4 3 09 Doc 23 in Re Mirch Report and Recommendation 32 Pages 80074

7/29/2019 4 3 09 Doc 23 in Re Mirch Report and Recommendation 32 Pages 80074

1/32

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re:

KEVIN JOHN MIRCH, Esq., Admitted tothe bar of the Ninth Circuit: February 16,1988,

Respondent.

No. 08-80074

REPORT ANDRECOMMENDATION

Before: Peter L. Shaw, Appellate Commissioner

IBackground

On June 9, 2008, this court ordered respondent Kevin John Mirch, Esq., to

show cause why he should not be suspended or disbarred from the practice of law

before the Ninth Circuit based on the April 10, 2008 disbarment order of the

Supreme Court of the State of Nevada. See Fed. R. App. P. 46(b)(1)(A)

(authorizing discipline); In re Rosenthal , 854 F.2d 1187, 1188 (9th Cir. 1988)

(stating conditions absent which state court disciplinary determination is entitled to

deference and recognition).

Mirchs discipline was based on an allegedly frivolous state court action that

he filed in 2002, but that action was part of a larger sequence of litigation dating

back to 1991, when Dr. Kenneth Frank (Frank) and his company Advanced

FILED APR 03 2009

MOLLY C. DWYER, CLERKU.S. COURT OF APPEALS

Case: 08-80074 04/03/2009 ID: 6870557 DktEntry: 23 Page: 1 of 32


2/32

No. 08-80074

2

Physicians Products, Inc. (APPI), were sued for breach of an exclusive

marketing agreement by Universal Sales, Inc., a company controlled by Mr. and

Mrs. Brooks. Soon after, Mirch was engaged to represent Dr. Frank and APPI in

the lawsuit, Universal Sales, Inc. v. Advanced Physicians' Prods., Inc., et al.,

CV-N-91-0375-ECR(VPC).

In 1995, Mirch, representing Frank and APPI, obtained a default judgment

of $3,439,868.77 after the Brookses did not appear for trial on January 24, 1995.

Mirch did not ask for an award of attorneys fees although the contract between the

parties allowed for such an award. In 2000, upon a motion by the Brookses, the

court set aside the judgment as to Dr. and Mrs. Frank and reduced the total award

by $1.1 million to exclude damages for emotional distress and personal losses on

behalf of the Franks. In 1999, Dr. Frank retained a collection agency, RC

International, to locate assets of the Brooks to satisfy the Universal Sales judgment.

To pay for these services, Dr. Frank assigned a portion of his rights to the

judgment to RC International. The assignment agreement gave RC International

rights to 50 percent of any assets they recovered. RC International located $1.8

million in assets, which became the subject of an interpleader action, Case No.



3/32

No. 08-80074

The relevance of the third party complaint in the federal case to Mirchs1

state action is important, albeit disputed. As a result of the Mirches federal

3

CV-N-00-0580-ECR(VPC). Mirch intervened in that action and filed an attorneys'

lien.

Subsequently, in 2001, Mirch filed a separate state court action against his

former clients, the Frank parties, for breach of contract based on his claim for

attorneys fees. This action was then removed to district court, and consolidated

with the interpleader action over the recovered Brooks assets. McDonald Carano

Wilson LLP (MCW) became counsel for the Frank parties. Mirch maintained

that in accordance with his engagement letter dated January 9, 1992, the parties

agreed he would be paid $25 per hour to litigate claims and that he would be

entitled to recover 40 percent of any judgment obtained. Dr. Frank denied there

was any such agreement, either written or otherwise, and asserted that the parties

agreed only upon an hourly payment. The Frank parties counterclaimed against

Mirch for, among other things, abandoning the Frank parties in their original action

and failing to execute on the default judgment obtained in favor of the Frank

parties. Mirch, through his wife, then filed a third-party complaint against MCW

and two of the firms attorneys for indemnification for any possible malpractice

liability suffered by Mirch. 1



4/32

No. 08-80074

third-party complaint, MCW concluded that it faced a conflict of interest.Accordingly, MCW moved to withdraw as counsel for the Frank parties. After the

district court granted the motion to withdraw, MCW moved to dismiss theindemnification claim under Federal Rule of Civil Procedure 12(b)(6) for failure tostate a claim. The district court granted the motion to dismiss, holding that Nevadalaw would not allow Mirch to recover on his indemnification claim. On the day of the dismissal order, Mirch voluntarily moved to dismiss the third-party complaint,claiming to have realized that the third-party complaint destroyed diversity

jurisdiction. The court declared Mirchs voluntary motion moot. MCWsubsequently moved for sanctions under Federal Rule of Civil Procedure 11, 28U.S.C. 1927, and the courts inherent authority. Mirch opposed the motion. On

August 24, 2004, the court granted sanctions in the form of attorneys fees andcosts solely under 1927. After further briefing, the court awarded MCW$16,271.12 in attorneys fees and costs. The sanctions award was affirmed by the

Ninth Circuit. See Mirch v. Frank , No. 06-15529 (9th Cir. Feb. 6, 2008). It isunclear to what degree the federal and state courts relied on Mirchs aggressivefilings in the other court in ordering sanctions.

