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IN THE SUPREME COURT FOR THE STATE OF OREGON
_____________________________________________________________
In re:
Complaint as to the Conduct of
LISA D. T. KLEMP,
Accused.
Supreme Court No. SC S064893
OSB Case No. 14-128 & 15-01
_____________________________________________________________
PETITION FOR REVIEW AND OPENING BRIEF
OF LISA D. T. KLEMP, ACCUSED-PETITIONER
_________________________
Review of Decision of an Oregon State Bar Trial Panel
J. David Coughlin, Trial Panel Chairman
_________________________
Nathan G. Steele Theodore W. Reuter OSB #004386 OSB #084529 The Steele Law Firm Oregon State Bar 125 NW Greeley Avenue P.O. Box 231935 Bend, Oregon 97703 Tigard, OR 97281 [email protected] [email protected] Attorney for Accused- Attorney for Oregon State Petitioner Bar-Respondent
July 26, 2017 09:20 PM
INDEX
I. STATEMENT OF CASE 1 A. Nature of the Action 1
B. Nature of the Judgment 1
C. Petition for Review and Statutory Basis for Appellate 2
D. Questions Presented for Review 3
1. Matter (Case No. 14-128) 2. Matter (Case No. 15-01)
E. Summary of Argument 4 F. Summary of Facts 8
1. Matter (Case No. 14-128) 2. Matter (Case No. 15-01)
II. ARGUMENT 30 A. Matter (Case No. 14-128) 30
1. First Assignment of Error: The Majority Erred in
finding Klemp violated RPC 1.16(d) based upon facts or evidence not pled by the Bar.
2. Second Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.16(d) based upon its determination that Klemp’s legal services had no value.
B. Matter (Case No. 15-01) 40
1. First Assignment of Error: The Majority Erred in
finding that Klemp violated RPC 4.3 based upon facts or evidence not pled by the Bar.
2. Second Assignment of Error: The Majority Erred in finding that Klemp Violated RPC 4.3 by implying that she was disinterested.
3. Third Assignment of Error: The Majority Erred in finding that Klemp violated PRC 4.3 by failing to disclose that she was representing to obtain the POA.
4. Fourth Assignment of Error: The Majority Erred in finding that Klemp violated PRC 4.3 by giving
legal advice.
5. Fifth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by modifying a residential lease based upon facts or evidence not pled by the Bar.
6. Sixth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by demanding Vinson pay rent to when Klemp knew that he was no longer successor trustee.
7. Seventh Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by preparing a Trust Deed for personal expenses, which was not pled by the Bar.
8. Eighth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by preparing a Trust Deed to secure repayment of personal expenses versus expenses on behalf of
or the Trust.
9. Ninth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by representing that had the power of attorney to execute the $9,500 check.
10. Tenth Assignment of Error: The Majority Erred in Finding that Klemp violated RPC 4.1(b).
III. CONCLUSION 58
APPENDIX
Relevant Oregon Rules of Professional Conduct App 1
Cast of Character App 2-4
EXCERPT OF RECORD
Formal Complaint ER 1-8
Trial Panel Opinion ER 9-26
Dissenting Opinion ER 27-39
TABLE OF AUTHORITIES
Cases:
Crawford v. Crane, 204 Or 60, 67, 282 P2d 348 (1955) 37
In re Ainsworth, 289 Or 479, 487, 614 P2d 1127 (1980) 35
In re Albrecht, 333 Or 520, 539, 42 P3d 887 (2002) 5
In re Chambers, 292 Or 670, 676, 642 P2d 286 (1982) 34
In re Fulop, 297 Or 354, 360, 685 P2d 414 (1984) 5, 35, 42, 48
In re Gildea, 325 Or 281, 295, 936 P2d 975 (1997) 5
In re Hockett, 303 Or 150, 162 n. 3, 734 P2d 877 (1987) 57
In re Jordan, 295 Or 142, 156, 665 P2d 341 (1983) 5
In re Thomas, 294 Or 505, 521, 659 P2d 960 (1983) 5, 35
Lee v. Lee, 5 Or App 74, 79 n.1, 482 P2d 745 (1971) 37
Ramstead v. Morgan; 219 OR 383, 399-400, 347 P2d 594 (1959) 33
Riley Hill General Contractor Inc. v. Tandy Corp., 303 Or 390, 405, 407, 737 P2d 595 (1987) 5
State ex rel. Currin v. Commission on Judicial Fitness and Disability, 311 Or 530, 533, 815 P2d 212 (1991) 36
Statutes:
ORS 9.534(2) 34
ORS 9.536(2) 2, 5
ORS 73.0402 27
ORS 87.430 37, 39
ORS 130.720(1) 22
Other Authorities:
Oregon Formal Ethical Opinion No. 2005-90 37
Oregon Rules of Professional Conduct Regulations (RPC):
RPC 1.16(d) 2, 3, 30, 31, 32, 33, 36, 37, 39, 40
RPC 1.2(c) 1, 2, 3, 4, 46, 47, 49, 50, 51, 52, 55, 56, 57
RPC 4.1(b) 1, 57, 58
RPC 4.3 1, 2, 3, 33, 40, 41, 42, 43, 44, 45
Rules:
