Lawhorn v. State Bar

• Citation: 43 Cal.3d 1357,743 P.2d 908,240 Cal.Rptr. 848
• Decision Date: 29 October 1987
• Docket Number: S.F. 25099
• Court: United States State Supreme Court (California)
• Parties: , 743 P.2d 908, 56 USLW 2321 Victor R. LAWHORN, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

Page 848

240 Cal.Rptr. 848

43 Cal.3d 1357, 743 P.2d 908, 56 USLW 2321

Victor R. LAWHORN, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

S.F. 25099.

Supreme Court of California In Bank.

Oct. 29, 1987.

Victor R. Lawhorn, Oakland, for petitioner.

Herbert M. Rosenthal, Truitt A. Richey, Jr., Richard Zanassi, Office of General Counsel, State Bar of California, San Francisco, for respondent.

BY THE COURT:

The Review Department of the State Bar Court recommended, with two members dissenting, that petitioner Victor R. Lawhorn be disbarred from the practice of law for mishandling client funds. Although petitioner was charged with and found to have committed four violations of the Rules of Professional Conduct, all arose from the same transaction between petitioner (a relatively inexperienced attorney) and his client. In these circumstances, and taking into account mitigating factors in the case, we conclude that disbarment would be excessive discipline and that petitioner should instead be placed on probation for five years with a two-year term of actual suspension.

BACKGROUND

Petitioner was admitted to practice in this state in November 1978. This is his first and only disciplinary matter.

In September 1982, petitioner, who concentrated on the practice of immigration law, was retained by Karen Ann Gayles to represent her in a claim for damages arising from an automobile accident. A written retainer agreement provided that petitioner would receive one-third of any recovery as his fee, in addition to reimbursement of any costs advanced.

In May 1983, Gayles agreed to accept $2,500 in settlement of her claim. A draft for this amount, payable to Gayles and her husband and to petitioner as her attorney, was endorsed by the couple and given by Gayles to petitioner for deposit into his client trust account. Under the retainer agreement, petitioner was due the sum of $1,144.25. Gayles was entitled to the balance of $1,355.75.

The settlement check was deposited into petitioner's trust account on June 8, 1983. The balance in his account previously had been $5.83. The new balance of $2505.83 was thus almost entirely due to the settlement draft. Petitioner told Gayles that she would be paid within seven to ten days after the draft was deposited. She was not paid.

Gayles first contacted petitioner about the payment toward the end of July 1983. Petitioner represented to her that his wife had placed a freeze on his trust account as part of divorce proceedings between the two. He also told her that he would attempt to get the freeze lifted. The file of the divorce case reveals that no freeze was ever sought or imposed on the trust account or any other accounts, and that petitioner made no court appearances in connection with any freeze.

In fact, on the day petitioner told Gayles about the freeze on his trust account, the account was almost empty. From the time of the deposit until the day of this conversation, petitioner had made six withdrawals from the account, four by checks drawn to himself as payee and two by checks payable to others. Only a balance of $48.19 was left in the account as a result of these withdrawals, and bank service charges soon depleted the account. Petitioner testified that he was concerned his wife might attempt to place a freeze on his trust account and to protect Gayles he placed $1,100 of the withdrawn funds and enough other cash to make up the amount due her in a "stash box"--resembling a Pepsi can--in his refrigerator.

Gayles attempted on numerous occasions to reach petitioner by telephone to discuss the late payment, but was unable to speak with him personally although she left numerous messages. She finally left a message that she would file a complaint with the State Bar if she were not paid her money. The record does not reveal the date Gayles ultimately filed her complaint. Petitioner, however, was not contacted by a State Bar investigator, and evidently had no notice of the complaint, until December 1983.

On September 8, 1983, petitioner sent Gayles a money order for $500 and promised in an accompanying letter to pay her the remainder of the money due by October 1, 1983. He did not do so. On November 2, 1983, petitioner paid Gayles $950 in cash, a sum that represented the balance of the money due her from the settlement draft plus interest and reimbursement for the 28 or so telephone calls she had made to his office.

