Title: In Re Baer
Citation: 298 Or. 29, 688 P.2d 1324
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: October 2, 1984

688 P.2d 1324 (1984)
298 Or. 29
In re Complaint As to the Conduct of Peter E. BAER, Accused.
OSB 82-38/SC S30593.

Supreme Court of Oregon, In Banc.[*]
Argued and Submitted September 6, 1984.
Decided October 2, 1984.
Garth S. Ledwidge, Gresham, argued the cause and filed briefs for accused.
Gregory R. Mowe, Portland, argued the cause for the Oregon State Bar. With him on brief was Leslie K. Bonney, Portland.
PER CURIAM.
The Oregon State Bar instituted disciplinary proceedings against the accused, Peter E. Baer, charging him with violations of the disciplinary rules in his dealings with Mr. and Mrs. Larry G. Peterson. A hearing was held before the Trial Board and the accused was found guilty of violating Disciplinary Rules 5-101(A) (refusing employment when the interests of the lawyer may impair his independent professional judgment); 5-104(A) (limiting business relations with a client); and 5-105(A)-(C) (refusing to accept or continue employment if the interest of another client may impair the independent professional judgment of the lawyer). The Trial Board recommended that the accused receive a public reprimand and be required to take and pass the legal ethics examination required of new admittees. The Disciplinary Review Board concurred in the findings but disagreed as to sanctions. The Disciplinary Review Board recommended that the accused be suspended for 30 days and be required to take and pass the legal ethics examination.
We find that in September, 1980, Mr. and Mrs. Larry G. Peterson owned a home in Boring, Oregon. Mrs. Peter Baer, the then wife of the accused, visited the Peterson residence and became interested in purchasing the property. Mrs. Baer returned to the home with the accused to inspect it and Mrs. Baer again expressed her desire to purchase the property. Within a few days, the Petersons and the Baers commenced negotiations for the sale of the house. The accused suggested to the Petersons that by letting him do the legal work necessary to close the transaction they would save several thousand dollars. The original sales price was $62,500. This price was lowered to $59,500 to reflect the savings in legal costs. The accused participated fully in negotiating the sales price and terms, and in other discussions relating to the property transaction. The accused did not disclose that he was representing only his wife's interests, but instead merely told the Petersons they could have another attorney check his work if they chose to do *1325 so. He did not clarify the need for independent legal advice nor did he inform the Petersons he was not representing them. The Petersons believed the accused was representing all parties to the transaction.
Thereupon, the Petersons accepted Mrs. Baer's offer to purchase the house with the understanding that the accused would perform all the legal services necessary to close the transaction. The Petersons asked questions about the legal aspects of the transaction and the accused answered their questions. He also offered them tax advice pertaining to the sale. Pursuant to the understanding of the parties, the accused prepared an earnest money agreement, an amended earnest money agreement, an addendum to the amended earnest money agreement, a warranty deed and escrow instructions.
The accused acted as escrow agent in closing the sale of the property. Mrs. Peterson questioned whether it was appropriate for Mr. Baer to handle the escrow and questioned him as to the legal rights of the Petersons in the event the transaction was not handled correctly. The accused responded that the Petersons could look to his malpractice insurance.
Pursuant to the amended earnest money agreement, Mrs. Baer was to make a down payment at closing, assume the Petersons' mortgage, and pay the remaining balance of approximately $29,500 no later than April 2, 1981. Upon payment of $29,500, Mrs. Baer was to receive a warranty deed previously signed by the Petersons and left in escrow with the accused. The Petersons asked the accused what would happen if the final payment was not made. The accused told them that they would get their house back and would keep the money. As it turned out, accused's wife was unable to sell her former residence and thus was not able to make the final $29,500 payment. The Petersons attempted to repossess the house but were advised by the accused that the agreement was not a contract of sale as the Petersons thought, but rather was a simple earnest money agreement. The accused further advised the Petersons that the accused's wife now held a part ownership interest in the house and if the Petersons wanted the house back they would have to sell it and refund the accused's wife her money.
In April, 1981, the Petersons hired an attorney to protect their interests. The Petersons' counsel reviewed the matter and wrote accused advising him that he had "a severe conflict of interest" and suggested the accused settle the matter immediately. The accused responded by filing suit on behalf of his wife in both state and federal court for rescission of the purchase agreement, alleging fraud on the part of the Petersons due to certain defects in the house. Suit was filed in both courts because the Petersons were then living in England and the accused apparently was uncertain as to which court had jurisdiction.
The accused was charged with violating DR 5-101(A) and DR 5-104(A).
DR 5-101(A) provides:
DR 5-104(A) provides:
The accused argues that the Trial Board and the Disciplinary Review Board erred in finding him guilty of violating DR 5-101(A) and DR 5-104(A) because his only client was his wife  he did not accept employment from the Petersons nor did he enter into a business transaction with them. We *1326 disagree. The accused suggested and the Petersons agreed that he perform the legal work necessary to close the real estate transaction. He prepared the documents associated with the sale of the property. The price of the home was reduced by approximately $3,000 to reflect the savings of attorney fees to the Petersons. Due to his wife's participation in the transaction, the accused's interests differed with the Petersons' and his professional judgment reasonably might have been affected by his own financial, business and personal concerns. Although the accused told the Petersons they could have another attorney check his work, this falls short of the full disclosure requirement:
We find the accused guilty of violating DR 5-101(A) and DR 5-104(A).
The accused was also charged with violating DR 5-105 for his representation of the Petersons and his wife in the real estate transaction and for filing suit against the Petersons. DR 5-105 provides in pertinent part:
In In re Porter, supra, 283 Or. at 523, 584 P.2d 744, we said:
A conflict of interest existed when the accused undertook the representation of both sides in the real estate transaction. See, In re Jans, 295 Or. 289, 666 P.2d 830 (1983); In re Hershberger, 288 Or. 559, 606 P.2d 623 (1980). The requirement of DR 5-105(C) for full disclosure was not met by the accused. We find the accused violated DR 5-105.
Finally, the accused was charged with violating DR 2-103(A) and DR 2-104(A), which provide:
The Trial Board and the Disciplinary Review Board found the accused not guilty of violating these disciplinary rules and we agree. It was not proven by clear and convincing evidence that the accused solicited the legal work from the Petersons.
We find the accused violated DR 5-101(A), DR 5-104(A) and DR 5-105. The accused is suspended from the practice of law for not less than 60 days beginning on November 1, 1984, and thereafter until he has taken and successfully completed the professional responsibility examination. See BR 6.1(a)(iv). The Oregon State Bar is awarded its actual and necessary costs and disbursements. ORS 9.536(4).
[*]  Lent, J., not participating.