November 2006
Disciplinary Notices
Disbarred
Andrew R. Gala (WSBA No. 17151, admitted 1987), of Seattle, was disbarred, effective April 20, 2006, by order of the Washington State Supreme Court following a hearing. This discipline was based on his conduct between 2000 and 2003 involving misappropriation of law-firm funds, entering into loan transactions with a client without adequate disclosure or written consent, and other conduct involving dishonesty, fraud, deceit, or misrepresentation.
Mr. Gala worked at the Seattle branch of a law firm based in Portland, Oregon. By 2002, Mr. Gala managed the firm’s Seattle office and was able to approve certain expenditures without further authorization. The firm’s Shareholder Compensation Plan in effect during Mr. Gala’s association with it specified that “each Shareholder shall devote his or her entire time and attention to the practice of law for the benefit and account of the Corporation. No Shareholder shall engage in the practice of law other than for the benefit and account of the Corporation.” Mr. Gala was the primary billing attorney assigned to all matters involving Client A. Mr. Gala also represented multiple clients in a matter known as the consolidated claims litigation, which had generated large fees over several years.
Matter 1: At intervals in 2002 and 2003, Mr. Gala asked his secretary to obtain three checks (totaling $12,300) for payments to a purported expert witness. Mr. Gala denominated the checks as cost items related to the consolidated claims litigation. The checks, signed by Mr. Gala, were actually made out to Mr. Gala’s personal creditor and used to pay a debt owed following Mr. Gala’s purchase of a residence on Mercer Island. To explain to the creditor why the check had been drawn on a firm account, Mr. Gala claimed that his firm had set up an escrow account for him. When the firm’s accounting department asked for the expert’s tax identification number (TIN), Mr. Gala concealed the fact that he was using firm funds to discharge a personal debt by providing the accounting department with an unwitting third party’s Social Security number. At the end of 2002, the firm completed an IRS 1099 form listing the $12,300 as income to the “expert witness” paid by the firm. Sometime in 2003, the firm received notice from the IRS that the TIN it had provided for the “expert witness” did not match IRS records. Consequently, the firm sent a notice to Mr. Gala’s creditor requesting that he complete a form with his correct TIN. Upon receipt of the notice, an assistant in the creditor’s office contacted the firm and explained that their only connection with Mr. Gala was through a purely personal debt for the purchase of his home. The firm’s accounting department gathered information about the three checks and learned that Social Security number for the TIN did not in fact belong to an “expert witness.” The accounting department determined that firm clients had contributed $10,455 towards Mr. Gala’s house payment, while Mr. Gala had caused the firm to absorb the remaining $1,845 as part of a write-off. The firm’s president immediately communicated with the affected clients and sent checks to reimburse those clients for the “expert fees.”
Matter 2: In April 2003, Mr. Gala applied to rent an apartment for himself. He listed the firm name as well as his own as the “applicant.” He directed his paralegal to request a check for $3,825, payable to the entity renting the property, to be drawn on the firm’s client advance account and chargeable to Client A for a “property purchase” matter. Mr. Gala identified the reason for the “client advance” as a “co-brokerage fee.” The firm’s accounting department prepared the check drawn on the firm’s Seattle client advance account. Mr. Gala signed the check and used it to prepay rent on the apartment. Mr. Gala listed the check as a cost item on a Client A matter. He asked the firm’s accounting department to transfer fees and costs in that matter to a new probate file, which would not be subject to the firm’s 60-day billing requirement.
Matter 3: In June 2000, Mr. Gala signed a $100,000 promissory note to Client A for money that Client A had loaned to Mr. Gala. In approximately February 2002, Client A loaned Mr. Gala an additional $25,000. Mr. Gala did not provide written disclosure to, and did not obtain written waivers or consents from, Client A regarding potential conflicts of interest. After signing the promissory note, Mr. Gala provided over 200 hours of legal services to Client A for which he did not bill Client A in order to retire all or part of his debt. Under the terms of the firm’s shareholder agreement, the firm, not Mr. Gala, was entitled to receive the value of the legal services provided by Mr. Gala to Client A. Mr. Gala also charged expenses for trips to California and Arizona on Client A matters to the firm, but did not bill Client A for those expenses. After discovering the situation and investigating further, the firm took prompt action to terminate its relationship with Mr. Gala.
