In re Disciplinary Action against Peterson, A05-646.

• Decision Date: 27 July 2006
• Docket Number: No. A05-646.,A05-646.
• Citation: 718 N.W.2d 849
• Parties: In re Petition for DISCIPLINARY ACTION AGAINST Brian J. PETERSON, a Minnesota Attorney, Registration No. 85625.
• Court: Minnesota Supreme Court

Page 849

718 N.W.2d 849

In re Petition for DISCIPLINARY ACTION AGAINST Brian J. PETERSON, a Minnesota Attorney, Registration No. 85625.

No. A05-646.

Supreme Court of Minnesota.

July 27, 2006.

COPYRIGHT MATERIAL OMITTED

Heard, considered, and decided by the court en banc.

OPINION

PER CURIAM.

This attorney discipline case arises out of a petition and a supplementary petition filed by the Director of the Office of Lawyers Professional Responsibility (OLPR) against respondent Brian J. Peterson alleging numerous violations of the Minnesota Rules of Professional Conduct. We granted the director's request for temporary suspension based on the alleged misconduct. After a hearing, the referee concluded that Peterson had violated Minn. R. Prof. Conduct 1.7(b), 14 Minn.Stat. 1391-92 (2004) (amended June 17, 2005, eff. Oct. 1, 2005) (conflict of interest), Minn. R. Prof. Conduct 8.4(b) (commission of a criminal act), and Minn. R. Prof. Conduct 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation). The referee recommended that Peterson be disbarred. We conclude that disbarment is the appropriate discipline.

Peterson was admitted to practice law in Minnesota on October 1, 1976. He has a history of professional discipline. Peterson has been admonished for professional misconduct connected with his representation of six separate clients. He was previously suspended by this court on December 21, 2000. In re Peterson, 620 N.W.2d 29, 30 (Minn.2000). That suspension was based on Peterson's misconduct in fabrication of a homestead waiver and in filing an attorney's lien against the client's homestead without obtaining a validly executed waiver of the homestead exemption. Id. The director filed another petition for disciplinary action alleging that, while suspended, Peterson filed an attorney's lien against a client's homestead using a fabricated waiver of the homestead exemption. The referee appointed by this court in that matter agreed with the director, and we affirmed the referee's conclusion that Peterson committed misconduct and that the misconduct warranted suspension. In re Peterson, 658 N.W.2d 875, 875 (Minn. 2003). Peterson and the director entered into an agreement stipulating the conditions for Peterson's reinstatement, and we then ordered Peterson's reinstatement to the practice of law with supervised probation for a two-year period. In re Peterson, 660 N.W.2d 419, 420 (Minn.2003).

The majority of the allegations contained in the petition and supplementary petition for disciplinary action currently before us arise from Peterson's actions while acting as attorney in fact for his client, Mildred Johnson, an elderly widow. In 1994, Johnson retained Peterson to prepare her will, and in August 2000 Johnson designated Peterson as her attorney in fact. In December of 2002, Johnson fell in her apartment, fracturing her pelvis. As a result of this injury, Johnson was admitted to the Maranatha Care Center (MCC), where she was diagnosed with moderate dementia. At the hearing, Johnson's physician opined that, from the time of Johnson's admission to MCC, Johnson was unable to make decisions regarding her health care or finances and that Johnson would not be able to return to her assisted-living facility.

Soon after Johnson's admission to MCC, Peterson decided to engage in a "spend down"¹ of Johnson's assets in order to make her eligible for government medical assistance. In January of 2003, Peterson estimated that Johnson had roughly $100,000 in assets, an estimate he based on a 1995 inventory of Johnson's property. Because Peterson was suspended from the practice of law at that time, he retained Donald Fraley, an attorney for whom Peterson was currently working as a legal assistant, to "protect [Johnson's] interests."²

In connection with the spend down, Peterson made a variety of purchases with Johnson's assets. On January 20, 2003, Peterson purchased a 1998 Nissan Infiniti 130 for $10,018.38. He and Johnson were both listed on the title to the vehicle. Peterson testified that when he purchased the Infiniti he believed that $4,500 was the maximum vehicle exemption for the purposes of a medical assistance application. Soon after he purchased the Infiniti, Peterson testified that he was informed by a Hennepin County employee that there was no maximum vehicle exemption and that "You can buy a $40,000 car as far as we're concerned. There's no limit as long as you use it to do things for her." Peterson further testified that based on this information he wrote a check to Johnson for the purchase price of the Infiniti, removed Johnson's name from the title, and began looking for a more expensive vehicle for Johnson to purchase as part of the "spend down."

