Title: In re Paulson

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED: June 8, 2006
IN THE SUPREME COURT OF THE STATE OF OREGON
(OSB No. 01-100; SC S52465)
On review of the decision of a trial panel of the
Disciplinary Board.
Argued and submitted January 4, 2006.
Lauren J. Paulson, Aloha, argued the cause and filed the
briefs on his own behalf.
Mary Anne Cooper, Assistant Disciplinary Counsel, Lake
Oswego, argued the cause and filed the brief for the Oregon State
Bar.
Before De Muniz, Chief Justice, and Gillette, Durham, Riggs,
Balmer, and Kistler, Justices.*
PER CURIAM
The accused is suspended from the practice of law for six
months, commencing 60 days from the effective date of this
decision.
*Carson, J., did not participate in the consideration or
decision of this case.
PER CURIAM

In this lawyer disciplinary proceeding, the Oregon State Bar
(Bar) charged the accused with violating Code of Professional
Responsibility Disciplinary Rule (DR) 1-102(A)(4), a rule
prohibiting conduct that is prejudicial to the administration of
justice. (1)  A trial panel of the Disciplinary Board concluded
that the accused's conduct had violated DR 1-102(A)(4) during a
bankruptcy proceeding, but that his conduct during a state court
proceeding in which he had represented the same clients had not. 
The trial panel suspended the accused from the practice of law
for 45 days.  The accused now seeks review of that decision
pursuant to BR 10.1 and ORS 9.536(1).  On review, the Bar argues
that the trial panel erred in concluding that the accused's
conduct in the state court proceeding did not violate DR 1-102(A)(4) and that the trial panel should have imposed a longer
period of suspension.
We review the trial panel's decision de novo.  ORS 9.536(3);
BR 10.6.  The Bar must establish the alleged misconduct by clear
and convincing evidence.  BR 5.2.  "Clear and convincing
evidence" means evidence establishing that the truth of the facts
asserted is highly probable.  In re Johnson, 300 Or 52, 55, 707
P2d 573 (1985).  For the reasons that follow, we agree with the
trial panel's conclusion that the accused's actions during his
client's bankruptcy proceeding violated DR 1-102(A)(4).  However,
we disagree with the trial panel's conclusion regarding the
accused's conduct during the state court proceeding.  Instead, we
conclude that the accused's conduct during the course of that
proceeding also violated DR 1-102(A)(4).  We further conclude
that the appropriate sanction is a six-month suspension from the
practice of law. 
I.  FACTS AND PROCEDURAL BACKGROUND
The relevant facts are, for the most part, undisputed.  In
1997, Jerry and Phyllis Nutt, a retired couple, purchased a
modular home for installation in Hebo, Oregon.  The Nutts
contacted Mark Gensman, a mortgage broker with Business Resource
Group (BRG), for construction financing.  Gensman met with the
Nutts and arranged for a construction loan to purchase and
install the modular home.  The terms of the loan required payment
within four months, at which point the Nutts were to obtain
permanent financing on their home.  The Nutts encountered
problems with delays and defects in the installation of their
modular home, however, and the construction loan deadline
expired. 

