Conduct of Griffith, In re

• Decision Date: 30 December 1987
• Citation: 304 Or. 575,748 P.2d 86
• Parties: In re Complaint as to the CONDUCT OF C. Anderson GRIFFITH, Accused. OSB 85-61; SC S33097.
• Court: Oregon Supreme Court

Page 86

748 P.2d 86

304 Or. 575

In re Complaint as to the CONDUCT OF C. Anderson GRIFFITH, Accused.

OSB 85-61; SC S33097.

Supreme Court of Oregon,

In Banc.

Argued and Submitted July 8, 1987.

Decided Dec. 30, 1987.

[304 Or. 576] John R. Faust, Jr., Portland, argued the cause and filed the petition and briefs for accused. With him on the petition and briefs were Schwabe, Williamson, Wyatt, Moore & Roberts, Portland; William L. Hallmark, Portland and Emil R. Berg, Portland.

Jeffrey D. Sapiro, Portland, argued the cause and filed the petition and respondent's brief for the Oregon State Bar. With him on the brief was William F. Schulte, Jr., Portland.

[304 Or. 577] PER CURIAM.

The Oregon State Bar filed an amended complaint against C. Anderson Griffith accusing

him of unethical conduct in 39 separate causes involving for the most part alleged dishonesty in business transactions and alleged conflicts of interest. The Trial Panel of the Disciplinary Board found Griffith guilty as charged in the 2nd, 27th, 28th, and 34th causes of complaint and not guilty of the balance of the causes. It "recommended" that Griffith "be permanently disbarred from the practice of law." ¹

We find that Griffith is guilty under the 2nd, 27th, 29th, 30th, 32nd, 33rd, 34th, 36th, 38th, and 39th causes of complaint and order that he be disbarred. The chief difference between this decision and that reached by the Trial Panel is that we have found Griffith violated disciplinary rules involving conflict of interest in several causes where the Trial Panel did not.

De novo review by this court is required. The relevant portions of ORS 9.536 provide:

"(2) If the decision of the disciplinary board is to suspend the accused attorney from the practice of law for a period of longer than 60 days or to disbar the accused attorney, the matter shall be reviewed by the Supreme Court. The procedure on review shall be as provided in the rules of procedure.

"(3) When a matter is before the Supreme Court for review, the court shall consider the matter de novo and may adopt, modify or reject the decision of the disciplinary board in whole or in part and thereupon enter an appropriate order."

Both Griffith and the Oregon State Bar have filed extensive briefs in this court. Griffith urges us to find him not guilty of all causes or in the alternative to give him a new hearing because he was able to attend only one day of the previous hearing. The Bar argues that Griffith is guilty of all causes and that he waived his appearance at the hearing. The hearing before the Trial Panel commenced on February 10, 1986 and was concluded on February 22, 1986. The transcript is over 2,000 pages in length. Hundreds of exhibits were received in evidence and over 50 witnesses testified. We review the entire record de novo.

This case is unusual in that it did not arise from the complaints of a disgruntled client or another lawyer. A series of newspaper articles concerning the collapse of the Columbia Pacific Bank sparked the Bar's investigation. All the causes in the Bar's amended complaint arise, directly or indirectly, from Griffith's association with Thomas E. Wolf, C. Dale Brookens, and Lester Hardy or from the rise and fall of Columbia Pacific Bank and the First Northwest Mortgage Company. ²

At all material times Griffith and Wolf were partners in a law firm which included numerous other lawyers. Griffith was in the litigation section of the firm and specialized in the defense of medical malpractice claims. Wolf was the head of the business section and was recognized by the other partners as being an expert in banking and finance.

Brookens and Hardy are not and were not lawyers. They are experienced businessmen who at the beginning of their ventures with Wolf and Griffith had considerable financial assets. Both Brookens and Hardy had previous experience in the construction business and were long-standing clients of Griffith's law firm.

Columbia Pacific Bank was established in the mid-1970s. Wolf was active in forming the bank. After its formation he was a director, a member of the loan committee and secretary to the board of directors. He was also the chief legal counsel. Griffith represented the bank in some litigation In 1978 Wolf, Griffith, Brookens and Hardy formed the mortgage company which is referred to in this proceeding as "First Northwest." Each individual paid $26,250 for 150 shares of the original capital stock. The principal business of First Northwest was to make short term construction loans to real estate developers. At first the business was successful--between 1978 and 1983 it loaned approximately $7 million to its customers. First Northwest and its shareholders borrowed money from Columbia Pacific and Canadian Imperial Bank and then turned around and loaned it to its customers.

matters but was not active in its day-to-day operations.

