In Re Complaint As To The Conduct Of D. Rahn Hostetter, (OSB Nos. 07-37, 007-161; SC S056471).

• Citation: 238 P.3d 13,348 Or. 574
• Decision Date: 29 July 2010
• Docket Number: (OSB Nos. 07-37, 007-161; SC S056471).
• Parties: In re Complaint as to the Conduct of D. Rahn HOSTETTER, Accused.
• Court: Supreme Court of Oregon

348 Or. 574

238 P.3d 13

In re Complaint as to the Conduct of D. Rahn HOSTETTER, Accused.

(OSB Nos. 07-37, 007-161; SC S056471).

Supreme Court of Oregon,En Banc.

Argued and Submitted March 1, 2010.

Decided July 29, 2010.

Roy Pulvers, Hinshaw & Culertson LLP, Portland, argued the cause and filed the briefs for the accused.

Stacy Hankin, Assistant Disciplinary Counsel, Oregon State Bar, Tigard, argued the cause and filed the brief for the Oregon State Bar.

PER CURIAM.

In this lawyer disciplinary matter, the Bar charged the accused with ethical violations in two separate matters. In the Ingle matter, the Bar alleged that the accused violated the former-client conflict-of-interest rule. The trial panel concluded that the accused violated DR 5-105(C) and RPC 1.9(a) when, having represented the borrower in the underlying loan transaction, he subsequently represented the lender in collecting the loans from the borrower's estate. In the Grohs matter, the Bar alleged that the accused violated the rule against misrepresentation. The trial panel concluded that the accused violated RPC 8.4(a)(3) when he “acquiesced [in] the removal” of a notarized signature page from one deed and had it placed on a second deed, which contained a different legal description, and then had the altered deed recorded. In part because the accused had been disciplined previously, the trial panel recommended that he be suspended from the practice of law for 150 days.

Pursuant to ORS 9.536(1) and Bar Rules of Procedure (BR) 10.1 and 10.3, the accused seeks review of the trial panel's conclusions. This court reviews the trial panel decision de novo. ORS 9.536(2); BR 10.6. The Bar must establish misconduct by clear and convincing evidence. BR 5.2. Clear and convincing evidence means “evidence establishing that the truth of the facts asserted is highly probable.” In re Cohen, 316 Or. 657, 659, 853 P.2d 286 (1993). As to the Ingle matter, we conclude that the accused violated DR 5-105(C) and RPC 1.9(a). As to the Grohs matter, we conclude that the accused violated DR 1-102(A)(3) and RPC 8.4(a)(3). ¹ We impose a suspension of 150 days.

I. FACTS AND PROCEDURAL HISTORY

A. The Ingle Matter

In the mid 1990s, the accused represented Pearl Ingle in obtaining a series of loans from Andrew Hohn and drafted the documents to evidence and secure those loans. The documents included several promissory notes and a mortgage in favor of Hohn on certain property owned by Ingle (loan transactions). The accused also represented Ingle in obtaining from Hohn partial releases of the mortgage securing the loans. In 2004, Ingle died, and her daughter was appointed personal representative of Ingle's estate. Ingle's will directed that all her “just debts and liabilities” be “fully paid.”

During 2004 and 2005, the accused represented Hohn in collecting the outstanding loans that Hohn had made to Ingle during her lifetime (the debt collection). ² In particular, the accused asserted a probate claim on Hohn's behalf against Ingle's estate based on the promissory notes and mortgages that he had previously prepared for Ingle. The personal representative disallowed the claim. The accused then demanded that the personal representative pay Hohn $81,519.29 or execute a new promissory note for that amount, or the accused would initiate a foreclosure action against Ingle's property-the same property at issue in the mortgages that the accused had prepared on Ingle's behalf.

Eventually, the accused brought an action against Ingle's estate asserting claims for breach of contract, action on promissory notes, and judicial foreclosure of real property. The personal representative challenged Hohn's claims, arguing that some loans were barred by the statute of limitations, were unsupported by documentation, or had already been repaid. The parties ultimately settled the claims for $52,660.64.

The personal representative registered a complaint with the Bar. The Bar charged the accused with violating DR 5-105(C) (subsequently representing a client in the same or a significantly related matter as a former client when the interests of the current and former clients are in actual or likely conflict) and RPC 1.9(a) (representing a client in the same or substantially related matter as a former client in which the current client's interests are materially adverse to the interests of the former client without obtaining informed consent, confirmed in writing). The trial panel concluded that the accused violated the foregoing provisions.