Mr. Gala’s conduct violated RPC 1.7(b), prohibiting a lawyer from representing a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person or by the lawyer’s own interests, unless the lawyer reasonably believes the representation will not be adversely affected and the client consents in writing after a full disclosure of material facts; RPC 1.8(a), prohibiting a lawyer from entering into a business transaction with a client or knowingly acquiring an ownership, possessory, security, or other pecuniary interest adverse to a client unless the transaction and its terms are fair and reasonable and fully disclosed and transmitted in writing to the client, the client is given opportunity to seek the advice of independent counsel, and the client consents; RPC 8.4(b), prohibiting a lawyer from committing a criminal act (here, theft) that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects; RPC 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; RPC 8.4(i), prohibiting a lawyer from committing any act involving moral turpitude, corruption, or any unjustified act of assault or other act which reflects disregard for the rule of law, whether the same be committed in the course of his or her conduct as a lawyer, or otherwise; and former RLD 1.1(a), prohibiting acts involving moral turpitude and acts reflecting disregard for the rule of law.
Linda B. Eide and Scott G. Busby represented the Bar Association. Mr. Gala represented himself. Susan H. Amini was the hearing officer.
Disbarred
Virginia S. Lauver (WSBA No. 33377, admitted 2003), of Spokane, was disbarred, effective May 9, 2006, by order of the Washington State Supreme Court following a stipulation approved by the Disciplinary Board. This discipline was based on her conduct between 2002 and 2004 involving multiple acts of forgery and submission of false information on a loan application.
In December 2002, Ms. Lauver filed petition for dissolution of marriage from her husband. Ms. Lauver did not serve her husband with a summons. Ms. Lauver subsequently filed an acceptance of service, which had been signed by her husband at her request in March 2003. The dissolution was ultimately granted by default, finalized, and filed with the court in June 2003. Ms. Lauver did not inform her husband of the finality of the dissolution proceedings, even when it was clear to her that he was unaware of it. In the divorce decree, dated May 30, 2003, Ms. Lauver’s husband was awarded a 160-acre piece of property in Ada County, Idaho.
In June 2003, Ms. Lauver opened her own law practice in Spokane. In 2004, another lawyer joined Ms. Lauver’s firm as a partner. In May 2004, Ms. Lauver filed a quitclaim deed at the Ada County Recorder’s Office. According to the face of the deed, Ms. Lauver’s former husband had awarded to Ms. Lauver title to the 160-acre property as a result of the divorce. Ms. Lauver forged her former husband’s signature on the deed. Ms. Lauver also forged the name of her law partner as notary on the deed.
Subsequently, Ms. Lauver obtained a bank loan secured by the Ada County property. In support of the application for the loan, Ms. Lauver falsely stated that her former husband had died. She supplied the bank with a modified copy of the divorce decree inaccurately showing that she had been awarded the property in the dissolution. At the same bank, Ms. Lauver and her law partner opened a business checking account, a line of credit account for $50,000, and a capital loan account for $10,000. In May 2004, Ms. Lauver forged her law partner’s signature or endorsement on three checks (totaling $43,800), payable to herself, on the business checking account. She used the money from the checks to pay for numerous items, which included personal debts and business debts.
In 2005, Ms. Lauver was charged with one count of forgery in Ada County and four counts of forgery in Spokane County. She pled guilty to one count of forgery in each county, with the single count of forgery in Spokane County encompassing the quitclaim deed as well as the three checks written on the business checking account.
Ms. Lauver’s conduct violated RPC 8.4(b), prohibiting a lawyer from committing a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects; RPC 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; and RPC 8.4(d), prohibiting a lawyer from engaging in conduct that is prejudicial to the administration of justice.
Sachia Stonefeld Powell represented the Bar Association. J. Donald Curran represented Ms. Lauver.