4

On September 25, 2002, during the pendency of the federal action, Mirch

filed the state court action that is the underlying basis of the state disciplinary

action. Mirch filed suit against MCW and one of its attorneys, Leigh Goddard, for

intentional interference with a contract and conspiracy, as well as a self-styled

whistleblower claim. An amended complaint was filed the next day. Service of

the amended complaint was not accomplished until January 22, 2003. Without

alleging a cause of action for bankruptcy fraud, the amended complaint contained

three causes of action, all of which depended to some extent on a theory that Dr.

Frank and his attorneys had engaged in bankruptcy fraud insofar as the assets from



5/32

No. 08-80074

Dr. Frank had filed a Chapter 11 bankruptcy in 1984, which was converted2

to a Chapter 7 proceeding in 1994.

5

the 1995 default judgment were being hidden from Dr. Franks bankruptcy

creditors. Mirch purported to bring one count of the amended complaint on behalf 2

of several Doe plaintiffs who were Dr. Franks bankruptcy creditors, and the

other two counts alleged that various actions were taken against Mirch as a result

of his threat to inform the bankruptcy court of the alleged fraud.

On February 10, 2003, defendants filed a lengthy motion to dismiss and a

motion for sanctions. Mirch opposed the motions, and a hearing was held on the

motion to dismiss, which was converted to a motion for summary judgment

because both parties introduced evidence beyond the pleadings. On October 9,

2003, Judge (later Justice) Hardesty filed his order finding the amended complaint

frivolous, imposing sanctions in an unspecified amount, and referring the matter to

the State Bar of Nevada.

On June 15, 2004, the Northern Nevada Disciplinary Board of the Nevada

State Bar filed its complaint alleging that Mirch had engaged in acts of

misconduct warranting the imposition of professional discipline. ER X:1. The

sole count and basis of the complaint was the 2002 state court action, and the



6/32

No. 08-80074

6

complaint incorporated by reference each and every factual finding and legal

finding made in Judge Hardestys October 9, 2003 order. ER X:2.

Through counsel, Mirch filed an Answer and Affirmative Defenses on

June 1, 2005, in which he denied the charges incorporated by reference and argued

that the form of the complaint violated Nevada SCR 105(2) by failing to inform

him clearly and specifically how the amended complaint in his state court action

violated Supreme Court Rule (SCR) 170. See ER X:128. The Answer also

included a lengthy legal memorandum from Mirchs counsel, David Hamilton,

which argued that the state court amended complaint was based on sound legal

argument and appropriate factual investigation. See ER X: 131-160.

The disciplinary panel conducted a hearing on the charges against Mirch in

February 2007, and the panel issued its decision on March 7, 2007. The five-

member panel concluded unanimously that Mirchs conduct had violated SCR 170

insofar as the amended complaint was in most respects frivolous. ER X:181.

The panel found that the allegations in fifteen paragraphs of the amended

complaint lacked factual or legal support. More specifically, the panel found that

the defendants had not devised a scheme to prevent Mirch from disclosing an

alleged bankruptcy fraud, that Ms. Goddard had not threatened Mirch with reprisal



7/32

No. 08-80074

7

if he made such a disclosure, that Ms. Goddard had not destroyed or failed to

produce documents in the course of litigation, that neither Ms. Goddard nor her

agents had contacted other Mirch clients in an attempt to interfere with his

business, nor had they interfered with his business in any other way. See ER

X:182-86. The panel also found that Mirch had no attorney-client relationship

with any of the Doe plaintiffs named in the amended complaint, and therefore

had no legal or factual basis upon which to seek damages on their behalf. ER

X:186. The panel also found that Mirch intended to harass, embarrass and

otherwise injure and inconvenience MCW and Goddard in their representation of

Dr. Frank in the underlying federal action. Id. The panel also noted Mirchs

refusal to accept responsibility, and flatly rejected Mirchs attempt to characterize

his whistleblower action as an action under Nevadas anti-SLAPP statutes. See

ER X:187. The panel recommended disbarment.

The panels decision was automatically reviewed by the Nevada Supreme

Court. In addition to his earlier affirmative defense that the state bar complaint

insufficiently stated the charges against him, Mirch argued to the Supreme Court

that the disciplinary panels proceedings violated due process because he had not

received notice that: (1) the state bar would rely on prior uncharged bad acts as



8/32

No. 08-80074

8

aggravating factors; (2) the state bar would argue that Mirchs delay in serving the

amended complaint until three days before the expiration of the 120-day service

period violated SCR 170; and (3) the state bar would argue that a failure to

investigate constituted a violation of SCR 170. See ER X:191.

