In re Conduct of Campbell, OSB 06-14.

• Court: Supreme Court of Oregon
• Writing for the Court: Per Curiam
• Citation: 345 Or. 670,202 P.3d 871
• Parties: In re Complaint as to the CONDUCT OF G. Jefferson CAMPBELL, Jr., Accused.
• Decision Date: 05 February 2009
• Docket Number: SC S055577.,OSB 06-127.,OSB 06-14.

202 P.3d 871 345 Or. 670 In re Complaint as to the CONDUCT OF G. Jefferson CAMPBELL, Jr., Accused. OSB 06-14. OSB 06-127. SC S055577. Supreme Court of Oregon, En Banc. Argued and Submitted December 10, 2008. Decided February 5, 2009.

[202 P.3d 873]

G. Jefferson Campbell, Jr., in propria persona, argued the cause. Douglas J. Richmond, Kellington, Krack, Richmond, Blackhurst & Glatte, LLP, Medford, filed the briefs for the accused.

Stacy J. Hankin, Assistant Disciplinary Counsel, Tigard, filed the brief for the Oregon State Bar.

PER CURIAM.

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In this lawyer disciplinary matter, the Bar charged the accused with ethical violations in two separate matters. In the first matter, the Bar charged that the accused violated conflict of interest rules in a bankruptcy case. The trial panel concluded (1) that the accused did not violate DR 5-101(A)(1)¹ when, although he had represented the debtor in a Chapter 13 bankruptcy proceeding, and was therefore an administrative creditor of the estate, he agreed to serve as special counsel to the estate when the bankruptcy was converted to a Chapter 7 proceeding; but (2) that the accused did violate DR 5-105(C) when, after the trustee in the Chapter 7 case reached a settlement that was contrary to the accused's interest in collecting his fees, he resigned as special counsel and represented new clients in an appeal that challenged the settlement. In the second matter, the trial panel concluded that the accused violated DR 2-106(A) when he charged his client, Burch, for late fees in excess of the legal rate of interest, although no written agreement required payment of such fees, and when he charged Burch hourly fees for a trespass case, although a written agreement provided for a contingency fee. In part because the accused had been disciplined previously, the trial panel recommended that he be suspended from the practice of law for 90 days.

Pursuant to ORS 9.536(1) and Bar Rules of Procedure (BR) 10.1 and 10.3, both the Bar and the accused seek review of the trial panel's conclusions.² 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, i.e., "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 bankruptcy matter, we conclude, as did the trial panel, that the accused did not

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violate DR 5-101(A)(1), but did violate DR 5-105(C). As to the Burch matter, we conclude that the accused violated DR 2-106(A) in charging Burch late fees not provided for by prior written agreement, but that the Bar failed to prove that the accused had charged Burch excessive fees in violation of DR 2-106(A), when he billed Burch for his services on an hourly-fee basis. We impose a suspension of 60 days.

I. FACTS AND PROCEDURAL HISTORY

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A. Facts in the Bankruptcy Matter³

The accused represented Kara, the debtor, in a Chapter 13 bankruptcy proceeding. The most important asset of the bankruptcy estate was a piece of real property known as the Phoenix Club. Three secured creditors had liens on the property. The Dorsey Trust (Dorsey)⁴ held the lien that was in first position, the Ziegenhagen family (Ziegenhagens) was in second position, and First Call Mortgage (First Call) held the third secured interest in the property.

The bankruptcy court ordered that the bankruptcy be converted from a Chapter 13 to a Chapter 7 proceeding and appointed Tracy Trunnell, an attorney, to serve as trustee for the bankruptcy estate. At that time, the debtor owed the accused attorney fees of approximately $20,000 for work in the Chapter 7 case, and the accused was an administrative expense creditor of the estate. See 11 U.S.C. § 503 (describing administrative expense claims).

Shortly after the conversion, Dorsey, the senior lien creditor, began to take steps to obtain judicial authority to foreclose its lien. The accused discussed with Trunnell the possibility that she retain him to challenge the validity of Dorsey's lien, and Trunnell agreed to employ him to bring an adversary proceeding against Dorsey.⁵ In his application for

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appointment as special counsel, the accused disclosed his earlier representation of the debtor in the Chapter 13 case and stated that the interests of the debtor and the trustee in employing him to file an adversary proceeding against Dorsey were the same. The accused reasoned that, if the challenge to Dorsey's lien were successful, the benefits of that challenge would redound to the junior secured creditors, the Ziegenhagens and First Call, and possibly also to unsecured creditors. Furthermore, defeat of Dorsey's security interest would make payment of the administrative expenses of the estate, including the fees of the accused in the Chapter 13 case, more likely.