Bar Rule 2.3(b)(3) 32
Bar Rule 2.4(f)(1) 32
Bar Rule 2.4(i)(1) 32, 33
Bar Rule 2.5(b)(2) 32
Bar Rule 2.6(a) 32
Bar Rule 2.6(c) 32
Bar Rule 2.6(c)(1)(B) 32
Bar Rule 2.6(f) 32
Bar Rule 4.1 32
Bar Rule 4.1(c) 34
Bar Rule 4.2 33
Bar Rule 4.3(c) 33
Bar Rule 4.4 33
Bar Rule 4.4(b)(1) 34
Bar Rule 5.2 5, 32
Bar Rule 10.1 2
Bar Rule 10.3 2
Bar Rule 10.5 2
Bar Rule 10.6 2
Former Disciplinary Rule 1-102 35
Former Disciplinary Rule 5-101(A) 35
Former Disciplinary Rule 6-101(A)(1) 35
Former Disciplinary Rule 6-101(A)(2) 35
Former Disciplinary Rule 6-101(A)(3) 35
Former Disciplinary Rule 7-104(4) 35
Former Disciplinary Rule 9-102 35
1
I. STATEMENT OF THE CASE
A. Nature of the Action.
Petitioner Lisa Klemp (“Klemp”), Bar No. 040012, appeals from a Trial
Panel Opinion rendered in disciplinary proceedings filed against her by the
Oregon State Bar (“the Bar”)
B. Nature of the Judgment.
In a combined Formal Complaint (Case Nos. 14-128 and 15-01) the Bar
alleged numerous violations of the standard of professional conduct against
Klemp A copy of the Formal Complaint is attached at ER-1-8. The Trial
Panel held a bifurcated hearing on March 23-26, 2016, and June 20-21,
2016, respectively (“hearing”). The Trial Panel issued both a Majority and
Dissenting Opinion on February 28, 2017.
The Majority Opinion (“MPO”) was signed by both attorney David
Coughlin (“Coughlin”), the Trial Panel Chair, and the sole public member,
William Olsen (hereinafter collectively referred to as the “Majority”). A
copy of the MPO is attached as ER -9-26. The MPO found that the Bar had
failed to carry its burden with respect to alleged violations of Oregon Rules
of Professional Conduct (“RPC”) 1.2(c), 4.1(b), and 4.3, but also found that
Klemp committed:
2
1) A violation of RPC 1.16(d) (surrender of papers and property upon
termination of representation);
2) Three violations of RPC 1.2(c) (a lawyer shall not counsel a client to
engage, or assist a client, in conduct that the lawyer knows is illegal or
fraudulent); and
3) One violation of RPC 4.3 (disinterested lawyer).1
The Dissenting Opinion (“DPO”) was signed by the other lawyer on the
Trial Panel, Max Taggart (“Taggart”). A copy of the DPO is attached as ER-
27-39. In his DPO, Taggart found that the Bar failed to carry its burden of
proof on any of its claims against Klemp, and recommended both cases be
dismissed.
C. Petition for Review and Statutory Basis for Appellate Jurisdiction.
Pursuant to Oregon State Bar Rule of Procedure (“BR”) 10.3, Klemp
timely filed her Request for Review on April 25, 2017, and petitioned this
Court for de novo review of each of the MPOs findings of violation. ORS
9.536(2); BR 10.1, 10.5, and 10.6.
1 Copies of the RPC’s at issue in this case are attached as Appendix (“App”)-1.
3
D. Questions Presented for Review.
1. Matter (Case No. 14-128)
a. Did the Majority err in finding a violation of the RPC 1.16(d) that
was not pled by the Bar?
b. Did the Majority err in finding that Klemp violated RPC 1.16(d) based
upon its conclusion that Klemp’s legal services had no value?
2. Matter (Case No. 15-01)
a. Did the Majority err in finding a violation of RPC 4.3 that was not pled
by the Bar?
b. Did the Majority err in finding that Klemp violated RPC 4.3 based
upon its conclusion that Klemp’s legal services had no value?
c. Did the Majority err in finding a violation of RPC 1.2(c) (disinterested
lawyer) that was not pled by the Bar?
d. Did the Majority err in finding that Klemp violated RPC 1.2(c) by
implying that she was a disinterested party?
e. Did the Majority err in finding that Klemp violated RPC 1.2(c) by
giving an unrepresented party legal advice?
4
f. Did the Majority err in finding a violation of RPC 1.2(c) (modifying a
residential lease) that was not pled by the Bar?
g. Did the Majority err in holding that Klemp violated RPC 1.2(c) based
upon its finding that Klemp modified a residential lease?
h. Did the Majority err in finding a violation of RPC 1.2(c) (drafting
Trust Deed) that was not pled by the Bar?
i. Did the Majority err in finding that Klemp violated RPC 1.2(c) by
drafting a Trust Deed that sought reimbursement for client’s personal
expenses?
j. Did the Majority err in finding that Klemp violated RPC 1.2(c) by
holding that she falsely represented to a financial institution that a check
signer held a valid power of attorney?
E. Summary of Argument.
The Bar’s Formal Complaint against Klemp pleads two separate
cases. The first case pertains to Klemp’s representation of Kathleen
(“ in connection with a wrongful death claim (“ Matter”). The
second case arises out of Klemp’s representation of Theodore
5 (“ in various matters (“ Matter”). 2 The Bar must prove the
violations alleged in its Formal Complaint by “clear and convincing
evidence”.” ORS 9.536(2); BR 5.2.; In re Thomas, 294 Or 505, 521, 659
P2d 960 (1983). Clear and convincing evidence is "free from confusion,
fully intelligible, distinct" and establishes that the truth of the asserted fact is
“highly probable.” Riley Hill General Contractor Inc. v. Tandy Corp., 303
Or 390, 405, 407, 737 P2d 595 (1987). This standard demands more than a
suspicion that a particular fact may be true. In re Albrecht, 333 Or 520, 539,
42 P3d 887 (2002). A lawyer accused of misconduct is presumed innocent
until proven otherwise. In re Jordan, 295 Or 142, 156, 665 P2d 341 (1983).
The lawyer is not required to prove that he or she did not commit the
violations alleged. In re Gildea, 325 Or 281, 295, 936 P2d 975 (1997).
Conflicting testimony between equally credible witnesses is not clear and
convincing evidence of an ethics violation. In re Fulop, 297 Or 354, 360,
685 P2d 414 (1984).
In reviewing this case on appeal, Klemp asks this Court to be mindful
of what is at stake. As Taggart wrote in his dissenting opinion, “[w]e should
not need to be reminded of that which should be obvious. These cases have
weighty consequences and are not things to be taken lightly.” (Er-27.)
