Opinion ID: 1723573
Heading Depth: 1
Heading Rank: 3

Heading: Application of Issue Preclusion.

Text: The district court in the fraud case found by clear and convincing evidence that Isaacson was guilty of misconduct in his dealings with clients named Scharnberg. Specifically, the court found that Isaacson involved the Scharnbergs in four investments, which were identified as Cedar Ridge, the Clive Duplex, Execucharter, and the Crossing. Cedar Ridge and the Clive Duplex involved the Scharnbergs' purchase of property directly or indirectly from Isaacson. A portion of the Cedar Ridge project was sold to the Scharnbergs for $15,000. The Clive Duplex, owned by Isaacson and one other person, was sold to the Scharnbergs for $117,500. Execucharter was a corporation that another client of Isaacson, Griffith, had established to purchase a yacht/fishing boat. The Scharnbergs invested $29,500 in this project. The Crossing was a condominium project for which the Scharnbergs financed the construction, on Isaacson's advice. The district court found that Isaacson made misrepresentations to the Scharnbergs and failed to disclose material facts to them. He failed to provide corrected projections of income, failed to provide information about the financial status of Griffith, misrepresented the appraisal for the Crossing, misrepresented that the Cedar Ridge investment would not require capital calls, overstated the cash flow from the Clive Duplex, and failed to disclose to the Scharnbergs that the investment that Isaacson was requesting from them was on behalf of another client, Griffith. Isaacson actively discouraged the Scharnbergs from obtaining independent counsel, according to the court, and advised his clients that it would only delay matters and cause additional expense. Isaacson told his clients that he could do it more efficiently by representing both parties. In Isaacson's first appeal, we considered the issue preclusion requirements as outlined by Hunter v. City of Des Moines, 300 N.W.2d 121, 123 (Iowa 1981), and by court rule 118.7. We found that the respondent's challenges to the board's claims of fraud and misrepresentation under DR 1-102(A)(4) of the code of professional responsibility and his conflict of interest under DR 5-104(A), DR 5-105(B), and DR 5-105(C) were precluded by the judgment in the fraud case because the case fit all three of the rule's requirements for application of the doctrine. D.J.I., 545 N.W.2d at 875-76. We hold that the evidence before the commission established by a convincing preponderance of the evidence that Isaacson violated DR 1-102(A)(4) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation); DR 5-104(A) (entering business transaction with client without full disclosure of differing interests); DR 5-105(B) (accepting employment if exercise of independent judgment likely to be adversely affected); and DR 5-105(C) (continuing multiple employment if exercise of independent judgment likely to be adversely affected).