In its April 10, 2008 disbarment order, the Nevada Supreme Court rejected

Mirchs due process arguments, concluding that Judge Hardestys order in the state

court case provided detailed notice of the charges against Mirch. The Supreme

Court also noted that Mirch had been provided, in accordance with SCR 105(2)(c),

a complete list of witnesses and evidence the state bar planned to introduce at the

hearing. It also rejected the claim that delayed service of the complaint was an

improperly undisclosed part of the charged conduct, noting that the conduct in

question was introduced as part of the effort to show Mirchs intent. The Supreme

Court also concluded that Mirch should have known that duty to investigate was

part of the ethical rule Mirch was charged with violating, and it noted that Mirchs

spirited defense of his pre-complaint investigation showed that he was on notice of

the charges against him. See ER X:191-93.

The Supreme Court also addressed Mirchs other arguments about the

conduct of the disciplinary hearing. The Supreme Court rejected Mirchs claim



9/32

No. 08-80074

9

that the hearing should have been bifurcated because evidence of prior bad acts

improperly influenced the panel, concluding that Mirch had waived this argument.

The Supreme Court also rejected as inapposite Mirchs Confrontation Clause

argument that he should have had the opportunity to examine (now-)Justice

Hardesty, whose order was the genesis of the disciplinary proceedings. The Court

also cited the hearing transcript in rejecting Mirchs claim that state bar witness

Bruce Laxalt did not testify under oath. See ER X:193-95.

The Supreme Court concluded that the findings of fact that Mirch had

violated SCR 170 were supported by clear and convincing evidence, and it agreed

that discipline was warranted. Based on the circumstances surrounding Mirchs

filing of the lawsuit, in connection with evidence that this action represented only

one instance in a pattern of similar conduct, the Supreme Court accepted the

panels recommendation that Mirch be disbarred. ER X:196.

Reciprocal disciplinary proceedings were instituted in this court with the

June 9, 2008 filing of an order to show cause why Mirch should not be disbarred

on the basis of the Nevada Supreme Courts disbarment order. See 9th Cir. R.

46-2.



10/32

No. 08-80074

10

In his July 8, 2008 response to this courts order to show cause, Mirch

requested a hearing before the Appellate Commissioner, and contended that State

Bar proceedings, real and threatened, had been used to frustrate his own legitimate

litigation. With respect to the state court action against MCW and Goddard, which

formed the basis for the disciplinary proceedings, Mirch alleged that his due

process rights had been violated when the state court converted a motion to dismiss

into a motion for summary judgment without allowing Mirch adequate notice or an

opportunity for discovery or opposition to the summary judgment motion. With

respect to the state bar proceeding at issue here, Mirch alleged that his due process

rights had been violated insofar as: (1) Mirch was not allowed the opportunity to

cross-examine Justice Hardesty; and (2) Mirch was disbarred without an entire

panel of the Supreme Court ruling on the matter because two justices had recused

themselves.

In his September 9, 2008 order, the Appellate Commissioner set a hearing

date and invited Mirch to submit a pre-hearing brief addressing this circuits

analysis of reciprocal discipline, as set out in In re Kramer , 282 F.3d 721 (9th Cir.

2002). Under that analysis, Mirch has the burden of showing that reciprocal

discipline is improper because an independent review of the record reveals: (1) a



11/32

No. 08-80074

11

deprivation of due process; (2) insufficient proof of misconduct; or (3) grave

injustice which would result from the imposition of such discipline. Id. at 724.

On October 6, 2008, Mirch filed his pre-hearing memorandum (Mem.).

The memorandum reiterated the various ways in which his due process rights

allegedly had been violated by Judge Hardesty in the conduct of the underlying

state-court action, and it expanded his earlier allegations of due process violations

in the conduct of the state bar disciplinary proceeding. Mirch alleged, inter alia :

(1) the wrongful denial of his right to confront Judge Hardesty;

(2) inadequate notice of the charges against him;

(3) the wrongful acceptance of unsworn testimony at the state bar hearing;

(4) the improper review of the panels decision by a reduced panel of the

Nevada Supreme Court;

(5) the wrongful appointment of competitors to his disciplinary panel, in

violation of Stivers v. Pierce , 71 F.3d 732, 741 (9th Cir. 1995).

Mirchs account of the due process violations that occurred in the course of his

disciplinary proceedings is somewhat confusedly intermixed with his charges of

due process violations before Judge Hardesty and broader claims that he was a

victim of one or more wide-ranging conspiracies to disbar him. See Mem. at 6-9.