2 The Cast of Characters is attached as App-2-4.
6
The evidence presented at the hearings was described by the Trial
Panel Chair as “spaghetti” and “confusing”. The Bar’s evidence did not
focus on the allegations against Klemp in the Formal Complaint. Rather, the
Bar centered its case on conduct and character, which was totally
irrelevant to the question of whether Klemp violated the RPCs. The Bar
failed to present any evidence of Klemp’s involvement in, or knowledge of,
purported wrongdoings, and thus, failed to prove its case.
The Bar’s case consisted of hypotheticals, assumptions, and
conjecture. On the second day of the hearing, Coughlin stated: “[w]e haven’t
looped [Klemp] into this at all.” (Tr. 44.) 3 The Bar’s focus on
conduct, coupled with its failure to establish Klemp’s involvement or
knowledge thereof, led Coughlin to remark: “The question is whether—not
what he did. *** The question is: What did Ms. Klemp do or know. That’s
the question.” (Tr. 550.) Taggart echoed this sentiment when he stated on the
record: “I’m having some problem here understanding how the bad acts or
the alleged bad acts of Mr. are being tied into the accused.” (Tr.
115.) At the conclusion of the hearing, Coughlin summed up the Bar’s case
3 References to the hearing transcript are made by using the last name of the witness and the page and line numbers in the court reporter’s transcript. Where the reference is to a statement by the Panel or lawyers, a generic “Tr.” cite is used.
7 thusly: “this is so convoluted. I mean, it’s just astounding***it’s a mess.”
(Tr. 1934-35.) The insufficiency of the Bar’s evidence against Klemp led
Taggart to write in his dissenting opinion:
“These violations require that [Klemp] have a specific state of mind that: a) her conduct was either illegal or fraudulent, or b) she had knowledge that she was counseling a client to engage in conduct which she believed was illegal or fraudulent and, additionally, that conduct of the client was either illegal or fraudulent. *** [T]his Panel member does not know how the Bar (given the facts it had to work with) could carry its burden by clear and convincing evidence.” (ER 37.)
The Bar’s focus on was not only fatal to proving its case against
Klemp, but also had the effect of thoroughly confusing the Majority. The
record is replete with examples of the Majority’s inability to track the
evidence. 4 Further, the Bar’s focus on attacking clearly lead the
Majority to dislike him. Early in the proceedings, Coughlin referred to
as “puke.” (Tr. 444.) Coughlin’s apparent disdain for
resulted in assumptions that were wholly unsupported by the evidence, e.g.,
incorrectly assuming had been “incarcerated” for his alleged
4 Olsen: “I’m confused. Maybe you can help. I’m pretty slow here.” (Tr. 376-377); Coughlin incorrectly stating was incarcerated. (Tr. 108); Coughlin incorrectly stating and Klemp were married. (Tr. 396); Coughlin repeating in MPO that and Klemp were married (ER-15.) Coughlin stating Klemp filed Guardianship when she did not. (Tr. 1363); Coughlin allowing extensive irrelevant testimony and then apologizing. (Tr. 1363); MPO finding that Klemp attempted to “cash the $9,500 check” when there was no evidence in the record to support such a finding. (ER-23.)
8 conduct. (Tr. 108). Coughlin’s dislike for also led him to make
legal conclusions unsupported by the evidence. For example, after hearing
the testimony of just one witness at the hearing, Coughlin concluded: “[w]e
decided the signature of Lauren is forged….” (Tr. 386.) These type of
erroneous factual and legal conclusions resulted in the Majority issuing an
Opinion that found violations against Klemp that were neither alleged in the
Bar’s Complaint, nor supported by the evidence. Taggart addressed this in
his dissenting opinion when he stated: “assuming for the sake of argument
that was a bad actor, it’s difficult to impute to [Klemp] that
requisite state of mind…” (ER 38.) Notably, Taggart provided a thorough
analysis of the credibility of primary witness who testified at the hearing.
(ER-29-30.) He found Klemp to be a “very credible witness.” (ER 30.)
Klemp is incredibly fortunate that Taggart saw the lack of evidence for what
it was, and wrote a detailed dissenting opinion recommending that all the
claims against Klemp be dismissed.
F. Summary of Facts
1. ( Matter (Case No. 14-128))
Klemp and met while working at the law firm of Bryant Emerson
& Fitch (“Firm”) in Redmond, Oregon. Klemp was as an associate and
was a paralegal. ( 695, 711). While working at the Firm,
9 represented that she was an attorney, though she did not have a law degree.
( 713-15). In July 2012, Klemp left the Firm and opened her own
practice in Redmond, Oregon. (Klemp 1626). In approximately September
2012, was fired from the Firm. ( 717). After being fired,
started a business called Central Oregon Probate ( 717).
promoted the business as an “estate planning” service. (Id.) held
herself out as an expert in the area of estate planning. ( 721.) Klemp’s
firm had additional office space, and and Klemp entered into an
office sharing agreement. (Klemp 1780.)
In November 2012, asked Klemp to represent her in a potential
wrongful death claim against a nursing home. ( 695.) mother
passed away while in the care of a nursing home located in Central Oregon.
(Id.) Klemp agreed to investigate potential claims against the nursing home.
(Id.) Klemp informed that she would bill an hourly rate of $225 for
work performed on the case. (Klemp 1782). The parties agreed Klemp
would keep track of her hours. ( 702.) Based upon their agreement,
Klemp arranged a meeting with the nursing home’s representatives. (
782; Klemp 1782.) Following the meeting, which lasted several hours,
brought Klemp a large binder containing the medical and nursing
home records for both her mother and father. ( 695, 782; Nichols
10 1523; Klemp 1781, 1783, 1826.) Klemp and her legal assistant, Linda
Nichols (“Nichols”), reviewed the voluminous records in the binder.
(Nichols 1523; Klemp 1793.) Klemp did legal research, prepared attorney
notes, and drafted an outline complaint for potential claims. (Klemp
1796; Klemp Ex. 218.)5 Both Klemp and Nichols tracked their time, which
was reflected in monthly invoices sent to (Nichols 1525; Klemp
1796; Klemp Ex. 122.) Nichols testified at the hearing that she understood
was being billed hourly. (Nichols 1525, 1559, 1597-98).
