Title: In re Levie
Citation: N/A
Docket Number: S53311
State: Oregon
Issuer: Oregon Supreme Court
Date: March 8, 2007

FILED: March 8, 2007
IN THE SUPREME COURT OF THE STATE OF OREGON
In re Complaint as to the Conduct of
IAIN LEVIE,
Accused.
(OSB 04-97; SC S53311)
En banc
Argued and submitted January 10, 2007.
Iain Levie, Portland, filed the briefs for himself.
Mary A. Cooper, Assistant Disciplinary Counsel, Lake Oswego, argued the cause
and filed the brief for the Oregon State Bar.
PER CURIAM
The accused is suspended from the practice of law for one year, effective 60 days
from the date of this decision.
PER CURIAM
The issue in this lawyer disciplinary proceeding is whether the accused, in
the course of representing a client, violated various provisions of the former Code of
Professional Responsibility (1):  DR 1-102(A)(3) (dishonesty, fraud, deceit, or
misrepresentation); DR 7-102(A)(5) (knowingly making false statement of law or fact
while representing his own or a client's interests); DR 7-106(A) (disregarding ruling of a
tribunal); DR 1-102(A)(4) (conduct prejudicial to administration of justice); and DR 5-101(A)(1) (continuing employment involving financial conflict).  A trial panel found the
accused guilty of those violations, as well as with one other. (2)  The trial panel
suspended the accused for one year.  The accused challenges the foregoing findings of
guilt. (3)  We review the decision of the trial panel de novo.  ORS 9.536(2); BR 10.6. 
For the reasons that follow, we find the accused guilty of the contested charges and
suspend him from the practice of law for one year.
The accused joined the Oregon State Bar in 1991 and, at the time of the
conduct at issue, was an associate in a Portland law firm.  In February 2001, the accused
agreed to represent Cosmopolitan Imports, LLC, an import company, in a dispute arising
out of the company's contract to purchase a number of August Rodin cast bronze
sculptures from Gruppo Mondiale, a Liechtenstein company.  McMullen, a friend and
former business partner of the accused, owned Cosmopolitan Imports.  McMullen also
owned a second company, Cosmopolitan Motors, LLC. (4)
Under the contract at issue, Cosmopolitan Imports agreed to deliver three
classic cars, which were to be supplied by Cosmopolitan Motors, to Gruppo Mondiale, in
exchange for 23 Rodin bronze sculptures.  By the time that the accused became involved,
Cosmopolitan Imports had received most of the 23 bronzes but had not delivered any of
the promised cars.
In March 2001, Gruppo Mondiale filed an action for breach of contract
against Cosmopolitan Imports, Cosmopolitan Motors, McMullen, and others, in
Washington state.  The accused asked Noel, an associate in the law firm's Bellevue office,
to assist in the Washington litigation and to serve as attorney of record.  At the time, the
accused told Noel that Noel need not worry about Cosmopolitan Imports paying the firm's
fee, because the firm would have a security interest in some of the bronzes at issue in the
litigation.  The accused was referring to three bronzes that McMullen had given to the
accused to display in the firm's Portland offices, apparently to serve both as a marketing
device and as security for his company's mounting legal bills.   
In June 2001, relying on an allegation that his import company owed a debt
to his motor company, McMullen filed a UCC-1 form with the Washington Department
of Licensing giving Cosmopolitan Motors a priority interest in the proceeds from any sale
of the 23 bronzes to secure the debt owed by Cosmopolitan Imports.  Shortly thereafter,
Lewis, a partner at the accused's firm, told the accused that the informal agreement to
treat the three bronzes at the firm as security for Cosmopolitan Imports' legal fees should
be formalized.  Lewis asked another firm partner, Paterson, to negotiate a security
agreement.  Paterson, in turn, contacted McMullen and had him sign a security agreement
on behalf of Cosmopolitan Imports.  There is no direct evidence in the record that the
accused played any role in the negotiations between Paterson and McMullen. 
In the meantime, Gruppo Mondiale's lawyer, Smith, had filed a motion in
the circuit court in Seattle to compel McMullen and his companies to advise him where
the bronzes were located and provide a statement that they had not been sold or
encumbered.  Smith also asked the Washington court to enjoin McMullen from selling or
encumbering the bronzes in the future.  Noel, the attorney of record, discussed the motion
with McMullen and the accused and advised both men that, if they intended to perfect a
security interest for the law firm in the three bronzes, they should do so before the court
ruled on the motion.  Within a few weeks, Paterson had filed a UCC-1 form with the
Washington Department of Licensing, thereby establishing the law firm's place in the line
of priority with respect to the three bronzes displayed in its offices. (5)
The circuit court subsequently heard and granted Gruppo Mondiale's motion
to compel, enjoined McMullen and his companies from selling or encumbering the 23
bronzes, and ordered him to advise Gruppo Mondiale of the location of the bronzes and
whether they had been sold or encumbered.  On September 5, 2001, in a declaration that
the accused either drafted or discussed with Noel, McMullen certified that the bronzes
were encumbered by unspecified perfected security interests and that they were located in
six different places in Oregon and Washington, one of which was the law firm's offices.
