Disciplinary Action Against Larson, Matter of, 910344

• Decision Date: 05 May 1992
• Docket Number: No. 910344,910344
• Citation: 485 N.W.2d 345
• Parties: In the Matter of DISCIPLINARY ACTION AGAINST Lorene Whitesides LARSON, a Member of the Bar of North Dakota. DISCIPLINARY BOARD OF the SUPREME COURT OF the STATE OF NORTH DAKOTA, Petitioner, v. Lorene Whitesides LARSON, Respondent. Civ.
• Court: North Dakota Supreme Court

Page 345

485 N.W.2d 345

In the Matter of DISCIPLINARY ACTION AGAINST Lorene Whitesides LARSON, a Member of the Bar of North Dakota DISCIPLINARY BOARD OF the SUPREME COURT OF the STATE OF NORTH DAKOTA, Petitioner, v. Lorene Whitesides LARSON, Respondent.

Civ. No. 910344.

Supreme Court of North Dakota.

May 5, 1992.

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

Thomas L. Trenbeath (argued), of Fleming, DuBois & Trenbeath, Cavalier, for respondent.

PER CURIAM.

This is a disciplinary proceeding against Lorene Whitesides Larson, an attorney licensed to practice in North Dakota. For misappropriating client funds and for practicing law while suspended, the Disciplinary Board recommends two seven-month suspensions to run concurrently. We suspend Larson for two years for misappropriating client funds, with a concurrent seven-month suspension for practicing law while suspended.

We explained our standards of review for attorney discipline in a prior discipline of Larson:

We review disciplinary proceedings against attorneys de novo on the record with the standard of proof being by clear and convincing evidence.... In reviewing the record, we accord due weight to the findings, conclusions, and recommendations of the hearing panel.... However, this Court does not act as a mere "rubber stamp" approving the findings and recommendations of the Disciplinary Board after a perfunctory review.... In determining what discipline is warranted, each case must be decided on its own particular facts.

In re Larson, 450 N.W.2d 771, 773-774 (N.D.1990) [Larson I ] (citations omitted). These standards apply equally to this disciplinary proceeding against Larson.

The current charges against Larson arose from her mishandling funds of the Chris Reiten estate and from several instances of practicing while under suspension. Larson concedes that her conduct violated the applicable disciplinary standards. However, she asserts that the Board made some erroneous findings of fact; that the Board failed to properly take into account mitigating factors; that the recommended sanctions are too harsh; and that attorney's fees should not be assessed against her.

I. MISHANDLING CLIENT FUNDS

In 1980, Larson prepared a will for Chris Reiten. The will devised $1,000 to Our Savior's Lutheran Church of Park River, North Dakota, and the balance of his estate to numerous relatives living in Canada and Norway. The will named a friend, Duncan Meagher, as personal representative. After Meagher's death in 1985, Larson drafted, and Reiten signed, a codicil to the will. The codicil named Larson as personal representative.

Reiten died on February 25, 1988. Larson applied for informal probate of the will, and she received letters testamentary on March 9, 1988. She served as personal representative and attorney for the estate.

Although the terms of the will were clear and unambiguous, Larson wrote a letter on August 25, 1988, to the beneficiaries under the will expressing her desire to give $25,000 each to three charities: the Good Samaritan Nursing Home, Our Savior's Lutheran Church, and Park River Bible Camp. The letter stated: "After you have read and considered this letter, please let me know if you feel the above would be the way Chris would like to be remembered." Two of the nine beneficiaries immediately objected to this distribution. Larson thereafter distributed 7/9ths of $25,000, that is $19,444.44, to each of the three charities. After these distributions were made, the remaining beneficiaries also objected.

Larson also mishandled several of Reiten's bank accounts. One account was a money market account that allowed three checks to be written each month. This account was originally in the names of Reiten and Meagher in joint tenancy. After Meagher's death in 1985, Reiten appointed Harlan Grovom as power of attorney on the account. Grovom assisted Reiten in handling personal matters, ran errands for him, and paid bills by writing checks on the account. When Reiten died in 1988, this account totaled more than $65,000.

Clearly, Reiten became sole owner of the account by right of survivorship upon Meagher's death. See NDCC 30.1-31-09. Furthermore, the power of attorney to Grovom terminated immediately upon Reiten's death. ¹ See 3 Am.Jur.2d Agency Sec. 55 (1986). Unaccountably, Larson acted as if the remaining funds were not part of Reiten's estate and as if Grovom was entitled to those funds. In her August 25, 1988, letter to the beneficiaries, Larson said that Reiten had "designated" the account "for his Power of Attorney."

