Disciplinary Bd. of the Supreme Court of State v. Carpenter (In re Application for Disciplinary Action Against Carpenter)

• Decision Date: 01 May 2015
• Docket Number: No. 20140254.,20140254.
• Citation: 863 N.W.2d 223
• Parties: In the Matter of the Application for Disciplinary Action Against Kerry J. CARPENTER, 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. Kerry J. Carpenter, Respondent.
• Court: North Dakota Supreme Court

863 N.W.2d 223

In the Matter of the Application for Disciplinary Action Against Kerry J. CARPENTER, 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.Kerry J. Carpenter, Respondent.

No. 20140254.

Supreme Court of North Dakota.

May 1, 2015.

Brent J. Edison, Bismarck, N.D., for petitioner.

Sean O. Smith, Bismarck, N.D., for respondent.

SUSPENSION ORDERED

PER CURIAM.

[¶ 1] Attorney Kerry J. Carpenter objects to the findings, conclusions, and recommendation of the Disciplinary Board that he be suspended from the practice of law for 90 days and be assessed the costs of the proceedings for violating N.D.R. Prof. Conduct 1.18, which addresses duties owed to potential clients, and N.D.R. Prof. Conduct 1.7, which addresses conflicts of interest. We conclude there is clear and convincing evidence Carpenter violated N.D.R. Prof. Conduct 1.18. We suspend Carpenter from the practice of law for 90 days commencing July 1, 2015, order that he complete six hours of Continuing Legal Education on conflicts of interest in addition to the mandatory requirements, and order that he pay $7,107.79 for the costs and expenses of the disciplinary proceedings.

I

[¶ 2] Carpenter was admitted to practice law in North Dakota on October 5, 1981. From 1981 until 1987, Carpenter worked as an oil and gas landman in North Dakota. During this period, Carpenter became a business acquaintance with another landman, Martin Thompson. After 1987, Carpenter began practicing law and also eventually became a real estate broker in Bismarck. In the late 1990s, the Christian Science Church listed property it owned in Bismarck with Carpenter and Carpenter assisted the Church in having the property re-zoned to facilitate its sale. Through the years, Thompson and his mother also listed their Bismarck homes for sale with Carpenter. In 2008, Thompson approached Carpenter about a potential opportunity to obtain mineral interests in McLean County. Although they agreed to a “50/50” partnership arrangement in the matter, the deal never came to fruition.

[¶ 3] In early 2009, Thompson learned that a deceased person had owned a large number of mineral acres in Mountrail County, and Thompson spent more than 300 hours researching the deceased's potential heirs so he could either negotiate a finder's fee, or lease or purchase the mineral acres. Thompson later obtained from an individual a copy of the deceased's will, which bequeathed the mineral acres to the headquarters of the Christian Science Church in Boston, Massachusetts. Thompson and a partner contacted a Williston attorney to assist them in negotiating with the Church. The attorney sent letters to the Church proposing several alternative deals, and accompanied the letters with copies of the will, other documents, and eventually, a notice of lapse of mineral interests under N.D.C.C. § 38–18.1 filed by the surface owners and first published on January 13, 2010. The attorney was unsuccessful in his negotiations with the Church, and on March 1, 2010, the Church advised the attorney that it was not interested in pursuing the matter.

[¶ 4] The Board found that on March 1, 2010, Thompson telephoned Carpenter about the Mountrail County mineral acres. On March 2, 2010, Thompson provided Carpenter with detailed information about the deceased's will, the Williston attorney's efforts to negotiate with the Church, and the potential that a portion of the mineral acreage could be lost because a notice of lapse had been filed. On March 3, 2010, Thompson and Carpenter met and Carpenter reviewed documents from Thompson's research file. Thompson provided Carpenter with copies of the deceased's will, the Williston attorney's first letter to the Church, a portion of an oil and gas lease involving the mineral interests, and the notice of lapse.