12/32

No. 08-80074

12

At his October 14, 2008 hearing, Mirch represented himself, and he argued

that his disbarment had violated all three of the Kramer factors. Mirch alleged

multiple due process violations that began with the state bars decision to rely on

Judge Hardestys order in the underlying state court action, rather than conduct its

own investigation, as mandated by Nevada Supreme Court Rule 105(3). Mirch

also elaborated on the various due process issues raised in his pre-hearing

memorandum. In particular, Mirch argued that he had not received sufficient

notice that his conduct in other cases would be at issue.

During Mirchs testimony, the Appellate Commissioner suggested that many

of the issues Mirch raised as due process violations, e.g., the use of allegedly

unsworn testimony, were more properly understood as arguments about the quality

and sufficiency of the evidence presented against him during his disciplinary

proceedings. Mirch agreed, and he noted that much of his own evidence was

completely ignored, including the testimony of his experts on bankruptcy and legal

ethics, and the testimony of Charles Wiseman, the former client and sometime

employee who had allegedly overheard Leigh Goddard instruct Dr. Frank to

destroy evidence. Mirch concluded that the state bars case against him did not



13/32

No. 08-80074

13

remotely satisfy the clear and convincing evidence standard required by Nevada

law.

In the course of the hearing, Mirch provided considerable detail about his

protracted disciplinary proceedings. During the pendency of the disciplinary

proceedings, Mirch suffered a stroke, and Mirch described his struggle to resist the

state bars efforts to have him declared disabled, and to preserve his right to a

hearing. Mirchs testimony was corroborated by Marie Mirch, his wife and law

partner, who took over much of her husbands defense after his stroke. Mrs. Mirch

also testified that she was unprepared to take over her husbands defense, in part

because there was considerable confusion about the specific charges against him,

and whether the state bar contended that the underlying complaint was meritless

factually or legally.

In addition to his wife, Mirch offered as a witness his former client, Earlene

Forsythe. Ms. Forsythe explained that her husband had retained Mirch to defend

him on a criminal matter after his original counsel had recommended that he accept

a plea agreement. Mrs. Forsythe testified that in March 2007 she received a call

from Pat Lundvall, a partner at MCW, who warned her not to hire Mirch because

he was about to lose his license and his reputation would bias judges against her



14/32

No. 08-80074

14

husband. Ms. Forsythe also testified that she and Ms. Lundvall had organized a

fundraiser for Judge Hardestys campaign for the Supreme Court that took place

just two days after Judge Hardesty had dismissed Mirchs amended complaint in

the underlying action.

Mirch offered Ms. Forsythes testimony to corroborate his claims that

conflicts of interest and other improper motives lay behind both Judge Hardestys

referral to the state bar and the conduct of his disciplinary proceedings. At several

points during his hearing, Mirch alleged that the Reno legal community was

threatened by him and actively sought to disbar him.

In the course of the hearing, the Appellate Commissioner noted several

issues and contentions that either lacked legal support or had not been discussed in

Mirchs pre-hearing memorandum. He therefore ordered Mirch to submit post-

hearing briefing that addressed these points. On November 20, 2008, Mirch

submitted a brief that addressed, inter alia , the state bars duty to conduct an

independent investigation before proceeding with a complaint; the effect of

Mirchs stroke on the disciplinary proceedings; and the propriety of the State Bars

rejection of the testimony offered by Mirchs witnesses.



15/32


16/32

No. 08-80074

16

at 724 (applying Selling factors to reciprocal discipline based on discipline in

district court). The attorney-respondent has the burden of proving one of the three

Selling or Kramer conditions by clear and convincing evidence. See In re Kramer ,

282 F.3d at 724 (citing Selling , 243 U.S. at 50-51).

B. Due Process Allegations

Evaluating Mirchs due process arguments is difficult for two reasons. First,

Mirch points to alleged due process problems in the underlying state court action

as examples of how his due process rights were violated in the course of the state

bar disciplinary proceedings. The two issues are distinct, however, and the

allegation that Mirch was not given sufficient notice or discovery in the resolution

of the underlying claim via summary judgment is irrelevant to an evaluation of the

due process components of the disciplinary proceedings. Mirch may be arguing

that the two are connected because Judge Hardestys order in the underlying case

was the sole basis for the disciplinary action, and his findings were incorporated by

reference in the state bars complaint, but those findings were merely the starting

point of the proceedings. Mirch had ample opportunity to challenge the way Judge

Hardesty reached his conclusion in the course of the disciplinary proceedings.



17/32

No. 08-80074

17

Second, as the Appellate Commissioner noted at the hearing, Mirch alleges

as due process issues questions that are more properly regarded as challenges to

the sufficiency of the evidence. These will be discussed in part C below.