Disbarred
Carlos Valero (WSBA No. 29192, admitted 1999), of Spokane, was disbarred, effective April 6, 2006, by order of the Washington State Supreme Court following a default hearing. This discipline was based on Mr. Valero’s conduct in 2003 and 2004 in a number of matters involving multiple acts of misconduct.
It is pertinent to several of the matters that Mr. Valero was previously suspended from the practice of law by order of the Supreme Court dated October 22, 2003, effective December 1, 2003.
Matter 1: Between May and September 2003, Mr. Valero, who was not licensed to practice law in Idaho, met with a client on seven different occasions regarding a family law action filed in Idaho, accepted a $100 fee from the client, and appeared on the client’s behalf in Idaho court. Mr. Valero told the Idaho court that he would be filing a notice of appearance, a pro hac vice application, and the necessary pretrial documents by mid-November 2003, all of which he failed to do. Mediation was set for December 1, 2003, and trial was set for December 8, 2003. Mr. Valero failed to meet any of the pretrial deadlines. He subsequently advised the mediator that he would file a pro hac vice motion, associate with Idaho counsel, and represent his client through the mediation. Mr. Valero did not advise the court, the mediator, or opposing counsel about his imminent suspension. After December 1, 2003, Mr. Valero did not cease practicing law. On December 2, Mr. Valero faxed a number of trial documents to opposing counsel. By letter on his law office letterhead, Mr. Valero subsequently advised opposing counsel that he would no longer be representing his client.
Matter 2: In a family law action pending in late 2004, Mr. Valero did not notify the opposing lawyer, his client, or the court of his imminent suspension. Mr. Valero did not file a notice of withdrawal with the court after he was suspended. Following the commencement of his suspension, Mr. Valero had several telephone conversations with his client, during which they substantively discussed the case. Mr. Valero told the client that he was very busy and that another lawyer had agreed to assist him on the case. Until she received a fee agreement from the new lawyer and telephoned the new lawyer’s office in early 2004, the client had no knowledge that Mr. Valero was suspended.
Matter 3: In January 2003, Mr. Valero was hired by clients to pursue a breach-of-contract claim against a Spokane business. The clients signed a fee agreement and paid Mr. Valero $10,000, characterized in the fee agreement as a “non[-]refundable advance flat fee retainer.” The clients believed the payment to be an advance fee that would be refunded if Mr. Valero did not do the work for them. Mr. Valero deposited the money into his own account. During the representation, Mr. Valero failed to return several phone calls from the clients and did not appear for scheduled meetings. At one point, he told the clients that he hired a detective, that the detective had discovered that the defendants owned 13 pieces of real property, that he was working on placing liens on these properties, and that he had served the defendants with a notice to appear in court. Mr. Valero had done none of these things. After receiving a letter from the clients in which they requested an itemized bill, copies of the liens, and the return of some original documents, Mr. Valero denied having ever told the clients that a detective had discovered property owned by the defendants. In August 2003, the clients went to Mr. Valero’s office to demand the return of their original documents and property, some of which he failed to return. Subsequently, the clients again demanded an itemized billing statement. As Mr. Valero did not keep track of the time he had spent on their legal matter, he recreated a billing statement showing that he had spent $9,292.50 of attorney time on their case, and he sent the bill to the clients. He also sent them a copy of a proposed complaint, which he asked the clients to sign and return to him. The clients refused to sign the complaint, did not authorize the complaint to be filed, and did not communicate further with Mr. Valero.
