Evans, Matter of

• Decision Date: 10 February 1995
• Docket Number: No. 22206,22206
• Citation: 1995 NMSC 12,119 N.M. 305,889 P.2d 1227
• Parties: In the Matter of Jake R. EVANS, an Attorney Disbarred from the Practice of Law before the Courts of the State of New Mexico.
• Court: New Mexico Supreme Court

Page 1227

889 P.2d 1227

119 N.M. 305

In the Matter of Jake R. EVANS, an Attorney Disbarred from the Practice of Law before the Courts of the State of New Mexico.

No. 22206.

Supreme Court of New Mexico.

Feb. 10, 1995.

[119 N.M. 306] David A. Baca, Deputy Disciplinary Counsel, Albuquerque, for Disciplinary Bd.

Carmen E. Garza, Las Cruces, for respondent.

OPINION

PER CURIAM.

This matter came before the Court following two separate disciplinary proceedings conducted pursuant to the Rules Governing Discipline, SCRA 1986, 17-101 to -316 (Repl.Pamp.1991 & Cum.Supp.1994), in which respondent Jake R. Evans was found to have committed various violations of the Rules of Professional Conduct, SCRA 1986, 16-101 to -805 (Repl.Pamp.1991 & Cum.Supp.1994). Pursuant to Rule 17-316(D) we adopt the disciplinary board's findings of fact, conclusions of law, and recommendation to disbar respondent from the practice of law pursuant to Rule 17-206(A)(1). In addition, certain conditions are imposed that must be satisfied before consideration of a petition for reinstatement.

Between 1989 and 1992, Evans represented Consuelo Coyazo regarding various legal matters. The representation included assisting Coyazo in obtaining $100,000 in life insurance proceeds on her deceased husband's policy; Coyazo was the named beneficiary on the policy. During his representation of Coyazo, Evans entered into business transactions with her consisting of three separate $20,000 loans by Coyazo to Evans between January 1990 and March 1992.

Evans prepared and delivered to Coyazo a promissory note and mortgage to secure $40,000 of the loan. The collateral listed was Evans' residence on Hillrise Drive in Las Cruces, New Mexico. Evans represented to Coyazo that the Hillrise property was free and clear of prior liens, when in fact it had a prior mortgage. Evans also prepared and delivered to Coyazo a promissory note and mortgage to secure $20,000 of the loan. The collateral listed was 4.99 acres of real estate identified as the Fairacres property, which Evans represented was free and clear of prior liens, when in fact it also had a prior mortgage.

In the course of engaging in these business transactions with his client, Evans failed to advise Coyazo to seek independent legal advice, made no effort to obtain independent legal advice for her, and failed to advise her fully on the reasonable and appropriate protection that could be afforded by private mortgage financing. Evans also failed to advise Coyazo of the need to promptly record each mortgage and made no effort to record the mortgages for her. In fact, Evans wrongfully instructed Coyazo to file the mortgages upon his death.

On the advice of others, Coyazo finally recorded her mortgages on March 15, 1993. By the time the mortgages were recorded, a lis pendens on Evans' Hillrise residence had been filed with respect to foreclosure proceedings by the First National Bank of Dona Ana County. Since Coyazo was not named in the foreclosure proceedings, her post-lis pendens lien effectively was foreclosed. With regard to the Fairacres property, on February 12, 1993, by a deed dated May 15, 1987, Evans conveyed the 4.99 acres in Fairacres to a third party. A title search on the two properties confirmed that prior to the recording of Coyazo's mortgages, Evans' Hillrise residence as well as the Fairacres property were encumbered with two recorded transcripts of judgment and two recorded federal tax liens, in addition to the recorded first mortgage liens, all of which were superior to any lien of Coyazo.

Rule 16-108(A) governs business transactions with or adverse to a client and provides as follows:

A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;

(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and

(3) the client consents in writing thereto.

Evans' business transactions with Coyazo failed to comply with the provisions of Rule 16-108(A). The terms and conditions of the loans were not fair and reasonable; the terms and conditions were not fully disclosed to the client in writing; Evans' client was not given a reasonable opportunity to seek independent counsel; and, she did not consent to the transactions in writing.

