Opinion ID: 2714911
Heading Depth: 2
Heading Rank: 2

Heading: Jackson's Evidentiary Challenges Fail

Text: Jackson argues that the hearing officer erred in giving preclusive effect to the bankruptcy court's sanctions order and in admitting e-mails that should have been 20 No. 201,017-2 protected under attorney-client privilege. Both of these claims fail because the hearing officer independently determined that Jackson had violated discovery orders and the e-mails were admitted without objection, subject to a protective order. A. Hearing Officer Independently Found Jackson Had Violated Discovery Orders Jackson argues that the bankruptcy court's order granting the trustee's motion for sanctions against Jackson's law firm was error and should not have been admitted in his disciplinary hearing. He contends that Bankruptcy Judge Karen Overstreet's decision violated his due process rights because no motion was before her and no evidentiary hearing was held. This is false because the bankruptcy judge clearly considered and ruled on the pending sanctions motion. Jackson, his wife, and his law firm all submitted materials to oppose the sanctions motion. The court heard oral argument on the motion on July 11, 2008, and asked the parties for supplemental materials. The trustee submitted a supplemental declaration. Jackson and his codefendants submitted 10 additional supplemental pleadings. Upon reviewing the materials, the bankruptcy judge issued a 47-page decision, finding that Jackson's firm had withheld relevant documents, in violation of a discovery order. The bankruptcy judge thoroughly considered the issue. Jackson has not argued that the bankruptcy judge ruled incorrectly on the motion. Furthermore, Jackson has not offered any authority for why he should have received an evidentiary hearing. Jackson also argues that [n]o guilt or disciplinary action should have been inferred from the bankruptcy court's decision because Judge Overstreet was biased. But Jackson offers no evidence of bias. Jackson points to a single telling comment he believes substantiates Judge Overstreet's bias: the defendants have submitted all 21 No. 201,017-2 this information about the bad acts of Langford and GFS and all these other cases. It's completely irrelevant to this case. It is not clear how this statement evidences bias on the part of Judge Overstreet. The judge was just stating that evidence of other parties' bad acts are irrelevant-i.e., they do not excuse or justify Jackson's bad acts in the current proceeding. Also, the hearing officer made clear that she would not give preclusive effect to Judge Overstreet's decision granting the motion. The hearing officer admitted Judge Overstreet's ruling but noted that she had independently resolved the discovery violation issue by comparing the documents that were in Jackson's possession with those actually produced in response to the trustee's requests. The hearing officer reviewed exhibits and independently verified each of the entries on the exhibits before reaching her conclusions. In other words, the hearing officer found that Jackson violated discovery orders, based on the overwhelming evidence before her, not on the bankruptcy court's decision. B. Hearing Officer Properly Admitted the E-mails, Subject to a Protective Order This court reviews evidentiary rulings for abuse of discretion. See Cox v. Spangler, 141 Wn.2d 431,439,5 P.3d 1265 (2000). In disciplinary hearings, evidence is admissible if the hearing officer determines it is the kind of evidence on which reasonably prudent persons are accustomed to rely on and not irrelevant, immaterial, or unduly repetitious. ELC 10.14(d)(1 ). In the instant case, the hearing officer did not abuse her discretion in admitting thee-mails at issue, subject to a protective order. 22 No. 201,017-2 Jackson argues that e-mails he exchanged with Simonson should have been protected under attorney-client privilege. 13 He acknowledges that attorney-client privilege does not protect attorney-client communications made in furtherance of crime or fraud. State v. Richards, 97 Wash. 587, 591, 167 P. 47 (1917) (communications involving proposed blackmail); Cede// v. Farmers Ins. Co. of Wash., 176 Wn.2d 686, 699, 295 P.2d 239 (2013). But he argues that the crime-fraud exception does not apply here because the Association had not proved that a crime or fraud was committed and that communications were made in furtherance of that crime. 14 He specifically takes issue with the admission of Ex. A-170. However, the hearing officer admitted exhibit A-170 into evidence on April 8, 2011 without objection, and not through application of the crime-fraud exception. The only issue was whether the exhibit should be protected. The hearing officer noted that exhibit A-170 included e-m ails between Jackson and Simonson and asked for briefing on whether the crime-fraud exception applied to these communications. If it did, the hearing officer explained that she would lift the protective order on some of the communications, including exhibit A-170. The Association ultimately argued that the exception did apply but that exhibit A-170 should, nevertheless, be subject to a protective order under ELC 3.2(e). See 13 Note that elsewhere in his brief, Jackson argues that he was not Simonson's attorney. 