Larson offered to transfer the entire $65,000 from the account to Grovom but he refused, agreeing to accept only $33,000. Grovom had not at that time filed a claim for services performed for Reiten. Rather, Larson justified the payment on the grounds that the account was "designated" for the power of attorney. There was no basis in the law for her handling of the account.

Larson's handling of two other bank accounts is even more egregious. These accounts were in joint tenancy between Reiten and Meagher. One account listed the owners as Reiten and "Meagher, Duncan, Executor." The other listed Reiten and Meagher with no reference to Meagher as executor. When Reiten died, these accounts held over $47,000.

Under well-settled legal principles, Reiten became sole owner of these accounts upon Meagher's death. See NDCC 30.1-31-09; Olson v. Fraase, 421 N.W.2d 820, 831 (N.D.1988) ("ownership in a surviving joint tenant vests immediately upon the other's death"). Accordingly, the accounts should have been included in Reiten's estate and distributed as his will directed. Larson, however, took the position that these accounts created a joint tenancy with whomever was designated as the personal representative, not just Meagher, and she converted the funds to her own use. In her August 25, 1988, letter, she advised the beneficiaries that these accounts had been "designated" for the personal representative. There is no legal authority for Larson's claim that the accounts created a "generic" joint tenancy between Reiten and the personal representative of his estate.

The beneficiaries challenged Larson's actions. On February 6, 1990, the probate court removed Larson as personal representative, ordered the three charities to return the estate funds disbursed to them, and ordered Grovom and Larson to return funds removed from Reiten's bank accounts.

A petition for discipline was filed against Larson. The Board found that Larson's conduct violated NDRPC 1.15(b) (mishandling client funds); NDRPC 1.5(a) (charging unreasonable fees); NDRPC 1.7(b) (conflict of interest); NDRPLDD 1.2(A)(3) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation); and NDCC 27-14-02(7) (conduct which tends to bring reproach upon the legal profession). Larson concedes that her conduct was unethical, and she does not challenge the Board's findings on these violations.

II. PRACTICE WHILE UNDER SUSPENSION

Larson was suspended from the practice of law from March 1, 1990 to June 11, 1990. Larson I. The Board found that Larson engaged in four separate instances of unauthorized practice during her suspension. The Board found that Larson's conduct violated NDPRLDD 1.2(A)(3) (conduct involving dishonesty, fraud, deceit, or misrepresentation), and NDCC 27-14-02(2) (disobeyance or violation of a court order).

A. Drafting Power of Attorney

The Board found that Larson drafted a power of attorney for a client during the period of suspension. Larson concedes this violation.

B. Land Sale

The Board found that during Larson's suspension she advertised for sale, accepted bids, and sold a parcel of land for clients. Under North Dakota law, persons selling real estate must be licensed. NDCC 43-23-05. There is a statutory exception for sales of real estate arising in the usual course of the practice of law. NDCC 43-23-07(2). Larson does not assert any applicable exception, nor does she challenge the Board's finding of a violation.

C. Small Claims Action

On March 5, 1990, Larson attempted to file an action in small claims court on behalf of a client. The court, aware of Larson's suspension, refused to file the action.

Larson asserts that she was not aware that her suspension was in effect on that date because she had not received notice of the resolution of her motion for rehearing in this court. Larson misconstrues the effect of a motion for rehearing. Our prior opinion, dated January 25, 1990, clearly ordered that Larson's suspension commence on March 1, 1990. Larson I, 450 N.W.2d at 774. Larson cites no rule, statute, or other authority that an order of suspension is stayed pending the decision of a motion for rehearing. ²

By its terms, our order of suspension took effect on March 1, 1990. Larson's continued practice after that date was the practice of law while under suspension.

D. School Staff Meeting

During her suspension, Larson appeared at a special education staff meeting at Park River High School with Robert and Mary Ann Kjelland, parents of John Kjelland. Larson characterizes the Kjellands as family friends. Larson had previously attended such meetings with the Kjellands, and had been introduced as their attorney. The purpose of this meeting was to determine whether John would graduate or return the following year for further education. The Board found that Larson's appearance constituted the practice of law while under suspension.

Disciplinary counsel bears the burden of proving each alleged violation by clear and convincing evidence. NDPRLDD 3.5(C) and (D); Disciplinary Board v. McKennett, 349 N.W.2d 29, 31 (N.D.1984). Upon de novo review of this record, we conclude that disciplinary counsel has failed to prove by clear and convincing evidence that Larson's appearance at the school staff meeting constituted practice of law while under suspension. The record demonstrates that non-lawyers often appeared with parents and students at such...