Disciplinary Action Against Kaiser, Matter of

• Decision Date: 21 April 1992
• Docket Number: No. 900393,900393
• Citation: 484 N.W.2d 102
• Parties: In the Matter of the Application for DISCIPLINARY ACTION AGAINST Marvin L. KAISER, a Member of the Bar of the State of North Dakota. DISCIPLINARY BOARD OF the SUPREME COURT OF the STATE OF NORTH DAKOTA, Petitioner, v. Marvin L. KAISER, Respondent. Civ.
• Court: North Dakota Supreme Court

Page 102

484 N.W.2d 102

In the Matter of the Application for DISCIPLINARY ACTION AGAINST Marvin L. KAISER, a Member of the Bar of the State of North Dakota DISCIPLINARY BOARD OF the SUPREME COURT OF the STATE OF NORTH DAKOTA, Petitioner, v. Marvin L. KAISER, Respondent.

Civ. No. 900393.

Supreme Court of North Dakota.

April 21, 1992.

Vivian E. Berg (argued), Bismarck, for petitioner.

Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, for respondent; argued by Ronald H. McLean.

Dean Winkjer (appeared), Williston, amicus curiae.

PER CURIAM.

Attorney Marvin L. Kaiser twice violated the Code of Professional Responsibility by two episodes of testifying falsely under oath. We suspend Kaiser from the practice of law for two years.

In September 1989, a formal disciplinary action began against Kaiser for testifying falsely at a 1977 trial. After a hearing panel of the Disciplinary Board met, but before it acted, another complaint of false testimony at a 1985 trial was received. After the panel considered this added complaint, the panel recommended in November 1990 that Kaiser be publicly reprimanded. Kaiser and Disciplinary Counsel submitted a stipulation for a public reprimand to this court.

We rejected the stipulation and referred the matter to a Special Master. In November 1991, the Master recommended that Kaiser be publicly reprimanded and assessed costs. We ordered briefs and arguments on the question of sanctions. We now conclude that Kaiser's repeated false testimony requires a two-year suspension from the practice of law.

I.

In 1976, Kaiser agreed to a secret joint venture with Russell Kiker, Duane Peterson, and William D. Walters Sr. (Kaiser's father-in-law) to invest in oil and gas properties in the Williston Basin. They agreed to conceal the existence of the venture. Kiker v. Walters, 482 N.W.2d 626 (N.D.1992) (Meschke, Justice, dissenting), outlines the workings of this venture. Although profits were to be shared variously based on individual contributions to capital, all investments were to be made in Kiker's name, not Kaiser's.

In January 1977, Kiker, for himself, Walters, and Kaiser purchased twenty mineral acres in Dunn County from Pete and Lillian Glovatsky. On the same day, Kiker leased the mineral rights to Target Energies, Inc., a corporation held solely by Kaiser. Target immediately recorded its lease.

The William Herbert Hunt Trust Estate had obtained a ten-year oil and gas lease from the Glovatskys in 1972, covering land in both Dunn and McKenzie Counties. The Hunt Trust had recorded its lease in McKenzie County but, through inadvertence, failed to record its lease in Dunn County until the day after Kiker purchased the minerals from Glovatsky and leased them to Target.

The Hunt Trust sued Kiker and Target, seeking to establish the priority of its lease. The litigated question was whether Kiker and Target acquired their interests in the Glovatsky property without notice of the Hunt Trust's lease. At the trial in June 1977, when asked by counsel for the Hunt Trust, Kaiser testified:

Q: Have you ever been a partner with Mr. Kiker or entered into any joint ventures with him?

A: No.

The answer was false.

Kaiser insists that his false testimony was prompted by "pep talks" from Walters Sr. to remember his "duty to the Walters family" and "the harmful things which the Hunts had allegedly done" to Walters Sr. during a previous "run-in" where Walters Sr. "felt that he had been taken advantage of." Kaiser admits, however, "I fully knew that I was making a false statement regarding our relationship."

Had Kaiser testified truthfully, Kiker's knowledge of the Hunt Trust's lease would have been imputed to Kaiser and Target as partners. Instead, from Kaiser's false testimony, the trial court concluded that Kiker and Target were bona fide purchasers for value without notice of the prior Hunt Trust lease, and that the Hunt Trust lease was subordinate.

On appeal, this court concluded that "Kiker is not a good faith purchaser without notice of Hunt's oil and gas lease and that Kiker's mineral deed is subject to Hunt's oil and gas lease...." Hunt Trust Estate v. Kiker, 269 N.W.2d 377, 382 (N.D.1978). Still, this court understood:

It is undisputed that Kaiser was not informed by Kiker that Pete Glovatsky had told Kiker the NW 1/4 of Section 19 was leased to someone else. It is also undisputed that Kiker did not mention Hunt's name to Kaiser, nor did he tell Kaiser about the rental receipts which the Glovatskys had displayed to Kiker...."

