Conduct of Moore, In re

• Decision Date: 23 July 1985
• Citation: 703 P.2d 961,299 Or. 496
• Parties: In re Complaint as to the CONDUCT OF David L. MOORE, Accused. SC S30904; OSB 82-63. . *
• Court: Oregon Supreme Court

Page 961

703 P.2d 961

299 Or. 496

In re Complaint as to the CONDUCT OF David L. MOORE, Accused.

SC S30904; OSB 82-63.

Supreme Court of Oregon,

In Banc. ^*

Argued and Submitted Jan. 31, 1985.

Decided July 23, 1985.

Lee S. Werdell, Medford, argued the cause and filed the brief for accused

Walter L. Cauble, Grants Pass, argued the cause and filed the brief for the Oregon State Bar. With him on the brief was Philip L. Nelson, Grants Pass.

[299 Or. 498] PER CURIAM.

The Oregon State Bar filed a complaint against David L. Moore accusing him of unethical conduct in five separate causes. All the causes arise, directly or indirectly, from Moore's alleged representation of clients in connection with the negotiation and purchase of the corporate stock of Pinnacle Packing Corporation, Inc.

The Bar's complaint is dated January 11, 1983, and Moore accepted service of it on January 31, 1983. ¹ The Trial Board found

Moore guilty of all causes and recommended that he be disbarred. The four member Disciplinary Review Board found that the Trial Board's opinion was "thorough, reasonable and accurate," but recommended that Moore be suspended from the practice of law for a period of three years. We find Moore guilty of all five causes and suspend him from the practice of law for a period of one year

In 1979, the First National Bank of Oregon as testamentary trustee and executor wanted to sell all the corporate stock of the Pinnacle Packing Corporation, Inc. The assets of the corporation included real estate in downtown Medford, a packing plant and more than 1,000 acres of orchards. Early in that year, a group of investors headed by Cecilia Hardwick began negotiating with the bank. The proposed purchase of the packing company was to be made by Vanya Corporation of which Hardwick was president. Vanya was a corporate shell without assets. Hardwick's equity in a Medford motel was to be used as her contribution to finance the purchase of Pinnacle Packing.

In the late summer of 1979, Charles L. McLaughlin joined the Hardwick group that was attempting to purchase the packing company. He gave the joint venture financial strength. He was a successful real estate developer from California. McLaughlin advanced the sum of $50,000 to the trust account of an Ashland lawyer to be used as the earnest money for the proposed purchase. It was agreed by the group that McLaughlin was to have 60 percent of the ownership and that after the purchase was completed at least a portion of the orchard property was to be transferred to his individual name. On October 1, 1979, the bank's main office in Portland received the $50,000 as part of an offer from Vanya to purchase Pinnacle Packing.

On October 5, 1979, another member of the group, John Lisac, contacted Moore and requested that he help them "put the Pinnacle deal together." ² Lisac was a real estate agent who had the property listed for sale. He was going to use the real estate commission as his contribution toward the purchase of the packing company.

On October 10, 1979, Vanya Corporation, through Hardwick as president, submitted a new offer to the bank to purchase all of the outstanding stock of Pinnacle Packing for the sum of $2,750,000 to be paid as follows: (1) earnest money in the amount of $50,000; (2) a first mortgage on Hardwick's Cedar Lodge Motel in the sum of $900,000; and (3) the balance of $1,800,000 to be paid in cash on closing.

In late October 1979, Moore had several meetings with Hardwick, Lisac and Hardwick's husband. Then on October 30, 1979, Moore traveled to Portland with Lisac and Hardwick and met with the bank officers. As a result of that meeting, the bank wrote a letter to "C. C. Hardwick, Individually and President of Vanya Corp., and David Moore, Attorney," confirming its intention to accept the previous offer submitted by Hardwick, subject to certain conditions.

During November 1979, Moore met with Hardwick, Lisac and McLaughlin several times but was unable to complete the transaction and the bank extended its previous deadlines. At a meeting on November 8, Moore told the group that his contingent fee for the completion of the transaction would be $250,000.

On December 1, 1979, Hardwick delivered to Moore a check payable to him in the sum of $5,000. The check was drawn on Mineral Extraction Corp., a corporation owned by Hardwick and her husband. Later, Hardwick claimed that the $5,000 was a loan and Moore claimed that it was in partial payment of his legal fees.

