V I R G I N I A :


IN THE CIRCUIT COURT FOR THE CITY OF ALEXANDRIA

VIRGINIA STATE BAR, EX REL., )
FIFTH DISTRICT, SECTION ONE, )
COMMITTEE, ) )
Complainant/Petitioner, )
)
v. ) Chancery No. CH010029
)
STEPHEN LEE SHELNUTT, )
)
Defendant/Respondent. )


AGREED DISPOSITION


On this 28th day of February, 2001, come the Virginia State Bar by Peter A. Dingman, Esquire, Special Assistant Bar Counsel, and Respondent, Stephen Lee Shelnutt, Esquire, by his counsel, C. Russell Twist, Esquire, and tender the following Agreed Disposition:

A. STIPULATION OF FACTS (VSB DOCKET NO. 93-051-1322:
1. At all time relevant hereto, and continuing to the present time, Respondent, was licensed to practice law in the Commonwealth of Virginia; however, from June 26, 1992, through February 1993, Respondent was an Associate member of the Virginia Star Bar, a membership status by which Respondent, under the rules of the Virginia State Bar, was not authorized to practice law in the Commonwealth of Virginia.
2. Margaret Blackledge ("Blackledge") owned a condominium in Falls Church, Virginia, against which there were two deeds of trust on which Blackledge was behind in her payments to the noteholders. Blackledge's son had co-signed the second deed of trust note.
3. On or about July 28, 1992, Blackledge signed a Contract of Employment (the "Contract") by which she retained Respondent to represent her in a Chapter 7 bankruptcy "to discharge a note on a parcel of real property" and in a Chapter 13 bankruptcy "to reaffirm the existing deed of trust at the current fair market value of the property". The Contract stated fees of $350.00 for the Chapter 7 bankruptcy and $375.00 for the Chapter 13 bankruptcy.
4. In the Contract, Respondent represented to Blackledge that he had "undertaken sufficient investigation and is sufficiently familiar with the intricacies of the needed procedures to ascertain a reasonable basis for this procedure". Complainant represented that she had equity in her property described in Stipulation Number 3.
5. In the Contract, Respondent also agreed, as an officer of the court but not as an attorney, to seek a stay of foreclosure proceedings scheduled for July 30, 1992, on the basis of the Solders' and Sailors' Civil Relief Act of 1940.
6. Blackledge paid Respondent the following amounts by check as indicated:
Date Amount Payee Memo Notation

July 27, 1992 $125.00 Cash S Shelnutt
July 28, 1992 $725.00 Steve Shelnutt Fee 7/27 - Chap's 7& 13
August 7, 1992 $22.55 Steve Shelnutt 7-30-92 Bill