For the next five months, Klemp sent monthly invoices with
hourly billing entries. (Klemp Ex. 122.) Klemp’s bookkeeper Janice Fryer
(“Fryer”) testified that she sent the invoices to (Fryer 848.) Klemp
always expected to be paid for her services. (Klemp 1783-84.)
testified that she expected Klemp would be paid. ( 784.) The billing
invoices stated: “please remit payment”. (Klemp 1798; Klemp Ex. 122.)
Even after receiving monthly invoices, asked Klemp to perform
additional services, including reviewing additional records and participating
in discussions regarding the strategy for handling the matter. (Tr. 23).
5 Klemp’s Exhibits at the hearing will be referred to as “Klemp Ex.”, while the Bar’s Exhibits will be referred to as “Bar Ex.”.
11
On May 14, 2013, contacted Klemp regarding the outstanding
invoices. (Klemp 1824). The parties engaged in some discussions about the
possibility of entering into a modified fee arrangement if a lawsuit was filed.
(Klemp 1787.) The proposed modified agreement consisted of an
hourly/contingency fee arrangement. (Id.) However, the specific terms were
never fully discussed or agreed upon (e.g., there was no agreement regarding
payment of costs, attorney fees for review of case, percentages, etc.).
(Klemp 1787, 1791, 1797.)
As a result of a personal dispute between Klemp and
moved out of their office on May 16, 2013. ( 698.) Klemp terminated
her attorney-client relationship with and sent her a letter on May 30,
2013, confirming the same. ( 698; Klemp Ex. 155.) After sending
her termination letter, Klemp researched the legal and ethical rules
applicable to securing an attorney lien. (Klemp 1789, 1799.) Based upon this
research, Klemp wrote a second letter on June 4, 2013, asserting an
attorney lien against file in the amount of $4,252.50. (Klemp Ex.
157.) The fee lien reflected the total amount of legal work Klemp had
performed, and that had been documented in the invoices. Klemp asserted
the lien pursuant to ORS 87.430, which provides:
12
“An attorney has a lien for compensation whether specially agreed upon or implied, upon all papers, personal property and money of the client in the possession of the attorney for services rendered to the client. The attorney may retain the papers, personal property and money until the lien created by this section, and the claim based thereon, is satisfied, and the attorney may apply the money retained to the satisfaction of the lien and claim.” (Emphasis supplied.)
contested that she owed Klemp attorney fees, and filed an OSB
complaint against Klemp on September 6, 2013. (Klemp Ex. 186.)
2. Matter (Case No. 15-01)
The Bar’s allegations against Klemp in the Matter arise from
her representation of in various matters. was married to a
woman by the name of Lauren (“ The couple was married in
approximately 2002. (Kellogg 79; Klemp Ex. 102.) The two entered into a
Premarital Agreement that set forth their joint and separate property. (Klemp
Ex. 102.) On April 5, 2006, established the Lauren Robertson
Revocable Trust (“Trust”). (Klemp Ex. 103.) was named both the
trustor and trustee, while was named successor trustee. Id. In the
event that was “for any reason […] unwilling or unable to serve as
trustee,” would become the successor trustee. (Klemp Ex. 103, p.
1.) Additionally, if became incapacitated to the extent that she was
“unable to manage her business affairs,” would be entitled to
distribute income from the Trust. (Id., p. 3.) In the event of
13 incapacity, was empowered to make “discretionary
distributions…in such proportions as [ may deem proper, any real
or personal property, whether tangible or intangible, held by the trust….”
(Id.) Although the Trust owned numerous commercial and residential
properties that generated income, never established a separate bank
account for the Trust. (Bertalan 409-410; Bryant 1304; 1053.)
also executed a Durable General Power of Attorney (“Durable
POA”) on April 5, 2006 (Klemp Ex. 104, p. 1), and an Unlimited Durable
Power of attorney (“Unlimited POA”) on May 30, 2012. (Klemp Ex. 105.)
Both power of attorneys named as the power of attorney for
(Klemp Exhs. 104, 105.) Both gave broad authority as
attorney in fact, including the right to “sign, endorse, sell, discount, deliver
and/or deposit checks, drafts, notes and negotiable or nonnegotiable
instruments.” (Klemp Ex. 104, p. 1.) The power of attorneys were triggered
in the event that became incapacitated or disabled. (Klemp Ex. 104, p.
1; Ex. 105, p.)
Throughout marriage, suffered from extreme
alcohol and prescription drug addiction. (Klemp Exhs. 106, 107;
1071.) Over the course of their marriage, was convicted of numerous
DUII charges, assaults (including assaulting police officers), and hit and
14 runs. (Klemp Ex. 106, p. 1.) In May 2012, to avoid sentencing for her fifth
DUII, absconded to California. ( 1071). In June and July 2012,
was evaluated by a licensed psychotherapist and a medical doctor.
(Klemp Ex. 107, pp. 1-6.) The examiners determined that suffered
from numerous psychological problems, including PTSD, severe depression,
and anxiety. (see generally Klemp Ex. 107.) One of the doctors, Dr.
Marjores Geis, found that was incapable of any “rational participation
in court hearings or proceedings,” and recommended that a Guardian ad
Litem be appointed for (Klemp Ex. 107, p. 6.) In her declaration, Dr.
Geis stated that was unable to participate meaningfully in a “court
hearings”. (Klemp Ex. 107, p. 6). This reference was to pending litigation in
Oregon against both and The couple had been sued for
allegedly breaching a contract with Exchange Properties Inc. (“the Exchange
Litigation”) (Klemp Ex. 110.) Due to ongoing mental health issues,
managed the litigation on behalf, including the payment of
attorney fees. (Bryant 1292; Klemp 1638.)
At the end of June 2012, retained Klemp to file a bankruptcy
solely on his behalf. (Klemp 108.) At this time, Klemp was an associate at
Bryant, Emerson, & Fitch LLP (“Bryant Emerson”) (Klemp 1631.) In
addition to retaining Klemp, hired Steve Bryant (“Bryant”), a
15 partner at Bryant Emerson, to petition the court to have a guardian ad litem
appointed on behalf. (Bryant 1291-1292.)
