In re Potts, 04-562.

• Decision Date: 22 March 2007
• Docket Number: No. 04-562.,04-562.
• Parties: In the Matter of Steven T. POTTS, an Attorney at Law.
• Court: Montana Supreme Court

158 P.3d 418

2007 MT 81

336 Mont. 517

In the Matter of Steven T. POTTS, an Attorney at Law.

No. 04-562.

Supreme Court of Montana.

March 22, 2007.

OPINION AND ORDER

¶ 1 The Commission on Practice of the Supreme Court of the State of Montana (the Commission) entered its Findings of Fact, Conclusions of Law, and Recommendations on January 5, 2006, regarding a complaint filed against Steven T. Potts (Potts), an attorney licensed to practice law in the State of Montana. The Commission concluded that Potts violated Rules 1.2(d) and 3.3(a)(2) of the Montana Rules of Professional Conduct (M.R.P.C.) during his representation of heirs in a will contest. We adopt the Commission's Findings of Fact and Conclusions of Law. We order Potts to appear before this Court for public censure.

¶ 2 Potts presents the following issues for review:

¶ 3 1. Whether Rule 1.6, M.R.P.C., required Potts to maintain his clients' confidences to the exclusion of being candid with opposing counsel and candid with the tribunal.

¶ 4 2. Whether Potts violated Rule 1.2(d), M.R.P.C.

¶ 5 3. Whether Potts violated Rule 3.3(a)(2), M.R.P.C.

¶ 6 4. Whether the Commission improperly excluded Potts's proposed expert witness testimony.

¶ 7 5. Whether the Commission improperly excluded a portion of Potts's testimony as inadmissible hearsay.

¶ 8 6. Whether the Commission's proposed sanctions are appropriate.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 9 This disciplinary action arises from Potts's representation in a will contest involving the estate of Ernestine Stukey (Ernestine). Ernestine died March 8, 2001. Ernestine was survived by her daughter, Evon Leistiko (Evon), her six grandchildren, including Tyson Leistiko (Tyson), and her niece, Charlene Howard (Charlene).

¶ 10 Ernestine executed a will on January 14, 1998, disinheriting Evon and bequeathing most of her estate to Charlene. The will designated Charlene and Ernestine's friend, Verna Kessner (Verna), as co-personal representatives of her estate.

¶ 11 Ernestine's mental health deteriorated over the next two years, and she was involuntarily committed to the Montana State Hospital at Warm Springs. Evon petitioned the Third Judicial District, Deer Lodge County, to become Ernestine's conservator. The district court appointed Evon as conservator. The law firm of Church, Harris, Johnson & Williams, P.C. (Ernestine's attorneys) represented Ernestine's interests throughout the conservatorship proceedings.

¶ 12 Evon filed an initial inventory (initial inventory) with the district court in the conservatorship proceedings, reporting Ernestine's net worth as $1,254,795. The initial inventory included several accounts with a total worth of approximately $270,000, that Evon held in joint tenancy ownership with Ernestine or in which Evon was named as a beneficiary to the accounts (joint tenancy accounts). Ernestine established these joint tenancy accounts with Evon in 1967 and 1991.

¶ 13 As Ernestine's conservator and guardian, Evon petitioned the court to distribute gift money totaling $160,000 from Ernestine's estate to family members. The district court denied the petition on January 24, 2001, and authorized Ernestine's attorneys to investigate Evon's conduct as conservator. Ernestine's attorneys petitioned the court to remove Evon as conservator as a result of the investigation. Ernestine's attorneys later filed an action seeking recovery of monetary damages for Evon's alleged breach of fiduciary duty and self dealing related to the conservatorship proceedings. Ernestine's attorneys alleged that Evon had misappropriated $10,000 of Ernestine's money and engaged in other mismanagement of Ernestine's funds while Ernestine was incapacitated.

¶ 14 Without notifying the district court or Ernestine's attorneys, Evon moved Ernestine to an assisted living facility in the state of Washington. Ernestine purportedly executed a second will (second will) with assistance of Washington counsel on February 12, 2001, while staying in the Alzheimer's Unit of the facility. The second will appointed Evon as personal representative and bequeathed the bulk of the estate to Evon and Evon's family.

¶ 15 Ernestine died on March 8, 2001. A will contest ensued. Ernestine's attorneys filed a petition in the Eighth Judicial District, Cascade County, on March 13, 2001, to probate Ernestine's 1998 will. Evon filed a competing petition to probate Ernestine's second will in Chelan County, Washington, on March 23, 2001.

