McGlothlen, Matter of

• Decision Date: 12 May 1983
• Docket Number: No. 6087,6087
• Citation: 99 Wn.2d 515,663 P.2d 1330
• Parties: In the Matter of the Disciplinary Proceeding Against Gary G. McGLOTHLEN, an Attorney at Law. C.D.
• Court: Washington Supreme Court

Page 515

99 Wn.2d 515

663 P.2d 1330

In the Matter of the Disciplinary Proceeding Against Gary G. McGLOTHLEN, an Attorney at Law.

C.D. No. 6087.

Supreme Court of Washington En Banc.

May 12, 1983.

Washington State Bar Ass'n, Robert T. Farrell, Rhea J. Rolfe, Gen. Counsel, Seattle, for appellant.

Velikanje, Moore & Shore, John S. Moore, Yakima, for respondent.

UTTER, Justice.

This attorney disciplinary proceeding presents us with a question of how broadly CPR DR 5-104, the rule governing attorneys' business dealings with clients, should sweep. We must focus on whether to limit the rule's applicability solely to present and clearly defined attorney-client relationships or whether to include less well defined relationships where the attorney's status gives him disproportionate influence. To more effectively protect the public, we choose to paint with the broader brush. In so broadening the rule, we hold that the transaction in this case, an attorney's purchase of property from a client, was subject to CPR DR 5-104. We hold further that the respondent attorney did not satisfy the high standards of disclosure which that rule imposes. Inasmuch as we are announcing a new standard, however, it would be unfair to impose discipline here and hence we refrain from doing so.

In June 1977, respondent, Gary McGlothlen, purchased property from Eileen Ward, the sole heir and former executrix of an estate which McGlothlen was representing in probate. The relationship between McGlothlen and Ward was quite complex and an accurate appreciation of its nature requires a somewhat detailed recounting of its development.

The story begins with the death in 1975 of a Yakima attorney named Perry Woodall. McGlothlen was asked to store Woodall's old files and, as compensation, was told that he could have any future business which arose from the files, assuming the client in question consented. For each file which remained open, McGlothlen wrote to the client summarizing the action which was necessary to close the file and asking the client to contact him about what action to take.

One of the files which came into McGlothlen's possession was a file for the probate of the estate of one John Cole. Cole's wife, who apparently had an interest in the estate or its property, had died during probate and her estate had never been probated. Mrs. Cole's estate named her daughter, Eileen Ward, as sole heir and executrix. Ward was also the sole living heir to Mr. Cole's estate, whether independently or through her mother's interest is unclear.

McGlothlen apparently contacted Delford Woodall, the executor of Mr. Cole's estate, and was asked to bring the estate to a satisfactory close. On July 22, 1975, McGlothlen wrote to Ward, reviewing the file for her, informing her that he was taking it over, requesting her cooperation and assistance, and suggesting that she call him "[i]f [she] ha[d] any immediate legal questions". Report of Proceedings, Exhibit 4. Ward, who lived in California, replied several days later, basically thanking McGlothlen for his assistance. In part, her letter stated:

I sincerely hope you will take care of this matter for me. It is kinda hard for me living in Calif. instead of Wash. I could drop in to see you about the second week in Sept. I had not planned on coming to Toppenish however I can do so if you need to see me.

Report of Proceedings, Exhibit 1. McGlothlen apparently informed Ward that a meeting was unnecessary.

On September 19, 1975, McGlothlen wrote to Ward once more, to notify her that it would be necessary to probate Mrs. Cole's estate as well as that of Mr. Cole. McGlothlen also acted to set up an account in the name of Mrs. Cole's estate. On December 17, McGlothlen wrote to Ward again, informing her that he was able to commence the probate of Mrs. Cole's estate and suggesting that Delford Woodall be substituted as executor. Ward agreed and Woodall was apparently officially substituted at some point, though the record does not indicate when.

At the time she authorized Woodall's substitution as executor, Ward also mentioned that she wished to sell the sole asset of the Cole estates, a house, as soon as possible. McGlothlen wrote back, offering to help locate a purchaser and asking Ward what price would be acceptable. Apparently, McGlothlen and Ward later spoke on the phone about selling the house and on June 1, 1977, McGlothlen wrote to Ward offering to purchase it himself for $8,500. McGlothlen also offered to draw up the necessary papers, so that Ward would save attorney's fees. He testified at his disciplinary hearing, however, that he intended to act as his own counsel, not Ms. Ward's. Though the house had last been appraised in 1971 for $9,000, it had significantly deteriorated since that time and McGlothlen did not mention the appraisal to Ward. He did describe a recent fire in the house, indicate that it was in very poor shape, and suggest that she check with Delford Woodall if she had any questions about its condition.