In approximately September 2012, returned to Oregon, and was
incarcerated at the Deschutes County Jail (“Jail”). (Klemp 1657.) was
represented by Bend criminal defense attorney Angela Lee-Mandlin. (Lee-
Mandlin 593.) When returned to Oregon, already had an
Unlimited POA executed by however, it did not become effective
unless was deemed “disabled or impaired.” Bryant had not filed a
petition to appoint a guardian ad litem for and thus, her competency
had not yet been determined by a court. (Klemp Ex. 118, p. 1.)
therefore hired Klemp in September 2012 to obtain a durable power of
attorney from that was not contingent upon her disability or
competency. (Klemp 1657.) By this time, Klemp had started her own firm.
(Klemp 1735). Klemp’s first visited in Jail on September 14, 2012.
(Klemp 1660.) A notary by the name of Julie Boock (“Boock”)
accompanied Klemp to the Jail to assist with the execution of the power of
attorney. (Id.). Klemp brought the durable power of attorney with her, as
well as a list of questions to determine competency. (Klemp 1680;
Klemp Exhs. 112, 113.)
16
Because Klemp was an attorney, Jail staff had arranged for the
meeting to take place in the attorney-client conference room. (Klemp 1661.)
appeared agitated when Klemp and Book entered the room. (Klemp
1662.) Klemp told that she was there “because your husband asked
me to have you sign a POA for him.” (Klemp 1662.) Klemp and Boock both
testified at the hearing that responded: “I know who you are. I told
my attorney Angela Lee to tell you not to come. I’m not signing that – I
didn’t ask for it my husband did.” (Klemp 1662; Boock 931.) Klemp then
asked if Lee represented in relation to her financial matters.
said “No.” (Klemp 1666-67; Boock 931.) Klemp apologized for not getting
the message. (Klemp 1662.) refused to sign the power of attorney, but
asked to keep Klemp’s draft. (Klemp 1666.) Klemp allowed to keep
the power of attorney and informed her that, if she had any questions
concerning the document she could call an attorney. (Boock 955; Klemp
1666-67). responded that “Steve Bryant doesn’t return my calls.”
(Klemp 1666-67.) Klemp asked whether Bryant represented to which
responded “no”. (Klemp 1667.) Klemp then informed that the
OSB provided attorney referrals if she needed one. (Klemp 1667.) Klemp
and Boock then left the Jail.
17
After the Jail visit, called Klemp on September 15, 2012, and
said she would sign the power of attorney. (Klemp 1674.) Klemp informed
that she need approval before she could return to the Jail.
(Klemp 1674.) Subsequently, authorized Klemp to return to the
Jail, and thus, Klemp once again contracted Boock and arranged to meet her
at the Jail. (Klemp 1674 - 1675.) Klemp and Boock returned to the Jail on
September 17, 2012. (Klemp 1675.) Upon meeting Klemp
reintroduced herself and Boock, and explained the purpose of their visit,
whereupon stated she had already signed the power of attorney, which
was dated September 17, 2012 (“POA 1). (Klemp Ex. 112; Klemp 1675-76;
Boock 933.) Klemp informed that she did not think that the POA 1
would be valid because it was signed outside the presence of a notary.
However, after discussing the situation with Boock, Boock decided to
notarize POA 1. (Boock 934.). Because had POA 1 over the weekend,
Klemp asked whether she had contacted an attorney to discuss the
document. (Klemp 1680.) immediately responded: “I know what a
Power of Attorney is”. (Klemp 1680.).
After Boock notarized POA 1, Klemp read through the competency
questions with When Klemp asked if she had signed the POA 1
under duress, indicated that she had signed it under duress. (Klemp
18 1680; Boock 933.) Surprised by answer, Klemp again asked if
she had signed the POA 1 under duress. (Klemp 1680.) again stated
that she had signed under duress. (Id.) Based upon representation,
Klemp and Boock agreed the POA 1 was not valid. (Boock 935; Klemp
1680.) Klemp and Boock then left the Jail.
again contacted Klemp on September 19, 2012 and stated she
was prepared to sign a power of attorney. (Klemp 1685.) Klemp informed
of call and obtained his authority to return to the Jail.
(Klemp 1685-86.) Klemp and Boock returned to the Jail that day. (Klemp
1686.) At the outset of this third meeting, Klemp informed that they
were there to provide her with a power of attorney for her signature. (Klemp
1686). Klemp informed that the power of the attorney was in the
exact form as POA 1. (Klemp 1686). After reviewing the document,
made some changes to the power of attorney (Klemp 1687.) Boock asked
competency questions, which answered appropriately. (Klemp
Ex. 113; Klemp 1687). signed the durable power of attorney (“POA
2”), dated it September 19, 2012, and Boock notarized it. (Klemp Ex. 114.)
The meeting was uneventful. (Boock 963.) Boock testified that clearly
understood Klemp was there to obtain a power of attorney for so
that he could use it to “take care of the bills and mortgage and that sort
19 thing.” (Boock 964.) Klemp sent POA 2 to on September 20, 2012.
(Klemp Ex. 115.) For reasons that remain unexplained,
inadvertently filed the POA 1 instead of POA 2 with the Deschutes County
Clerk’s Office on January 11, 2013 (Bar’s Ex. 33.)
POA 2 gave numerous rights, including, but not limited to,
the authority to “receive, endorse, sign, sell, discount, deliver, and deposit
check, drafts, notes, and negotiable and nonnegotiable instruments….”
(Klemp Ex. 114, p. 1.) (Emphasis supplied.) Therefore, as of September 19,
2012, had a valid power of attorney signed by allowing him
to handle her financial affairs, including signing checks.
