Monday, December 8, 2008
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State Bar Panel Urges Suspension of Palm Desert Attorney
By SHERRI M. OKAMOTO, Staff Writer
The Review Department of the State Bar Court has recommended the suspension of a Palm Desert attorney who had negotiated a property sale between two clients and failed to disclose the material terms of the transaction to one of them.
In an opinion Thursday, the three-judge panel reversed State Bar Court Hearing Judge Richard A. Platel’s determination that Clifford Lee Casey had acquired a pecuniary interest adverse to his client, finding instead that Casey was culpable of acts constituting moral turpitude.
The panel adopted Platel’s recommended discipline of three years’ probation on condition of 90-days actual suspension.
In 1998, Thomas and Ida Stewart retained Casey to prosecute an unlawful detainer against the tenants of the Stewarts’ condominium unit in Palm Springs. The matter was eventually settled.
A year later, Ida Stewart contacted Casey because the homeowners’ association was threatening to foreclose on the unit because the Stewarts had not paid past-due homeowners dues. Stewart said she told the attorney that she was suffering financially and could not afford to make the payments.
Casey claimed that Stewart then offered to sell him the property, and he told her he had a client, Ajax, Inc., that might be willing to purchase the unit.
The record indicated that Ajax’s president, Ray Lyons, was a long-standing client, friend, and one-time business partner of Casey. Casey served as the corporation’s agent for service of process, and previously served as Ajax’s president.
According to Casey’s version of events, Lyons agreed to buy the unit, and to entice Casey to manage the unit, Lyons suggested that Casey’s minor son receive a 50 percent ownership interest.
In contrast, Stewart testified that she had only asked Casey to find “good tenants” and “look over the property” since she was in Santa Ana and unable to do so.
Casey subsequently sent the grant deed for the unit to the Stewarts for them to sign. The letter was apparently sent around the time of Thomas Stewart’s death in late August 1999, but Ida Stewart denied ever receiving it.
Casey assumed management of the unit on behalf of Ajax.
In March 2001, Ida Stewart met Casey and signed the grant deed. She testified that she had signed the deed as a show of good faith because she knew that she would eventually have to pay the attorney and was not able to compensate him.
The deed conveyed the unit to Casey’s son and Ajax as tenants in common, but Stewart remained liable on the deed of trust.
Stewart said she asked Casey for $500 to reimburse her for money she had advanced in taxes for the unit, and Casey promised to send it to her, but never did.
Eventually Stewart filed a civil suit against Casey, and received a judgment in her favor for $1, but did not obtain possession of the unit.
Casey then filed a libel action against Stewart, but at the time of the State Bar Court hearing, had not yet served the complaint.
In the State Bar proceedings against Casey, Platel held Casey culpable for a violation of Rules of Professional Conduct Rule 3-300, finding that Casey had acquired a pecuniary interest adverse to his client through his son’s interest in the unit, by managing the unit and serving as Ajax’s attorney and agent for service of process.
In her opinion for the Review Department, Judge Judith A. Epstein explained that the panel agreed with the ethical concerns articulated by Platel, but that Casey could not be culpable for violating Rule 3-300 because he was not a party to the transaction and did not personally gain financially from it.
The allegations did, however, provide clear and convincing evidence of a violation of Business and Professions Code Sec. 6106, Epstien said.
“We find, at best, respondent was grossly negligent in failing to fully disclose the terms of the sale of the condo as well as the pros and cons of the transaction to Mrs. Stewart,” Epstein wrote.
Casey also breached his fiduciary duty to ensure the transaction was properly documented and disclose his divided loyalties, Epstein said.
In light of the factors in aggravation—Casey’s public reproval in 2003 due to his three misdemeanor convictions of unlawful entry into the property of another, the significant harm to Stewart, and Casey’s lack of insight into the seriousness of his misconduct—Epstein concluded the hearing judge’s recommendation was appropriate.
Presiding Judge JoAnn M. Remke and retired Presiding Judge Ronald Stovitz, sitting by designation, concurred.
The State Bar was represented by Paul T. O’Brien, who cautioned, “not all conflicts are necessarily codified in the rules of procedure under the sections we normally think about,” adding that the court “seemed to be troubled greatly by what eventually boiled down to a conflict in its finding of a violation of Sec. 6-106.”
He advised attorneys to “always fully disclose,” and “be as transparent as possible in all transactions,” opining “the more information an attorney shares with his client, the better.”
Neither Casey nor his law partner, Paul Dent Munn of Casey & Munn, could be reached for comment.
The case is In the Matter of Casey, 04-O-11237.
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