In re Kluge

• Decision Date: 28 June 2001
• Parties: In re as to the CONDUCT OF David R. KLUGE, Accused.
• Court: Oregon Supreme Court

27 P.3d 102

332 Or. 251

In re as to the CONDUCT OF David R. KLUGE, Accused.

(OSB 98-22; SC S47247)

Supreme Court of Oregon.

Argued and Submitted January 10, 2001.

Decided June 28, 2001.

David R. Kluge, Portland, argued the cause and filed the brief in propria persona.

Jeffrey D. Sapiro, Disciplinary Counsel, Lake Oswego, argued the cause and filed the brief for the Oregon State Bar.

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

PER CURIAM.

In this lawyer disciplinary proceeding, the Oregon State Bar (Bar) filed a complaint alleging that the accused violated DR 1-102(A)(3) (prohibiting conduct involving dishonesty, fraud, deceit, or misrepresentation) (two counts); DR 3-101(B) (prohibiting unlawful practice of law); DR 5-102(C) (requiring lawyer to withdraw from representation if lawyer will be witness and lawyer's testimony will or might be prejudicial to client); and DR 7-102(A)(5) (prohibiting lawyer from knowingly making false statement of law or fact). The accused failed to file a timely answer, and a trial panel of the Disciplinary Board deemed the allegations in the complaint to be true. BR 5.8(a).² The trial panel concluded that the accused had committed the alleged violations and, after hearing evidence on the issue of sanction, imposed an 18-month suspension.

De novo review by this court is automatic. ORS 9.536(2), (3). Because the accused defaulted, we deem the allegations in the complaint to be true. In re Parker, 330 Or. 541, 543, 9 P.3d 107 (2000). As discussed below, we conclude that those allegations establish that the accused violated DR 1-102(A)(3), DR 3-101(B), DR 5-102(C), and DR 7-102(A)(5). We also conclude that the appropriate sanction is a three-year suspension.

The Bar's complaint states the following facts. In December 1994, the accused and his wife filed a petition with the Yamhill County Board of Equalization (Board), contesting an increase in the assessed value of real estate that they owned. The accused also submitted a real estate appraisal, prepared and signed by Wogan, that supported the petition. In April 1995, the Appraiser Certification and Licensure Board (ACLB) charged Wogan with statutory or administrative violations relating to the appraisal. The accused represented Wogan regarding the ACLB charges from 1995 to 1998.

On July 21, 1995, the accused deposed Riddell, the administrator of ACLB, regarding the Wogan matter. The accused told ACLB's counsel that the accused was a notary public. That representation was false. The accused then administered an oath to Riddell before the deposition. When he engaged in that conduct, the accused knew that he was not a notary public and could not administer an oath.

Counsel for ACLB notified the accused in July 1995 that he intended to call the accused as a witness in the contested case hearing concerning Wogan's appraisal. It was apparent that the accused's testimony would or might be prejudicial to Wogan, but the accused did not withdraw from the representation. At the contested case hearing on November 27, 1995, ACLB's counsel called the accused to testify. The accused testified to a limited extent but refused to answer any material questions, claiming attorney-client privilege.

Between 1995 and 1998, the accused engaged in the private practice of law by representing Wogan. The Oregon State Bar requires active members who engage in the private practice of law to carry professional liability insurance through the Professional Liability Fund (PLF). The accused did not carry PLF insurance from 1995 to 1998. In each of those years, the accused falsely represented to the PLF that he was exempt from the PLF requirement because he did not engage in the private practice of law in Oregon. The accused knew that his representations to the PLF were false when he made them.

On review, the accused first argues that the Bar failed to prove that he violated any rules because the facts alleged in the complaint are not supported by clear and convincing evidence. See BR 5.2 (setting that standard of proof). As noted, however, the accused defaulted. The trial panel, exercising the authority granted in BR 5.8(a), deemed the allegations in the Bar's complaint to be true. On de novo review, this court agrees with that decision of the trial panel. Accordingly, this court also deems the allegations in the complaint to be true. See BR 10.6 (authorizing court, on de novo review, to adopt, modify, or reject trial panel decision in whole or in part). The accused forfeited his opportunity to require the Bar to prove its allegations in a hearing when he failed to file a timely answer to the Bar's complaint.