B. The Grohs Matter

Anna Grohs purchased property from Oliver and Christie Wilde in 2003. The property consisted of four parcels. Grohs defaulted on a payment, and the Wildes initiated a foreclosure proceeding. Grohs obtained a bank loan to pay the Wildes, and the parties discussed entering into a new agreement in which the Wildes would accept the proceeds of the bank loan in exchange for releasing parcel 3.

The Wildes retained the accused to represent them in negotiating the new agreement with Grohs. In November 2004, the accused faxed Grohs a letter setting out the terms of the new agreement. The letter enclosed for Grohs's signature a Deed in Lieu of Foreclosure for parcels 1, 2, and 4 (deed on three parcels) and a promissory note for the remaining balance. In a handwritten postscript, the accused informed Grohs that, to cancel the foreclosure sale, Grohs would also need to sign a Deed in Lieu of Foreclosure on all four parcels (deed on four parcels). Apparently, the deed on four parcels was necessary to protect the Wildes in case Grohs's loan did not close. In a later fax, the accused assured Grohs that, if Grohs's loan closed, the foreclosure would be cancelled and the accused would destroy the deed on four parcels. However, if the loan did not close, the accused would record the deed on four parcels rather than the deed on three parcels.

Grohs signed and notarized the deed on four parcels. The accused immediately cancelled the foreclosure sale. Grohs's bank loan closed a few weeks later, and parcel 3 was reconveyed to Grohs.

The accused was scheduled to be away on vacation the next week. Before he left, he arranged for the Wildes to come to the office during his absence and execute the remaining documents, including the deed on three parcels. The accused reviewed the documents that the Wildes were to sign and dictated a letter to Grohs, sent the next day, informing her that the deed on three parcels would be recorded that day.

There is no record that Grohs ever signed the deed on the three parcels. Instead, the signature page from the deed on four parcels-containing Grohs's notarized signature-was affixed to the deed on three parcels. The Wildes executed the deed on three parcels, and the deed was sent for recording. Due to unrelated errors in the paperwork, the deed was re-sent for recording at least two times, and was eventually recorded sometime after January 1, 2005. ³ About two years later, Grohs discovered that her signature from the deed on four parcels had been affixed to the deed on three parcels, and she complained to the Bar. The accused responded by letter to Grohs's complaint. In that letter, the accused acknowledged that he attached the signature page from the deed on four parcels to the deed on three parcels, but asserted that he had Grohs's permission to do so:

“Ms. Grohs was under time pressure to get her loan closed. I told Ms. Grohs by telephone that I would send her the documents. I told her that the Promissory Note did not need to be notarized, but the [deed on three parcels] did need to be notarized. I told her that, if she wanted to avoid the hassle of going to a notary again, I could use the deed she signed previously and substitute the legal description of Parcels 1, 2 and 3 in place of the legal description for Parcels 1,2,3, and 4. She agreed.”

The Bar charged the accused with violating DR 1-102(A)(3) (conduct involving misrepresentation) and RPC 8.4(a)(3) (conduct involving misrepresentation that reflects adversely on the lawyer's fitness to practice law).

The accused gave sworn deposition testimony that confirmed the version of events he gave to the Bar in his letter. In that testimony, he explained:

“All I know is, is that there was a time when we were pressured to-she was pressured. She's the one that was feeling pressure, not from me, but from wanting to salvage her interest in the property, to have all the documents signed. And [there] were Fed-Ex exchanges. And somewhere in there, there was an agreement to, for time's sake, to use, since she had already signed, the [deed on four parcels].” ⁴

The accused also testified that it was not Grohs's idea to switch the pages, but his own:

“No, she wouldn't have thought of that. I think that, and I'm pretty confident of this, I just think I suggested an option that I can send this to you, but guess what, it reads the same and so we could just change the legal description.”

Contrary to his letter to the Bar and his deposition testimony, the accused testified at the disciplinary hearing that he first learned of the switched signature pages when the Bar informed him of Grohs's complaint against him. The accused also testified that he did not know how the signature page from the deed on four parcels became attached to the deed on three parcels. Faced with the fact that his billing records and documentation revealed no discussion with Grohs about affixing the signature page from the deed on four parcels to the deed on three parcels, the accused conceded that he had merely speculated that he and Grohs discussed saving her a trip to the notary, and that he had assumed that they discussed it because he “would not ever do anything like that without her agreement.” The accused opined that his staff possibly “just mixed it up” because the accused was gone on vacation at the time and his legal assistant told him that he did not instruct her to affix the signature page from the...