STATE BAR COURT PROCEEDINGS

Following an unsuccessful mandatory settlement conference in May 1985, hearings were held before a single referee in Los Angeles on October 22 and December 5, 1985. At the October hearing, testimony was taken from Gayles and petitioner. Petitioner moved for a continuance at the outset of the hearing, asserting that he had not been able to take discovery from Gayles and indicating that he might wish to call her husband to testify. After determining that petitioner had made no efforts to take discovery during the preceding months, the referee denied the motion without prejudice to renewal. At the close of the first hearing, the referee gave petitioner an opportunity to file a trial brief in which he could set forth any requests for additional discovery or testimony. Petitioner filed no brief and failed to appear at the hearing in Los Angeles on December 5, calling from his home in Vallejo to report that he had been unable to get his car started that morning and requesting a continuance. The referee denied the continuance after determining that petitioner had made no efforts to arrange alternative transportation to the hearing.

By decision filed January 23, 1986, the referee found that petitioner had: (1) knowingly made a false representation to Gayles that petitioner's wife had placed a freeze on his trust account in an attempt to conceal the fact that he had misappropriated her funds and to induce her to acquiesce in the continued withholding of her funds; (2) wilfully failed to pay Gayles the amounts due her as requested; (3) commingled his own funds with those of Gayles by failing promptly to withdraw his fees and advanced costs from the trust account; and (4) converted to his personal use the money owed to Gayles. The referee also found, in mitigation, that: (1) petitioner fully paid Gayles, although not until she had informed him that she intended to file a complaint with the State Bar; (2) petitioner was under strain due to marital difficulties; and (3) petitioner had no prior disciplinary record in his four years as an attorney. Finding that petitioner had "displayed a lack of appreciation for the seriousness of the charges, and a lack of candor and cooperation," the referee recommended that he be disbarred "pursuant to Sections 2.2 and 2.3 of the Standards for Attorney Sanctions for Professional Misconduct...."

The review department adopted the findings and recommendation on July 10, 1986, two members dissenting on the ground that the degree of discipline recommended appeared excessive to them. ¹ Petitioner did not timely file a petition for review and, by our order of November 12, 1986, he was ordered disbarred effective December 12, 1986.

On December 1, 1986, petitioner filed an application for stay of the order, accompanied by a petition for review. Petitioner alleged that he had not received the review department order--sent neither to the residence address he had provided to the State Bar Court Clerk nor to his office address, as had been done with all prior papers in the case--and that our order was his first notice of the review department's action. By order of December 10, 1986, we vacated our prior order and issued a writ of review.

DISCUSSION

Petitioner asserts that disbarment is inappropriate on seven separate grounds. His contentions are largely irrelevant and, where relevant, are unsupported by the record.

1. Repayment of funds as mitigating factor.

Petitioner objects "to the finding that [his] repayment to [Gayles] did not constitute mitigation." No such finding was made. The referee specifically noted that repayment was made within five months of receipt of the settlement draft and identified this as the first of three mitigating factors. Petitioner's objection is mainly addressed to the argument of State Bar counsel that repayment was entitled to little weight because it was made in two installments. Petitioner contends that Gayles agreed to accept the installment payments. The record does not support petitioner's assertion and, in any event, petitioner's argument is irrelevant. The referee did not rely on the installment payments as affecting the weight to be given repayment as a mitigating factor. He discounted the payment only because it was made after Gayles had told petitioner that she would file a complaint with the State Bar.

2. Marital problems as mitigating factor.

Petitioner also objects that "all the information concerning the marital problems that [he] had outlined to counsel and the investigator were unmentioned." This statement is rebutted by the record. Petitioner testified at the hearing and was questioned as to the effect his wife's filing of divorce proceedings had on him. He had full opportunity to raise his emotional state to explain his actions. The referee's decision expressly noted as a mitigating factor that "[petitioner] was under strain as a result of marital difficulties."

3. Petitioner's good faith.

Petitioner objects "to a finding that [he] did not demonstrate good faith" and accuses State Bar counsel of prejudice against him on racial and sexual grounds. The record shows no evidence of prejudice, nor was any finding made that petitioner did not demonstrate good faith. The referee found only that petitioner had "[t]hroughout the course of these proceedings, ... displayed a lack of appreciation for the seriousness of the charges, and a lack of candor and cooperation." This finding is not without support in the record, but, as we note subsequently, the explanation...