ROBERT L. HUNNIECUTT, Petitioner, v. THE STATE BAR, Respondent.
S.F. No. 25134
Supreme Court of California
Feb. 16, 1988.
44 Cal. 3d 362
Robert L. Hunniecutt, in pro. per., for Petitioner.
Herbert M. Rosenthal, Truitt A. Richey, Jr., and Richard J. Zanassi for Respondent.
THE COURT. In this proceeding we review the recommendation of the State Bar of California that petitioner Robert Lewis Hunniecutt be suspended from the practice of law for three years, that execution of suspension be stayed, and that petitioner be placed on probation for five years on conditions which include actual suspension for ninety days and until restitution has been made.
The recommendation is based on findings that petitioner abandoned clients in two matters and violated the State Bar Rules of Professional Conduct,
We conclude that an attorney-client relationship existed at the time of the business transaction involved herein, that the transaction was not “fair and reasonable” to petitioner‘s client, that petitioner‘s involvement therein constituted an act of moral turpitude within the meaning of
I.
Petitioner was admitted to practice law in December 1976. He has not previously been disciplined by the State Bar. The present action arises from his conduct in three separate matters:
In January 1983, Cynthia Rosenquist employed petitioner to assist her in recovering her investment of $3,500 in a company that had become insolvent. Rosenquist relinquished to petitioner all of her documents related to the investment, and in January and February 1983 he made some inquiries on her behalf. He did no further work on the matter, and after February 1983 he failed to return any of her frequent telephone calls or to communicate with her in any way. In August or September 1983, Rosenquist, in an attempt to retrieve her documents, went to the office where she had initially consulted petitioner, but she found the office vacant. She did not hear from petitioner again until after she had contacted the State Bar about her situation.
B. The Chang Matter
In December 1981, Janet Chang employed petitioner to represent her in a dispute with Laura Wong concerning the ownership of a home in San Francisco. In February 1983, Wong filed an action against Chang in San Francisco Superior Court. Petitioner scheduled the plaintiff‘s deposition for March 1, 1983, in his own office, but failed to appear. He took no further action in the matter, and his client‘s default was entered. She subsequently employed another attorney and, in September 1983, the default was set aside. The superior court, however, imposed a $1,000 sanction against Chang to compensate Wong for legal fees incurred as a result of petitioner‘s failure to respond to the complaint in a timely manner.
C. The Mitchell Matter
In 1978, Leolani Mitchell employed petitioner to represent her in a personal injury action. Mitchell had been referred to petitioner by her coworker Robert White, a longtime personal friend of petitioner who was also involved in planning real estate investments with him. Petitioner negotiated a $5,000 settlement on Mitchell‘s behalf, and in October 1979 he asked White to deliver the settlement funds to Mitchell. At that time, petitioner and White were seeking investors’ funds for use in a contemplated real estate transaction. White testified that when petitioner gave him the settlement check to deliver to Mitchell, petitioner asked him to solicit Mitchell for an investment loan for the venture. Petitioner denies having suggested the solicitation of Mitchell at that time.
In March 1980, Mitchell tendered $5,000 to White, who delivered the money to petitioner for investment in the real estate venture. As security for her investment, White gave Mitchell a note and deed of trust he had signed
The note specified that the principal, together with interest at the rate of 20 percent per annum, would be due to Mitchell six months after the date of the note. When payment became due in October 1980, White received the accrued interest from petitioner and delivered it to Mitchell, and at petitioner‘s request asked Mitchell whether she would prefer to receive her principal payment or reinvest it with petitioner. She indicated that she wished to reinvest the funds at the same rate of interest. She did not request, and neither White nor petitioner offered, any new security for the funds, nor did petitioner suggest that new security was required to secure the new arrangement.
In March 1982, Mitchell telephoned petitioner and requested her principal investment and accrued interest. Petitioner asked her to wait another six months for payment, and she agreed. At her request, he sent her a letter confirming that the interest on her loan would be paid at the rate of 20 percent per annum. In October 1982, Mitchell again demanded her funds. The real estate venture had resulted in large financial losses to petitioner, however, and he was unable to repay the money.
II.
The hearing panel of the State Bar Court concluded that petitioner had abandoned his clients Rosenquist and Chang in violation of
III.
Petitioner concedes that he violated his duties as an attorney in the Rosenquist and Chang matters. He denies that he violated any
It is our task independently to examine and reweigh the evidence in passing on the State Bar‘s disciplinary recommendation. (Arden v. State Bar (1987) 43 Cal.3d 713, 724 [239 Cal.Rptr. 68, 739 P.2d 1236].) It is petitioner‘s burden, however, to demonstrate that the State Bar‘s findings are unsupported by the evidence, or that its recommendations are erroneous or unlawful, and in assessing credibility great weight is given to the findings of the hearing body that saw and heard the witnesses and the petitioner. (Id. at p. 725.)
A. Attorney-client Relationship
The evidence concerning the date of the initial solicitation of Mitchell is in conflict. Petitioner denied asking White to solicit Mitchell at the same time he asked him to deliver her settlement check. Mitchell‘s testimony on the point was ambiguous; she testified that, “After the settlement in 1979, that was all cleared, White came talking to me about this realty investment. . . .” White testified that petitioner asked him to solicit the loan at the same time that he delivered the check. He also testified, however, that Mitchell decided to invest and gave him the money within a day or two of his delivering the settlement check and soliciting the loan.
