Rodgers v. State Bar

• Decision Date: 16 March 1989
• Docket Number: No. S006167,S006167
• Citation: 48 Cal.3d 300,768 P.2d 1058,256 Cal.Rptr. 381
• Court: California Supreme Court
• Parties: , 768 P.2d 1058 Bobby D. RODGERS, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

Page 381

256 Cal.Rptr. 381

48 Cal.3d 300, 768 P.2d 1058

Bobby D. RODGERS, Petitioner, v. The STATE BAR OF CALIFORNIA, Respondent.

No. S006167.

Supreme Court of California,

In Bank.

March 16, 1989.

Jon P. Beaver, Rocklin, for petitioner.

Diane C. Yu, Truitt A. Richey, Jr., Richard J. Zanassi and Sherrie McLetchie, San Francisco, for respondent.

BY THE COURT: ^*

We review the recommendation of the Review Department of the State Bar Court (hereafter the department) that petitioner Bobby D. Rodgers (hereafter Rodgers) be disbarred from the practice of law in California. After considering the record we conclude that we should adopt the department's findings of fact and conclusions of law, but that we should order, in place of disbarment, five years' suspension, stayed on condition of probation with two years' actual suspension.

In September 1981 attorney George Brekke filed a complaint against Rodgers with the State Bar. The complaint arose out of Rodger's representation of Thann Penery, the conservator of the person and estate of Thelma Wright Raymond, who was one of Brekke's clients. Brekke alleged that Rodgers, as Penery's attorney, mishandled the estate's funds and wilfully concealed his wrongful acts.

Rodgers met and corresponded with the State Bar a number of times in 1982. The State Bar then suspended its investigation. It apparently did so pending resolution of a civil action brought by Raymond against Rodgers, Penery, and one Thurl Panky, alleging negligence, fraud, conversion, malpractice, and conspiracy arising out of the conservatorship.

In May 1986 the State Bar issued a notice to show cause. In September 1986 the parties met for a mandatory settlement conference. They failed, however, to reach any stipulation as to facts and discipline. The matter was set for formal hearing. In April 1987 the hearing was held before a hearing panel consisting of a single referee. The referee found the following facts.

Rodgers was admitted to the practice of law in California in January 1969 and has no prior record of discipline. In June 1979 Penery, who had previously been represented by Rodgers, consulted him about establishing a conservatorship over the person and estate of Raymond, who was her 80-year-old aunt. Although Rodgers had no experience in conservatorship proceedings, he nonetheless agreed to represent Penery in the matter. Despite his inexperience, Rodgers failed to perform necessary legal research on the law of conservatorships. Later that month, he submitted a petition for appointment of Penery as conservator. At this time Penery was in control of Raymond's funds and asked Rodgers if he could give her investment advice. Rodgers suggested that Penery consider lending money to Panky. Panky was one of Rodgers's clients and also one of his former business partners. Rodgers failed to disclose either of these facts.

In July 1979 Penery transferred $26,000 of Raymond's funds to Rodgers for investment with Panky. There was no evidence that a loan agreement was reduced to writing, that the loan was secured by Panky's assets, or that the agreement provided for a definite rate of interest. ¹ Rodgers did not obtain permission from the probate court for Penery to lend Raymond's funds to Panky as required by Probate Code section 2570, nor did he inform the court of the loan.

In August 1979 Penery was appointed conservator over Raymond's person and estate. Within 90 days of her appointment she was required to file an inventory and appraisal of Raymond's assets. She did not do so. Rodgers did not request a continuance or otherwise inform the court that the inventory would not be forthcoming.

In the spring of 1980 Raymond retained attorney Brekke to represent her in an action to terminate the conservatorship. Brekke attempted to determine the extent of Raymond's assets but had difficulty because the required inventory had not been submitted. Brekke contacted Rodgers, informed him that Raymond would seek to terminate the conservatorship, and asked him to explain what Penery was doing with Raymond's funds. Rodgers told Brekke about the loans to Panky and promised to deliver copies of the notes. Brekke also asked about Rodgers's relationship with Panky and expressed concern when Rodgers told him that the loans were not secured.