In November 2003, Mr. Valero filed the complaint in superior court. The complaint named a number of individuals as defendants, along with a business and several insurance and bonding companies. None of the individual defendants were served, and owing to lack of specificity in naming the business-entity defendant, the incorrect bonding company was served. On or after December 1, 2003, a claims representative contacted Mr. Valero and advised him that they had had no business dealings with the named plaintiffs and were therefore wrongfully served. Mr. Valero responded that he would investigate the matter, but took no further steps to ensure that the incorrectly named party was dismissed from the action. He later told the representative that another lawyer was representing his clients, which was untrue. Mr. Valero did not inform the representative, his clients, any opposing party or counsel, or the court that he was suspended from the practice of law. In December 2003, a lawyer wrote a letter to Mr. Valero asking him to dismiss the lawsuit against the incorrectly named party. Mr. Valero did not respond or take any action after receiving the letter, nor did he inform the lawyer that he was suspended. In January 2004, Mr. Valero told the lawyer that he would agree to dismiss the lawsuit after consulting with his clients, but he took no further action. The lawyer then informed Mr. Valero that if the suit was not voluntarily dismissed, he would commence summary judgment proceedings and seek attorney fees. In a subsequent telephone conversation, Mr. Valero told the lawyer that he would dismiss the lawsuit, but that he was withdrawing from the case and another lawyer would be taking over. He did not provide a reason for withdrawal or identify the new lawyer.
A summary judgment motion was filed against Mr. Valero’s clients and served on Mr. Valero, as he was still the clients’ attorney of record. Mr. Valero did not tell the clients about the motion. Neither Mr. Valero, nor anyone else on behalf of Mr. Valero’s clients, responded to the motion or appeared at the hearing. After determining that Mr. Valero was suspended, the judge rescheduled the hearing. Mr. Valero was sent a notice indicating that the motion had been rescheduled. Mr. Valero did not tell the clients that the motion had been rescheduled. Neither Mr. Valero, nor anyone else on behalf of Mr. Valero’s clients, responded or appeared at the rescheduled hearing, and the judge dismissed the complaint with prejudice, awarding the moving party attorney’s fees and costs. In June 2004, opposing counsel began garnishment proceedings against the clients’ bank account for a total of $955.00. The clients subsequently paid the judgment against them.
Matter 4: In August 2004, Mr. Valero agreed to represent a client in a criminal matter for a $2,000 flat fee. Mr. Valero did not tell the client that he was suspended from the practice of law. After meeting with the client several times and offering legal advice about the case, Mr. Valero accepted a $200 payment towards the flat fee. When the client requested that Mr. Valero appear with him at an upcoming court hearing, Mr. Valero explained that another lawyer would be more successful before the assigned judge and would appear at the hearing. While waiting in the courtroom for his lawyer to appear, the client heard the court commissioner tell another defendant that Mr. Valero was suspended from the practice of law. Neither Mr. Valero, nor the other lawyer Mr. Valero had named, arrived in the courtroom by the time the client’s case was called. The client’s subsequent attempts to contact Mr. Valero were unsuccessful.
Matter 5: In July 2004, while Mr. Valero was suspended from the practice of law, a client hired him to handle both a criminal and a child custody matter. The client paid to Mr. Valero at least $800 towards an agreed-upon $1,500 flat fee. In late July or early August 2004, Mr. Valero prepared and signed a variety of pleadings in the case, which had previously been commenced in superior court. Mr. Valero drove the client and his mother to the courthouse to attend the client’s dependency hearing. During the drive, Mr. Valero and the client substantively discussed both of the client’s cases. While at the courthouse, Mr. Valero identified himself as the client’s lawyer to a Child Protective Services representative, the appointed GAL, his client’s court-appointed lawyer, and the assigned assistant attorney general. Mr. Valero engaged each of these persons in conversation about his client’s case and proposed changes to the parenting plan. He did not tell any of these persons, or his client, that he was suspended from the practice of law. At the courthouse, Mr. Valero accompanied his client and client’s mother to the clerk’s office to file the pleadings he had prepared. Prior to filing the pleadings, Mr. Valero used white-out to cover his signature and directed his client to sign the documents in the area over which he had used white-out.
The client’s pretrial hearing on the criminal charges was set for September 2004. Mr. Valero told his client that he would appear with him at the hearing and advised him to plead not guilty to the charges. On the day of the hearing, Mr. Valero did not meet with his client at the courthouse at the appointed time. When Mr. Valero’s client told the court the name of his lawyer, the presiding judge informed the client that Mr. Valero was suspended from practicing law and could not represent him. In October or November 2004, Mr. Valero contacted his client and asked him to come to his house, where he asked him to sign a declaration. The declaration stated that the client had been confused when he told the court that he had hired Mr. Valero to represent him on his criminal case. The client refused to sign the declaration because it was false.