Around December 10, 1979, Moore made a trip to Palm Springs, California to meet On December 14, 1979, Moore and McLaughlin travelled to Portland without Hardwick. Moore introduced McLaughlin to the bankers as a person "with a substantial balance sheet and ability to handle the transaction." At that meeting, McLaughlin informed the bank that the $50,000 that had been tendered previously with the offer from Vanya was his money and not Hardwick's. Moore delivered to the bank a letter signed by him as "Attorney for Celia L. Hardwick" purporting to assign the $50,000 to Charles L. McLaughlin. The letter read in part:

with McLaughlin, his banker, and his accountant. Arrangements were then made for Moore and McLaughlin to meet with the First National Bank officers in Portland in the near future.

"The assignment of the above funds eliminates all rights and interests that were held by Mrs. Cecilia L. Hardwick, individually and as President of Vanya Corporation and assigns any and all rights, if any, to Charles L. McLaughlin, of Palm Springs, California.

"An assignment of the interest signed by Cecilia L. Hardwick will be sent to you next week."

Two days later, when Moore returned to Medford, he asked Hardwick to execute the assignment of the &,000 to McLaughlin. Hardwick refused. ³

At the meeting on December 14, 1979, the bank learned for the first time that the purchase was to be made by JJ & L Properties, Inc., instead of Vanya corporation. JJ & L was represented to be another shell corporation which Moore had incorporated during prior negotiations to purchase Pinnacle Packing. McLaughlin became its president and Lisac the vice-president. Although Moore refused an offer from McLaughlin to acquire a beneficial interest in the transaction, he did become the secretary and a director of JJ & L.

On January 28, 1980, the First National Bank, as trustee and executor, entered into an agreement whereby JJ & L agreed to purchase all the common stock of Pinnacle Packing. The purchase was made possible by a loan from Connecticut General Life Insurance Company in the amount of $1,800,000. As part of the same transaction the shareholders of JJ & L were required to execute an agreement in favor of the bank by which they individually guaranteed perfomance by JJ & L in amounts exceeding one million dollars.

McLaughlin and Lisac offered Hardwick a 20 percent interest in JJ & L if she would execute the guaranty agreement. Hardwick refused.

On October 30, 1980, McLaughlin mailed Moore a check payable to him in the amount of $35,000. Later Moore claimed that the $35,000 was an advance on his legal fees and McLaughlin claimed that it was a loan.

This story does not have a happy ending. JJ & L ended up in a Chapter 11 proceeding in the bankruptcy court. Connecticut General foreclosed its mortgage. Hardwick and McLaughlin made separate complaints to the Oregon State Bar accusing Moore of unethical conduct. Those complaints led to this proceeding. Hardwick has filed a civil action against both Moore and McLaughlin in the Jackson County Circuit Court. McLaughlin has filed a civil action against Moore in the same court.

FIRST CAUSE OF COMPLAINT

The Bar in this cause of complaint in effect alleges that Moore, by attempting to represent Hardwick, Vanya Corporation, McLaughlin, JJ & L Properties and Lisac at the same time, was representing multiple clients without the necessary consent and disclosure in violation of:

"DR 5-105 Refusing to Accept or Continue Employment if the Interest of Another "(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C).

Client May Impair the Independent Judgment of the Lawyer.

"(B) A lawyer shall not continue employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DR 5-105(C).

"(C) In the situations covered by DR 5-105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each."

Moore's answer to this cause is that he was representing the group purchasing Pinnacle Packing and not the individuals. On January 11, 1980, he wrote to McLaughlin, Hardwick and Lisac and in part said:

"It would appear from my recent discussions with each one of you that there is some disagreement as to the ownership percentage of the purchasing entity.

"Just so there is no misunderstanding, I want it clearly understood that I represent the group purchasing Pinnacle Packing Company, not any one of you individually." (Emphasis in original.)

The statements in Moore's letter do not square with the facts. As previously noted in this opinion, on December 14, 1979, Moore signed a letter addressed to the bank as "Attorney for Cecilia L. Hardwick" in a matter concerning other members of the group. On more than one occasion Moore sent statements for services rendered in connection with the purchase of Pinnacle Packing to Hardwick, McLaughlin or Lisac as individuals. The record discloses that Hardwick...