Strutz, Matter of, 02S00-8906-DI-466

Citation652 N.E.2d 41
Decision Date16 June 1995
Docket NumberNo. 02S00-8906-DI-466,02S00-8906-DI-466
PartiesIn the Matter of Donald F. STRUTZ.
CourtSupreme Court of Indiana

Donald F. Strutz, Fort Wayne, pro se.

Donald Lundberg, Jeffrey D. Todd, Indianapolis, for the Indiana Supreme Court Disciplinary Com'n.

PER CURIAM.

This disciplinary action is now before the court on a two count amended verified complaint charging the Respondent with conduct in violation of the Code of Professional Responsibility for Attorneys at Law (Professional Responsibility Code) and the Rules of Professional Conduct for Attorneys at Law (Professional Conduct Rules). 1 This case requires us to examine the professional responsibility of a lawyer engaged in business transactions with his client and of a lawyer serving as general counsel for a corporation during a change in management.

I

The Indiana Supreme Court Disciplinary Commission filed its original complaint as required by Ind.Admission and Discipline Rule 23(12) in 1989. As provided in Admis.Disc.R.23 (11)(e), a hearing officer was appointed. Having conducted a hearing, the hearing officer has tendered findings of fact, conclusions of law, and a recommendation for sanction. The Respondent has petitioned this court for review of the hearing officer's report, asking us to vacate the findings, conclusions, and recommendations "for lack of jurisdiction and abuse of process." The Commission has responded and Respondent has replied.

In his petition for review, the Respondent challenges various procedural rulings and contends that certain events during the litigation of this disciplinary proceeding constitute the denial of due process.

A

First, Respondent contends that he was denied due process because a second count was added to the complaint on motion by the Commission without having been filed with this court and without this court having appointed the hearing officer. Both counts arising in this proceeding evolved from grievances filed with the Commission in the late 1980's. On June 15, 1989, the Commission filed its verified complaint with respect to what was to become Count I. This court appointed the hearing officer later that month. After several years of discovery and continuances, the hearing officer in October, 1991, advised the parties that any amendment to the complaint was required to be submitted by December 31, 1991, and that any response thereto was required by January 31, 1992. On December 31, 1991, the Commission filed its amended complaint, restating its original single count as Count I and adding a new Count II. Respondent moved to dismiss the amended complaint and to separate the counts. The hearing officer held a hearing and, on March 4, 1992, held that for the sake of judicial economy the two counts would be tried contemporaneously. The hearing officer found that Respondent failed to provide any authority for his motion to dismiss and that the hearing officer himself had failed to find any such authority.

No procedure is set forth in our Admission and Discipline Rules for amending a complaint of misconduct that has been filed with the Clerk under Admis.Disc.R. 23(12) and with respect to which a hearing officer has been appointed under Admis.Disc.R. 23(11)(e). We hold that the Commission may amend (including an amendment alleging additional misconduct) such a complaint, that the Respondent may amend any answer, by leave of the hearing officer or by written consent of the adverse party, and that leave shall be given when justice so requires. Leave of this court is not required and no new hearing officer need be appointed.

The Commission and the hearing officer followed the proper procedure here. Furthermore, as to Respondent's due process arguments, we note that we have previously addressed the question of procedural due process in a disciplinary proceeding. In such setting, due process requires notice and an opportunity to be heard in a fundamentally fair proceeding. In re Wireman (1977), 270 Ind. 344, 367 N.E.2d 1368, cert. denied, 436 U.S. 904, 98 S.Ct. 2234, 56 L.Ed.2d 402; In re Murray (1977), 266 Ind. 221, 362 N.E.2d 128, appeal dismissed, 434 U.S. 1029, 98 S.Ct. 758, 54 L.Ed.2d 777; In re Stivers (1973), 260 Ind. 120, 292 N.E.2d 804. Here, the Respondent was on notice that he was under investigation for the misconduct eventually charged in Count II for at least three years prior to the complaint being filed. The hearing officer did not permit the complaint to be amended until holding a hearing on the Respondent's objection to the amendment. And trial on Count II was not held for another year and a half after the complaint was amended. We find that Respondent had notice and an opportunity to be heard in a fundamentally fair proceeding; he suffered no deprivation of procedural due process.