Matter 6: Between January and August 2004, the Bar Association directed Mr. Valero to respond to the grievances filed against him in Matters 1, 2, and 3. Because Mr. Valero failed to respond, disciplinary counsel was obliged to issue subpoenas duces tecum in order to obtain the responses.
Mr. Valero’s conduct violated RPC 1.1, requiring a lawyer to provide competent representation to a client; RPC 1.2, requiring a lawyer to abide by a client’s decisions concerning the objectives of representation; RPC 1.3, requiring a lawyer to act with reasonable diligence and promptness in representing a client; RPC 1.4, requiring a lawyer to keep a client reasonably informed about the status of a matter, to promptly comply with reasonable requests for information, and to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation; RPC 1.5(a), requiring a lawyer’s fee to be reasonable; RPC 1.14(a), requiring that all funds of clients paid to a lawyer be deposited into an interest-bearing trust account; RPC 1.14(b)(4), requiring a lawyer to promptly pay or deliver to the client as requested by a client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive; RPC 1.15(a)(1), requiring a lawyer to withdraw from representing a client if the representation will result in a violation of the Rules of Professional Conduct or other law; RPC 1.15(d), requiring a lawyer upon termination of representation to take steps to the extent reasonably practicable to protect a client’s interests; RPC 5.5(a), prohibiting a lawyer from practicing law in a jurisdiction where doing so violates the regulation of the legal profession in that jurisdiction; RPC 5.5(e), prohibiting a lawyer from engaging in the practice of law while on inactive status, or while suspended from the practice of law for any cause; RPC 8.4(b), prohibiting a lawyer from committing a criminal act (here, theft in the second degree, witness tampering, and attempting to suborn perjury) that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects; RPC 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; RPC 8.4(d), prohibiting a lawyer from engaging in conduct that is prejudicial to the administration of justice; RPC 8.4(i), prohibiting a lawyer from committing any act involving moral turpitude, or corruption, or any unjustified act of assault or other act which reflects disregard for the rule of law; RPC 8.4(j), prohibiting a lawyer from willfully disobeying or violating a court order directing him or her to do or cease doing an act which he or she ought in good faith to do or forbear; RPC 8.4(k), prohibiting a lawyer from violating his or her oath as an attorney, and RPC 8.4(l), prohibiting a lawyer from violating a duty or sanction imposed by or under the Rules for Enforcement of Lawyer Conduct (here, ELC 1.5, 5.3(e), 14.1, and 14.2).
Leslie C. Allen represented the Bar Association. Mr. Valero represented himself. Dennis W. Morgan was the hearing officer.
Suspended
Randy L. Durham (WSBA No. 17382, admitted 1987), of Tacoma, was suspended for two years, effective April 14, 2006, by order of the Washington State Supreme Court following a stipulation approved by the Disciplinary Board. This discipline was based on his conduct in three matters between 2000 and 2004 involving lack of diligence, failure to abide by a client’s decision concerning the objective of representation, filing a non-meritorious claim, and misrepresentations to clients.
Matter 1: Between 1997 and 2004, Mr. Durham represented a sheet-metal business. In January 1999, Mr. Durham commenced an action on behalf of the client to recover damages resulting from a breach of contract and to foreclose on a bond and retainage fund. The named defendants in the action included a general contractor, a governmental entity, and a bonding company. In October 2000, the presiding judge partially granted the client’s motion for summary judgment, awarding the client $5,500 against the retainage fund. No order was signed at the time of the hearing. In November 2000, Mr. Durham sent the general contractor’s lawyer a proposed order for signature. The order was never signed and returned, but Mr. Durham did not pursue the matter further. In December 2001, the general contractor made an offer to settle all claims for $11,997.62. Mr. Durham did not respond to the offer. For a period of approximately two years, during which there was little activity on the case, Mr. Durham repeatedly misled the client about the status of the matter. In October 2002, the general contractor offered to settle for $13,727.48. Mr. Durham communicated the offer to the client, who told him to counter-offer $15,000. Mr. Durham instead counter-offered $17,003.48. The parties failed to reach a settlement. In November 2002, Mr. Durham filed a second motion for summary judgment seeking the identical relief sought in the October 2000 motion. As a result, the judge signed the order that Mr. Durham had prepared and circulated in November 2000.