On September 27, 2012, Bryant filed a Petition for Appointment of
Guardian Ad Litem on behalf of On November 1, 2012, a Deschutes
County Circuit Court Judge entered a judgment declaring
incapacitated (“November Judgment”). (Klemp Ex. 118.) The November
Judgment also appointed an individual by the name of David Defoe as
Guardian. (Id.) Bryant, an experienced trust and estates attorney, testified at
the hearing that authority as successor trustee of the Trust vested
by November 1, 2012. (Bryant 1302-05.) The Bar’s trust and estates expert
Lisa Bertalan (“Bertalan”) agreed with Bryant’s conclusion regarding when
became successor trustee. (Bertalan 428.) Thus, by November 1,
20 2012, was serving as both attorney in fact and successor
trustee.
The Trust owned real property located at 22680 Crestview Lane, in
Bend Oregon (“property”). (Klemp Ex. 125.) On February 1, 2013,
as attorney in fact and successor trustee—entered into a
residential lease (“February Lease”) for the property with a tenant by the
name of Samantha Vinson (“Vinson”). (Klemp Ex. 125.) The term of the
February Lease was for three months, i.e., from February 1, 2013 until April
1, 2013. (Id.) The rent checks were made payable to “Lauren (Id.)
Klemp had no involvement with the preparation or execution of the February
Lease. (Klemp 1744). Moreover, the Bar presented no evidence that Klemp
was involved in the drafting or execution of the February Lease.
At the end of the lease term, entered into a new lease with
Vinson on May 1, 2013 (“May Lease”). (Klemp Ex. 142.) Klemp’s legal
assistant Linda Nichols (“Nichols”) testified at the hearing that she gave
a boilerplate lease from the Oregon State Bar’s website to use as a
template. (Nichols 1534; Klemp Ex. 141, p. 1-2) Nichols further testified
that made changes to the boilerplate lease and she reformatted it.
(Nichols 1535; Klemp Ex. 141, p. 1) Klemp never reviewed nor provided
any input regarding the May Lease. (Klemp 1745; Nichols 1535; Klemp Ex.
21 141, p. 2.) took the May Lease to Vinson for her signature.
(Nichols 1535). The May Lease named as “Landlord” and provided
that the lease payments be made to (Klemp Ex. 142, p. 1.) Klemp
never saw the May Lease, and did not know that it directed Vinson to pay
(Klemp 1748-49.)
At the hearing, Vinson testified that the May Lease was executed in
July 2013, and was backdated. (Vinson 898.) The date of the execution of
the May Lease was disputed between the parties at the hearing. Regardless,
asked Klemp later in May to prepare a separate addendum to the
May Lease. (Klemp 1747; Klemp Ex. 141, p. 47.) The addendum shortened
the notice period to terminate the lease. (Klemp 1747). Klemp never
reviewed nor saw the May Lease. (Klemp 1748.) Klemp prepared the
addendum and gave it to Nichols to format. Nichols in turn gave it to
(Klemp 1748.) Klemp never met with Vinson. (Klemp 1749-70.)
On February 26, 2013, filed a petition to have
appointed as permanent successor guardian ad litem for (“Petition”).
Klemp Ex. 127.) After the Petition was filed, acted in behalf
in the Exchange Litigation and made financial decisions affecting
(Klemp Exhs. 129, 130, 131, 134.)
22
In March 2013, was still the successor trustee, and therefore
had the legal authority over the Trust’s property. See ORS 130.720(1).
paid expenses on behalf of and the Trust, including writing
checks from his own personal bank account. (Klemp Ex. 136). Bryant
testified at the hearing that had the right, as successor trustee, to
sell or encumber Trust property and to reimburse himself for expenses he
personally paid. (Bryant 1307-10.) Bertalan—the Bar’s trust and estates
expert—agreed that had such rights as successor trustee. (Bertalan
398.) At the hearing, Bryant further testified that could legally
place a lien on Trust property to secure repayment, regardless of whether his
expenditures could be specifically documented. (Bryant 1313).
In an effort to get reimbursed for his expenditures, went to
a self-proclaimed estate and probate expert— to assist him in
documenting the expenses. (Klemp Ex. 130; Klemp 1757; 711.)
Working together, and compiled ledgers and documents,
including checks drawn from personal checking account to
support of his claim for reimbursement from the Trust. (Klemp Exhs. 136,
137; Fitch 574; Klemp 1753-54). had almost 250 pages of
documents to support his claims. (Klemp Exhs. 136, 137.) and
documented $53,741.81 in expenditures made by (Klemp
23 Ex. 136, p. 12.) On March 6, 2013, in her capacity as guardian ad litem for
and to assist wrote attorney and stated that
the Trust owed money for his personal expenditures. (Klemp Ex.
129.) informed the attorney that she would “dispose” of Trust
property to pay back. (Id.) also wrote in prison, and
advised her that she owed for expenditures and services he had
made on behalf of her and the Trust. (Klemp Ex. 140.) Despite writing these
letters, denied at the hearing that she had any involvement in assisting
with seeking reimbursement from the Trust. ( 757.)
Nevertheless, Klemp did not assist or with compiling or
preparing documentation in support of his expenditures. (Klemp 1756.)
In April 2013, and asked Klemp to prepare a
Promissory Note and Trust Deed for to secure repayment from the
Trust. (Klemp 1753.) Klemp believed that was still operating as
successor trustee as this time. (Klemp 1752.) Klemp agreed, and obtained a
conflict waiver from both and because of their respective
involvement with the Trust and to wit: as successor trustee,
and as Guardian Ad Litem. Ex. 138. Both and
executed the conflict waiver. (Klemp Ex. 138.) Klemp reviewed the ledgers
24 and documents compiled by and and drafted a Promissory
Note and Trust Deed. (Klemp 1753; Klemp Ex. 139.)
Bertalan testified at the hearing that a successor trustee is entitled to
secure repayment of its expenditures with a trust deed against trust property.
(Bertalan 396). Both Bryant and Bertalan testified that the documentation
compiled by and could legally justify the execution of a
promissory note or trust deed by a successor trustee against the Trust to
secure repayment. (Bertalan 396-97, 402-403, Bryant 1334-35; Klemp Ex.