White‘s account of the sequence of events contradicts Mitchell‘s testimony that she received the settlement funds on October 16, 1979, and made
Petitioner also argues that, even if we accept the hearing panel‘s findings regarding the solicitation of the loan, we should focus on whether an attorney-client relationship existed as of March 1980, when the loan was actually made, rather than October 1979, when the personal injury action was completed and the solicitation begun. He maintains that
We decline to take such a narrow view of the reach of
Moreover, even if we were to accept either of petitioner‘s contentions, that (i) the loan was not solicited until after the settlement funds were disbursed, or (ii) that
There is adequate evidence in this case to support a finding that Mitchell placed special trust in petitioner because he had represented her in obtaining the personal injury settlement. Petitioner emphasizes the fact that, under cross-examination, Mitchell stated she did not consider him to be her attorney at the time she made the loan. It is also true that Mitchell never met with petitioner personally until well after the loan had been made; all of their dealings were conducted over the telephone or through White. Mitchell also testified, however, “I trusted in [petitioner] because he had settled my Triple A claim.” She also testified, “[t]his much money. . . I‘ve never had before in my life.” It appears that Mitchell became a target of petitioner‘s solicitation because he knew, through his representation of her, that she had recently received the settlement fund. Similarly, her lack of sophistication in financial matters would have been evident to petitioner because of his role as her attorney. Under these circumstances, we conclude the attorney-client relationship continued for the purposes of
This conclusion is supported by our decisions in Wallis v. State Bar (1942) 21 Cal.2d 322 [131 P.2d 531], and Beery v. State Bar (1987) 43 Cal.3d 802 [239 Cal.Rptr. 121, 739 P.2d 1289]. In Wallis, the bar brought a disciplinary action against an attorney who had defaulted on a loan obtained from a former client. Although we held that disciplinary action was not justified in that case, we based our decision on the fact that the former client was a sophisticated businesswoman who had actively negotiated for terms she thought desirable, and that the loan transaction was not connected with the land litigation the attorney had handled for her. We did not rely on the theory that the attorney-client relationship between the parties had terminated. Our analysis in Wallis, supra, 21 Cal.2d 322, suggests that when an attorney enters into a transaction with a former client, the transaction must be scrutinized for signs of unfairness despite the fact that the attorney-client relationship has terminated for most purposes.
In Beery, supra, 43 Cal.3d 802, an attorney was charged with a violation of
Moreover, the application of
B. Moral Turpitude
Petitioner also contends that, even if he violated
When an attorney-client transaction is involved, the attorney bears the burden of showing that the dealings between the parties were fair and
In addition, petitioner admits that following the expiration of the original six-month term the investment was converted to an unsecured loan. We have previously pointed to the absence of security, when security would ordinarily be considered essential to the client, as an indication of unfairness. (Beery v. State Bar, supra, 43 Cal.3d 802, 814-815.) Here, as noted above, Mitchell testified she had never before possessed as much money as she invested in this transaction. Under such circumstances, it appears highly unfair and unreasonable for petitioner to borrow her funds on an unsecured basis. Mitchell‘s testimony strongly indicates that she did not understand the nature of the transaction with petitioner and White. Thus, not only has petitioner failed to show that the transaction was fair and reasonable, but the record strongly indicates it was not.
IV.
Although the ultimate decision on discipline rests with this court, the review department‘s recommendation is entitled to great weight. (Beery v. State Bar, supra, 43 Cal.3d. at p. 815.) “In deciding what discipline is warranted, each case must be decided on its own facts. (Alberton v. State Bar (1984) 37 Cal.3d 1, 14 [206 Cal.Rptr. 373, 686 P.2d 1177].)
In Ritter v. State Bar (1985) 40 Cal.3d 595, 604, footnote 9 [221 Cal.Rptr. 134, 709 P.2d 1303], we noted that violations of
Petitioner introduced certain mitigating evidence at the hearing, such as his marital problems which have since been resolved, his efforts to
Accordingly, it is ordered that petitioner be suspended from the practice of law for three years, that execution of the suspension be stayed, and that petitioner be placed on probation for said three years on the following conditions: (i) actual suspension from the practice of law for the first ninety days of said probation; (ii) payment of restitution to Chang in the sum of $1,000; (iii) payment of restitution to Mitchell in the sum of $5,000 with interest as promised; (iv) compliance with all other conditions set out in the hearing panel decision in this matter filed on September 5, 1986, and adopted by the review department on January 29, 1987. Petitioner is ordered to take and pass the Professional Responsibility Examination within one year after the effective date of this order. Petitioner is further ordered to comply with rule 955 of the California Rules of Court and to perform the acts specified in subdivisions (a) and (c) of that rule within 30 and 40 days, respectively, after the effective date of this order. This order is effective upon the finality of this opinion.
KAUFMAN, J.—I concur in the decision and opinion of the court in all respects except one: In my view the 90-day period of actual suspension is inadequate. I would increase the period of actual suspension to a minimum of six months and preferably nine months.