On October 20, 1997, the Nutts sought legal advice from the
accused regarding the acquisition of permanent financing.  The
accused reviewed the Nutts' loan documents and advised them to
pursue a claim against Gensman and their construction lender. 
The Nutts expressed a desire simply to finish their home and
indicated their reluctance to get involved in extensive
litigation.  Nevertheless, as difficulties with the installation
of the home continued, the Nutts and the accused agreed to take
legal action against the parties involved in financing and
constructing the home.  Specifically, the complaint alleged that
Gensman, BRG, and the other parties involved had failed to make
various disclosures relating to the terms of the loan pursuant to
the Truth in Lending Act (TILA), the Oregon Lender Law (OLL), and
the Oregon Unfair Trade Practices Act (UTPA), and that those
nondisclosures also constituted fraud.
 (2)  The resulting
complaint alleged seven different claims and damages totaling
$500,000.  The complaint also sought an unspecified amount in
punitive damages.  
Steven Berman and John Dunbar, the lawyers representing
Gensman and BRG, evaluated the Nutts' complaint and concluded
that, at most, the Nutts might be entitled to recover a portion
of their loan fees.  Furthermore, Berman and Dunbar concluded
that the complaint was vulnerable to attack on several grounds. 
On June 3, 1998, Berman wrote to the accused, requesting a
meeting to discuss the issues in the case.  The accused failed to
respond.  Two weeks later, Berman again wrote to the accused,
addressing the complaint's perceived deficiencies.  Several days
later, the accused responded by letter, stating that he was
"feeling real pouty" and that he was "sending a copy of this
letter to my clients so they know I am on the ball and you're
not."  Upon receiving the letter, Berman attempted to contact the
accused by telephone, but the accused did not return the call. 
Berman then advised the accused that he would move to correct
what he perceived to be the complaint's deficiencies.  
On August 11, 1998, Berman spoke with the accused and
requested a damages estimate.  Although the accused assured
Berman that he would provide an estimate within one week, he
failed to do so.  Instead, the accused notified Berman that he
intended to apply for an order of default against Berman's and
Dunbar's clients. 
Meanwhile, at the third summary judgment hearing on
Berman's motion, the trial court ruled that the accused had not
offered sufficient evidence of fraud and granted summary judgment
to Gensman on that claim.  At that time, Dunbar made another
settlement overture to the accused, stating that the Nutts'
"remaining claims are not strong ones, and the most you can hope
to achieve * * * is a few hundred dollars[.] * * * [The Nutts]
are at enormous risk for a sizable fee award."  The settlement
offer included payment of $2,500 and a waiver of Gensman's right
to collect attorney fees. (3) 
On June 9, 1999, at the fourth summary judgment hearing
on Berman's motion, the trial court dismissed most of the Nutts'
UTPA claim and all the fraud claims.  After that hearing, Berman
and Dunbar made another settlement offer.  They noted that the
Nutts' case against Gensman had diminished to a $200 UTPA claim
and that the Nutts were at risk for a sizable attorney fee award,
and they offered to settle for $1,000 and to waive Gensman's
right to collect attorney fees.  The accused did not inform the
Nutts of that settlement offer.  Neither did the accused inform
the Nutts that they could be held liable for attorney fees.
II.  ACCUSED'S PRELIMINARY ARGUMENTS
III.  DR 1-102(A)(4) ANALYSIS
The accused challenges the trial panel's conclusion that his
actions in the Nutts' bankruptcy proceeding constituted "conduct
that is prejudicial to the administration of justice." (4)
IV.  SANCTION
In addition to those aggravating factors, the Bar
argues that the accused's pattern of misconduct should be taken
into account in determining the severity of the sanction in this
case.  Under the circumstances here, we agree.  The harm caused
in this case did not derive from an isolated incident.  Rather,
the harm derived from the accused's multiple failures throughout
the course of the state court and bankruptcy proceedings.  See In
re Jaffee, 331 Or 398, 411, 15 P3d 533 (2000) (finding a "pattern
of misconduct" based on four separate episodes of
misconduct). (5) 
In In re White, 311 Or 573, 815 P2d 1257 (1991), the
accused lawyer engaged in actions similar to those of the
accused, including filing repetitive claims and failing to appear
at hearings without notice to the trial court or opposing
counsel.  This court concluded that that conduct violated DR 1-102(A)(4).  In that case, however, the court focused on the
violation of DR 1-102(A)(4) as well as additional violations when
imposing a three-year suspension from the practice of law.  
1. 
The Oregon Rules of Professional Conduct became
effective January 1, 2005.  The conduct at issue in this
proceeding occurred before that date, and we therefore apply the
Oregon Code of Professional Responsibility.
2. 
The complaint failed, however, to state the manner in
which those nondisclosures had harmed the Nutts.  
3. 
As of that date, Gensman's attorneys fees totaled
almost $23,000.  
4. 
The accused also argues that "this matter must be
dismissed" because of prosecutorial misconduct and prejudicial
delay.  The Bar admits to a delay in pursuing this matter, but
contends that delay is not a reason to dismiss.  Rather, the Bar
argues the delay should be considered as a mitigating factor in
determining the appropriate sanction.  As discussed later in the
opinion, we agree with the Bar. 
5. 
In In re Paulson, 335 Or 436, 438, 71 P3d 60 (2003),
this court held that the accused violated Disciplinary Rule 2-106(A) by billing a client for time spent responding to the
client's complaint to the Bar against the accused.  In this
proceeding, the trial panel did not consider the accused's
previous reprimand to be an aggravating factor because that
reprimand had been imposed after the events relevant to this
second proceeding against the accused.  The Bar does not contest
that conclusion, and we do not consider that earlier proceeding
in aggravation here.