A few weeks later, McMullen entered into settlement discussions with and
ultimately signed a settlement agreement with Gruppo Mondiale.  The accused was
actively involved in the negotiations, although he claims that McMullen alone was
responsible for the final settlement agreement.  Under the settlement, (1) Gruppo
Mondiale agreed to accept a cash payment from the proceeds of the sale of the bronzes
instead of delivery of one of the classic cars; (2) Cosmopolitan Imports granted Gruppo
Mondiale a security interest in the bronzes to secure that payment; (3) McMullen agreed
to consign and deliver all the bronzes to a gallery for sale within 30 days and warranted
that all but two of the bronzes were within his possession or control (the two that he
excepted had not yet been shipped by Gruppo Mondiale); and (4) McMullen warranted
that the bronzes were free from encumbrances except as listed in the settlement
agreement.  Notably, the settlement agreement did not disclose the law firm's perfected
security interest in the three bronzes in its offices.  McMullen subsequently delivered all
the bronzes, except the three at the law firm's offices, to a gallery in Kirkland,
Washington. 
Gruppo Mondiale did not become aware that the law firm's three bronzes
had not been delivered to the gallery until November 2001, when Smith became
concerned about whether Cosmopolitan Imports had complied with the parties' settlement
agreement.  He filed a demand for arbitration in accordance with an arbitration provision
in the settlement agreement and moved for partial summary judgment in that arbitration. 
The summary judgment motion raised, among other things, the issues whether the bronzes
had been delivered to a gallery for sale and whether (and what) encumbrances on the
bronzes existed prior to the settlement agreement.  The accused filed a response to the
summary judgment motion that did not address those two issues.  However, the accused
contemporaneously wrote a letter to Smith stating that "the casts are presently with the
O'Day Bronze Gallery in Kirkland Washington. * * *.  It is where all the bronzes are
currently consigned."  That statement was false; three of the bronzes were in the law
firm's Portland offices.  
On January 18, 2002, the arbitrator issued an order resolving the parties'
various motions.  The order required McMullen and his companies to disclose and
document all encumbrances on the bronzes and to deliver all the bronzes to a gallery for
sale within a specified period of time.  On January 23, 2002, Smith e-mailed the accused,
again inquiring about the security interests in the bronzes.  The accused replied, also by e-mail, "We are unaware of any claimed security interests, although both [the law firm] and
[another entity] probably claim a lien for any unpaid fees, but clearly any such claim is
junior to that of Gruppo Mondiale."  In other e-mails at around the same time, the accused
represented to Smith that the bronzes "have already been delivered to the O'Day Bronze
Gallery" and are "currently displayed at the O'Day Bronze Gallery in Kirkland." 
Smith then e-mailed the accused asking for a written receipt from the
gallery "listing all of the bronzes that it has received."  A few weeks later, Smith visited
the gallery and noticed that not all the bronzes that he expected to see were on display. 
Smith made some inquiries and the gallery's owner confirmed that all the bronzes that had
been delivered to him were on display.
Based on what he had learned, on March 11, 2000, Smith filed a motion
with the arbitrator for a determination of contempt and imposition of sanctions against
McMullen and Cosmopolitan Imports.  When the accused received a copy of the motion,
he wrote to the arbitrator stating that, "with the exception of four pieces, all of the bronzes
have been consigned with the O'Day Gallery.  Three pieces that have not been consigned
are displayed in my offices with the full knowledge and consent of Mr. Smith."  The
accused then shipped the three bronzes from the law firm's offices to the O'Day Gallery
and sent a letter to Smith informing him of that action.
On April 1, 2002, Smith wrote to the accused advising him that the
accused's statement to the arbitrator regarding Smith's "full knowledge and consent" was
false and warning him against repeating it.  In spite of that warning, the accused filed a
sworn declaration with the arbitrator on April 8, 2002, asserting that "it was my
understanding and belief that Mr. Smith and his client were aware that three of the
bronzes were being displayed in the offices of [the law firm] in Portland." 