14 Although the crime-fraud exception used to apply only to criminal activity, the exception now applies to advice or assistance for the purpose of perpetrating a civil fraud as well. Escalante v. Sentry Ins. Co., 49 Wn. App. 375, 394, 743 P.2d 832 (1987). A court engages in a two-step process whenever the civil fraud exception is asserted. See Cede//, 176 Wn.2d at 700. But this procedure is not required when evidence is admitted without objection. 23 No. 201,017-2 In re Disciplinary Proceeding Against Schafer, 149 Wn.2d 148, 166-67, 66 P.3d 1036 (2003) (even if disclosure required, court can still restrict disclosures to only those matters necessary for court proceedings). The hearing officer determined that exhibit A-170 was subject to a protective order. Again, Jackson did not object. Jackson's claim is a nonissue. See generally CR 37(d) (because discovery is intended to be broad, party wishing to assert privilege cannot simply keep quiet; it must either reveal information, disclose it has it and assert it is privileged, or seek protective order). Ill. Substantial Evidence Supports the Hearing Officer's Findings of Fact Jackson generally claims that all of the hearing officer's 391 findings of fact are unsupported, noting that it is impossible to specifically assert error to each of the findings within the page limitation set forth by our court. Acknowledging this difficulty, we review his entire brief, and consider Jackson's specific assignments of errors as they arise within his other arguments. But we are not required to address findings not specifically referred to, and we reject challenges he fails to support with citations to the record or legal authority. Marsha//, 167 Wn.2d at 67 (providing that a challenge is sufficient only if the attorney cites to the record in support of argument); RAP 10.3(a)(6) (arguments in a brief should contain citations to the record and legal authority). 24 No. 201,017-2 A. Jackson Had a Financial and an Ownership Interest in Various Companies Jackson argues that there is no evidence that he had a financial interest in New Century Builders or Chelan Landing LLC or any other company for that matter. 15 The fact that he has no ownership or financial interest in New Century Builders is not pertinent to any of the counts alleged against him. 16 And we should reject Jackson's other challenges because he does not cite to the record or any legal authority to rebut the hearing officer's findings on this issue. The hearing officer found that Jackson participated ·in the formation of Chelan Landing, LLC and was the registered agent and organizer of this company. In addition, his company, Jackson-Field Enterprises, LLC, was a member of the Chelan Landing, LLC and entitled to participate in its management. The hearing officer specifically rejected Jackson's claim that he had no interest in Chelan Landing. Also, the record directly contradicts Jackson's statement that he had no financial interest in any other company. Jackson and his wife co-owned RPC Enterprises with the Dainards and co-owned Jackson-Field Enterprises with the Fields. Thus, Jackson's claim that he had no financial interest in any of these companies fails. 15Jackson's interest in these companies implicates Counts 11-13, which deal with Jackson's duty to avoid conflicts of interest. Of these, only Counts 11 and 12 carried with them a presumptive sanction of disbarment. 16 New Century Builders is owned by Kenneth North. 25 No. 201,017-2 B. Jackson Was Simonson's Attorney during the Bankruptcy Proceeding Jackson argues that there is no evidence he represented Simonson in the bankruptcy proceeding. He points out that he did not have a PACER (Public Access to Court Electronic Records database) account with the bankruptcy court at the time, and he never signed any of the pleadings. Also, he was not the attorney of record for Simonson. Accordingly, he argues that it was wrong for the hearing officer to attribute attorney misconduct during the bankruptcy proceeding to Jackson. Jackson made similar arguments during his disciplinary hearing, and the hearing officer rejected them. The hearing officer found that although Greg Cavagnaro was Simonson's attorney of record in the bankruptcy proceeding, Jackson was Simonson's primary legal advisor for all issues related to the proceedings. Jackson's time records reflected many hours of researching, attending meetings, and preparing for the first and second adversary proceedings. E-mails reflect that Jackson was Simonson's primary legal advisor regarding the bankruptcy. After Jackson began representing the Levenhagens, Laings, and Lanings, he continued to spend hours conferencing with Simonson, often without Cavagnaro present. And when Simonson was added to the second adversary proceeding, Jackson continued to advise him and draft and edit his pleadings. Thus, the mere fact that he did not have PACER account or that he did not sign pleadings is not sufficient to rebut the hearing officer's findings, which are supported by substantial evidence. Jackson additionally argues that he could not have violated discovery orders because he had no records. But he offers no new evidence and instead relies on the 26 No. 201,017-2 same facts and testimony he offered at his disciplinary hearing. 