After his conversation with Brekke, Rodgers facilitated another $6,000 loan between Penery and Panky and drew up new promissory notes extending the two previous loans. Like those, this loan was not approved by the court. In July 1980 Rodgers delivered to Brekke three promissory notes for $22,000, $6,600 and $6,000 respectively, each of which was purportedly secured by Rodgers's own assets. The $22,000 note was secured by an assignment of Rodgers's interest in a $46,000 promissory note from one Lades; this note carried a monthly payment of $700, payable from August 10, 1980, until July 10, 1985, at an interest rate of 10 percent a year. ² The loans for $6,600 and $6,000 were both secured by an assignment of Rodgers's interest in a $15,000 promissory note payable "at maturity" by one Mohanna.

After investigation Brekke discovered that these assignments were not notarized and consequently could not be recorded. He asked Rodgers to notarize the assignments but Rodgers did not immediately respond. Instead, in January 1981 Rodgers again assigned the Lades note, this time to secure a debt for his father. Rodgers did not inform Penery or Brekke of this subsequent assignment. This assignment was notarized, so that if it was recorded it would have been senior to Rodgers's assignment to Penery.

Rodgers deposited the new $6,000 loan Penery made to Panky in his client trust account. His bookkeeper accounted for the deposit by crediting Panky's account for $5,000 he allegedly owed for legal services. A few days later Rodgers drew a check on his client trust account for $5,000 to avoid foreclosure on his family's residence. At no time did he inform Penery that Panky would use the bulk of the loan to pay his legal fees.

In October 1980 the court terminated the conservatorship over Raymond's person. The court continued the conservatorship over her estate, however, because Penery had still not filed the required inventory of the estate's assets. It ordered Penery to submit the inventory.

In January 1981 the inventory was finally submitted. The loans to Panky were described only as a "loan" without any further explanation; their terms and conditions were not disclosed. Raymond objected to the inventory.

In June 1981 the court held a hearing on the objection. It ordered the public guardian to serve as the temporary conservator of Raymond's estate. It also ordered Rodgers to pay the public guardian all the funds of the conservatorship, including the monthly payments he received on the Lades note from August 1980 until May 1981. Rodgers did not immediately comply. Consequently, the public guardian petitioned the court for further instructions. Thereafter Rodgers gave the public guardian a check for $6,300 representing the money received on the Lades note. The check was not honored, however, because it was drawn on uncollected funds.

In September 1981 Raymond brought the civil action against Rodgers, Penery, and Panky referred to above. At that time Brekke submitted his complaint against Rodgers to the State Bar. Raymond subsequently settled the case against Penery for $43,898; Rodgers apparently provided Penery with the settlement funds. Later, Raymond settled the case against Panky for $8,000. The case against Rodgers was suspended after he filed for bankruptcy in 1984.

In addition to the foregoing facts, the referee also found that Rodgers's explanation of the events in question was not credible: he relied on documentary evidence that he could not produce and at times gave answers that were disingenuous.

After finding these facts, the referee concluded that as a result of his conduct Rodgers violated the Rules of Professional Conduct and the Business and Professions Code by accepting employment for which he was not qualified, obtaining an interest adverse to a client, deceiving opposing counsel and the probate court, and commingling his client's funds with his own.

As evidence in mitigation the referee found that no other complaints had been filed against Rodgers in the five years since the State Bar began its investigation. In aggravation he determined that Rodgers's answers throughout the hearing were evasive, that at some points he lied about his involvement, and that such conduct demonstrated a failure to appreciate the harm he had caused to his client. In addition, the referee found that Rodgers failed to appreciate the inherent impropriety of his actions and refused to take any steps to ameliorate the consequences of his wrongdoing until he was compelled to do so.

In view of the foregoing, the referee recommended that Rodgers be suspended for 90 days.

Rodgers sought review of the referee's decision, but the State Bar did not. On review the department, by a vote of the twelve members to none (four members not voting), adopted substantially all the referee's findings of fact and most of his conclusions of law. Specifically it concluded as follows.

By persuading Penery to transfer conservatorship funds to himself for investment with Panky, Rodgers entered into a business transaction with a client that required him to fully disclose the nature of his past business dealings with Panky, explain in writing the terms of the loan agreement, and encourage consultation with outside counsel. Because Rodgers failed to conduct himself as required, he violated rule 5-101 ³ of the Rules of Professional Conduct ^{4 4} as well as Business and Professions Code ⁵ section 6068. ⁶ In addition, when Rodgers secured the loans to Panky with his own assets he obtained an interest that was potentially adverse to Penery and the conservatorship in violation of rules 5-101 and 5-102(B). ⁷

Rodgers was...