Ward agreed to sell her interest in the house for $8,500 and entered into a real estate contract with McGlothlen. A year later, McGlothlen sold the house, also by real estate contract, to the occupying tenant for $14,500. Because McGlothlen's resale was on different payment terms than his purchase from Ward, the hearing examiner found, and we agree, that it is not possible to judge the relative value of the respective real estate contracts.

Soon after McGlothlen's resale, a local real estate broker filed a complaint with the bar association ¹ which instituted the present proceeding. The hearing officer concluded (1) that McGlothlen and Ward had an attorney-client relationship; and (2) that CPR DR 5-104, which requires an attorney who enters into a business transaction with a client to make full disclosure, was applicable; but (3) that there had been sufficient disclosure.

Pursuant to DRA 5.2, bar counsel filed an objection to this last conclusion with the Disciplinary Board while McGlothlen filed no objections at all. The Board concluded that McGlothlen's disclosure had not been sufficient and recommended that he receive a censure. McGlothlen refused to accept the censure, and the proceeding is now before us. McGlothlen contends that CPR DR 5-104 is not applicable because Ward was not his client and that, even if CPR DR 5-104 were applicable, his disclosure was sufficient.

I

Bar counsel initially asserts that McGlothlen is precluded from raising before this court any objection to the hearing officer's finding that CPR DR 5-104 is applicable. She points out that McGlothlen had an opportunity to raise this objection before the Disciplinary Board and that his failure to do so waives his right to raise it here.

Prior to review by this court, the findings, conclusions, and recommendations of the hearing officer are reviewed by the Disciplinary Board. DRA 5.4. The purpose of this intermediate review is to prevent needless appeals to this court. To assure knowledgeable Board review, DRA 5.2 provides that the parties "shall have the right to file with the Board a typewritten statement in support of or in opposition to the findings, conclusions and recommendation of the [hearing officer]".

Despite its permissive form, we construe DRA 5.2 as mandatory. Cf. In re Kerr, 86 Wash.2d 655, 658, 548 P.2d 297 (1976) (construing permissive language of DRA 6.2, governing the raising of issues before the Supreme Court, as mandatory). It not only serves to allow the parties a fair opportunity to present their arguments to the Board, but also allows the Board an opportunity to correct mistakes, thereby avoiding needless appeals. To accomplish this latter purpose, we must require parties to exercise their rights under DRA 5.2 if they wish to preserve error. Cf. 2A L. Orland, Wash.Prac. 500 (3d ed. 1978) (purpose of analogous limitation on appellate review is to allow court and parties below to correct error).

Nonetheless, McGlothlen's failure to object before the Board does not absolutely bar review. A disciplinary proceeding "is not in the nature of an appellate review as that term is generally understood." In re Sherman, 58 Wash.2d 1, 8, 354 P.2d 888 (1960), cert. denied, 371 U.S. 951, 83 S.Ct. 506, 9 L.Ed.2d 499 (1963). Thus this court is not entirely bound by traditional rules of appellate practice and we retain discretion to step outside our procedural rules when warranted. For example, in In re Kerr, supra, we reached issues raised by the respondent attorney despite his failure to raise formal objections as required by DRA 6.2.

While we are not obliged to review the findings and recommendations, no objection having been made thereto, we are not powerless to do so. The ultimate responsibility for the discipline of attorneys rests with us, and we would be remiss in our duty were we to accept the recommendations based upon findings which are insufficient on their face.

Kerr, 86 Wash.2d at 658, 548 P.2d 297. Accord, In re Sherman, supra, 58 Wash.2d at 8-9, 354 P.2d 888; cf. In re Donohoe, 90 Wash.2d 173, 175, 580 P.2d 1093 (1978) (would enforce DRA 6.4 regarding timely filing of briefs but "we note that we have reviewed all of the testimony and documents so as to insure appellant a fair review even though she has not followed the applicable rules").

The present case warrants a similar exercise of discretion. The relationship between McGlothlen and Ward was at the outer reaches of CPR DR 5-104. Analysis of McGlothlen's contentions should be instructive and serve to enlighten other attorneys as to the extent of their duties.

II

CPR DR 5-104 provides:

A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise his professional judgment therein for the protection of the client, unless the client has consented after full disclosure.

An attorney is thus obliged to provide "full disclosure" to ...