Worth v. State Bar

• Decision Date: 29 June 1976
• Citation: 17 Cal.3d 337,130 Cal.Rptr. 712,551 P.2d 16
• Court: California Supreme Court
• Parties: , 551 P.2d 16 Arthur A. WORTH, Petitioner, v. The STATE BAR of California, Respondent. L.A. 30557.

Page 712

130 Cal.Rptr. 712

17 Cal.3d 337, 551 P.2d 16

Arthur A. WORTH, Petitioner, v. The STATE BAR of California, Respondent.

L.A. 30557.

Supreme Court of California,

In Bank.

June 29, 1976.

Arthur A. Worth, Newport Beach, in pro per.

John H. Eversmeyer, Los Angeles, for petitioner.

Herbert M. Rosenthal and Ronald W. Stovitz, San Francisco, for respondent.

BY THE COURT.

Proceeding to review a recommendation of the Disciplinary Board of the State Bar (board) that petitioner be suspended from the practice of law for a period of three years on conditions of probation including one-year actual suspension.

Admitted to practice on July 31, 1952, petitioner is also a licensed real estate broker and a licensed contractor. He has not been the subject of previous disciplinary proceedings.

Petitioner's wholly owned corporation, Flight Deck Inn and Restaurant (Flight Deck), purchased a parcel of land in Los Angeles County. Petitioner planned to combine the property with two contiguous parcels and develop it by constructing apartment buildings. One parcel was owned by a Mr. and Mrs. Wilson with who he had business relations and the other by the Department of Public Works. He apparently had an option to purchase the latter parcel.

Petitioner showed Mrs. Holzhauer, his law partner's 77-year-old mother, a chart of all three parcels telling her he intended to divide the property into 12 sections and sell 12 shares in the property for $12,500 per share. Mrs. Holzhauer believed that if she invested in the property there would be other investors besides herself and petitioner.

Although two of the three parcels of land were still owned by the Wilsons and the Department of Public Works, petitioner represented he owned all three parcels. He offered to form a partnership with himself as a general partner and Mrs. Holzhauer as a limited partner, informing her he would prepare a partnership agreement for her signature. Mrs. Holzhauer's son, and petitioner's law partner, did not participate in these negotiations.

On two separate occasions, Mrs. Holzhauer gave petitioner funds taken from her personal savings totalling $25,000 for two 'shares' in petitioner's development. The first time Mrs. Holzhauer turned funds over to petitioner he gave her a receipt containing the notation, 'Limited Partnership 2 shares ($12,500 each) Dominguez Real Estate Dev.' Dominguez Real Estate Development never existed. Petitioner did not place Mrs. Holzhauer's $25,000 in a separate bank account. Instead, he deposited her money in three accounts of his wholly owned corporations and his personal account. Petitioner did not maintain records or accounts of any kind concerning his disbursements of the $25,000.

Petitioner has never sent Mrs. Holzhauer a limited partnership agreement, completed a certificate of limited partnership or applied for a tax identification number. The Wilsons were granted a one-third interest in the parcel owned by Flight Deck. Other than the Wilsons, petitioner did not obtain any additional investors.

In November 1972, Mrs. Holzhauer received a letter from petitioner advising that he was having difficulties obtaining an environmental impact report and proposing that she sell her $25,000 interest for $30,000. Mrs. Holzhauer answered, informing petitioner she would agree to sell her interest if petitioner and a 'majority of partial owners' thought it best to sell at that time. Mrs. Holzhauer's letter stated that she left the final decision whether to sell up to petitioner. Petitioner never responded to Mrs. Holzhauer's letter.

On January 30, 1973, Mrs. Holzhauer again wrote petitioner, reminding him of his failure to answer her previous letter and asking him to send her the partnership agreement. She also informed petitioner that she needed her money back to pay for medical care she was receiving. Petitioner did not respond to Mrs. Holzhauer's January 30, 1973, letter in writing. Instead, in March or April 1973, he telephoned Mrs. Holzhauer and told her he would give her some 'mortgages' instead of returning her money. Mrs. Holzhauer refused to accept the mortgages. She suggested to petitioner that if he was short of money that he obtain a loan from the bank, using the mortgages as...