136 and 137). Bertalan testified that, if checks were written, she would also
want a ledger showing the amount of the checks. (Bertalan 406.) According
to Bertalan, if sufficient documentation of expenditures on behalf the trust
existed, she ‘would approve it.” (Bertalan 402). The process described by
Bertalan for securing a loan to the Trust with a trust deed is the exact process
that Klemp followed in this case. (Klemp 1554-56.)
On May 14, 2013, terminated as guardian ad Litem.
(Klemp Ex. 131.) Angered by this move, traveled to Coffee Creek
Prison, where was incarcerated at the time, and obtained from her a
power of attorney and a handwritten note appointing her as successor trustee
(“ POA”). ( 1015; Klemp Ex. 145, pp. 1-2.) The handwritten
note also removed both and Linda ( sister) as
25 successor trustees. (Klemp Ex. 145, pp. 1-2.) At this time, the November
Judgment—adjudging that incapacitated—was still in place. (
1012; Klemp Ex. 118, p. 8-9.) Klemp never received nor reviewed copies
of the POA, nor the handwritten note by (Klemp 1897.) The
Bar presented no evidence that Klemp ever received copies of the
aforementioned documents.
On May 31, 2013, or 14 days after purportedly became
power of attorney and successor trustee, sister, Linda
(“ had execute an “Amendment of Lauren Robertson
Trust” (“Amendment”), wherein revoked the handwritten note
appointing the successor trustee. (Klemp Ex. 145, p. 3.) Although the
Amendment was signed by on May 31, 2013, the effective date of the
Amendment was May 20, 2013. (Klemp Ex. 145, p. 3). Klemp was never
aware of the Amendment, nor did she receive a copy of it. (Klemp 1897.)
By June 2013, became involved with business affairs.
She retained Bend attorney Linda Ratcliffe (“Ratcliffe”) to assist in taking
over as trustee. On May 31, 2013, executed a Special Power of
Attorney (“Special POA”) designating as her attorney in fact. (Bar’s
Ex. 27).
26
On June 10, 2013, Ratcliff wrote Bend attorney Brendon Alexander
(“Alexander”) regarding her representation of (“June 10 Letter”).
(Klemp Ex. 163.) The June 10 Letter starts with “I understand that you
represent Ted M. (Klemp Ex. 163.) The letter purported to attach
the Amendment and Special POA. (Klemp Ex. 163.) However, the June 10
Letter entered into evidence at the hearing did not have any attachments.
(Bar’s Ex. 134.) Thus, it is unclear what documents, if any, were attached to
the June 10 Letter. In any event, the scope of Alexander’s representation at
this time was unclear. (Ratcliffe 1376.) In fact, Ratcliffe testified that
was represented by a number of attorneys at this time. (Ratcliffe
1374, 1376.) The Bar presented no evidence that Alexander provided
with a copy of the letter, or the alleged attachments. Neither
nor Alexander testified at the hearing. Ratcliffe admitted at the
hearing that she could not confirm whether actually received a copy
of her June 10 Letter, nor whether he was aware of it. (Ratcliffe 1372-73;
1377.) The Bar presented no evidence that Klemp received a copy of the
June 10, 2013, letter, or the attached documents. There was no evidence that
Klemp was ever aware of the June 10 letter, POA, the Amendment,
or the Special POA. On the contrary, Klemp testified that these documents
were never provided to her, nor was she aware of them. (Klemp 1724, 1897,
1903.)
27
On June 17, 2013, wrote a check in the amount of $9,500
from bank account at Evergreen Federal Bank (“Evergreen”). (Klemp
Ex. 166.) endorsed the check as “Lauren (Id.) The subject
line for the check read “attorney fees.” (Klemp Ex. 166.) When
wrote the check, he was operating under the September 19, 2012 power of
attorney, which gave him full authority to sign checks on behalf.
Notably, Bryant, Bertalan, and Ratcliffe all testified that, with a valid power
of attorney, had the right to sign name on checks. (Bertalan
325, 411; Bryant 1300; Ratcliffe 1419). See ORS 73.040(2). In fact, Bryant
testified that, if had a valid power of attorney, then signing
name was not forgery. (Bryant 1301.)
Before the check was written, Klemp and had created a
company called TLA Properties. (Klemp Ex. 128.) The $9,500 check was
deposited into the TLA Properties’ business account at Washington Federal.
(Klemp Ex. 166.) At the hearing, Klemp testified that “ used the
TLA bank account as a personal account.” (Klemp 1698.) Klemp maintained
her own personal and business accounts separate and apart from TLA’s bank
account. (Klemp 1711.) used the TLA account to pay the debts of
and the Trust. (Klemp 1711-12; Klemp Ex. 215). wrote
checks on behalf of for horse hay, dog care, moving expenses,
28 insurance, and construction of a fence and dog houses for four dogs.
(Klemp 1699; Klemp Ex. 128, p. 9, 20, 46, 47.)
Klemp testified at the hearing that she had no knowledge of the
$9,500 check, nor what the funds were used for. (Klemp 1712-20.) The Bar
presented no evidence that Klemp knew of the deposit of the check, nor that
she benefited from the funds in any respect. (Id.) did not testify at
the hearing, and thus no evidence was presented regarding any facts
underlying the check, including whether he intended to use the check to pay
“attorney fees.”
Klemp did not learn about the check until she received a telephone
call from Washington Federal advising her that the $9,500 had been frozen.
(Klemp 1692.) The funds were frozen because had filed an Affidavit
of Forgery with Evergreen Bank. (Klemp 1692; Bar Ex. 69.) alleged
that committed forgery by signing name on the check. (Bar
Ex. 69.) As joint owner of the account, Klemp felt compelled to respond to
the allegation that had forged the check by signing name.
