Hippard v. State Bar, S008378

• Decision Date: 11 December 1989
• Docket Number: No. S008378,S008378
• Citation: 49 Cal.3d 1084,264 Cal.Rptr. 684,782 P.2d 1140
• Court: California Supreme Court
• Parties: , 782 P.2d 1140 Richard M. HIPPARD, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

Page 684

264 Cal.Rptr. 684

49 Cal.3d 1084, 782 P.2d 1140

Richard M. HIPPARD, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

No. S008378.

Supreme Court of California In Bank.

Dec. 11, 1989.

Rehearing Denied March 1, 1990.

[782 P.2d 1141] Larson & Weinberg, Joel C. Johnson and Doron Weinberg, San Francisco, for petitioner

Diane C. Yu, Oakland, Truitt A. Richey, Jr., and Richard J. Zanassi, San Francisco, for respondent.

BY [49 Cal.3d 1088] THE COURT:

This is a proceeding to review the State Bar's denial of Richard Hippard's petition for reinstatement to the practice of law. We hold that petitioner's discharge in bankruptcy of indebtedness to clients arising from misconduct did not preclude the State Bar from considering, as an indicator of rehabilitation, petitioner's efforts, if any, to make restitution; that petitioner did not

meet his burden of demonstrating rehabilitation because he failed to prove either an inability to make restitution in whole or in part or an objectively verifiable effort to make restitution reasonably related to his ability to pay; and that the appropriate showing regarding restitution must be made before the granting of reinstatement, and not thereafter as a condition of reinstatement. We conclude petitioner should not be reinstated at this time

FACTS

Petitioner was admitted to the practice of law in 1966. The State Bar initiated three separate disciplinary proceedings against petitioner based on misconduct that occurred between 1971 and 1975. In one of the proceedings, the Local Administrative Committee of the State Bar recommended in June 1976 that petitioner be disbarred. The recommendation was based on the finding that petitioner had misappropriated $3,967.66 from a client, Maxine Peairs. It was made after the entry of a judgment in favor of the client based, in part, on judicial findings that petitioner had converted funds and had wilfully and knowingly engaged in conduct which created an undue hardship on his client in breach of his fiduciary duties.

Thereafter, in August 1976, petitioner submitted his resignation to the State Bar. The Board of Governors adopted a resolution recommending acceptance by this court of petitioner's resignation subject to the completion of proceedings to perpetuate the evidence in the remaining two pending disciplinary matters. Petitioner and the State Bar then entered into "Stipulations and Admissions" in both of the remaining proceedings. Those stipulations and admissions, signed by petitioner on January 18, 1977, address a total of five counts and numerous instances of misconduct for the period 1972 to 1975.

Petitioner admitted the commission of the following acts of misconduct: (1) seven instances of borrowing money from clients either for himself or, in one instance, for a friend, totaling more than $22,000, without providing security or disclosing his poor financial condition and his probable inability to repay; (2) one instance of advising a client to loan funds at a usurious rate; (3) three separate instances of abandoning clients; (4) four instances of knowingly issuing checks drawn on either a closed account or on accounts with insufficient funds; (5) two instances of misappropriating funds from clients; (6) one instance of fraudulently representing to his client and to the United States Bankruptcy Court in the client's bankruptcy case that funds he had misappropriated had been disbursed to creditors; and (7) one instance of falsely representing to the State Bar that he had sent a check to one of his creditors. ¹

In February 1977, we accepted petitioner's voluntary resignation without prejudice to further disciplinary proceedings in the event he should thereafter seek reinstatement. We also ordered petitioner to comply with rule 955, California Rules of Court, subdivisions (a) and (c) within 60 and 70 days, respectively. ² Petitioner failed to do so.

Between 1976 and December 1979, petitioner worked as a sales agent for a real estate company. During that period, his earnings increased from approximately $15,000 to $27,500 a year. From 1977 to 1981, petitioner underwent professional counseling for what his therapist described as a "me-first" attitude that resulted in a In April 1980, petitioner filed for bankruptcy, listing $88,762 as debts (including 24 judgments against him in the sum of approximately $58,000) and $3,520 as the value of his property. A number of petitioner's debts, including obligations to a number of his clients and to the Client Security Fund, were discharged by the bankruptcy court. Not discharged were petitioner's outstanding tax obligations and a judgment against him based on fraud (the misappropriation of funds from client Maxine Peairs). Petitioner has never repaid Maxine Peairs.