Peterson, acting as Johnson's attorney in fact, next purchased a 2003 Acura 3.5RL for $37,350.00. Peterson and Johnson were again both listed on the title, which Peterson testified was done for insurance purposes because Johnson did not have a valid driver's license. Other purchases made on Johnson's behalf as part of the spend down included the purchase of Thomas Moser furniture, Seasonal Concepts furniture, sculptures, and a sound system with a subwoofer. In addition, Peterson attempted to establish a pooled trust which he testified was intended to shelter Johnson's remaining assets.

Hennepin County received Peterson's first application for medical assistance, made on behalf of Johnson, on January 31, 2003. While Johnson's application was initially approved, medical assistance benefits were eventually denied on the basis of Johnson's ownership of the Acura. Peterson, through Fraley, appealed this denial, but later dropped the appeal and, on May 13, 2003, purchased the Acura from Johnson for $27,300. Peterson's second application for medical assistance was received by Hennepin County on September 19, 2003. Hennepin County Adult Protection subsequently brought a petition for conservatorship, and a guardian/conservator was appointed for Johnson by early 2005. On January 10, 2005, Peterson was convicted of violating Minn.Stat. § 297B.10(a) (2004) (evasion of sales tax on motor vehicles) in connection with his purchase of the Acura from Johnson.

On March 31, 2005, the director filed the present petition for revocation of probation and further disciplinary action. The director alleged that Peterson had violated Rule 1.7(b), Minn. R. Prof. Conduct 1.5(a) (unreasonable fees), Minn. R. Prof. Conduct 1.8(c) (conflict of interest), Minn. R. Prof. Conduct 3.4(c) (disobey obligation under rules of tribunal), Minn. R. Prof. Conduct 5.5 (unauthorized practice of law), rule 8.4(b), rule 8.4(c), and Minn. R. Prof. Conduct 8.4(d) (conduct prejudicial to the administration of justice). In a supplementary petition, the director also alleged a violation of Minn. R. Prof. Conduct 1.15(a) (safekeeping of client funds) and rule 8.4(c).

After a hearing, the referee concluded that Peterson had violated rules 1.7(b) and 8.4(b) in connection with his purchase of the Acura from Johnson. In addition, the referee concluded that Peterson violated rule 8.4(c) through omissions made in Johnson's two applications for medical assistance. The referee found Peterson's history of professional discipline to be an aggravating factor and recommended that Peterson be disbarred. Peterson appeals to this court, disputing the referee's findings, conclusions, and recommendation. The director argues the referee's recommended discipline is appropriate, but asserts that the referee erred in failing to find that Peterson committed additional acts of misconduct.

I.

Peterson ordered a transcript of the referee's hearing. Therefore, under rule 14(e), Rules on Lawyers Professional Responsibility (RLPR), the referee's findings and conclusions of law are not binding on this court. In re Wentzell, 656 N.W.2d 402, 405 (Minn.2003). Generally, "this court will not reverse the findings and conclusions of the referee in a disciplinary hearing unless they are clearly erroneous." In re Reiter, 567 N.W.2d 699, 701 (Minn. 1997). We must be "`left with the definite and firm conviction that a mistake has been made'" before determining a referee's findings to be clearly erroneous. Wentzell, 656 N.W.2d at 405 (quoting In re Strid, 551 N.W.2d 212, 215 (Minn.1996)).

A.

Peterson's first challenge is to the referee's conclusion that Peterson's May 2003 purchase of the Acura from Johnson violated rule 1.7(b).³ The referee based this legal conclusion on his finding that Peterson purchased the Acura "for his personal use for less than fair market value." This finding was based in large part on the testimony of Richard Hibbing, a used car sales manager at Buerkle Acura. Hibbing, whose testimony the referee found credible, testified that the Acura in question would have had a retail sale value of at least $34,000 in May of 2003. Hibbing further testified that the Acura's value in a private sale would have been $32,000 to $33,000 and that the auction or trade-in value would be $31,000 to $32,000. Hibbing concluded that a person who paid $27,300 for the Acura in question in May of 2003, as did Peterson, paid less than fair market value for the vehicle and stated "we call it stealing a car in the car business."

Before this court, Peterson challenges the referee's conclusion by arguing that there is no evidence to show that he had reason to believe that the $27,300 he paid for the Acura was not a fair price. Peterson arrived at the sale price after obtaining trade-in offers from two car dealerships. Peterson stated that he "presumed that the offers [he] got were [the dealers'] best offers" and that he asked the dealers "what's the most you can allow me on this vehicle, assuming a trade on a new [Acura] MDX." Peterson also argues that he believed he was paying a fair price based on his compliance with the request of Richard Newstrom, a Hennepin County employee involved with applications for medical assistance, who requested...