The accused sought a preliminary injunction to prevent Dorsey from foreclosing. Before the injunction hearing, the parties engaged in settlement discussions. Trunnell, who had begun to have concerns about both the merits and potential expense of the adversary proceeding, changed her position and negotiated a settlement that permitted Dorsey to proceed with foreclosure on the condition that it pay the trustee $18,000 out of the sale proceeds. The accused thought, however, that those terms wrongly granted Dorsey a windfall, precluded payment of the claims of the other creditors, and possibly also precluded payment of his fees. The accused decided that he could not advocate for the settlement and informed Trunnell that he needed to resign as special counsel in the adversary proceeding.

After the court permitted the accused to withdraw as special counsel,⁶ the accused filed an objection to the settlement on behalf of his law firm and encouraged the Ziegenhagens and First Call to do the same. Despite those objections, the bankruptcy court entered an order permitting the settlement. The accused then, on his own behalf but also as the attorney for the Ziegenhagens and First Call, filed an appeal to the Bankruptcy Appellate Panel of the Ninth

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Circuit and then to the Ninth Circuit itself. In re Kara, 258 Fed Appx 154, 2007 WL 4292575 (9th

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Cir.2007). The appeals were unsuccessful, and the appellate courts upheld the settlement that Trunnell had negotiated. Trunnell incurred $18,000 in attorney fees to contest those appeals.

B. Facts in the Burch Matter

The accused represented Burch in 10 or more matters over a number of years and billed Burch for those services. On the lower margin of many of the bills that were received in evidence, the accused included the following statement: " Statements not paid within 30 days of billing will be charged a late fee of 1 1/2% per month of the unpaid balance on the statement." The late fees exceeded the legal rate of interest, and the fee agreements that were received in evidence and signed by Burch did not include a provision requiring that Burch pay those fees. See ORS 82.010(1) (2003) (legal rate of interest for certain transactions, unless parties otherwise agreed, was nine percent per year).

On October 18, 2000, the accused and Burch entered into a contingent-fee agreement providing that the accused would represent Burch in a case that involved assault, battery, and trespass claims against one Thompson. On February 27, 2001, the accused wrote a letter to Burch advising him to file two separate actions in the Thompson case—one for the assault and battery claims, and one for trespass. In the accused's view, the potential award on the assault and battery claims, which had resulted in personal injuries, was sufficient to justify a contingent fee. By contrast, the potential award on the trespass claim likely would not be sufficiently sizeable to justify the accused handling the case on a contingent-fee basis. However, the accused reasoned, the trespass claim would entitle Burch to seek an award of attorney fees reasonably incurred, should he prevail. See ORS 20.080 (providing for attorney fees in certain tort actions pleading minimal damages). That suggested to the accused that it would be better to bill the trespass claim on an hourly fee basis. During several telephone conversations and one in-person meeting, the accused and Burch discussed the fee arrangement. The accused testified that Burch had agreed to

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the change that the accused had proposed and that, thereafter, the accused had billed Burch on an hourly fee basis for the work that he performed on the trespass matter in accordance with their modified oral agreement. Burch testified that he did not remember agreeing to the change in billing. However, the accused established that he had billed Burch on an hourly fee basis for his work on the trespass claim and that Burch had paid most, but not all, of those bills.

Burch did not prevail in the trespass case against Thompson and was therefore not entitled to seek recovery in that action. The accused notified Burch that he owed fees for the Thompson trespass case and other unrelated matters and billed Burch a total of more than $15,000. That total included approximately $300 in late fees and slightly more than $1,000 for the Thompson trespass matter. When Burch refused to pay any portion of that bill, the accused transferred the debt to a collection agency. At the arbitration that followed, Burch was required to pay approximately half of the amount that the accused had billed him. It is unclear whether the arbitration award included the late fees or any sum for the trespass matter.

C. Procedural History

The Bar filed its initial formal complaint against the accused on April 11, 2006, and an amended complaint on December 8, 2006. The accused denied the majority of the Bar's allegations, but conceded as to the Burch matter that he had violated DR 2-106(A) (charging an illegal or excessive fee) when he billed Burch for late fees at...