17 The hearing officer specifically rejected Jackson's contrary evidence and found that Jackson, acting as Simonson's attorney, knowingly violated the bankruptcy court's restraining orders. Thus, we reject this claim. Marshall, 160 Wn.2d at 331 (not sufficient for attorney to merely re-argue his version of facts); Poole, 156 Wn.2d at 212 (we will not overturn findings of fact based merely on alternative explanations or versions of the facts already rejected by the hearing officer and board). C. Jackson Was Kenneth North's Attorney As he did at his disciplinary hearing, Jackson argues generally that he was never Kenneth North's attorney and, specifically, that he was not involved in North's presentations at the winery regarding the condo development. These facts implicate counts 8-14, which involve Jackson's duty to avoid conflicts of interest. Jackson does not offer any compelling evidence in support of this contention. Jackson first argues that he had no attorney-client relationship with North because Jackson merely acted as a messenger, conveying information between North and other parties to various transactions. However, he does not cite to the record for support. He also argues that there was no attorney-client relationship because the record is devoid of any evidence that North believed Jackson was his lawyer. He cites 17 Jackson asserts that he and Stephen Araki turned over all pleadings and files to Marc Stern, who failed to return copies. It is true that Leanne Volz, who worked with Jackson, testified that they sent boxes of documents to Stern and received a portion of those boxes back. But the hearing officer heard this testimony and rejected it, reasoning that Araki's testimony directly contradicted Jackson's and Volz's statements concerning the files. 27 No. 201,017-2 State v. Hansen, 67 Wn. App. 511, 837 P.2d 651 (1992), for the proposition that the existence of an attorney-client relationship turns on the client's subjective belief that it exists. However, Hansen also held that the client's belief will control only if it is reasonably formed based on attending circumstances, including the attorney's words or actions. !d. (aff'd, 122 Wn.2d 712, 720, 862 P.2d 117 (1993) (no attorney-client relationship where total contact consisted of only one phone call where attorney said he would not take the case)); see also Bohn v. Cody, 119 Wn.2d 357, 363, 832 P.2d 71 (1992). Here, Jackson provided legal advice to multiple legal entities owned by North and helped North form companies, including Cedar Hollow Development, New Century Builders and Chelan Landing, LLC. E-mails between North and Jackson show that Jackson acted at North's direction when he made offers on various properties, negotiated contracts, and held funds. And, Jackson kept North's funds in his trust accounts and made payments at North's direction. Thus, we find that substantial evidence supports the hearing officer's finding that Jackson had an attorney-client relationship with Kenneth North. D. The Dainards Had No Knowledge of Jackson's Involvement with North Jackson reasserts his argument that Mr. Dainard knew of Jacksons' involvement with North the entire time. But, Jackson has not offered any evidence to rebut the hearing officer's findings that Jackson intentionally concealed his involvement with North in order to benefit himself and North. Jackson points to e- mails wherein Dainard does not mention North. This is not evidence that Mr. Dainard knew of Jackson's involvement with North. 28 No. 201,017-2 To conclude, we hold that Jackson's general assignment of error to all of the hearing officer's findings of fact and law are insufficient. In re Disciplinary Proceeding Against Kronenberg, 155 Wn.2d 184, 191, 117 P.3d 1134 (2005) (to challenge findings of fact, respondent attorney must argue why specific findings are unsupported and cite to the record to support the argument). Jacksons' specific assignments of error to certain findings of fact also fail. He offers little to no evidence to support his claims. And ultimately, many of the hearing officer's findings of fact were the result of credibility determinations based on abundant testimony and exhibits. Considering we give great weight to the hearing officer's evaluation of the credibility and veracity of the