"charming pattern of pushiness and aggressive extraction of supplies from the environment, feeling he has the right to whatever he needs." Petitioner apparently has not sought or received counseling since 1981.

Between 1980 and 1984, petitioner worked for six different firms selling real estate, and for a brief period he was employed at an executive placement firm. He earned $10,000 in 1980; $33,900 in 1981; $9,500 in 1982; $19,545 in 1983; and $39,400 in 1984. In January 1984, petitioner became a self-employed legal assistant for John Trump, a San Francisco solo practitioner. He has worked full time for Mr. Trump since that time, earning $36,000 a year.

Petitioner's marriage ended in an uncontested divorce in 1975. He has three children. Since his divorce, petitioner has paid child support and contributed to the costs of his children's education. In January 1987, when the petition for reinstatement was filed, petitioner's 3 children were 23, 21, and 16 years old. Petitioner testified that he has always believed he was morally, if not legally, obligated to repay his debts to his former clients. However, between 1980 and now, petitioner has not repaid his former clients any of the sums he had improperly obtained or converted. Although petitioner has stated he believes he may have made partial payments to some of his former clients before 1980, the record is inadequate to permit evaluation of such payments.

STATE BAR COURT PROCEEDINGS

The petition for reinstatement sets forth petitioner's divorce in 1975, his family background, his resignation, a brief summary of the disciplinary proceedings that recommended disbarment, his occupational history since 1976, his earnings and expenses, and a brief discussion of 15 lawsuits pending against petitioner at the time of his resignation and their outcome. The petition cites as justification for readmission the passage of 10 years since petitioner's voluntary resignation; his assertion that he has stabilized his life and begun to control his finances; the success of his therapy; and a number of testimonial letters from members of the legal profession and from friends, associates, and former clients. The testimonials include a letter from Attorney John Trump (petitioner's employer), stating, among other things, that petitioner has learned from his past misconduct; paid his debt to society; and, if readmitted, would be "a welcome addition to our legal staff." ³

Following an evidentiary hearing at which petitioner testified, a three-member By a vote of nine to two, the Review Department of the State Bar adopted the findings and conclusions of the hearing panel. In addition, it found that petitioner wilfully failed to comply with rule 955, as ordered by this court, "until after he had applied for reinstatement in 1987." It cited petitioner's insufficient efforts to repay his clients or the Client Security Fund and his noncompliance with rule 955 as clearly and convincingly supporting the conclusion that he did not sustain his burden of showing exemplary conduct over an extended period of time. It then denied, again by a vote of nine to two, the petition for reinstatement. One of the referees who had voted to deny the petition noted that the issue of petitioner's rehabilitation presented a close question. The same referee, joined by another, also expressed the view it was unfortunate that reinstatement could not be accepted with conditions.

hearing panel of the State Bar unanimously recommended that the petition be denied. The hearing panel made these findings: (1) petitioner had misappropriated $3,967.66 from client Maxine Peairs, (2) disciplinary proceedings were pending against petitioner when he resigned from the State Bar, (3) he continued to borrow money from clients without repayment schedules, (4) he made false statements to the State Bar relating to a check for an overdraft being in the mail, (5) petitioner encouraged a client to give false testimony in a bankruptcy proceeding, (6) he named clients from whom he [782 P.2d 1144] had borrowed money as creditors in his petition in bankruptcy, (7) he has made no effort to repay in whole or in part any of the funds he obtained from clients despite his having been gainfully employed in recent years, and (8) he has established the requisite knowledge of the law to be qualified to practice. The hearing panel concluded that the evidence "clearly and convincingly supports the conclusion that Petitioner is not rehabilitated...." In support of its conclusion, the hearing panel specifically cited petitioner's continued borrowing of money from friends, paying some and not others, and indulging his own interests rather than repaying clients or the Client Security Fund. The panel determined "[t]he overwhelming evidence clearly supports the conclusion that the Petitioner has done little to rehabilitate himself...."

DISCUSSION

1. Burden of Proof

In seeking reinstatement, petitioner bears a heavy burden of proving rehabilitation. (Calaway v. State Bar (1986) 41 Cal.3d 743, 745, 225 Cal.Rptr. 267, 716 P.2d 371; Tardiff v. State Bar (1980) 27 Cal.3d 395, 403, 165 Cal.Rptr. 829, 612 P.2d 919.) He must show by the most clear and...