Matter 2: Mr. Durham’s client was hired by a general contractor to install metal sidings at a construction project for a university. The client did not receive full payment for its services. In May 2000, Mr. Durham commenced an action on the client’s behalf, naming the contractor, the bond, and the university as defendants. The bonding company tendered defense of the claim to the general contractor. In June 2001, Mr. Durham negotiated a settlement that included a “Joint Pursuit of Claims” agreement, under which Mr. Durham’s client obtained $40,446.49, assigned $25,000 of its claims against the university to the contractor and the bonding company, waived and released its claims against the bonding company and the university, and agreed to dismiss the contractor and the bonding company from the lawsuit. Mr. Durham advised the client to sign the agreement, erroneously assuring him that it would not jeopardize the client’s right to collect additional damages. In July 2001, in accordance with the settlement, Mr. Durham filed the stipulation and order voluntarily dismissing the contractor and the bonding company from the case. The client did not recover any damages above the amount paid pursuant to the agreement.
The client subsequently expressed dissatisfaction about the outcome of the lawsuit. Mr. Durham suggested that the client file a suit to void the agreement on the basis of fraudulent inducement. In August 2002, Mr. Durham filed a second suit against the contractor, the bonding company, and the university. Lawyers for the bonding company and the university requested that Mr. Durham voluntarily dismiss the lawsuit for a number of reasons. Despite being notified that the bonding company would seek attorney’s fees and costs for a frivolous lawsuit, Mr. Durham did not dismiss either party. In March 2003, Mr. Durham advised the client that he would file a motion for default “to focus the court on our request for Arbitration.” In fact, no request for arbitration had ever been filed, the relief sought in the complaint exceeded the jurisdictional requirement for mandatory arbitration, and there was no contractual basis for arbitration.
In September and October 2003, all defendants filed motions for summary judgment. Mr. Durham erroneously advised the client that the defendants’ chances for success were “nominal” and that the university’s motion was baseless. The court granted the defendants’ motions, noting in its order that the claims against the bonding company and the bond were frivolous in their entirety. The order included an award of attorney’s fees and costs against Mr. Durham’s client under the frivolous claims statute. When the client told Mr. Durham that he was shocked to find out the lawsuit was frivolous, Mr. Durham told the client that he would pay the award of attorney’s fees and costs, which he did not immediately do.
Mr. Durham told the client that it was still possible to execute on the default judgment obtained in the first lawsuit. In fact, this course of action was not viable, because the client had waived such a remedy when it settled and voluntarily dismissed the general contractor from the first lawsuit in July 2001. In February and March 2004, Mr. Durham repeatedly misled the client about the status of the matter.
In March 2004, the bonding company garnished the client’s bank account to recover the attorney’s fees and costs previously assessed. In April 2004, Mr. Durham attempted to pay the fees and costs with his credit card, but the bonding company’s law firm was not set up to process credit cards and requested a check. Three weeks later, the bonding company again garnished the client’s bank account. Shortly thereafter, Mr. Durham mailed a check that fully satisfied the judgment.
Matter 3: In March 2000, in an unrelated matter, the CEO of the sheet-metal business asked Mr. Durham to investigate and pursue claims against the CEO’s business partner for breach of an agreement. Mr. Durham came to the conclusion that the CEO had no viable claims against the business partner because, among other reasons, the statute of limitations for such an action had already passed. He failed, however, to advise the CEO about this conclusion. The CEO believed Mr. Durham was actively pursuing the claims. In August 2002, Mr. Durham made a number of misrepresentations to the CEO about his efforts to pursue the claims and serve a lawsuit on the CEO’s business partner.
