In re Klemp
| Decision Date | 24 May 2018 |
| Docket Number | SC S064893,OSB 141-28, 15-01 |
| Citation | 363 Or. 62,418 P.3d 733 |
| Parties | IN RE Complaint as to the CONDUCT OF Lisa D. T. KLEMP, OSB No. 040012, Respondent. |
| Court | Oregon Supreme Court |
Nathan G. Steele, The Steele Law Firm, Bend, argued the cause and filed the briefs for respondent.
Theodore W. Reuter, Assistant Disciplinary Counsel, Oregon State Bar, Tigard, argued the cause and filed the brief for Oregon State Bar.
In two separate lawyer discipline matters, the Oregon State Bar charged respondent with violating various Rules of Professional Conduct (RPCs) in her dealings with two different clients, Boyce and Andrach. In the first matter, the Bar alleged that respondent failed to protect Boyce's interests upon terminating her representation of Boyce, RCP 1.16(d), by refusing to surrender documents belonging to the client until her fees were paid. In the second matter, the Bar alleged that, in taking certain actions, respondent assisted Andrach in diverting money from his incapacitated wife's trust account, thereby violating RPC 1.2(c) (); RPC 4.1(b) (failing to disclose a material fact when disclosure is necessary to avoid assisting an illegal or fraudulent act by a client; and RPC 8.4(a)(3) (). The Bar also alleged that, in her efforts to obtain the wife's signature on a document giving Andrach power of attorney to manage the wife's financial affairs, respondent violated RCP 4.3 ().
After hearing evidence and argument on the two matters, the trial panel issued a divided decision. A two-member majority concluded that respondent had violated RPC 1.16(d), 1.2(c), 4.3, and 8.4(a)(3), and that the appropriate sanction was disbarment. The single dissenting member opined that the Bar had failed to prove any of the charges and that the complaint should be dismissed. On de novo review, we conclude that the Bar proved a violation of RPC 4.3 () but failed to prove the other charged violations by the requisite clear and convincing evidence standard. We further conclude that the appropriate sanction for the violation of RPC 4.3 is a public reprimand.
We consider and decide the two matters separately, but before we do so, we provide some general facts that are relevant to both matters. In our analysis of each matter, we discuss those facts and additional facts that we provide at that juncture.
In June 2012, respondent was working for a Bend-area law firm, Bryant, Emerson and Fitch, when a local man, Andrach, sought help from the firm in defending a lawsuit against him and his wife, Wells. The lawsuit had been brought by Exchange Properties, which owned a building that Wells and Andrach had leased for Wells's antique business, and alleged that Wells and Andrach breached their lease. At some point after that lawsuit was filed, Wells was charged with and ultimately convicted of a number of serious crimes in connection with a drunk driving incident, and she absconded to California before she could be sentenced for those crimes. Andrach thus was left to deal with the Exchange Properties litigation on his own.
Wells's absence also left Andrach to manage his wife's self-settled trust, the Wells Trust, which had been the couple's primary source of income over the years of their marriage. Wells was the sole beneficiary of the trust, which owned and generated income from rental properties. Although Wells also was the trustee of the trust, Andrach was identified in the trust documents as her successor trustee: If Wells herself was unable to serve as trustee, Andrach was supposed to step in and manage the trust, but solely for Wells's benefit. Other than that eventuality, Andrach had no legal rights or involvement in Wells's money or property; Wells maintained separate bank and credit accounts, and a prenuptial agreement provided that any property owned or acquired by Wells would remain hers alone.1 However, in May 2012, before absconding to California, Wells had signed a power of attorney in favor of Andrach, and he used that power of attorney to pay the trust's expenses out of Wells's bank and credit accounts.
That is how matters stood in June 2012, when Andrach sought help from respondent's law firm in the Exchange Properties litigation. Respondent did not work on the Exchange Properties litigation, which was handled by one of the firm's named partners, Bryant.2 However, respondent did agree to represent Andrach in a separate matter—a petition to have his personal debts discharged in Chapter 7 bankruptcy.3
While Andrach's bankruptcy petition was pending, respondent left the Bryant, Emerson and Fitch firm and set up as a sole practitioner. Respondent shared office space with Boyce, a woman who previously had worked at Bryant, Emerson and Fitch as a paralegal.4 In the early days of that office-sharing arrangement, Boyce sought respondent's assistance in a legal matter relating to the care that her parents had received at a nursing home, and respondent agreed to look into the matter. Boyce gave respondent a binder of documents that she thought were relevant to the matter, and respondent and her legal assistant, Nichols, started to research possible claims.