7. On or about July 29, 1992, Respondent filed a Chapter 7 bankruptcy petition on behalf of Blackledge in the United States Bankruptcy Court, Eastern District of Virginia, Alexandria Division, Case No. 92-13663.
8. On or about July 29, 1992, Respondent filed in the Blackledge bankruptcy a Motion for Stay under 50 U.S. C. App. 523. In the Motion, Respondent stated that he was filing the Motion on behalf of Blackledge's son, but not as his attorney. In the Motion, Respondent sought a stay of the pending foreclosure proceedings based upon the fact that Blackledge's son was an active duty member of the U.S. Coast Guard. Respondent signed the Motion and indicated his Virginia State Bar membership number on the pleading.
9. By letter dated August 20, 1992, the U.S. Department of Housing and Urban Development ("HUD") accepted the assignment of the first deed of trust loan, instructed Blackledge to contact HUD to discuss a payment plan based upon her ability to pay. The letter also stated that "HUD will now become your lender and you will be able to stay in your home".
10. On or about September 23, 1992, Respondent filed a Motion for Sanctions under 11 U.S.C. 362(h), and Points and Authorities, based upon contact by the second deed of trust noteholder with Blackledge after the filing of the Chapter 7 bankruptcy. Respondent failed to indicate his Virginia State Bar number on the Motion. Counsel for the noteholder filed a Response and Memorandum on October 21, 1992. The docketing sheet of the Bankruptcy Court indicates that the Motion was scheduled for hearing on November 3, 1992; that on November 2, 1992, a hearing was again requested. No hearing on the Motion occurred on November 3, 1992.
11. On or about September 23, 1992, the second deed of trust noteholder filed with the Bankruptcy Court a Motion for Relief from Stay asserting, inter alia, that there was no equity in the subject property available for unsecured creditors. According to the Certificate of Service on the Motion, it was mailed to Blackledge and Respondent. The Motion was heard on October 9, 1992, and continued to October 21, 1992. On October 21, 1992, the Motion was granted by default order effectively allowing the second deed of trust noteholder to proceed to enforce his deed of trust and note against Blackledge.
12. Respondent did not appear at either the October 9, 1992, or October 21, 1992, hearing dates on the Motion for Relief from Stay. He also did not file an answer or assert a defense by either hearing date. Blackledge came to court on both dates, but did not enter the courtroom since Respondent did not appear with her.
13. On or about October 7, 1992, the Bankruptcy Court issued a Notice of Commencement of Case which included notification of an October 29, 1992, meeting of creditors. Respondent was informed of the October 29, 1992 meeting of creditors on July 29, 1992 at the initial filing. Respondent had a medical disability suspension September 27, 1990 until June 26, 1992.
14. On or about October 26, 1992, Respondent filed with the Bankruptcy Court a "Defendant's Response to Plaintiff's Motion to Lift Automatic Stay" and "Points and Authorities". Respondent argued, inter alia, that there was equity in the subject property due to what were Blackledge's interest-only payments. He also argued that the Chapter 7 bankruptcy filing was the first of two serial filings and that the subject property would be required for an effective reorganization under the yet-to-be-filed Chapter 13 bankruptcy. Respondent indicated his Virginia State Bar membership number on the Response.
15. The Certificate of Service for Respondent's response to the Motion for Relief from Stay represents that it was mailed to counsel for the second mortgage noteholder on October 7, 1992, two days prior to the first hearing date on the Motion and fourteen days prior to the second hearing date. However, the pleading was filed in the Bankruptcy Court five days after the entry of the Order granting the Motion.
16. Blackledge appeared with Respondent at the meeting of creditors on October 29, 1992. This was the last date on which Blackledge had any contact with Respondent.
17. On or about October 30, 1992, Respondent filed a Motion to Vacate Default Judgment claiming that he had been unable to file a timely answer to the Motion for Relief from Stay filed by the second deed of trust noteholder due to back spasms. The Certificate of Service indicated that the Motion was mailed on October 26, 1992. Respondent indicated his Virginia State Bar membership number on the Motion.
18. The Trustee in the bankruptcy filed a Report of No Distribution on or about November 1, 1992, indicating that there was no property available for distribution from the estate of Blackledge, the debtor.
19. On or about November 2, 1992, Respondent filed a Motion for Continuance of a November 5, 1992, hearing date for one week, and to set his Motion for Stay under the Soldiers' and Sailors' Civil Relief Act concurrently, asserting medical disability. The Certificate of Service indicated that Respondent mailed the Motion to the attorney for the second deed of trust noteholder on November 2, 1992. The Bankruptcy Court's docket sheet contained no hearing entry with respect to November 5, 1992. Respondent indicated his Virginia State Bar membership number on the Motion.
20. On or about November 12, 1992, counsel for the second deed of trust noteholder filed a response to the Motion for Continuance indicating no knowledge of any hearing scheduled for November 5, 1992, and asserting that Blackledge did not come under the purview of the Soldiers' and Sailors' Civil Relief Act.
21. Counsel for the second deed of trust noteholder filed a response to Respondent's Motion to Vacate the Default Judgment in which he indicated that he had received a Motion for Continuance from Respondent just prior to the October 9, 1992, scheduled first hearing date on the Motion for Relief from Stay based upon Respondent's back spasms.