On May 12, 2002, the arbitrator issued an order finding that McMullen and
Cosmopolitan Imports intentionally failed to deliver all the bronzes to the O'Day Gallery,
but represented to Gruppo Mondiale that they had delivered all of them.  The arbitrator
found McMullen and his company to be in contempt and imposed a $19,500 fine.
Smith reported the accused's actions to the Bar.  An  investigation ensued
and the present charges were filed.  After a hearing, a trial panel concluded that the
accused was guilty of three counts of violating DR 1-102(A)(3) (dishonesty) by (1)
affirmatively misstating the whereabouts of the three bronzes and the law firm's security
interest in them in his responses to Smith's November 2001 summary judgment motion;
(2) falsely representing to Smith that all the bronzes had been delivered to the O'Day
Gallery in his January 2002 e-mails to Smith; and (3) falsely representing to the arbitrator
in March and April 2002 that he had understood that the three bronzes had remained at
the law firm's offices with Smith's full knowledge and consent.  The trial panel also found
that the accused had violated DR 7-102 (false statements while representing client's or
lawyer's own interests) in his January 2002 statements to Smith and his March and April
2002 statements to the arbitrator; DR 7-106(A) (disregarding ruling of a tribunal), by
failing to comply with the arbitrator's order to deliver all the bronzes to a mutually
acceptable gallery for sale; DR 1-102(A)(4) (conduct prejudicial to the administration of
justice), by failing to do what the arbitrator specifically had ordered respecting the
bronzes; and DR 5-101(A) (continuing in employment after conflict of interest arises), by
continuing to represent McMullen and his companies after the arbitrator ordered all
bronzes -- including the three that his law firm held a security interest in -- to be delivered
to a gallery. (6)  Based on those findings, the trial panel concluded that the accused
should be suspended from the practice of law for one year.  
The accused argues that the Bar failed to prove any of the contested charges
by clear and convincing evidence.  The accused contends that all the charges rely, to some
degree, on a finding that he purposefully or knowingly hid the location and status of the
three bronzes from Gruppo Mondiale and its lawyer, Smith.  The accused argues that that
finding is incorrect and that the evidence proves that the opposite was true -- that he did
not know that the law firm had perfected its prior security  interest in the three bronzes
and believed that Smith and Gruppo Mondiale understood all along that the bronzes were
at the law firm's Portland offices.  The accused acknowledges that "there are facts and
circumstances that could be construed to support th[e trial panel's] finding" to the contrary
but argues that, "when each of those facts and circumstances is examined in its proper
context, and considering the parties' motivations, objectives and credibility[,] the record
does not support a finding that the [accused] had [such a] subjective belief."
The accused contends that the trial panel's conclusions that the accused
knowingly and dishonestly failed to disclose the fact of his law firm's security interest in
the three bronzes rests on an assumption that the accused knew that his firm's security
interest in the bronzes had been perfected.  The accused contends that that assumption is
erroneous -- that the evidence supports his claim that he did not know that the security
interest had been perfected.  He points to his own "consistent" testimony (as he
characterizes it) to the effect that, "after initially discussing the prospect of a lien with his
managing partner, the matter was placed in the hands of the firm's creditor rights partner
and the [accused] had no further involvement with the matter."  Indeed, he asserts that he
could not reasonably have been expected to have anything further to do with that aspect
of his firm's business.  He also argues that he did not participate directly in any
misrepresentations that were included in the settlement agreement because McMullen and
Gruppo Mondiale's principal dealt with each other directly.
None of the accused's arguments is persuasive.  Even if no one told the
accused exactly when the firm's security interest in the bronzes was perfected, he knew
that another employee of the firm had set the process in motion, that time was vital, and
that there was no reason to believe that that employee would be unsuccessful.  In fact, one
partner in the accused's firm testified that he had told the accused to "work with * * *
Paterson to get the security interest perfected and done properly."  Given that sequence of
events, we do not credit the accused's testimony that he was unaware of a perfected
security interest when he signed off on the settlement agreement indicating that no one
had priority interests in any of the bronzes.  Contrary to the accused's assertions, we find
by clear and convincing evidence that the accused had knowledge of the firm's security
interest in the bronzes.     