The majority of Mirchs true due process allegations have been fully, if

concisely, rejected in the Nevada Supreme Court disbarment order summarized

above. Although Mirch raised many of these same issues to this court at his

hearing and in the briefing that preceded and followed the hearing, he has not

provided any basis for rejecting the Supreme Courts analysis of these issues. For

example, Mirch continues to maintain that he was not given sufficient notice that

his conduct in other cases would be at issue in his discipline, even in the face of the

state bars designation of witnesses and evidence that stated it intended to

introduce such matters as evidence in aggravation which will demonstrate a

pattern of egregious activity . . . which reflects adversely on his fitness to practice

law.

The due process issues raised by Mirch to this court that were not addressed

by the Nevada Supreme Court also lack merit. For example, Mirch argues that he

was entitled to a hearing before the Supreme Court, or at least notification that the

matter of his discipline would be submitted on the briefs. But in support of his



18/32

No. 08-80074

18

position, he offers only unconvincing inference from existing rules. Similarly,

Mirchs argument about the improper competitor composition of his disciplinary

panel misapplies Stivers v. Pierce , 71 F.3d 732, 741 (9th Cir. 1995) and ignores the

Supreme Court precedent behind Stivers . That precedent requires a showing of a

tribunals direct, personal, substantial, pecuniary interest to substantiate a due

process violation. Aetna Life Ins. Co. v. Lavoie , 475 U.S. 813, 822 (1986).

C. Sufficiency of the Evidence

Mirchs challenge to the sufficiency of the evidence used to disbar him falls

into two categories: an attack on the evidence used against him and a claim that the

evidence he presented in his favor was unjustifiably ignored. The latter set of

arguments has more weight, but Mirchs tendency to confuse what he had to prove

in state court with what the state bar had to demonstrate at the disciplinary hearing

undermines his claim that the bar lacked sufficient evidence to support its findings.

The sufficiency-of-proof question is complicated by legal uncertainty about

the nature of the charge against Mirch, and therefore what each side had to prove at

the hearing. The rule that Mirch was charged with violating, SCR 170, provided,

in relevant part: A lawyer shall not bring or defend a proceeding, or assert or

controvert an issue therein, unless there is a basis for doing so that is not frivolous,



19/32

No. 08-80074

The only difference between SCR 170 and RPC 3.1 is the latters3

specification that the lawyers claim must have a basis in law and fact.

19

which includes a good faith argument for an extension, modification or reversal of

existing law. Only one published case has applied SCR 170, and the Nevada

Supreme Court did not interpret its provisions in any extended way. See In re

Schaefer , 25 P.3d 191 (Nev. 2001). SCR 170 was replaced in 2006 by Nevada

Rule of Professional Conduct (RPC) 3.1, which explicitly tracks the similar

language of Model Rule 3.1. 3

Neither SCR 170 nor Model Rule 3.1 offers explicit guidance about how

frivolousness is to be determined. The state bars ethics expert, Dennis

Kennedy, offered extensive and persuasive testimony that the standard for judging

an attorneys behavior is objective, not subjective. In other words, an attorneys

conduct in proceeding with a questionable case is to be evaluated with reference to

what a reasonable lawyer would do. Mirch appears to have based a good part of

his defense on the contrary, older, position that a subjective standard applies and

therefore he attempted to show that he could have believed, and did in fact believe,

that there was legal and factual support for the claims in his amended complaint.

This difference of opinion matters little, however, because the state bars expert

agreed that motive was a secondary consideration in determining culpability, and



20/32

No. 08-80074

In analyzing the requirements of SCR 170, both sides legal ethics experts4

relied on case law involving sanctions under Federal Rule of Civil Procedure 11and its state-law cognates. Although sanctions case law is distinguishable becauseit explicitly requires an inquiry into the motives behind questionable litigation, thequestion of motive is clearly relevant to SCR 170.

20

Mirchs expert argued that state-of-mind was part of the context to be considered

in determining what a reasonable lawyer would do in specific circumstances. In

any event, both sides presented considerable evidence of Mirchs actual state-of-

mind. 4

Based on the testimony of its witnesses, and the argument of its counsel, the

state bars position was that none of the three causes of action contained in the

amended complaint was legally cognizable, and none of them was supported by the

facts. Even if Mirch somehow did not understand the lack of a basis for his claims,

he had a duty to investigate under SCR 170 and Model Rule 3.1, and a reasonable

lawyer would have discovered that Judge Reed had ruled in 2000 in the

interpleader action that the proceeds of Dr. Franks suit were not a part of the

bankruptcy estate. Therefore, there was no bankruptcy fraud, and this ruling by

Judge Reed undermines the linchpin of all the claims of the amended complaint.

Mirch therefore violated SCR 170.



