Title: STATE ex rel OKLAHOMA BAR ASSOCIATION v. CLAUSING
Citation: 2009 OK 74, 224 P.3d 1268
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: September 29, 2009

STATE ex rel OKLAHOMA BAR ASSOCIATION v. CLAUSING Annotate this Case STATE ex rel OKLAHOMA BAR ASSOCIATION v. CLAUSING 2009 OK 74 224 P.3d 1268 Case Number: SCBD-5443; OBAD-1761 Decided: 09/29/2009 THE SUPREME COURT OF THE STATE OF OKLAHOMA STATE OF OKLAHOMA ex rel OKLAHOMA BAR ASSOCIATION Complainant v. W. KIRK CLAUSING Respondent BAR DISCIPLINARY PROCEEDING ¶0 In this disciplinary proceeding against a lawyer, the complaint alleges in one count several instances of unprofessional conduct deemed to warrant sanctions. A trial panel of the Professional Responsibility Tribunal found that respondent's actions call for the imposition of professional discipline. It recommended that respondent be suspended from the practice of law for six months and that he pay the costs of this proceeding. Upon de novo review of the evidence presented to the trial panel, RESPONDENT IS ORDERED DISCIPLINED BY A SUSPENSION FROM THE PRACTICE OF LAW FOR ONE YEAR, THE SUSPENSION TO BEGIN ON THE DAY THIS OPINION BECOMES FINAL. HE IS DIRECTED TO PAY THE COSTS OF THIS PROCEEDING IN THE AMOUNT OF $605.35, WHICH SHALL BE DUE NOT LATER THAN NINETY DAYS AFTER THIS OPINION BECOMES FINAL. Gina L. Hendryx, General Counsel, Janis Hubbard, First Assistant General Counsel, Oklahoma Bar Association, Oklahoma City, Oklahoma, for Complainant W. E. Sparks, Gary A. Eaton, Tulsa, Oklahoma, for Respondent OPALA, J. ¶1 In this disciplinary proceeding against a lawyer, the issues to be decided are: (1) Does the record submitted for our examination provide sufficient evidence for a meaningful de novo consideration of the complaint and of its disposition?1 and (2) Is a suspension from the practice of law for six months an appropriate disciplinary sanction for respondent's breach of professional ethics? We answer the first question in the affirmative and the second in the negative. I INTRODUCTION TO THE RECORD ¶2 The Oklahoma Bar Association (Bar) commenced this disciplinary proceeding on 15 August 2008 against W. Kirk Clausing (respondent or Clausing), a licensed lawyer, by filing a formal complaint in accordance with the provisions of Rule 6.1 of the Rules Governing Disciplinary Proceedings (RGDP).2 The complaint alleges in one count violations of the RGDP and of the Oklahoma Rules of Professional Conduct (ORPC).3 A trial panel of the Professional Responsibility Tribunal (trial panel or panel) conducted hearings (the PRT hearings) on 6 January 2009 to consider the charges. It recognized for the record the parties' stipulations and agreed conclusions of law. Left unresolved by the parties' stipulations was the discipline to be suggested for imposition. Respondent concedes (by stipulation) that his conduct violates RGDP Rule 1.34 and ORPC Rules 1.1,5 1.76 and 1.8.7 ¶3 Upon completion of the hearing and consideration of the stipulations and testimony on file, the trial panel issued its report (which incorporates the parties' stipulations, but rejects certain tendered statements as not supported by the law and record), II THE RECORD BEFORE THE COURT PROVIDES SUFFICIENT EVIDENCE FOR A MEANINGFUL DE NOVO CONSIDERATION OF ALL FACTS RELEVANT TO THIS PROCEEDING ¶4 In a bar disciplinary proceeding the court functions as an adjudicative licensing authority that exercises exclusive original cognizance. ¶5 The court's duty can be discharged only if the trial panel submits to us a complete record of the proceedings. ¶6 Having carefully scrutinized the record submitted to us in this proceeding, we conclude that it is adequate for de novo consideration of respondent's alleged professional misconduct. III THE CHARGES AGAINST RESPONDENT Count I - The Kulp Complaint ¶7 The charges against respondent arise from his handling of a spendthrift trust (Kulp Trust) established by Virginia K. Kulp, now deceased, for the benefit of her son, Jon Kulp (the life income beneficiary), and the remainder beneficiaries. Respondent had represented Mrs. Kulp over the years, advising her on tax matters, and preparing for her a will and a revocable trust. He prepared the Kulp Trust at her request in 1995 and served as a co-trustee at the trust's inception. He later succeeded as the sole trustee when the other co-trustee resigned in February 2007. ¶8 The May 2007 withdrawal. Respondent made the first unauthorized withdrawal on 18 May 2007 for $18,000 and noted on the check that it was for a "loan." On 29 May 2007 he made a partial repayment to the Kulp Trust of $8,000. He took money from the trust fund to relieve a personal financial crisis caused by an IRS notice of a lien levy on his office account. The withdrawn trust funds were used to pay his personal federal employment tax liability. ¶9 The July 2007 withdrawal. On 24 July 2007 respondent wrote a second unauthorized check on the Kulp Trust account for $27,500. According to respondent, the money was used to make a personal investment in a business opportunity - a stock subscription to an initial public offering. Trust funds were needed because the money he had intended to use for payment to Merrill Lynch of the subscription price had not arrived in time to meet the payment deadline. Three days later respondent repaid the Kulp trust $27,500 plus $50 interest. ¶10 The advancement of trustee fees. Respondent admits he had advanced the payment to himself of trustee fees before rendering the services. According to the record, this had been the practice of the Kulp co-trustees in previous years. He explained that the trustee fee was based on three-fourths of one percent of the average value of the trust. The fee advancements were made quarterly in an amount based upon this formula. ¶11 When the beneficiaries discovered that respondent had made unauthorized withdrawals of trust funds, they demanded by letter of 28 September 2007 that he