¶ 16 Evon also filed a second inventory (second inventory) with her petition to probate Ernestine's second will in Chelan County, Washington. This second inventory reported $1,253,000 as the gross value of Ernestine's estate. Evon's report of the estate's total value in the second inventory comported with the total estate value in the initial inventory that she had filed in the conservatorship proceeding in the Third Judicial District, Deer Lodge County. It also matched the total estate value that she reported in the final inventory (final inventory) to the Third Judicial District, filed May 10, 2001, in the conservatorship proceedings. All three inventories filed by Evon listed all of Ernestine's assets and included the joint tenancy accounts. None of the three inventories distinguished between probate assets and nonprobate assets, such as the joint tenancy accounts.

¶ 17 Evon retained Potts to represent her and the six grandchildren, including Tyson, in the will contest in the Eighth Judicial District, Cascade County. Evon's attorney in the conservatorship proceeding provided Potts with Evon's legal file. These files included the hearing transcript regarding the unauthorized gifts, the accountings, the inventories, and the wills.

¶ 18 Attorney Ward E. Taleff (Taleff) represented Charlene. Attorney Sue Ann Love (Love) represented the University of Wisconsin, a beneficiary under Ernestine's 1998 will. Attorney Greg Hatley (Hatley) represented a church holding a charitable interest in Ernestine's estate under the 1998 will. Attorneys from Church, Harris, Johnson & Williams, P.C., represented Ernestine's estate.

¶ 19 The parties agreed to mediate all disputes concerning the will contest and Evon's alleged misconduct in the conservatorship proceedings. Ernestine's attorneys filed a confidential settlement brochure that indicated the parties assumed a total estate value of $1.2 million, as Evon had reported in the three inventories, as the basis for settlement.

¶ 20 Potts attended the settlement conference on November 12 and 13, 2001, with his clients, Evon and Tyson. At that time, Evon already had claimed a fraction of the joint tenancy accounts and was working to obtain the rest of the $270,000. Evon never disclosed this fact at the mediation, even though the other parties apparently assumed that they were negotiating based on the $1.2 million total estate value that included the joint tenancy accounts. Potts also remained silent as to whether the settlement included the joint tenancy accounts.

¶ 21 The parties reached an agreement during the second day of the mediation. They drafted a memorandum of understanding (memorandum) before departing the mediation to memorialize the terms of their settlement. The memorandum purported to resolve both the will contest and conservatorship dispute. It called for portions of Ernestine's estate to go to specific beneficiaries and for fifty percent of the remainder to go to Charlene and for fifty percent of the remainder to go to Evon and Ernestine's grandchildren. The memorandum referred to the division of "the Estate," but failed to assign a particular dollar value to the total settlement. The memorandum also made no mention of the three separate inventories that Evon had filed in the conservatorship and probate proceedings as representing the value of "the Estate." The memorandum further stated that the parties would stipulate to the dismissal of the conservatorship action filed against Evon and the Washington probate proceeding. Glenn Tremper (Tremper), one of the attorneys representing Ernestine's estate from Church, Harris, Johnson & Williams, P.C., signed the memorandum along with attorneys Taleff, Love, and Potts. Evon, Tyson, Charlene, and Verna also signed the memorandum.

¶ 22 In the week following the settlement conference, Tremper suspected that Evon was attempting to secure the joint tenancy accounts. Tremper telephoned Potts to discuss the matter on November 20, 2001. Tremper wrote a letter to Potts on the same day as the telephone conversation, asking Potts to confirm that the parties had reached the settlement in the mediation "based upon the good faith assumption that Ernestine's estate includes the assets identified by Evon as belonging to Ernestine in her proposed Final Accounting before Judge Mizner," in the conservatorship proceeding. The final accounting of the conservatorship proceeding before Judge Mizner included the joint tenancy accounts and valued the total estate at $1.2 million. Tremper's letter requested that Potts let him know "immediately" if his clients had a different understanding of the settlement.

¶ 23 Potts showed Tremper's letter to his client, Tyson. Potts testified that he advised Tyson that any questions concerning what assets were included in the estate "will get cleared up," but that he would prefer to resolve any such dispute "sooner rather than later." Tyson instructed Potts not to respond because he wanted to deal only with a personal representative to be appointed later by the court. Potts did not answer the letter. Tremper construed Potts's silence as confirmation that the parties had based the settlement on the $1.2 million total estate value that Evon had reported to the courts in the initial, second, and final inventories.

¶ 24 One week later, Potts drafted and circulated a stipulation that purported to resolve "all" disputes regarding the division of Ernestine's "estate" as stated in the memorandum. The stipulation...