On May 15, 1979, Griffith and Wolf plus five of their law partners formed the "Lawyer's Retirement Trust." The seven law partners were the trustors and Wolf was the trustee. The agreement declared that the trust was for the "sole purpose of holding shares in the Columbia Pacific Bank * * * as an investment for the retirement account of the beneficiaries." The agreement also recited that the trustors were the owners of a certain number of shares of Columbia Pacific and that the trustee was authorized to purchase additional shares for their account. Griffith had a 13.5 percent interest in the trust.

By January 1980, the Lawyer's Retirement Trust had acquired 24.98 percent of the outstanding stock of Columbia Pacific. At that time a new corporation called Columbia Banshares, Inc. was formed and applied to the Federal Reserve Bank to become a bank holding company with authority to own more than 25 percent of the stock of Columbia Pacific. The application in effect stated that the holding company would be the successor to Lawyer's Retirement Trust. The application was denied by the Federal Reserve Bank. ³

In March 1980, Brookens and Hardy acquired in their names 20,000 shares of Columbia Pacific. They then conveyed the stock to First Northwest, but the transfer was never registered on the books of Columbia Pacific. 20,000 shares represented approximately 4.89 percent of the outstanding stock of Columbia Pacific.

In July 1980, Wolf purported to sell 125 of his 150 shares in First Northwest to Griffith thereby reducing Wolf's interest in the company to approximately 4 percent. Griffith executed and delivered to Wolf a promissory note in the amount of $125,000 in payment of the alleged purchase. Griffith also signed and gave to Wolf a blank stock power. Wolf kept the stock certificates. At the same time Wolf resigned as the secretary and as a director of First Northwest. Wolf told Griffith that the alleged sale would relieve Wolf of the obligation of reporting his interest in First Northwest in the annual report of Columbia Pacific. However, after the alleged sale, Wolf continued to be the moving force in the operations of First Northwest. Griffith did not and never intended to make any payments on the promissory note. In 1982 or 1983 Griffith requested that Wolf destroy the note. Wolf reported back to Griffith that it had been destroyed. ⁴

At all material times unsecured loans from Columbia Pacific were limited by law to $421,975 to one borrower. ORS 708.305. An internal bank policy lowered this limit to $400,000. First Northwest had an unsecured line of credit at the bank in the maximum amount. The unsecured lines of credit for the shareholders of First Northwest were: Griffith $250,000, Brookens Parts of this proceeding involve people and their business enterprises in Southern Oregon. Griffith's and Wolf's law firm represented Bear Creek Valley Bank, which had its principal place of business at Phoenix, Oregon. In February 1980, First Northwest loaned Lester H. Brown and Patricia Brown the sum of $375,000 to develop a subdivision. ⁵ In December 1980, Wolf persuaded the Bear Creek Valley Bank to loan the Browns $540,000, which was used in part to pay First Northwest. A dispute developed and the Browns filed an action against First Northwest seeking damages and reformation of their agreement. Griffith represented First Northwest in this litigation. During the summer of 1981, the Browns had difficulty making the payments due Bear Creek Valley Bank and requested the bank to restructure the loan. The bank wrote to Griffith's firm seeking legal advice concerning the Browns' request. The Browns' action against First Northwest was settled in November 1981.

$400,000, Hardy $300,000 and Wolf zero. The individual lines of credit were used exclusively by First Northwest and were administered by an employe who made all draws, deposits and renewals as the cash was needed for loans to First Northwest's customers. By mid-1982, First Northwest and its individual shareholders had borrowed from Columbia Pacific the maximum limits of the credit lines. Although Wolf did not have an individual line of credit at Columbia Pacific, the four shareholders of First Northwest had executed a cross guarantee agreeing to be jointly liable for all loans obtained by any shareholder from any source for the benefit of the corporation.

Wolf was the member of the law firm who helped organize the Bear Creek Valley Bank, and through his influence First Northwest provided the finances for a 16-acre tract near Medford being developed by several individuals from that area doing business as Village Joint Venture. Some of the initial members of the joint venture were officers and directors of the Bear Creek Valley Bank. By January 1982, Village Joint Venture owed First Northwest more than $1.2 million and could not pay it. First Northwest had borrowed the money from Columbia Pacific and could not meet its obligation. Griffith, Wolf and Brookens agreed to become principals in the project along with the Medford people in order to obtain more...