Disciplinary Action Against Ruttger, In re, C8-97-109

• Citation: 566 N.W.2d 327
• Decision Date: 17 July 1997
• Docket Number: No. C8-97-109,C8-97-109
• Parties: In re Petition for DISCIPLINARY ACTION AGAINST Max J. RUTTGER, III, an Attorney at Law of the State of Minnesota.
• Court: Supreme Court of Minnesota (US)

Page 327

566 N.W.2d 327

In re Petition for DISCIPLINARY ACTION AGAINST Max J.

RUTTGER, III, an Attorney at Law of the State of Minnesota.

No. C8-97-109.

Supreme Court of Minnesota.

July 17, 1997.

Martin A. Cole, Acting Director, Candice M. Hojan, Sr. Asst. Director, Office of Lawyers Prof. Responsibility, St. Paul, for Office of Lawyers Professional Responsibility.

Criston L. Drake, Brainerd, for respondent.

Heard, considered, and decided by the court en banc.

OPINION

PER CURIAM.

This matter arises from a petition for disciplinary action filed January 13, 1997, and a supplementary petition for disciplinary action filed February 12, 1997, ¹ by the Director of the Office of Lawyers Professional Responsibility against respondent Max J. Ruttger, III, alleging that Ruttger engaged in conduct involving misappropriation of client funds, fraud, lying under oath, and lying in response to inquiries from the Director's office during the investigation of this disciplinary matter in violation of the Minnesota Rules of Professional Conduct. The Director seeks to have Ruttger disbarred. A hearing before this court, pursuant to Rule 16, Rules on Lawyers Professional Responsibility (RLPR), was scheduled to take place on May 5, 1997, to determine if Ruttger should be temporarily suspended from the practice of law pending the final disposition of the pending petitions for disciplinary action. By stipulation with the Director's office, dated April 17, 1997, Ruttger, represented by counsel, withdrew his answers to the petition for disciplinary action and the supplementary petition for disciplinary action. As a result, by operation of Rule 13(b), RLPR, the allegations contained in the petitions are deemed admitted. In addition to stipulating to the withdrawal of his answers, Ruttger agreed to waive his rights under Rule 14, RLPR, and he specifically waived his right to any "further proceedings * * *, including but not limited to a hearing before a referee, further hearings before this Court and the right to contest what sanctions are appropriate." Ruttger also agreed that, without further notice or hearing, this court could enter any order permitted by Rule 15, RLPR. The Director and Ruttger, however, did not stipulate to any particular discipline. Based on the stipulation, this court, by order dated April 24, 1997, ordered Ruttger's immediate temporary suspension and, because of the serious nature of the allegations against Ruttger, the discipline sought by the Director, and the limited record before the court, set a briefing schedule and hearing date to give the Director's office and Ruttger the opportunity to more fully address the appropriate sanctions to be imposed for Ruttger's admitted misconduct.

Ruttger has no prior disciplinary history; however, the petition and supplementary petition for disciplinary action allege three counts of professional misconduct against Ruttger. The first count involves the Ruth Hall matter. Ruttger was appointed guardian of the estate of Ruth Hall on August 15, 1991. On September 30, 1994, he was also appointed guardian of the person of Ruth Hall and served in these capacities until he resigned from both guardianships on May 3, 1996. On August 26, 1995, Ruttger made an offer to purchase certain residential property located in Baxter, Minnesota, presumably for the benefit of Ms. Hall. The purchase agreement was signed by Ruttger, as the guardian for Ruth Hall, and specified that the purchaser would obtain conventional financing for the property. Prior to the closing, Ruttger represented to the sellers that he had not yet obtained financing and, as a result, would be paying cash for the property. During the closing, Ruttger gave the sellers a closing statement in which he itemized the debts to be paid on the property, including a Veteran's Administration (VA) first mortgage in the amount of $59,466.07. Ruttger filed the deed transferring the property to the Ruth Hall guardianship on September 23, 1995, deposited $9,233.83 from Hall's funds into his trust account, and used these funds to pay a second mortgage against the property. Ruttger also paid the real estate commission, state deed tax, and the abstract company. However, Ruttger failed, as required by the purchase agreement, to pay the VA mortgage and also failed to file a satisfaction of the VA mortgage. Instead of paying off the VA mortgage, Ruttger continued to pay the monthly mortgage amount, when due, even though he had not signed an assumption of this mortgage. Ruttger also failed to insure the property.

According to Ruttger, his intent was to resell the property to the assistant minister of the Brainerd Episcopal Church on a contract for deed. As Ruth Hall's guardian, Ruttger received monthly payments from the assistant minister in the amount of $500. It is unclear whether these payments were for rent or contract for deed payments. On Ruth Hall's 1995 income tax return, Ruttger listed the property as having been sold in September 1995, at a loss of $3,000. However, Ruttger did not enter into a written purchase agreement or contract for deed for the sale of the property, and no documentation exists indicating that a sale of the property ever occurred.

The Director alleges that Ruttger's conduct, as described above, violated Minn. R. Prof. Conduct 1.1, 1.7(b), and 8.4(c). We agree.

The second count involves a certificate of deposit, in the amount of $29,000, belonging to Ruth Hall, which matured and was redeemed by Ruttger on January 3, 1996. On January 19, 1996, Ruttger obtained a cashier's check with the proceeds from the certificate of deposit and placed the proceeds from that check into the account of Hailey A. Peterson at the First National Bank of Deerwood. Ruttger had control over the Hailey A. Peterson account. That same day, Ruttger purchased a cashier's check for $19,500, using money from the Peterson account. Without the $29,000 from the Hall certificate of deposit, the Peterson account would not have had sufficient funds to cover this cashier's check. The cashier's check was made payable to "Ernest E. Erickson, Jr., as personal representative of the estate of Ernest E. Erickson, deceased, and John R. Bonner, III, his attorney." The cashier's check was given to the payees in settlement of a lawsuit by Ernest E. Erickson against Ruttger and his wife for landscaping services. Trial of the lawsuit was set to begin on January 19th.

On May 28, 1996, the Director's office asked Ruttger to explain his handling of the proceeds from the Hall certificate of deposit. By letter dated May 31, 1996, Ruttger responded as follows:

I have received your letter of May 28 and enclosures and have reviewed same. I advise you that I intended to deposit Norwest Bank cashier's check 6813845 into account 293803 at First National Bank of Deerwood to be held pending a court order authorizing further charitable contributions. Inadvertently it was deposited into account 292335[sic]. When this error in [sic] my part was called to my attention, I transferred the proceeds of the additional cashier's check to account 293803 which was then used to purchase an additional certificate of deposit. That together with all other funds has been turned over to Crow Wing County District Court. No loss to any of Ruth Hall's funds has occurred.

On June 4, 1996, Ruttger...