Mr. Durham’s conduct violated RPC 1.2(a), requiring a lawyer to abide by a client’s decisions concerning the objectives of representation and to consult with the client as to the means by which they are to be pursued; RPC 1.3, requiring a lawyer to act with reasonable diligence and promptness in representing a client; RPC 1.4, requiring a lawyer to keep a client reasonably informed about the status of a matter, to promptly comply with reasonable requests for information, and to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation; RPC 3.1, prohibiting a lawyer from bringing or defending a proceeding, or asserting or controverting an issue therein, unless there is a basis for doing so that is not frivolous; and RPC 8.4(c), prohibiting a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.
Leslie C. Allen represented the Bar Association. Mr. Durham represented himself.
Reprimanded
Jeffrey T. Haley (WSBA No. 9526, admitted 1979), of Bellevue, was ordered to receive a reprimand on January 26, 2006, by order of the Washington State Supreme Court following a hearing. This discipline was based on his conduct in 1988 and 1991 involving conflicts of interest. In addition, the Supreme Court held prospectively that RPC 4.2 prohibits a lawyer who is acting pro se from contacting a party the lawyer knows to be represented by counsel. For additional information, see In re Discipline of Haley, 156 Wn.2d 324, 126 P.3d 1262 (2005).
In 1988, Mr. Haley and four other individuals formed a corporation engaged in the software-development business. In addition to being a shareholder, board member, and secretary of the corporation, Mr. Haley also served as the principal lawyer for the company. To raise capital, the corporation obtained a $75,000 line of credit from a bank. The line of credit was personally guaranteed by the shareholders/directors. This credit was properly secured with a security agreement and a UCC-1 financing statement. As a result, the bank maintained a first-priority security interest in the corporation’s assets. Additional capital was obtained in 1988 in the form of $40,000 loaned to the corporation by Mr. Haley, the funds for which Mr. Haley obtained via personal loan. Mr. Haley obtained a promissory note from the corporation and a signed UCC-1 financing statement as part of the loan transaction. However, there was no separate security agreement securing the note, and the UCC-1 financing statement was not filed until October 1990. Mr. Haley’s security interest had second priority behind the bank’s interest.
In late 1990, the corporation’s board of directors came to realize that the company’s financial viability was hopeless. The board concluded that the best option was to form another corporation that would purchase the original corporation’s assets for an amount at least covering the $75,000 from the bank, thereby discharging all personal liability that they had individually incurred by guaranteeing the line of credit. With the agreement or acquiescence of the board, Mr. Haley formed a new corporation for the purpose of purchasing the original corporation’s assets while leaving as many liabilities as possible behind. He conducted a foreclosure sale on the original corporation’s assets, which he appeared to be in a position to do as a second-priority security interest holder. Mr. Haley was one of the owners of the new corporation and acted as the new corporation’s attorney. As the only bidder at the sale, the new corporation purchased the original corporation’s assets for an amount that covered both the bank’s $75,000 and the $26,000 remaining due on Mr. Haley’s $40,000 loan.
Mr. Haley’s duty to the original corporation and its shareholders conflicted with his interests in recovering on his personal loan and in moving the original corporation’s assets to the new corporation at the lowest possible price. Mr. Haley made certain that the new corporation took on only those assets and liabilities beneficial to the new corporation, including foreclosing on assets not covered by his UCC-1 financing statement. When the original corporation’s board members agreed to the formation of the new corporation and the foreclosure sale, Mr. Haley did not obtain a written consent from the original corporation before the sale.
Mr. Haley’s conduct violated RPC 1.7, prohibiting a lawyer from representing a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person or by the lawyer’s own interests, unless the lawyer reasonably believes the representation will not be adversely affected and the client consents in writing after a full disclosure of material facts.
Julian C. Dewell represented the Bar Association at the hearing. Randy V. Beitel represented the Bar Association on appeal. Kenneth S. Kagan represented Mr. Haley at the hearing. Mr. Haley represented himself on appeal. Stew Cogan was the hearing officer.
