In re Gallagher

• Decision Date: 01 June 2001
• Citation: 26 P.3d 131,332 Or. 173
• Parties: In re Complaint as to the CONDUCT OF Daniel Q. GALLAGHER, Accused.
• Court: Oregon Supreme Court

26 P.3d 131

332 Or. 173

In re Complaint as to the CONDUCT OF Daniel Q. GALLAGHER, Accused.

(OSB 98-12; SC S47248)

Supreme Court of Oregon.

Argued and Submitted November 6, 2000.

Decided June 1, 2001.

Daniel Q. Gallagher, Winston, argued the cause and filed the briefs in propria persona.

Mary A. Cooper, Assistant Disciplinary Counsel, Lake Oswego, argued the cause and filed the briefs for the Oregon State Bar.

Before CARSON, Chief Justice, and GILLETTE, DURHAM, KULONGOSKI, LEESON, and RIGGS, Justices.¹

PER CURIAM.

The Oregon State Bar (Bar) charged the accused by formal complaint with violating Code of Professional Responsibility Disciplinary Rule (DR) 1-102(A)(3) (prohibiting conduct involving dishonesty, fraud, deceit, or misrepresentation) (two counts); DR 1-103(C) (requiring cooperation with Bar investigation) (two counts); and DR 9-101(A) (requiring deposit and maintenance of client funds in trust account). In its first cause of complaint, the Bar alleged that the accused violated DR 1-102(A)(3) by attempting to accept a settlement offer made by opposing counsel when the accused knew that opposing counsel mistakenly had offered too much money and by failing to respond truthfully to the Bar's subsequent letter and in the Local Professional Responsibility Committee (LPRC) interview; DR 1-103(C) by failing to respond truthfully to the Bar and the LPRC; and DR 9-101(A) by failing to maintain in his trust account the funds that opposing counsel mistakenly had sent. In its second cause of complaint, the Bar alleged that the accused violated DR 1-102(A)(3) and DR 1-103(C) by failing to respond truthfully during a Bar deposition. A trial panel of the Disciplinary Board determined that the accused had violated all those rules and imposed a two-year suspension. Given that sanction, review by this court is automatic. ORS 9.536(2); BR 10.1. On de novo review, ORS 9.536(3); BR 10.6, we conclude that the accused committed two violations of DR 1-102(A)(3) and two violations of DR 1-103(C), and impose a two-year suspension.

We find the following facts. In 1996, the accused represented Driscoll in two contract disputes. In the first contract, Driscoll, who owned a livestock business, had contracted with Hanna to have two of Hanna's mares bred to one of Driscoll's stallions. In the second contract, Driscoll had sold a horse to Hanna. Hanna had taken possession of that horse and had executed a promissory note as payment. Hanna eventually defaulted on both contracts.

In March 1996, the accused and Hanna's lawyer, Martinis, began settlement negotiations. On May 16, 1996, Martinis sent a settlement offer to the accused and enclosed two cashier's checks. One check, numbered 2827681, was in the amount of $1,610 and had the notation "Bay poco filly * * * paid in full" on its face. The other cashier's check, numbered 2827682, was in the amount of $600 and had the notation "Breeding fee * * * paid in full." Martinis also included a general release form with the checks. The accused communicated the settlement offer to Driscoll; Driscoll rejected it, and the accused returned the checks.

In June 1996, the accused filed a breach of contract action on Driscoll's behalf. Negotiations resumed. Soon, the parties seemed close to settlement: They both agreed that Hanna would pay Driscoll $1,400 in breeding fees and that Hanna would return the horse. The only point of dispute was whether Hanna also would pay Driscoll's attorney fees.

On November 21, 1996, the accused sent a settlement offer to Martinis with the following terms: (1) Hanna pays Driscoll $1,400 for breeding fees; (2) Hanna pays Driscoll's attorney fees; (3) Hanna returns the horse if a veterinarian finds the horse to be in good health, but if the horse is in poor health, then Hanna pays the balance of the purchase price; (4) Driscoll delivers the breeding certificates to Hanna; and (5) Driscoll dismisses the lawsuit.

On November 25, 1996, Martinis sent a letter in reply to the accused. That letter, and the accused's conduct in reaction to that letter, form the bases for the DR 9-101(A) charge and for one of the DR 1-102(A)(3) charges. The November 25 letter stated, in part:

"Please be advised that your client's counter offer set forth in your letter to me dated November 21, 1996 is rejected. Under no circumstances will my client agree to pay your client's attorney fees. All other points of your counter offer are acceptable.