22. On or about November 6, 1992, counsel for the first deed of trust noteholder filed a Motion for Relief from Stay which was set for preliminary hearing on December 2, 1992.
23. On or about November 9, 1992, the Bankruptcy Court Clerk issued a Confirmation of Request for Hearing indicating that December 1, 1992, had been scheduled for Respondent's Motion for Sanctions and Motion to Vacate Default Judgment. The Confirmation also indicated that Respondent had to send a notice of hearing to applicable parties and file the notice with a certificate of service within five days or the hearing would be stricken from the docket. The Bankruptcy Court docket sheet contains no indication of a hearing having taken place on December 1, 1992.
24. On or about November 13, 1992, foreclosure by the second deed of trust noteholder of Blackledge's residence occurred.
25. On or about December 2, 1992, an order was entered granting the Motion for Relief from Stay filed by the first deed of trust noteholder. The face of the Order indicates that no appearance was made by Respondent.
26. On or about December 4, 1992, Blackledge fired Respondent.
27. On or about January 13, 1993, the Bankruptcy Court issued a Discharge of Debtor Order.
28. On or about January 15, 1993, counsel for the second deed of trust noteholder filed a Motion to Dismiss for Want of Prosecution with respect to Respondent's Motion for Sanctions and Motion to Vacate Default Judgment. On March 17, 1993, Agreed Orders of Dismissal were entered with respect to each of said Motions. The agreed orders were signed by Blackledge and her new attorney, Darrell M. Allen, Esq.
29. An Order Closing Case was entered in the bankruptcy on February 5, 1993.
30. During the course of the representation, Blackledge received no written communication from Respondent other than the Contract of Employment.
31. During the course of the representation, Respondent did not take any action to convert the bankruptcy from a Chapter 7 to a Chapter 13 bankruptcy.
32. Respondent did not obtain the bankruptcy Court's authority to withdraw from the representation of Blackledge.
33. If called to testify in this matter, Respondent would testify that, at all times relevant to this matter, he believed, in good faith, that, having once been duly admitted to practice before the United States Bankruptcy Court for the Eastern District of Virginia, Respondent was entitled to continue practice before that Federal Court, even while under suspension or on associate status with the Virginia State Bar, unless and until the Federal Court should take affirmative action to suspend or disbar Respondent. Respondent would testify that his belief was premised, among other things, upon his understanding of the holdings of the United States Supreme Court in the following cases: In Re: Synder, 472 U.S. 634, 105 S.Ct. 2874 (1985); and Theard v. United States, 354 U.S. 278, 77 S.Ct. 1274 (1957). Further, Respondent would testify that his belief in this regard was also premised upon his reading of Local Rule 7(M), Federal Rules of Disciplinary Enforcement, of the Local Rules of Practice for the United States District Court for the Eastern District of Virginia (effective date February 15, 1989). Respondent would concede that he did not take affirmative steps to advise the United States District Court of either his suspension status and/or his associate status. The Federal Court did not take action pursuant to Local Rule 7 regarding Respondent's status as a member of the bar of that Court. Respondent did not inform the Court of the medical suspension because he interpreted the Local Rule 7 requiring notification of the court of public discipline as requiring notification of imposition of disciplinary public reprimands, suspensions and disbarments and not medical disability suspensions.
B. The United States Bankruptcy Court conducted no disciplinary hearing on any of the allegations in the Blackledge matters under the Local Rules of the Bankruptcy Court of the Eastern District of Virginia.
C. The United States Bankruptcy Court made no finding of bar membership status of the Respondent under the Local Rules of the Bankruptcy Court of the Eastern District of Virginia
D. All matters in both the Mbakpuo and the Blackledge matter took place more than 90 days after September 27, 1990, and all of the events in the Blackledge matter took place before the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division..
E. Part VI, Section IV, Paragraph 13K of the Rules of the Virginia State Bar imposes a duty on suspended attorneys to provide notice to courts of their suspension and to furnish proof of such notice within 60 days of such suspension to the Virginia State Bar.
F. Respondent complied with this notice provision in respect to the United States District Court for the Eastern District of Virginia and the United States Bankruptcy Court for the Eastern District of Virginia from September 27, 1990 through November 27, 1990.
G. At all times relevant hereto, Respondent worked in a shared office and does not recall receiving any of the documents described in Stipulations 1 through 33.
B. STIPULATION OF FACTS (VSB DOCKET NO. 93-051-0240:
1. At all relevant times, to the present, Respondent has been licensed to practice law in Virginia, but from September 27, 1990, until June 26, 1992, his license was suspended owing to a disability. From June 26, 1992, through the dates relevant to these events, Respondent maintained an Associate membership in the Virginia State Bar, a status which did not authorize him to practice law in this Commonwealth.