In August 2012, Wells returned to Oregon and immediately instructed her bank that she would resume control of her accounts. Soon thereafter, however, she was arrested and jailed in connection with her criminal convictions. Perhaps believing that Wells's instructions to her bank had affected the power of attorney that Wells had granted him in May 2012, Andrach retained respondent to obtain a new power of attorney from Wells. After multiple visits to Wells at the jail, respondent succeeded in obtaining Wells's signature on a document, dated September 19, 2012, naming Andrach as her attorney-in-fact.
Wells had a long history of mental illness and substance abuse and, while in jail awaiting sentencing, had appeared to be incapable of making rational decisions about the Exchange Properties litigation or her own health. On September 27, 2012, Andrach filed a petition for appointment of a guardian for Wells. A circuit court judge granted that petition on November 1, 2012, declaring Wells to be incapacitated and naming a longtime friend of Wells, Defoe, as temporary guardian and guardian ad litem in the Exchange Properties litigation.5 Upon the court's declaration of Wells's incapacity, Andrach understood that he had succeeded to the role of trustee under the terms of the Wells Trust. Thus, as of November 1, 2012, Andrach was holding himself out as both the trustee of the Wells Trust and Wells's attorney-in-fact under the power-of-attorney document that he had obtained in September 2012.
In November 2012, Andrach and respondent became involved in an intimate relationship. By March 2013, respondent was pregnant with Andrach's child. On March 5, 2013, respondent filed articles of incorporation to form a company, TLA Properties LLC, identifying herself and Andrach as the only members. On April 1, 2013, TLA Properties purchased a house, which became respondent's and Andrach's shared residence. Andrach contributed $65,000 to the $80,000 down payment. The $65,000 apparently came out of a $100,000 check that Andrach's mother-in-law (and Wells's mother), Robertson, had sent to Andrach the preceding Christmas, along with instructions to spend it on Wells's legal fees and the mortgage and property taxes on a house that Wells had purchased in California.
In the meantime, Defoe had resigned as Wells's temporary guardian and guardian ad litem , and Andrach petitioned the court to have respondent's officemate, Boyce, appointed to replace Defoe on a permanent basis (Wells, by that point, was serving the prison sentence that had been imposed for her criminal convictions). On March 22, 2013, the court issued a stipulated order appointing Boyce as Wells's permanent guardian ad litem (but not as her guardian).6 Boyce thereafter undertook to make decisions on Wells's behalf in the Exchange Properties litigation and also, apparently, in some additional financial matters. Andrach continued to serve as Wells's successor trustee and attorney-in-fact.
At around that time, Andrach was considering divorcing Wells and had decided to seek reimbursement from the Wells Trust for money that he claimed to have expended in the preceding months in support of Wells and management of the trust. As Wells's purported guardian, Boyce apparently agreed that Andrach should be repaid the sum of $53,000 and that that payment should be made by selling a property in the Wells Trust portfolio.7 Respondent drafted a promissory note from the Wells Trust to Andrach for $53,000 and a trust deed in Andrach's favor on the trust property. However, before the contemplated sale could occur, Boyce had a falling-out with Andrach and respondent.
One result of that falling out was that respondent terminated her representation of Boyce in the contemplated action against the nursing home. After receiving notice that respondent had decided to end her involvement in the nursing home matter, Boyce sought return of the binder of documents that she had given to respondent. Respondent refused to return the binder, asserting that, under ORS 87.430,8 she had a lien on the documents to secure Boyce's payment of her fees for the work she had performed on the case. Boyce denied that any fees were owed and brought an action against respondent alleging conversion and other claims. Boyce also complained to the Bar about respondent's retention of the binder, and the Bar opened an investigation into the matter. Ultimately, the Bar filed a formal complaint charging respondent with violating RPC 1.16(...
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