Evans' failure to comply with the requirements of Rule 16-108(A) were further aggravated by the fact that he knowingly deceived Coyazo by failing to properly advise her of the need to record her mortgages or by failing to record the mortgages for her, and by misrepresenting that there were no prior mortgages. The disciplinary board also found that Evans knowingly deceived Coyazo or acted with a dishonest or selfish motive in transferring the 4.99 acres in Fairacres to a third party without indicating that the property was subject to Coyazo's mortgage, thus causing serious or potentially serious injury to Coyazo. In obtaining the loans from Coyazo, Evans was dealing with a client who was particularly vulnerable, had no particular knowledge of mortgages, and lacked experience in dealing with large sums of money. Coyazo had a limited understanding of such matters and relied heavily on the guidance of Evans and the trust she placed in him.

In obtaining three separate $20,000 loans from Coyazo, Evans' conduct caused serious or potentially serious injury to the client and violated Rule 16-108(A) on each occasion. The relationship between a debtor and a lender is inherently adversarial in nature. By entering into such a relationship with his client, without first fully apprising the client of their differing interests and without complying with the provisions of Rule 16-108(A), Evans breached his duty of professional loyalty owed to Coyazo. Furthermore, Evans' conduct with respect to his business transactions with Coyazo violated Rules 16-804(C) and 16-804(H).

In July 1989, Jeff Knight and Jeanette L. Knight retained Evans to represent them regarding personal injuries and property damage suffered in an accident in which their vehicle collided with a cow on Interstate 25 near Hatch, New Mexico. Subsequently, Evans represented to the Knights that he was pursuing a lawsuit against the State Highway Department as well as the owners of the cow. Between April 1992 and February 1993, Ms. Knight made at least 64 long distance calls to Evans' law office in an effort to speak with him about the status of the case. Evans failed to respond to the calls. Additionally, in May 1992 and February 1993, Ms. Knight mailed certified letters to Evans detailing efforts to contact him and requesting a response, which Evans failed to answer. Ultimately, Evans failed to file the suit on behalf of the Knights with respect to the accident or otherwise resolve the matter. As a result, the statute of limitations expired on the personal injury and property damage claims.

In representing the Knights, Evans was found to have failed to act with diligence and promptness and such failure caused serious or potentially serious injury to those clients. Evans' conduct with respect to his representation of the Knights was, therefore, in violation of Rules 16-101, 16-103, 16-104(A), and 16-804(H).

Additionally, the disciplinary board determined that Evans properly was notified of the disciplinary complaints filed by Coyazo, Ms. Knight, and a third client, John F. Ramzy. Nevertheless, Evans failed to respond to disciplinary counsel regarding the Knight complaint and the Coyazo complaint. With regard to the Ramzy complaint, Evans failed to respond to requests for supplemental information submitted by disciplinary counsel. It was concluded that Evans engaged in bad faith obstruction of disciplinary proceedings by intentionally failing to cooperate with disciplinary counsel on multiple occasions. Evans, therefore, was found to have violated Rule 16-803(D).

In June 1991, Alan Chapman and Neil Fraembs, on behalf of Action Auto Parts & Towing, retained Evans to represent them in the purchase of a wrecker business, for which Evans was paid $3,000.00 as a retainer. Additionally, Chapman and Fraembs also paid $1,000.00 to Evans to be held in escrow for the purchase of the business. Evans subsequently drafted a purchase and sale agreement, and, as part of the agreement, Evans was appointed escrow agent for the transaction. The purchasers acknowledged in the agreement that they paid $1,000.00 to Evans as escrow agent and agreed he would hold that money in trust for the benefit of the seller upon execution of the contract. Additionally, as part of the purchase and sale agreement, Evans agreed to make application on or before September 1, 1991, to the State Corporation Commission for the transfer of certain certificates of public convenience and necessity associated with the business and to make application on behalf of the purchasers to expand the territory to be served by said certificates.

Although Evans agreed to file the application for transfer of the certificates of public convenience and necessity with the State Corporation Commission on or before September 1, 1991, the...