2. On April 6, 1992, Respondent signed a five count complaint on behalf of Plaintiff, Christopher E. Smith ("Smith"), against U.S. Sprint, et al., in the United States District Court for the Eastern District of Virginia, Alexandria Division, Civil Action 92-478-A. Smith's principal counsel was C. Victor Mbakpuo ("Mbakpuo"), an attorney not licensed to practice law in Virginia. Respondent served as local counsel and moved for the admission of Mbakpuo pro hac vice. On the date the complaint was filed, Respondent was not a member in good standing of the Virginia State Bar.
3. Respondent failed to include his Virginia Bar license number on the complaint and other subsequent pleadings, as required by local rule.
4. Respondent did not advise the Court of his suspended status and, subsequently, of his Associate status, but instead, at least by implication, represented to the Court that his license to practice in Virginia was in force. Despite such failure, the pleadings were accepted. Respondent had no active cases or clients when he entered into his medical suspension.
5. Respondent's participation in the federal litigation was irregular. He failed to endorse pleadings as local counsel as required by local rule. He failed to attend a deposition. He failed to respond to discovery on multiple occasions, resulting in imposition of sanctions by Magistrate Judge Leonie M. Brinkema (now United States Federal Judge Brinkema). At the time, then-Magistrate Judge Brinkema imposed sanctions for repeated failure to respond to discovery, she put counsel on notice that, if further days were experienced, she would recommend Smith's case be dismissed with prejudice. Respondent would testify that: (i) Mr. Mbakpuo would not listen to the guidance of the Respondent; (ii) Mr. Mbakpuo failed to inform the Respondent of the discovery until sanctions had been imposed; (iii) Mr. Mbakpuo received all pleadings in this case; (iv) Mr. Mbakpuo failed to inform the Respondent of the deposition; and (v) Mr. Mbakpuo was informed of the date of the pretrial conference but did not inform Respondent of the pretrial conference. Mr. Mbakpuo interfered with Respondent's ability to prepare list of witnesses and list of exhibits. Once sanctions had been imposed, Respondent attempted to obtain control of the case from Mr. Mbakpuo, however, Mr. Mbakpuo refused to turn control of the case to him.. It was too late for Respondent to comply with the discovery requirements.
6. Thereafter, Respondent (and Mbakpuo) failed to appear at the pre-trial conference, failed to file lists of witnesses and lists of exhibits, and failed to comply, in all respects, with the earlier order of Judge Brinkema concerning discovery and related matters. Accordingly, Judge Brinkema recommended the dismissal of the case with prejudice and appropriate disciplinary action against Smith's counsel.
7. Faced with the likely dismissal of his client's case, Respondent filed a motion to withdraw his endorsement of Mbakpuo on a pro hac vice basis. Respondent did not comply with the long overdue discovery requirements and he apparently made no effort to withdraw his own appearance as counsel for Smith. The client dismissed the Respondent at the time when Respondent attempted to withdraw Mr. Mbakpuo's endorsement.
8. The case was dismissed with prejudice on July 31, 1992, by a United States District Judge, solely because of the repeated and unexcused failure to comply with discovery and other pre-trial procedures.
9. Respondent understood his duties to be subordinate to those of Mbakpuo and, by the time he discovered that Mbakpuo had not attended to pre-trial matters satisfactorily it was too late for him to personally attend to the matter. Mbakpuo not only failed to meet his own responsibilities in the matter, but even interfered with Respondent's attempts to contact Smith and to see the papers and documents which would have permitted Respondent to respond to some of the discovery himself. The Respondent was a complainant against Mr. Mbakpuo in Ohio. Mr. Mbakpuo was subsequently disbarred in the state of Ohio.
10. A. If called to testify in this matter, Respondent would testify that, at all times relevant to this matter, he believed, in good faith, that, having once been duly admitted to practice before the United States District Court for the Eastern District of Virginia, Respondent was entitled to continue practice before that Federal Court, even while under suspension or on associate status with the Virginia State Bar, unless and until the Federal Court should take affirmative action to suspend or disbar Respondent. Respondent would testify that his belief was premised, among other things, upon his understanding of the holdings of the United States Supreme Court in the following cases: In Re: Synder, 472 U.S. 634, 105 S.Ct. 2874 (1985); and Theard v. United States, 354 U.S. 278, 77 S.Ct. 1274 (1957). Further, Respondent would testify that his belief in this regard was also premised upon his reading of Local Rule 7(M), Federal Rules of Disciplinary Enforcement, of the Local Rules of Practice for the United States District Court for the Eastern District of Virginia (effective date February 15, 1989). Respondent would concede that he did not take affirmative steps to advise the United States District Court of either his suspension status and/or his associate status. The Federal Court did not take action pursuant to Local Rule 7 regarding Respondent's status as a member of the bar of that Court.
B. The United States District Court conducted no disciplinary hearing in the federal court on any of the allegations in the Mbakpuo matters under its Local Rules.
C. The United States District Court made no finding of bar membership status of the Respondent under its Local Rules.
D. All of the proceedings in the Mbakpuo matter occurred before the United States District Court for the Eastern District of Virginia, Alexandria Division.
E. Respondent did not inform the United States District Court of the medical suspension because he interpreted the Local Rule requiring notification of the court of public discipline as requiring notification of imposition of disciplinary public reprimands, suspensions and disbarments.