21/32

No. 08-80074

21

The inherent ambiguity of the particular disciplinary charge lodged against

Mirchinvolving how to assess frivolousnessis not the only difficulty in

determining whether there is sufficient evidence to support the imposition of

reciprocal discipline. Equally difficult problems are posed by the interaction of the

various standards of review applicable to this case. The state bar was required to

find misconduct by clear and convincing evidence, see In re Stuhff , 837 P.2d

853, 856 (Nev. 1992), but this courts analysis of that process is highly deferential

and, as noted above, Mirch must demonstrate that at least one of the three Kramer

factors applies, also by clear and convincing evidence. Mirch argues that the

state bar did not satisfy its original burden of proof, but that is an argument for the

Nevadaa Supreme Court, which has the power to review directly the state bars

findings. See SCR 105(3)(b); In re Drakulich , 908 P.2d 709, 715 (Nev. 1995). In

determining whether there is insufficient evidence to impose reciprocal

discipline, this courts analysis of the evidence supporting the original discipline is

necessarily more deferential. Although no Ninth Circuit case interprets the

sufficiency standard, Mirchs burden is a heavy one.

The bar panels decision is nevertheless strikingly perfunctory, as is the

Supreme Court order affirming it. Under Nevada law, the clear and convincing



22/32

No. 08-80074

22

standard does not require irresistible proof, but there must be evidence of

tangible facts from which a legitimate inference . . . may be drawn. In re Stuhff ,

837 P.2d at 856 (quoting Gruber v. Baker , 23 P. 858, 865 (Nev. 1890)). The state

bar panels decision is marked by conclusory statements that do not demonstrate

how the findings flow from the evidence before it.

After stating that the panel did not find Mirch or his witness credible and

gave little or no weight to the testimony of Mirchs expert Hamilton, the panel

identifies 15 paragraphs of the amended complaint that contained allegations that

were made without factual or legal foundation and are frivolous. See ER X:182.

The panel proceeds to state its findings that Leigh Goddard, among other things,

had not told Dr. Frank to destroy documents; had not devised a scheme to prevent

Mirch from disclosing a bankruptcy fraud; and had not contacted any of Mirchs

clients and instructed them not to pay amounts due to his firm. See ER X: 185-86.

There are several problems with this decision. First , to the degree it

contains findings of fact, they are findings about the merits of the underlying

case, which was still pending on appeal at the time the bar panel issued its

decision. Assessment of the underlying merits is necessary for determining

whether the amended complaint was frivolous, but the bar panels decision offers



23/32

No. 08-80074

23

little explanation for its conclusion that there was no legal or factual basis for

Mirchs claims, the heart of the disciplinary inquiry. The decision does not even

clarify whether Mirchs specific claims violated SCR 170 because they lacked

legal or factual foundation or both.

Second , the panels decision does not explain how it weighed the evidence

Mirch presented. The decision memorializes the panels preference for the

testimony of one sides expert, but does not explain why. During the hearing, the

state bar counsel questioned David Hamiltons credentials as an expert, but the

panels reasons for rejecting his testimony out of hand remain unclear and

surprising, given that Hamilton served on the state bars disciplinary panel for nine

years. The panels decision does not even mention the testimony of Geoffrey

Giles, Mirchs bankruptcy expert. See ER XIV:501-37.

Third , the panels decision makes no findings whether or to what extent

Mirchs actions in filing his state court action against MCW and Leigh Goddard

are part of a pattern and practice. The panel decision recommends disbarment

without stating whether Mirchs conduct in similar circumstances or his past

disciplinary record was an aggravating factor. In upholding the panels



24/32

No. 08-80074

24

recommendation, the Supreme Court did little better, referring simply to a pattern

of similar conduct.

Although disturbing, the deficiencies of the panel decision are not

dispositive. In reciprocal proceedings, this court undertakes an intrinsic

consideration of the state record to determine whether sufficient evidence was

presented in the course of disciplinary proceedings, even if that evidence was not

fully recounted in the panels decision. See In re Rosenthal , 854 F.2d at 1188

(quoting Selling , 243 U.S. at 51).

The state bars expert explained at length how Mirchs claims were either

procedurally or substantively improper. A review of the record, however, suggests

that at least some parts of Mirchs action against MCW and Goddard were not

legally frivolous. Mirchs theory of an underlying bankruptcy fraud is at least

colorable in view of the orders issued in Dr. Franks bankruptcy case and the

unsettled law governing the conversion of Chapter 11 cases after a plan has been

confirmed.

