Marzen recommended a banker for the Piersons to contact about a loan for their business. The Piersons repeatedly requested financial statements and tax returns from Marzen to provide to the bank, and Marzen told the Piersons the financial statements were incomplete based on the missing documentation. Ultimately, Marzen prepared tax returns for 2014, 2015, and 2016, which the Piersons signed in Marzen's office on April 14, 2017. Marzen knew the Piersons needed the business tax returns for the bank. Marzen had the Piersons sign the tax returns despite knowing they significantly understated the cost of goods sold for the classic automobiles, among other items, given the lack of information from the Piersons. The Piersons provided the tax returns completed by Marzen to the bank on April 21, 2017.

Without consulting the Piersons, Marzen hired Amanda Conley, an accountant, in late April 2017 to help finalize amended Form 1065 partnership returns for 2014 through 2016 based on additional records the Piersons brought to Marzen in mid to late April, after Marzen had mailed the incomplete returns to the Internal Revenue Service (IRS). The Piersons did not learn of Conley's work until after she had completed it. Marzen paid Conley $300 for the approximate fifteen hours of work she performed, testifying he paid that bill himself and did not pass it on to the Piersons. Marzen testified his work on the project stalled in May 2017 from a lack of further documentation from the Piersons.

Marzen's monthly bills to the Piersons totaled $32,830 for approximately 164 hours’ worth of work on the business records and tax return project between September 2016 and May 2017. The Piersons paid lump sums toward their bill, including $7210 in September 2016 and $10,000 in July 2017. Marzen charged interest at 18% on monthly invoices that were not paid within fourteen days of the respective due dates. The commission determined the outstanding balance on the Piersons’ account, exclusive of interest, was $15,620. By October 2017, the Piersons questioned the size of the bill, and they filed this complaint in December 2017. Marzen wrote off the balance.

The parties disputed whether Marzen filed the Piersons’ tax returns in April 2017. Kari Marzen testified she put the personal and business tax returns in the mail on April 17, 2017, in three different envelopes, two addressed to the IRS and one to the Iowa Department of Revenue (IDOR). Marzen admitted into evidence a mailing affidavit Kari Marzen regularly completed in the course of her work, identifying the three envelopes as part of the outgoing mail on that date. Ms. Marzen also testified she specifically recalled mailing the tax returns because it was a milestone in a large project. Nonetheless, none of the three envelopes reached their destinations, and the Piersons’ business and personal tax returns for 2014, 2015, and 2016 were not actually filed at that time.

Marzen admits the returns he attempted to file were incomplete, referring to them as "junk" during the hearing, and required amendments. He testified he nonetheless mailed them on the April 17, 2017 filing deadline to minimize late filing penalties. Marzen was unable to reproduce copies of the signed returns, explaining he thought he could access the returns from his computer software and failed to keep a copy of the signed returns he gave to the Piersons.

In spring 2018, the Piersons hired attorney Todd Prichard to assist with the probate of Linda's father's estate and to assist with a foreclosure proceeding against their home. At some point, it was learned that the Piersons’ tax returns for 2014, 2015, and 2016 had not been filed. In July 2018, Prichard requested a transcript from the IRS of the Piersons’ personal tax returns for 2014 through 2016 and learned the IRS had not received the returns. Prichard requested Marzen send the Piersons’ file to him and, like Marzen, spent significant time recreating the Piersons’ business records from the boxes of unorganized information. Prichard...