witnesses he observes firsthand, there is not enough evidence to overturn the hearing officer's findings. See Marshall, 167 Wn.2d at 71. IV. The Hearing Officer's Conclusions of Law Are Supported by the Facts Jackson explicitly challenges the hearing officer's conclusions that he violated RPC 1.8(a), charged in counts 8 and 9, and 18 U.S.C. § 152, charged in count 2. In addition, Jackson appears to challenge the hearing officer's conclusion that he violated RPC 8.4(b) and (c), charged in count 6. We review each of Jackson's challenges to the hearing officer's conclusions of law de novo. Marshall, 160 Wn.2d at 330. The Association must prove misconduct by a clear preponderance of the evidence. /d.; see also ELC 10.14(b). We will uphold the hearing officer's ultimate conclusion relating to any misconduct if it is supported by substantial evidence in the record that the lower court could reasonably have found would meet the clear preponderance standard. Marshall, 160 Wn.2d at 330. 29 No. 201,017-2 The hearing officer issued conclusions of law regarding each charged count of misconduct. In each of the counts discussed below, the hearing officer found that Jackson acted knowingly, causing injury or potential injury. 18 We find that the Association has met its burden of proving misconduct by a clear preponderance of the evidence. A. Count 2: Jackson's Conduct Violated 18 U.S. C.§ 152 Count 2 involves Jackson's participation in the fraud on the bankruptcy court. We hold there was substantial evidence that Jackson committed fraud, in violation of 18 U.S.C. § 152, which prohibits the concealment of the debtor's assets. As he did at his disciplinary hearing, Jackson argues that there was no evidence that he made payments and transferred funds in knowing violation of any court order. The hearing officer found Jackson's testimony was not credible. Specifically, the documents, the timing of the events, and the substance of his communications with Simonson all rebutted Jackson's claim that he acted without knowledge. The hearing officer concluded that by transferring funds into and out of his trust account in February and March 2006, in contravention of a restraining order, Jackson knowingly violated 18 U.S.C. § 152 and RPC 8.4(b). Thus, we reject Jackson's claim that the record is devoid of any proof of this violation. 18Under the American Bar Association's Standards for Imposing Lawyer Sanctions (1991 ed. & Supp.1992) (ABA Standards), a lawyer acts with knowledge 'when the lawyer acts with conscious awareness of the nature or attendant circumstances of his or her conduct but without the conscious objective or purpose to accomplish a particular result.' In re Disciplinary Proceeding Against Stansfield, 164 Wn.2d 108, 123, 187 P.3d 254 (2008) (quoting ABA STANDARDS at 6). 30 No. 201,017-2 B. Count 6: Jackson's Conduct Violated RPC 8.4(b) and/or RPC 8.4(c) Count 6 alleges that Jackson made a false statement on a mortgage application and on a Second Home Rider involving 115 Webster. The hearing officer found that this conduct violated RPC 8.4(b) (by violating 18 U.S.C. § 1344) and RPC 8.4(c). 19 As he did at the hearing, Jackson denies that he had the mental state for fraud and denies his conduct violated the law. We find that substantial evidence supports the hearing officer's findings. Jackson's argument that it was the Dainards who obtained the financing for 115 Webster is as unconvincing now as it was at his hearing. He offers no credible evidence as support. Because substantial evidence supports the hearing officer's finding that Jackson violated the law, causing harm to the Dainards, we reject Jackson's challenge. C. Counts 8 and 9: Jackson's Conduct Violated RPC 1.8(a)2° Counts 8 and 9 allege that Jackson violated the rules pertaining to business transactions with or adverse to a client. Because the presumptive sanction for both of these counts was admonition and not disbarment, we need not review Jackson's 19 The RPC's were amended effective September 1, 2006. The formal complaint charged Jackson with violating RPC's in effect as of the date of the alleged conduct. Where amendments did not change the RPC provisions at issue, we cite to the current RPC's. Current RPC 8.4(b) states that it is professional misconduct to commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer. Current RPC 8.4(c) states that it is professional misconduct to engage in conduct involving dishonesty, fraud, deceit or misrepresentation. 2 ° Current RPC 1.8(a) states, A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless the terms are fair and reasonable, the client is advised in writing, and the client gives informed consent. 31 No. 201,017-2 challenges. 