The accused also argues that the trial panel's conclusions of wrongdoing
were based on the incorrect assumption that the accused was motivated to engage in a
series of misrepresentations by a desire to protect his job -- specifically, by a desire to
reassure the partnership that, although he had invested several months of the firm's time
in the Cosmopolitan Imports matter and Cosmopolitan Imports had not yet paid any of its
bills, the bills were as good as paid because the firm had the bronzes.  He contends that
the record establishes that that motive did not exist because, before any of the alleged
misrepresentations were made, the accused already had decided to leave the law firm and
embark on a solo practice.  He argues:
"All that can be stated with any certainty is that the decision was made
sometime between January 1, 2002 and March 8, 2002.  That calls into
question why the [accused] would have made material misrepresentations to
[Smith] on January 10, 2002, January 23, 2002, and January 28, 2002. * * *
More importantly, the critical representation at issue, that [the accused]
made in a sworn affidavit to the arbitrator, was made after the [accused's]
email to all of the attorneys and staff at [the law firm] announcing his
resignation."
The accused's argument is not persuasive.  It is true that the trial panel did
suggest that the accused was motivated to misrepresent the location and status of the
bronzes because he was torn between a personal identification with his friend's contract
dispute with Gruppo Mondiale and pressure to perform at his firm (including pressure to
ensure collection of the Cosmopolitan bill), and the evidence certainly permits that
inference.  But that suggestion of divided loyalties is irrelevant:  Regardless of the
accused's motivations, it remains clear to us that the accused knew the true state of affairs
respecting the location of the bronzes and the firm's security interest in them.  The
accused's claim of a prior decision to leave the firm does not detract from the trial panel's
conclusion -- with which we agree -- that the accused knowingly misrepresented the
status and location of the three bronzes to opposing counsel and the arbitrator. 
The accused also argues that the evidence shows that his subjective belief
about Smith's knowledge of the location and status of the bronzes was correct.  The
accused suggests, first, that there is "no dispute" that, as of October 2001, Smith knew
that there were a few bronzes at the offices of the law firm.  He then goes on to note that,
although Smith went to the O'Day gallery on February 6, 2002, and learned that not all the
bronzes were on display, and although the parties were engaged in settlement discussions
over the next few weeks, Smith never mentioned the missing bronzes to the accused and
instead simply filed a contempt motion on March 11, 2002.  The accused suggests that
that sequence of events "lends credibility" to his position that Smith knew where the
bronzes were and was essentially setting him up for a fall.
That argument is not persuasive.  It is true that there is evidence that Smith
knew that some of the bronzes were at the law firm's Portland offices in early October: 
McMullen had signed a declaration stating that the bronzes were in several different
locations, including the firm offices.  But, within a few weeks, McMullen also had signed
an agreement promising to send all the bronzes to a gallery for sale by a specified date. 
There is no persuasive evidence anywhere in the record suggesting that McMullen or the
accused somehow had conveyed to anyone that the law firm's three bronzes would be
exempt from that promise.  Neither does the fact that Smith refrained from asking about
the missing bronzes during subsequent settlement discussions in any way suggest that he
knew where they were.  All that Smith needed to know was that the accused had not
produced an itemized consignment agreement in spite of Smith's repeated requests and
that not all the bronzes were at the gallery that the parties had agreed upon.  That was a
sufficient justification for Smith to act as he did.
We find the accused guilty of the charged offenses.  Respecting sanction,
we note that the accused agrees with the Bar that the sanction chosen by the trial panel --
a one-year suspension -- is an appropriate one if the alleged violations are sustained. 
Having concluded that the accused is guilty of the violations alleged, we agree with the
parties and the trial panel that a one-year suspension is appropriate.  A further discussion
of that topic would not, in our view, aid the parties, the public, bench, or bar. 
The accused is suspended from the practice of law for one year, effective 60
days from the date of this decision.
1. The Oregon Rules of Professional Conduct became effective January 1, 2005. 
Because the conduct at issue in this case occurred before that date, we apply the Code of
Professional Responsibility.
2. The trial panel found the accused guilty of three violations of DR 9-101(A) (failing
to keep client trust account separate from other accounts).  The accused does not contest
the trial panel's finding that he committed three violations of DR 9-101(A).
3. The accused does not separately challenge the trial panel's choice of sanction.
4. At various points in the record, one could conclude that McMullen, Cosmopolitan
Imports, Cosmopolitan Motors, or some combination of the three were the accused's
clients.  The accused makes no issue respecting the identity of his client in connection
with the charges against him, and we do not attempt to sort the matter out further.
5. We attempt here to reflect the subjective beliefs and assertions of the various
parties (including the accused) who provided evidence.  We do not, however, vouch for
the accuracy of any participant's assertions.
6. As noted, the trial panel also found that the accused had violated DR 9-101(A)
(failing to keep client trust account separate) in an unrelated matter:  After leaving the law
firm in May 2002, the accused set up his own law firm and client trust account and used
his trust account as a personal checking account on at least three occasions.  The accused
never has contested that charge.