C. STIPULATION OF MISCONDUCT (VSB DOCKET NOS. 93-051-1322 and 93-51- 0240:
1. As to VSB Docket No. 93-051-1322 (Blackledge), the aforementioned conduct on the part of Respondent constitutes a violation of the following Disciplinary Rule(s) of the Virginia Code of Professional Responsibility:
DR 1-102. Misconduct.

(A) A lawyer shall not:

(3) Commit a crime or other deliberately wrongful act that reflects adversely on the lawyer's fitness to practice law.

(4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation which reflects adversely on a lawyer's fitness to practice law.

DR 2-108. Terminating Representation.

(A) Except as stated in paragraph (C), a lawyer shall withdraw from representing a client if:

(1) Continuing the representation will result in a course of conduct by the lawyer that is illegal or inconsistent with the Disciplinary Rules; or

(3) The lawyer is discharged by the client.

(B) Except as stated in paragraph (C), a lawyer may withdraw from representing a client if:

(1) Withdrawal can be effected without material prejudice to the client; or

(C) In any court proceeding, counsel of record shall not withdraw except by leave of court after notice to the client of the time and place of a motion for leave to withdraw. In any other matter, a lawyer shall continue representation, notwithstanding good cause for terminating the representation, when ordered to do so by a tribunal.

DR 6-101. Competence and Promptness.

(B) A lawyer shall attend promptly to matters undertaken for a client until completed or until the lawyer has properly and completely withdrawn from representing the client.

(C) A lawyer shall keep a client reasonably informed about matters in which the lawyer's services are being rendered.

DR 7-101. Representing a Client Zealously.

(A) A lawyer shall not intentionally:

(1) Fail to seek the lawful objectives of his client through reasonably available means permitted by law and the Disciplinary Rules, except as provided by DR 7-101(B). A lawyer does not violate this Disciplinary Rule, however, by acceding to reasonable requests of opposing counsel which do not prejudice the rights of his client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process.

(2) Fail to carry out a contract of employment entered into with a client for professional services, but he may withdraw as permitted under DR 2-108, DR 5-102, and DR 5-105.

(3) Prejudice or damage his client during the course of the professional relationship, except as required under DR 4-101(D).

DR 7-102. Representing a Client Within the Bounds of the Law.

(A) In his representation of a client, a lawyer shall not:

(5) Knowingly make a false statement of law or fact.

DR 7-105. Trial Conduct.