resign as trustee, remit the balance of the unpaid withdrawal and of any unearned trustee fees and transfer all trust records to a lawyer who had been engaged to assist them. Respondent submitted his resignation by letter of 3 October 2007 and turned over the requested records. On 9 October 2007 respondent repaid the Kulp Trust $10,000 for the balance owed on the first withdrawal plus interest of $300 and for the unearned trustee fees ($660.84). On 28 November 2007 the beneficiaries filed a Bar grievance against respondent. They described the May and July withdrawals as serious breaches of the trust as well as violations of the Oklahoma Trust Act ( IV A LAWYER WHO SERVES IN A DUAL CAPACITY AS A LAWYER AND TRUSTEE MUST ADHERE TO ETHICAL RULES WHICH GOVERN THE CONDUCT REQUIRED OF LAWYERS ¶12 Vis-a-vis the Kulp Trust respondent acted in a dual capacity. He performed legal services by advising the settlor and drafting the trust document in which he was named a co-trustee. He also served in a fiduciary capacity qua co-trustee of the Kulp Trust. A lawyer who commingles the role of a lawyer with that of a fiduciary is not immune to and cannot escape disciplinary action for a breach of fiduciary duty occurring dehors the practice of law. Respondent's Fiduciary Duty in Handling the Kulp Trust ¶13 A trustee is a fiduciary of the highest order in whom the hope and confidence of the settlor are placed with the expectation that the trustee will exercise the obligations of the office for the exclusive benefit of the cestui que trust.20 To the cestui que trust a trustee always owes uberrima fides (utmost good faith).21 ¶14 A trustee must act with undivided loyalty to the beneficiaries. ¶15 When a legal practitioner who occupies the position of trustee breaches that fiduciary obligation through mismanagement of the trust, that practitioner brings the legal profession into disrepute and, as a result, subjects himself (or herself) to bar discipline for acts contrary to prescribed standards of conduct. ¶16 Respondent qua trustee had a fiduciary duty to invest and manage funds in the Kulp Trust "solely in the interest of the beneficiaries" ¶17 As an attorney respondent should have been mindful of the strict standards of conduct to which a fiduciary is expected to adhere. The evidence clearly shows that respondent did not act within the prescribed standards of conduct mandated for a trustee. He took advantage of his position by "dipping" into trust funds for his own personal use in violation of his strict duty of loyalty to the trust beneficiaries. ¶18 Respondent failed to demonstrate competence in his handling of the Kulp Trust with respect to the trust funds that he withdrew for his personal use. He endangered the trust by taking money from the Kulp Trust without a written agreement or collateral. ¶19 Respondent admits that when he procured loans from the Kulp Trust while a co-trustee he did not comply with the procedure prescribed by RGPC Rule 1.8(a) and (b). ¶20 Respondent specifically admits to a violation of ORPC Rules 1.1, 1.7, 1.8 and RGDP Rule 1.3. We accept respondent's admission and find from clear and convincing evidence that his conduct, which violated those rules, constitutes grounds for the imposition of professional discipline. V ¶21 Respondent received in 1995 a private reprimand from this court for (1) failure to act with reasonable diligence and promptness as the lawyer in two probate cases and (2) for failure to respond to the Bar in the course of its investigation. VI CONCESSION AS TO AVAILABLE MITIGATION ¶22 Mitigating circumstances may be considered in assessing the appropriate quantum of discipline. ¶23 We have taken these matters into account in fashioning the appropriate measure of discipline. VII DISCIPLINE TO BE IMPOSED ¶24 A government's license to practice law is conferred not for the benefit of the individual licensee, but rather for that of the public. ¶25 The trial panel has recommended that respondent be suspended from the practice of law for six months. Respondent urges the court to fashion a disciplinary sanction that does not require a suspension of his license. ¶26 This court has imposed varying degrees of discipline upon lawyers for violating some or all of the rules we found to have been violated by the respondent. Respondent's admitted (1) violations of fiduciary duty, involving failure to adhere to the fiduciary standards of conduct that are obligatory on a trustee, (2) the use of trust funds for his own personal purpose without anyone's consent or affirmative disclosure, ¶27 We conclude that a suspension for a period of one year, coupled with imposition of liability for costs incurred in this proceeding, is an appropriate measure of discipline to be imposed for the respondent's serious breach of professional discipline. VIII SUMMARY ¶28 In sum, the record bears clear and convincing proof that respondent's participation in unprofessional conduct violates the rules that govern professional responsibility. After a thorough review of the record and upon due recognition of all the factors tendered to us in mitigation, ¶29 RESPONDENT IS ORDERED DISCIPLINED (1) BY SUSPENSION FROM THE PRACTICE OF LAW FOR A PERIOD OF ONE YEAR AND (2) BY IMPOSITION OF COSTS OF THIS PROCEEDING, WHOSE PAYMENT SHALL BE DUE NOT LATER THAN NINETY DAYS AFTER THIS OPINION BECOMES FINAL. ¶30 EDMONDSON, C.J., and OPALA, KAUGER, WATT, WINCHESTER, COLBERT, REIF, JJ., concur ¶31 TAYLOR, V.C.J., dissents ¶32 HARGRAVE, J., not participating ¶33 TAYLOR, V.C.J., dissenting I would disbar this lawyer. He was a trustee. He stole money from this trust and fully repaid it only when he was discovered and confronted. The most efficient and effective remedy to insure the protection of the public interest and the legal profession is to disbar him. This lawyer has been the subject of bar discipline in the past. This is not his first trip before this Court and it should be his last. FOOT