In addition, Judge Hardestys order misunderstood the role of the alleged

bankruptcy fraud in Mirchs amended complaint and, as a result, the allegations

against Leigh Goddard appeared patently ridiculous insofar as the alleged fraud



25/32

No. 08-80074

25

began when Goddard was still in school. The amended complaint alleged that

MCW and Goddard conspired to perpetuate the fraud and prevent its disclosure,

not that they were somehow involved in the events that occurred years before they

became Dr. Franks counsel. The panel apparently accepted bar counsels

argument that there could be no bankruptcy fraud, given Judge Reeds 2000

order in the interpleader case, but Mirch objected, as he had in the underlying case,

that he was not aware of that order, and that Judge Reeds order did not resolve the

issue in any event. Although Mirchs bankruptcy expert testified authoritatively

about the basis for alleging an underlying bankruptcy fraud and the state bars

expert disavowed any bankruptcy expertise, the panels decision did not even

discuss the bankruptcy fraud at the heart of the amended complaint, except to

conclude that [a]ssuming, arguendo , that Dr. Frank committed bankruptcy fraud

such was not engineered by Goddard or MCW. ER X:186. The panel thus

perpetuated Judge Hardestys misunderstanding of the amended complaint.

Mirchs admission that he knew nothing of Judge Reeds order does, however,

support the state bars charge that Mirch failed to investigate his claims adequately.

In explaining the legal shortcomings of the amended complaint, state bar

expert Dennis Kennedy repeatedly stated that, even assuming the facts alleged in



26/32

No. 08-80074

Mirch and his expert argued, for instance, that a suit against his former 5

clients current counsel was supported by Siragusa v. Brown , 971 P.2d 801 (Nev.1998) in which a woman sued her former husbands attorney for fraudulenttransfer of assets. Mirch also claimed repeatedly that the somewhat amorphous

26

the amended complaint were true, Mirchs claims would be frivolous. Kennedys

brief expert report does not explain how he reached this opinion, but he testified

that several aspects of the amended complaint made no sense (e.g., the use of Dr.

Franks bankruptcy creditors as Doe plaintiffs) or were improper (e.g., the use

of a separate state-court action to address issues that grew out of the ongoing

federal fee case). See ER XII:147-154. By contrast, Mirchs expert, David

Hamilton, who originally represented Mirch before the bar, provided detailed, if

not always persuasive, arguments about how each claim in the amended complaint

built upon existing precedent. In fact, Kennedy testified that, apart from their

fundamental difference of opinion about whether the objective or subjective

standard applied to SCR 170, he did not object to Hamiltons legal analysis. See

ER XII: 157.

This comparison of the approaches taken by the two experts is important

because SCR 170, like the state and federal versions of Rule 11, explicitly cautions

that a good faith argument for an extension, modification or reversal of existing

law is a valid basis for legal action. Ultimately, however, most of Mirchs5



27/32

No. 08-80074

whistleblower cause of action in the amended complaint built upon precedentMirch himself had established in Clark v. Columbia/HCA Information Servs., Inc. ,25 P.3d 215 (Nev. 2001), in which a psychiatrists efforts to disclose wrongdoingat a hospital were protected as whistleblowing.

27

alleged attempts to extend the law are unconvincing, post hoc rationalizations.

Many of the legal theories offered by Hamilton in support of the amended

complaint were conspicuously absent from Mirchs opposition to the motion to

dismiss the amended complaint, a pleading that was required to give the legal

underpinnings of the complaint. The plain language of SCR 170 requires a

determination whether the attempts to extend the law are made in good faith, and

the bar panel heard considerable evidence from which it could infer that Mirchs

attempts to extend existing law were not undertaken in good faith.

Even if this court were to conclude that there is insufficient evidence to

support the state bar panels conclusion that Mirchs amended complaint lacked a

legal basis, it is clear that the panels decision was also based on a finding that

Mirchs complaint lacked a factual basis. The explicit rejection of the testimony

given by Mirch and Wiseman suggests that the panel concluded that Mirch had

fabricated the claims that were based on his direct interaction with Goddard. It is

clear that the disciplinary panel believed Goddard, who appeared as a witness at

Mirchs disciplinary hearing and categorically denied his allegations about threats



28/32

No. 08-80074

In his post-hearing briefing to this court, Mirch raisesas a due process6

issuethe fact that Goddard had been disclosed as a witness who would testify

regarding the effect Respondents conduct had upon her professionally and uponthe underlying matter as well as related federal litigation, and not to the factualallegations of the First Amended complaint. This argument is disingenuous

because Goddards testimony about the effect of the allegations of Mirchsamended complaint necessarily included her assessment of the factual basis for those allegations.

28

she had made to him. The question then becomes whether there was sufficient6

evidence for the state bar to reject Mirchs testimony about the facts supporting the

claims in the amended complaint.

Credibility determinations are integral to disciplinary proceedings, and the

bar panel stated its conclusions about the parties credibility as its first finding.