(C) In appearing in his professional capacity before a tribunal, a lawyer shall not:

(5) Intentionally or habitually violate any established rule of procedure or of evidence, where such conduct is disruptive of the proceedings.

2. As to VSB Docket No. 93-051-0240 (Mbakpuo), the aforementioned conduct on the part of Respondent constitutes a violation of the following Disciplinary Rule(s) of the Virginia Code of Professional Responsibility:
DR 1-102. Misconduct.

(A) A lawyer shall not:

(3) Commit a crime or other deliberately wrongful act that reflects adversely on the lawyer's fitness to practice law.

(4) Engage in conduct involving dishonesty, fraud, deceit, or misrepresentation which reflects adversely on a lawyer's fitness to practice law.
DR 6-101. Competence and Promptness.

(B) A lawyer shall attend promptly to matters undertaken for a client until completed or until the lawyer has properly and completely withdrawn from representing the client.

DR 7-101. Representing a Client Zealously.

(A) A lawyer shall not intentionally:

(1) Fail to seek the lawful objectives of his client through reasonably available means permitted by law and the Disciplinary Rules, except as provided by DR 7-101(B). A lawyer does not violate this Disciplinary Rule, however, by acceding to reasonable requests of opposing counsel which do not prejudice the rights of his client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process.

(3) Prejudice or damage his client during the course of the professional relationship, except as required under DR 4-101(D).

D. FACTORS IN MITIGATION/ENHANCEMENT:
This Court has further taken into consideration the following factors in mitigation of the misconduct found by this Court:
(1) Absence of a significant prior disciplinary record;
(2) Respondent's cooperative attitude toward these proceedings; and
(3) A significant delay in these proceedings from the original misconduct to the date of this hearing.
E. IMPOSITION OF SANCTIONS:
In consideration of the foregoing, it is, by this Court, ORDERED that the license to practice law in the Commonwealth of Virginia heretofore issued to Respondent be, and the same hereby is, suspended for a period of six (6) months from the date hereof to and including August 31, 2001; and
FURTHER ORDERED that Respondent shall promptly give notice of this Suspension to each and all of his clients in all active files for which he is in any way a responsible lawyer and shall further give notice of this Suspension to the assigned Presiding Judge, or, in default thereof, to the Chief Judge of any court in which Respondent is currently an attorney of record in any active pending matter; and
FURTHER ORDERED that Respondent shall give notice of this Suspension to bar counsel, the highest employed disciplinary officer of any jurisdiction in which Respondent is admitted to the practice of law, furnishing to such bar counsel a copy of this Order; and
FURTHER ORDERED that Respondent shall make effective arrangements for the transition of any current active cases for which he is a responsible attorney on behalf of any client to successor counsel without expense to the client in any such matter; and
FURTHER ORDERED that Respondent shall, on or before March 15, 2001, certify, in writing, under oath to Peter A. Dingman, Special Assistant Bar Counsel, his compliance with the notification and case transition provisions of this Order, furnishing proof (certified mail receipts) of the delivery of notice as herein required.
F. COSTS:
Pursuant to Part Six, §IV, ¶ 13(D)(10) of the Rules of the Supreme Court, the Clerk of the Disciplinary System shall assess costs against Respondent.
SO ORDERED THIS 28TH DAY OF FEBRUARY, 2001.

____________________________________
David T. Stitt
Designated Chief Judge


____________________________________
William L. Winston
Judge, 17th Judicial Circuit, Retired


____________________________________
James C. Roberson,
Judge, 13th Judicial Circuit, Retired





WE ASK FOR THIS:


_______________________________________
Peter A. Dingman, VSB #14378
Special Assistant Bar Counsel
Virginia State Bar
526 King Street, Suite 209
Alexandria, Virginia 22314
Telephone (703) 519-0999
Facsimile (703) 519-1511



________________________________________
Stephen Lee Shelnutt, VSB #
Respondent
3825 North 36th Road
Arlington, Virginia 22207


________________________________________
C. Russell Twist, VSB #35483
Counsel for Respondent
2111 Wilson Boulevard, Suite 700
Arlington, Virginia 22201
Telephone (703) 812-8686
Facsimile (202) 686-5941