B

Respondent alleges with respect to the amendment of the complaint that the amendment was offered by the Commission "for the purpose of inflaming the Hearing Officer thereby creating irreversible bias and prejudice against the Respondent." However, Respondent does not cite any specific example of bias or prejudice and, in the absence of any such example, we find none.

Respondent also contends that he was denied due process because a transcript was not available to him to use in preparing proposed findings of fact and conclusions of law. Respondent offers no authority for this proposition and we find that he had no such entitlement. 2

Respondent's petition to vacate the hearing officer's report is hereby denied.

II
A

Respondent began providing legal representation to a client in or about 1969. The client was a family-owned petroleum refinery business. Soon thereafter, Respondent became the refinery's president's primary adviser on all legal matters involving the refinery. In a short time, Respondent's participation in the affairs of the refinery became so extensive that he was placed on retainer and was considered general counsel to the refinery. As general counsel to the refinery, Respondent was responsible for preparation of all leases and contracts involving the refinery's business. During this period of time Respondent also became personal counsel to the refinery's president himself.

In or about 1974, after consulting with a business associate, the refinery's president suggested to Respondent that the refinery construct a pipeline from the refinery's location to a major crude oil pipeline network in a neighboring community. Respondent agreed to this concept and a new corporation (the "pipeline corporation") was created for the purpose of building the pipeline.

With the assistance of outside counsel, the assets of the completed pipeline were transferred to a partnership (the "pipeline partnership") for tax reasons. The pipeline partnership consisted of forty-seven trusts. Respondent served as the refinery's attorney in this process and directed the establishment of the trusts by outside counsel. As attorney for the refinery, Respondent was consulted by the president regarding outside counsel's work product. Respondent negotiated with his client, the refinery president, for an ownership interest in the completed pipeline. Respondent told the president that partial ownership of the pipeline would serve to compensate him for the work he performed on the project. Respondent suggested a ten percent share of the trusts, but ultimately he agreed to accept a six percent share. Respondent never advised the president that obtaining such a share of ownership in the pipeline would give Respondent a personal interest in the pipeline that could conflict with the president's personal interests and those of the refinery.

Under the agreement between Respondent and his client, the refinery president, outside counsel designated four of the forty-seven trusts for the benefit of Respondent and various members of his family. The forty-three remaining trusts were created for the benefit of the president and his family. With the agreement in place, the president's family trusts held a ninety-four percent ownership interest in the pipeline partnership while the Respondent's family trusts held a six percent interest. At the time the partnership agreement was executed, Respondent served as trustee of the president's family trusts.

The refinery president was unaware that the pipeline partnership partnership agreement contained a provision that certain actions fundamental to the business of the pipeline partnership required unanimous consent of all partners. The effect of the unanimous consent provision was to give each of the Respondent's family trusts the right to veto any actions by the partnership, even though Respondent's family trusts only owned a six percent interest in the partnership. The refinery's president relied upon Respondent's recommendation to approve the partnership agreement, and Respondent failed to advise the president of the existence of this unanimous consent provision or of its possible ramifications to the president, his family, and the refinery.

In early 1975, the pipeline partnership entered into a lease agreement with the refinery. This lease was drafted by the Respondent, and it provided that the refinery would pump no less than four thousand two hundred barrels of oil per day through the pipeline for a minimum of three hundred thirty days per year for a period of ninety-nine years. The lease fixed the price at thirty cents per barrel, but failed to provide for a modification of this guarantee in the event of adverse financial conditions at the refinery. Lease payments made by the refinery to the pipeline partnership would be distributed to the president's family trusts and to the Respondent's family trusts according to the designated percentage interest of each.

Shortly after the pipeline was in place, the refinery decided to build a facility to increase its capacity to store oil. Respondent and the refinery president agreed to use an ownership agreement similar to that used by the pipeline...

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7 cases
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