21 In re Disciplinary Proceeding Against Petersen, 120 Wn.2d 833, 854, 846 P.2d 1330 (1993) (if facts sufficient to disbar on certain counts, court need not review other charged counts). To conclude, we reject Jackson's challenges to the hearing officer's conclusions of law. Nowhere does Jackson actually argue that the hearing officer's conclusions are not supported by findings of fact or that the findings are not supported by substantial evidence. He merely renews arguments that were raised and rejected at his hearing. V. There Is No Evidence of Misconduct on the Part of Disciplinary Counsel Jackson argues that various improper acts by Association's counsel violated his due process rights. All of these claims fail because there was no misconduct on the part of disciplinary counsel. First, Jackson takes issue with Mr. Dainard's presence in the hearing room, and with the fact that disciplinary counsel conferred with Mr. Dainard during the disciplinary hearing. But, Jackson specifically stated during the hearing that he had no objection to Mr. Dainard's presence. See ELC 5.1 (c)(5) (grievant has right to attend disciplinary hearing, subject to these rules and any protective orders). And, Jackson does not cite to any legal authority for the proposition that disciplinary counsel is forbidden from speaking with grievants. Thus, this claim fails. 21 Briefly, however, Jackson does not raise any new arguments with regard to Counts 8 or 9. The hearing officer concluded that both violations were proved. The conclusions of law are supported by substantial evidence and by the unchallenged findings of fact. Jackson's bald assertion on appeal that there was no violation of RPC 1.8(a) fails. 32 No. 201,017-2 Next, Jackson argues that Association's counsel intentionally presented the Dainards' perjured testimony. He argues that Mr. Dainard lied when he said he thought Bank of America was doing the loan for 115 Webster. Jackson claims that Mr. Dainard knew Ancora Financial was doing the loan because Mr. Dainard was copied on e-mails between Jackson and Jarred Teague (owner of An cora Financial) and because Mr. Dainard was the one who corrected the original loan documents, which bore Ancora Financial's name. However, Mr. Dainard was not copied on the e-mails to which Jackson cites, and there is no evidence that Mr. Dainard corrected the original loan documents. Jackson also claims that Mrs. Dainard falsely testified that she relied on Jackson to review the quitclaim deed when, in fact, David Hilyer prepared the deed. But Jackson's citations to the record indicate that it was Jackson who signed the quitclaim deed incorrectly transferring 115 Webster to RPC, LLC, prepared and signed the excise tax affidavit, and who later corrected the original document to list the grantee as RPC Enterprises, LLC. Third, Jackson argues that disciplinary counsel intentionally delayed sending out Mr. Dainard's second grievance against Greg Cavagnaro, submitted on March 5, 2011, to the Association. He contends that the grievance would have clearly revealed Mr. Dainard's lack of credibility. However, he does not specify how the grievance would have revealed a lack of credibility. He does not cite to any facts, evidence, or law to support this claim. Thus, Jackson has not alleged facts or law requiring us to overturn the hearing officer's evaluation of the credibility and truthfulness of the witnesses. 33 No. 201,017-2 Jackson next argues that disciplinary counsel improperly submitted evidence relating to the bankruptcy proceedings even though those proceedings were erroneously conducted. He argues that it was improper to submit evidence of the bankruptcy proceedings without explaining that some of the missing documents (that were the subject of discovery violations) had been found. But, Jackson does not specify what documents had been found. Jackson stated that he recalled Ms. Moewes' stating that she had found some of the missing documents, but he cited generally to two incredibly lengthy documents that mostly contain information adverse to him. Jackson's equivocal statement is not sufficient to undermine the hearing officer's findings related to the discovery violations. Last, Jackson argues that Association's counsel improperly subpoenaed Jackson's adult children's bank records even though Jackson's name is not on those accounts. Jackson contends that this violated privacy statutes. Under 12 U.S.C. § 3405, a government authority may obtain financial records protected by the Right to Financial Privacy Act of 1978 pursuant to an administrative subpoena only if (1) there is reason to believe that the records sought are relevant to a legitimate law enforcement inquiry and (2) a copy of the subpoena or summons has been served upon the customer or mailed to his last known address on or before the date on which the subpoena or summons was served on the financial institution together with a notice stating with reasonable specificity the nature of the law enforcement inquiry. Jackson does not allege any facts or evidence that the subpoenas violated this statute. Simply stating that the Association subpoenaed his adult children is not sufficient to allege a violation of§ 3405. 34 No. 201,017-2