[¶ 5] On March 5, 2010, Carpenter sent a letter to Thompson “to confirm the nature of our meeting on March 3, 2010”:

I explained again that I could not represent you because I felt it would be a conflict with my past representation of the Church. I did offer to contact the Church to see if the Church wanted me to handle the matter for them with the plan that I would ask if the Church would be willing to compensate you for the work you had done. I asked you for the telephone number to do so and you said you would go home to get it and call me back. As you left, we agreed that, while I was waiting for you to get the number, I would call my local Church contact to inquire if he would be willing to help in contacting the Church in Boston for this purpose. My contact said he would be willing to make a call. When I called you back to ask if you had the number yet, you informed me that one of your silent partners was dissatisfied that you may not receive enough compensation from the Church for your (joint) efforts, so you directed me to “hold off” until the next day. You called me on March 4, 2010, and told me the partner was still dissatisfied and that you wanted me to drop the matter. I expressed my concern in that I had already made contact with the Church in accordance with our conversation of the previous day.

This letter is to confirm what I told you both before and at the beginning of our meeting that I do not represent you in this matter. I also want to inform you that, in the event of further contact from Church representatives about this, I will divulge only public or published information to the Church. I received no confidential information from you at the time of our meeting that was not already communicated to the Church by [the Williston attorney] on your behalf, including a copy of the discovered Will.

[¶ 6] On March 11, 2010, Thompson sent a letter to Carpenter, stating:

While the events of our meeting are still very clear in my mind, I would like to clarify certain parts of that meeting as relates to statements you have made in your letter.

In our initial conversation over the telephone, I gave you some background information on my attempts to find [the deceased's] heirs and the probable value of the minerals in his estate. I also faxed you a copy of [the Williston attorney's] letter to the Christian Science Church. We also decided to have a meeting so we could discuss this matter specifically as to a partnership arrangement between you and me in trying to possibly buy the minerals from the church. At the meeting you said you had already contacted a person associated with the local Christian Science Church and said that person could be of assistance in contacting the mother church in Boston, Massachusetts, if need be.

At our meeting I provided you with copies of [the deceased's] will, death certificate, dormant mineral filing, the trustee's oil and gas information, etc. I explained that there could be about $1.5 million in mineral value. You stated that your contingency fee was 40% of any property involved but that ethically you could not split any fees you would be able to collect via the contingency fee. You then indicated that you could propose a 10% fee for me to the church since I had spent quite a few hours in researching [the deceased's] lineage. You would then settle for a 30% contingency fee.

I never knew before our meeting that you would not be representing me and it was my impression that at the least we were going to explore to somehow be partners in negotiating a deal with the church as to the [the deceased's] minerals. Otherwise there would have been no sense in having a meeting.

I do not recall you ever telling me, either before the meeting or at the beginning of the meeting, that you could not represent me in this matter. Quite to the contrary, I recall that at the end of the meeting I made a statement to you that you were representing me at that point and you replied that you were not representing me. You also stated that you could possibly have a conflict of interest in this matter since you had done some legal work for the church in the past and that you may be ethically obligated to them to provide them the information I had given to you. You then stated that you may have to do some research on that particular point.

At the disciplinary hearing, Carpenter and Thompson testified in accordance with their statements in the letters. The Board found that Thompson's version of the events on March 3, 2010, was “more credible” than Carpenter's version.

[¶ 7] After the meeting on March 3, 2010, Carpenter called the Church's local representative and on March 9, 2010, Carpenter participated in a conference call with the local representative and the estate and trust officer for the Church. Carpenter agreed to represent the Church in filing documents in Mountrail County to prevent the lapse of a portion of the deceased's mineral acres, and he did so. Carpenter also proposed to provide the estate and trust officer with his “agreement forms” if she was willing to take any further steps regarding the mineral acres. Carpenter eventually represented the Church in pursuing its claim to the bequeathed mineral acres. On December 10, 2010, Carpenter sent a letter to the estate and trust officer to “confirm the terms of Carpenter's representation of The Church to locate and recover mineral properties ... to which The Church has a legal claim to an ownership interest”:

My fee for these services (including clearing of record title into the client's name) and for all services previously provided on behalf of The Church in connection with the preparation and filing of that certain Affidavit Of Claim to Mineral Interest With Supporting Documentation filed with the County Recorder, Mountrail County, North Dakota, on March 15, 2010, shall be calculated as follows:

1. 12% (Twelve percent) of the gross value of all property and/or monetary proceeds therefrom, which are recovered to the name of The Church for its ownership and benefit, to be paid in kind according to the nature of the property actually recovered. For example, the fee for

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