Reprimanded
Barbara E. Varon (WSBA No. 17041, admitted 1987), of Bellevue, was ordered to receive a reprimand, effective August 4, 2005, following a hearing. This discipline was based on her conduct involving failure to advise a tribunal of all relevant facts in an ex parte proceeding and conduct prejudicial to the administration of justice.
In May 2000, Ms. Varon was hired to represent a client in a child-custody and visitation-rights matter involving the client’s son, who resided in Snohomish County with the client’s ex-wife pursuant to a parenting plan filed six years earlier in a King County dissolution action. The client advised Ms. Varon that the son was undergoing psychiatric treatment at a hospital in King County. Shortly after Ms. Varon was hired, the client’s ex-wife, acting pro se, obtained a temporary order for protection from the Snohomish County Superior Court (Snohomish County TRO). The Snohomish County TRO provided, inter alia, that the King County parenting plan was temporarily suspended, and that the client was restrained from having contact with his ex-wife and his two children except as authorized by the son’s psychiatrist.
The client’s ex-wife then hired a lawyer, who notified Ms. Varon that he would be representing the ex-wife. The lawyer’s letter to Ms. Varon stated that “[t]he purpose of this letter is hopefully to ensure that there is no disruption to the treatment plan devised for [the son] by the doctors and social workers ....” After receiving the letter, Ms. Varon told her client that she would not contact opposing counsel until after she had obtained a restraining order against the client’s ex-wife. Ms. Varon then filed a petition seeking modification of the parenting plan in King County Superior Court. Among other things, the petition sought to name Ms. Varon’s client as the primary residential parent for his son. Two days later, without notifying opposing counsel or the ex-wife of the hearing, Ms. Varon sought an ex parte temporary order to restrain the ex-wife from contacting her son. Ms. Varon believed that irreparable injury could result if the ex-wife was given notice of the proceeding. Ms. Varon also believed that the ex-wife was evading service.
In support of the request, Ms. Varon submitted 84 pages of documents to the court, which included a copy of the Snohomish County TRO and opposing counsel’s letter announcing his representation. However, due to the exigencies of the ex parte calendar, the commissioner only skimmed through the exhibits, relying (pursuant to his established practice) on counsel to advise him orally of all relevant facts to permit him to render an informed decision. Ms. Varon did not orally inform the commissioner of the existence of the prior Snohomish County TRO, nor did she inform the commissioner that the opposing party was represented by counsel. Had she done so, the commissioner would have followed his usual practice and contacted the issuing court and the opposing counsel for a response prior to making his ruling. The commissioner issued the order (King County TRO) as requested by Ms. Varon, giving her client custody of his son and prohibiting the ex-wife from interfering with that custody or entering the client’s home or workplace, or his son’s daycare or school.
Soon thereafter, to resolve the two conflicting orders, Ms. Varon and the ex-wife’s lawyer appeared before a King County commissioner at an emergency hearing, after which the King County TRO order was vacated. The lawyers also appeared before a Snohomish County commissioner at hearings in May and June. As a result, the Snohomish County TRO was vacated and the cause of action dismissed. The client’s King County petition for modification of the parenting plan was ultimately granted in the client’s favor.
Ms. Varon’s conduct violated RPC 3.3(f), requiring a lawyer in an ex parte proceeding to inform the tribunal of all relevant facts known to the lawyer that should be disclosed to permit the tribunal to make an informed decision, whether or not the facts are adverse; and RPC 8.4(d), prohibiting a lawyer from engaging in conduct that is prejudicial to the administration of justice.
Natalea Skvir represented the Bar Association. Steven R. Loitz represented Ms. Varon. Craig C. Beles was the hearing officer.
Non-Disciplinary Notice
Suspended Pending Conclusion of Supplemental Proceedings
Richard E. Dullanty (WSBA No. 1936, admitted 1957), of Rockford, was suspended from the practice of law pending the conclusion of supplemental proceedings, pursuant to ELC 7.3, effective August 29, 2006, by an order of the Washington State Supreme Court. This is not a disciplinary action.