"I enclose herein two cashier's checks numbered 2827681 and 2817682 [sic] in the amounts of $1,610.00 and $600.00, respectively. These checks are submitted to you in full satisfaction of the above-referenced matter.

"Your client's acceptance and negotiation of these checks, however, is conditioned upon her full performance of her end of the settlement agreement as specified in her counter offer, together with executing mutual general releases in this matter."

As stated in the letter, Martinis enclosed two cashier's checks. Martinis did not include a release form with the letter.

On December 2, 1996, the accused met with Driscoll to consider the offer. At the trial panel hearing, Driscoll testified that: the accused showed her the two cashier's checks, and she recognized them as the same checks that she had rejected previously; she expressed concern that, if she endorsed the check that had the notation "Bay poco filly * * * paid in full," then Hanna would not return the horse; and that the accused assured her that Hanna would return the horse and urged her to endorse both checks. Although the accused testified to a different version of the December 2 meeting, the trial panel expressly found Driscoll to be credible. We accept that credibility finding.

Near the end of their December 2, 1996, meeting, Driscoll endorsed the two cashier's checks and instructed the accused to give half of the total amount ($1,105) to her and to put the other half toward the attorney fees that she owed him.² That same day, the accused deposited the cashier's checks in his trust account and drew checks on that account, one in the amount of $1,105 payable to Driscoll and another, also in the amount of $1,105, payable to himself. The accused immediately deposited his check for $1,105 into his personal checking account.

The next day, December 3, 1996, the accused sent a letter to Martinis, purporting to accept the November 25, 1996, offer and reciting the following terms of settlement:

"1. Your client will pay the $1,610.00 breeding fees.

"2. Your client will pay $600.00 stud service, mare care, and insurance.

"3. Your client will have the horse checked by a licensed Oregon veterinarian, supply my client with a copy of the report, and will pay for the report.

"4. If the report is that the horse is in good health, your client will deliver the horse to a prearranged location in the Eugene area. If the horse is unsatisfactory to Ms. Driscoll, your client will pay the balance of the purchase price already agreed to by the parties.

"5. If the terms above are met, the breeding certificate will be delivered to your client, the lawsuit will be dismissed, and a letter of satisfaction will be signed by Ms. Driscoll."

The accused enclosed a stipulated dismissal for Martinis's signature, but did not enclose an executed general release, as Martinis's November 25 letter had required. On December 6, 1996, however, Driscoll signed a statement that the accused had drafted that repeated the above terms. The accused then sent the signed statement to Martinis. Driscoll testified to the trial panel that she expressly questioned the use of the term "stud service" in the statement, as that term was redundant with the term "breeding fees." The accused told Driscoll that that was not important.

When Martinis and his client received the accused's December 3, 1996, "letter of acceptance," they realized that Martinis had erred by offering the two cashier's checks and return of the horse, as the checks, which totaled $2,210, represented $810 more than the amount for which Hanna was willing to settle ($1,400) if she could not keep the horse. On December 6, Martinis telephoned the accused and sent him by facsimile a letter stating that he (Martinis) had made a serious mistake. Martinis asserted that the parties still had not reached a settlement, unless Driscoll was willing to accept the $2,210 in complete settlement of both contract claims. Martinis asked the accused to return the cashier's checks if Driscoll would not accept $2,210 in settlement.

The accused responded by letter dated December 6, 1996, stating that Driscoll already had accepted the terms offered in Martinis's November 25 letter, i.e., $2,210 and return of the horse. The accused asserted that Hanna's failure to return the horse would be a breach of the parties' settlement agreement.

Martinis sent another letter to the accused and telephoned him several times to reiterate that the parties had not settled and that the accused had acted wrongfully by permitting Driscoll to cash the checks. In those communications, Martinis pointed out that his November 25 offer letter and the accused's December 3 "acceptance" letter contained different terms. Specifically, in his December 3 letter, the accused had asserted that the $600 check represented the settlement for "stud service, mare care, and insurance." In the parties' previous letters, however, there was no mention of either "stud service" or "mare care." Martinis asked the accused to return the $2,210.

The accused replied that he was acting in good faith by retaining the $2,210 and insisting on return of the horse. He appeared to recognize, however, that Martinis had offered too much: "As for the offer and acceptance, there was no obligation on you to offer additional funds. You did offer additional funds with no further conditions. Ms. Driscoll accepted the offer."

On February 13, 1997, Martinis sent a letter to the Bar, recounting the accused's conduct during the settlement...