Nevada case law nevertheless warns against relying solely on such determinations

in the context of disciplinary proceedings. In In re Drakulich , for example, the

state bar had recommended discipline in the case of an attorney alleged to have

split fees with a non-attorney. The Supreme Court declined to do so, however,

because the only evidence of the charged conduct were the dubiously motivated

statements of a former employee of the attorney. See 908 P.2d at 717 (citing In re

Clarke , 212 P. 1037, 1038 (Nev. 1923)). In some respects, there is a similar he

said, she said aspect to determining whether there is a factual basis for the

allegations at the heart of Mirchs amended complaint. The state bar panel had



29/32

No. 08-80074

29

considerable evidence, however, from which it could conclude that Mirchs

testimony was not credible. The hearing transcript shows that some members of

the panel were particularly troubled by the fact that Mirch did nothing in federal

court with the shocking information Wiseman allegedly conveyed to him during a

break in Dr. Franks deposition in the underlying federal fee litigation. As with

some of his more fanciful legal theories, Mirch did not even disclose Wisemans

eyewitness testimony in the state court action until the motion for reconsideration

of Judge Hardestys order. Moreover, Wiseman himself was not a very credible

witness at the bar hearing.

The state bar panel had further reason not to credit Mirchs account of the

facts underlying the amended complaint. For example, Mirchs testimony

concerning the factual basis for his claim that Goddard and MCW had interfered

with his contracts with other clients was vague, speculative, and chronologically

confused. Similarly, Mirchs stated rationale for pleading Doe plaintiffs

depended on equivocal claims about his relationship to Dr. Franks creditors that

did not withstand cross-examination.

The state bar panel therefore had sufficient evidence from which it could

find that the amended complaint lacked a basis in fact and law, and conclude that



30/32

No. 08-80074

30

Mirch intended to harass, embarrass, and otherwise injure and inconvenience

MCW and Goddard in their representation of Dr. Frank in the underlying federal

action.

D. Grave Injustice

Much of Mirchs argument implicates the third Kramer factor insofar as he

contends that there was a conspiracy to run him out of the Reno legal community

because several prominent lawyers feared facing him in court. In fact, these claims

became the basis of a separate unsuccessful lawsuit in federal district court, which

Mirch pursued as part of a larger effort to forestall the state bar disciplinary hearing

that also included writ petitions in state court. This court has now affirmed the

district courts dismissal of his action against the state bar. See Mirch v. Beesley ,

Nos. 07-15143, 07-16046 (9th Cir. Mar. 5, 2009). On the record before this court,

there is no basis for concluding that Mirchs discipline was the result of such a

conspiracy and therefore a grave injustice.

Mirchs appeal of the panel decision to the Nevada Supreme Court argued

that disbarment was an excessive penalty, and he complained that the bar had not

initially sought disbarment. This argument builds on Mirchs contention that

uncharged past conduct was unfairly and improperly used in the proceeding.



31/32

No. 08-80074

The evidence of Mirchs prior allegedly meritless and harassing lawsuits7

was not clearly developed through the testimony of Bruce Laxalt, Esq., but the bar panels decision did not reference or rely upon this conduct in its decision, as notedabove.

31

These claims are unavailing. As noted above, the bars witness designation clearly

informed Mirch that his conduct in other cases would be used as an aggravating

factor. The state bars brief to the Supreme Court makes clear that its7

recommendation of increased discipline was based on Mirchs conduct at the

hearing itself, and it correctly noted that Mirchs prior discipline and lack of

remorse were also valid aggravating factors. See ABA Joint Comm. on Profl

Standards, Standards for Imposing Lawyer Sanctions (1984, rev. 1992),

9.22(a),(g).

An examination of the record reveals that Mirch tenaciously asserted his

procedural rights at every turn of the disciplinary process. The deficiencies of the

panels written decision are described above, but there was no grave injustice in

the process that produced that decision.

For the reasons described above, Mirch has failed to demonstrate that any of

the Kramer factors should prevent this court from imposing reciprocal discipline.

This court should accord a presumption of correctness to the Nevada disciplinary



32/32

No. 08-80074

32

proceedings, and defer to and recognize the state court order suspending Mirch.

See Fed. R. App. P. 46(b)(1)(A).

IIIConclusion

Because Mirch was disbarred under a version of Nevada Supreme Court

Rule 102 that allows him to petition for reinstatement after three years, the court

should impose a three-year reciprocal suspension, effective April 10, 2008, the date

of his Nevada disbarment. At the conclusion of the suspension, Mirch may

petition for reinstatement to the Bar of the Ninth Circuit, contingent upon a

showing that he is a member in good standing of the bar of any state.

Mirch should be required to reimburse the court for the $875.00 cost of

reporting and transcribing the disciplinary hearing. The courts order adopting this

report and recommendation should be served on the State Bars of California and

Nevada.


4 3 09 Doc 23 in Re Mirch Report and Recommendation 32 Pages 80074

Documents

Transcript of 4 3 09 Doc 23 in Re Mirch Report and Recommendation 32 Pages 80074