Next, the accused argues that, even if the court deems the allegations to be true, the alleged acts and omissions do not constitute rule violations. On de novo review, we must determine whether the alleged facts, which we deem to be true, establish the violations stated in the complaint.

The first cause of complaint alleges that the accused violated DR 1-102(A)(3) and DR 7-102(A)(5) by representing that he was a notary public, when he knew that he was not. DR 1-102(A)(3) provides that it is professional misconduct for a lawyer to "[e]ngage in conduct involving dishonesty, fraud, deceit or misrepresentation." DR 7-102(A)(5) prohibits lawyers from "[k]nowingly mak[ing] a false statement of law or fact." The accused contends that the allegations fail to demonstrate a violation because the Bar did not allege that the accused's misrepresentation was material. The accused asserts that the misrepresentation was trivial.

"Misrepresentation" under DR 1-102(A)(3) includes both affirmative misstatements and nondisclosure of material facts. In re Brandt, 331 Or. 113, 138, 10 P.3d 906 (2000). To violate DR 1-102(A)(3) by misrepresentation, a lawyer must know that the lawyer's statement is a misrepresentation and that it is material. In re Claussen, 331 Or. 252, 261, 14 P.3d 586 (2000). A misrepresentation is material if it involves information that would or could significantly influence the hearer's decision-making process. In re Gustafson, 327 Or. 636, 649, 968 P.2d 367 (1998).

The allegations in the Bar's complaint, and the reasonable inferences drawn from those allegations, establish that the accused's misrepresentation was material and that the accused knew that that misrepresentation was material. The complaint alleges that the accused lied about his notary status, administered an oath to the deponent, and then took her deposition. If Riddell and ACLB's attorney had known that the accused was not a notary, then they would have known that the purported deposition was legally defective. See ORCP 38 A(1) (oath or affirmation administered to deponent by officer authorized to administer oaths by Oregon law, or by person specially appointed by court, shall precede depositions in Oregon). That information could or would have influenced their decision to proceed with the deposition.

Similarly, the accused asserts that the first cause of complaint fails because it does not allege that anyone relied on the misrepresentation. This court has not required reliance as an element of fraud under DR 1-102(A)(3). See In re Claussen, 331 Or. at 261, 14 P.3d 586

(so holding). Applying the logic of Claussen here, we see no reason to require proof of reliance as an element of a charge of misrepresentation under DR 1-102(A)(3).³ Therefore, the accused's legal premise is incorrect. It follows from the foregoing that the accused violated DR 1-102(A)(3).

We turn to the alleged violation of DR 7-102(A)(5), which prohibits a lawyer from knowingly making a false statement of law or fact "[i]n the lawyer's representation of a client or in representing the lawyer's own interests." The accused again asserts that the Bar's complaint fails to allege that he misrepresented a material fact. That argument is not well founded. The complaint alleges that the accused misrepresented his notary status to ACLB's attorney during the accused's representation of Wogan and "knew the representation to be false when he made it." Those allegations establish the materiality of the accused's misrepresentation. Therefore, we conclude that the accused violated DR 7-102(A)(5).

The second cause of complaint also alleged that the accused violated DR 5-102(C) by failing to withdraw from representing Wogan in the ACLB proceeding. DR 5-102(C) provides:

"If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer or a member of the lawyer's firm may be called as a witness other than on behalf of the lawyer's client, the lawyer may continue the representation until it is apparent that the lawyer's or firm member's testimony is or may be prejudicial to the lawyer's client."

The allegations in the complaint establish a violation of DR 5-102(C).

In the third cause of complaint, the Bar alleged that the accused violated DR 3-101(B) by practicing law "in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction." Specifically, the complaint alleges that the accused violated ORS 9.080(2)(a) and sections 15.1 and 15.2 of the Bar's bylaws by engaging in the private practice of law without professional liability insurance from the PLF. ORS 9.080(2)(a) authorizes the Bar to require its active members "engaged in the private practice of law whose principal offices are in Oregon" to carry professional liability insurance from the PLF and to assess from those lawyers contributions to the professional liability fund. Oregon State Bar Bylaw 15.1 generally discusses the formation of the PLF. Bylaw 15.2 provides that the PLF shall possess the powers and authorities delegated to it by the Bar's Board of Governors, including the authority to carry out the provisions of ORS 9.080.

The accused suggests that the enumerated provisions regulate the PLF, not lawyers, so he...