Hunt Trust Estate, 269 N.W.2d, at 379. Without knowledge of the secret venture between Kiker and Kaiser, this court deemed Kaiser an "[i]nnocent agent of [a] guilty principal."

Although there very well may have been an attorney-client relationship between Kiker and Kaiser for the purpose of having Kaiser perform title investigations for Kiker, there is no evidence to support Hunt's assertion that the lease executed between Kiker and Target was not a bona fide arm's length transaction. Consequently, there is no legal basis upon which the knowledge Kiker possessed, upon executing the oil and gas lease with Target, can be imputed to Kaiser or to Target.

Hunt Trust Estate, 269 N.W.2d, at 383. Accordingly, this court concluded that

Target is a good faith purchaser for value without notice of the prior oil and gas lease executed between Hunt and the Glovatskys ... and that Target's lease is not subject to Hunt's lease.

269 N.W.2d at 385. Kaiser's false testimony tipped the scales of justice in favor of himself and his secret partners.

Thereafter the Glovatsky oil and gas was successfully developed by Target for Kiker, Walters Sr., and Kaiser. Kaiser began receiving checks from his share of the venture in 1979, and earned "approximately $600,000" from his share of this investment alone.

II.

Kaiser reports feeling "dirty" after his false testimony. In 1981, he became "extremely upset" and disclosed the perjury to his wife, Lillian Walters Kaiser. The marriage became shaky and, in 1986, Kaiser sued Lillian for a divorce.

About this same time, Kaiser and Kiker consulted a Fargo attorney to consider settlement with the Hunt Trust. Kaiser says that he was advised to attempt a settlement with the Hunt Trust only in cooperation with his joint venturers. To do so otherwise would have hazarded his liability to his partners for revealing the conspiratorial venture, Kaiser says, although he has not fully described the legal theory or factual scope of that hazard. Because the divorce was pending, Walters Sr. would not cooperate. Therefore, Kaiser says, he held off on contacting the Hunt Trust.

While the divorce was pending, Lillian threatened to expose Kaiser's false testimony. Two weeks before trial, Kaiser claimed the Fifth Amendment when asked about the subject in a deposition. Shortly before the divorce trial, Lillian disclosed the existence of the secret joint venture in her pretrial brief. For an account of the following disputes in the divorce, see Kaiser v. Kaiser, 474 N.W.2d 63 (N.D.1991). At the October 1988 divorce trial, Kaiser admitted testifying falsely in the Hunt Trust trial in 1977.

In a November 22, 1988 letter, shortly after the divorce trial began, Kaiser's counsel reported his 1977 false testimony to the Disciplinary Board. Kaiser, with Kiker, then approached the Hunt Trust and admitted the false testimony. In December 1988, Kaiser settled with the Hunt Trust, paying more than $300,000 and deeding his Glovatsky interests to the Hunt Trust.

In December 1988, too, Kaiser sought to minimize any disciplinary sanction by submitting an affidavit to the Disciplinary Board that consented to a private reprimand. See North Dakota Procedural Rules for Lawyer Disability and Discipline 4.2 (NDPRLDD), North Dakota Century Code, Court Rules Annotated, at 975 (1992-1993 ed.). In February 1989, the Disciplinary Board refused to accept this consent. The Board referred both Kaiser's self-report and another complaint about the same false testimony, filed by a former law partner, to the Inquiry Committee West for investigation. After an informal appearance by Kaiser with counsel in June 1989, the Committee recommended formal disciplinary action.

The formal action was begun. Kaiser answered, acknowledged that he violated the Code of Professional Responsibility, and urged the Board to consider mitigating circumstances. The matter was referred to a three-member hearing panel. The panel met in September 1989 and heard testimony from Kaiser. Before the panel acted, an additional complaint of another episode of false testimony was filed against Kaiser.

III.

In January 1990, another attorney complained to the Disciplinary Board that Kaiser testified falsely at a trial on March 21, 1985 in a Billings County case (identified as the Romanyshyn litigation). Again, Kiker had recorded oil and gas leases on the Romanyshyn minerals there disputed, secretly holding for himself, Walters Sr., and Kaiser. The Romanyshyn heirs sued Kiker and his assignee, Martin Oil Company, to cancel the leases to Kiker because production had ceased and reworking operations were not timely. Kaiser appeared as one of the attorneys for Kiker, but was called as an adverse witness by the attorney for the Romanyshyn heirs. During his testimony, Kaiser was asked:

Q: You don't have any interest in this particular property though, do you, that's involved in this case?

A: No.

Again, the answer was false.

After trial, the trial court denied the claim of the Romanyshyn heirs against Kiker for cancellation of the leases. On appeal, we reversed that part of the judgment and remanded for consideration of Kiker's and Martin's equitable defenses to cancellation of the leases. See Serhienko v. Kiker, 392 N.W.2d 808 (N.D.1986). The attorney for the Romanyshyn heirs showed the hearing panel that the heirs succeeded in terminating Kiker's leases after remand and that the heirs obtained a judgment for over...