After reviewing the Affidavit of Forgery, Klemp asked about the
signature. (Klemp 1692-1695.) indicated that he signed it as Well’s
attorney in fact, based upon the September power of attorney. (Id.)
also revealed to Klemp that he had filed the September power of attorney
29 with Deschutes County. (Klemp 1694.) Klemp accessed Deschutes County’s
online records and obtained a copy of the power of attorney. As noted above,
had inadvertently recorded the September 17 power of attorney
rather than the September 19 power of attorney. (Klemp 1694.) Given that
eight months had passed since the execution of POA 1 and POA 2, Klemp
did not recall the exact date of the operative power of attorney (Klemp
1695.) It should be noted here that Bertalan testified that recording POA 1
did not invalidate the POA 2. (Bertalan 311.) Because POA 2 was still valid,
was attorney in fact when he signed the check. Based upon
Klemp’s review of the recorded power of attorney, Klemp concluded that
had the right to sign name as her attorney in fact, and thus,
he did not commit forgery. (Klemp 1695-96) Again, the Bar presented no
evidence that Klemp ever received copies of or powers of
attorney. Based upon her review of the power of attorney, Klemp
wrote a letter to Washington Federal on July 18, 2013. (Klemp 1694; Klemp
Ex. 177.) In this letter, Klemp wrote that had a “Power of Attorney
dated September 17, 2012…and the Power of Attorney authorized signature
for financial matters concerning Lauren (Klemp Ex. 177.)
Subsequently, Evergreen Bank conducted its own investigation and
ultimately approved the transfer of funds because “[u]nder the foregoing
30 facts, it is not clear that Mr. the apparent signer, was
unauthorized.” (Klemp Ex. 187.)
On June 21, 2013, Ratcliffe filed a Petition to appoint as
Successor Guardian and Conservator of (Klemp Ex. 168.) A Limited
Judgment was signed by the court on July 1, 2013 that specifically revoked
all “prior power of attorneys.” (Klemp Ex. 169, p. 4.; p. 2 ¶7.) Klemp
testified that she believed the Limited Judgment revoked
authority as power of attorney. (Klemp 1725.) However, the Limited
Judgment was entered after signed name on the check.
did not sign a formal resignation as successor trustee until July 9,
2013, three weeks after he signed the check. (Klemp 1752; OSB Ex. 53).
II. ARGUMENT
A. Matter (Case No. 14-128)
1. First Assignment of Error: The Majority Erred in finding Klemp violated RPC 1.16(d) based upon facts or evidence not pled by the Bar.
In its Formal Complaint, the Bar alleged that Klemp violated RPC
1.16(d) by withholding file upon the termination of her
representation. (ER-2) Specifically, the Bar alleged “Klemp agreed to
represent in pursuing the wrongful death claim on a contingency fee
basis.” (Id.) According to the Formal Complaint, when Klemp terminated
31 her representation of she “confirmed the prior contingency
arrangement with but announced that he was asserting a lien against
the file for her time spent on the wrongful death claim at her hourly rate.”
(Id.) Based upon the assertion of the hourly rate lien against a contingency
fee agreement, the Bar alleged that Klemp wrongfully withheld file.
(ER-2.) The Bar therefore alleged Klemp violated RPC 1.16(d) by failing to
take steps to protect interests.
The MPO ‘s Opinion definitively found that the Bar failed to “establish
by clear and convincing evidence of a violation of RPC 1.16(d)” regarding
its allegation that the Klemp had entered into a contingency fee agreement
with (ER-11.) The finding that there was no contingency fee
agreement should have resulted in a dismissal of this claim, as the Bar failed
to prove an essential element of its claim, to wit, Klemp placed an hourly fee
lien on a contingency fee file. However, instead of dismissing this claim, the
MPO sua sponte found a violation of RPC 1.16(d) on the basis that the legal
services rendered by Klemp had “little or no benefit to (ER-12.)
The MPO further found that “there was no evidence of what the fair market
value of Klemp’s work was, and *** there was no evidence of what her
reasonable services were.” (ER-13.) Based upon the aforementioned, the
MPO concluded that Klemp had no right to assert the lien because “nothing
32 would be owed by (ER-14.)
None of the facts underlying the MPO’s finding that Klemp violated RPC
1.16(d) were alleged by the Bar. There is no allegation that Klemp did not
perform legal work, that the work she performed had little or no value, nor
that the lien was invalid because the services she rendered were
unreasonable. (ER-1-2.)
A trial panel cannot unilaterally add charges to the Bar’s Formal
Complaint. Under the Rules adopted by this Court, only the State
Professional Responsibility Board ("SPRB") may authorize the charge of a
violation of the disciplinary rules. BR 2.6(c), (f); BR 4.1. Further, the
investigation of potential attorney misconduct is assigned to Bar
Disciplinary Counsel, BR 2.5(b)(2) and 2.6(a), under the SPRB’s oversight,
BR 2.3(b)(3) and 2.6(c). There is no role for a trial panel to play in the
investigation or charging process. It is only after charges have been
approved, and the accused lawyer denies them, that a trial panel is even
convened. BR 2.4(f)(l) and 2.6(c)(l)(B)
Trial Panels in Bar disciplinary proceedings have a limited role: to decide
issues of evidence and procedure and to determine impartially whether the
Bar has proven the charges in its complaint by clear and convincing
evidence. BR 2.4(i)(l) and 5.2. Trial Panels are required to "promptly try the
33 issues" and to "pass on all questions of procedure and admission of
evidence." BR 2.4(i)(l). By finding a violation of RPC 1.16(d) that was not
alleged in the Bar’s Formal Complaint, the MPO ignored the separation of
the roles of prosecutor and adjudicator embedded in the Bar Rules.
Moreover, the Rules of Procedure clearly establish a formal process for
amending a complaint. Amendments are permitted, see BR 4.4, but an
amended complaint must be filed and served, see BR 4.2. A trial panel has
no role in this process other than to extend the time for filing pleadings, see
BR 4.3(c), and presumably to ensure that all parties have sufficient notice
and time to respond. Maintaining the separation between the roles of
prosecutor and adjudicator is crucial to ensuring a fair process. As reflected
in the American Bar Association Model Rules on Lawyer Discipline,
"prosecutorial and adjudicative functions should be separated as much as
possible within the unitary system to avoid unfairness and any appearance of
unfairness.” The authority to change the roles and authority of the SPRB
and a trial panel, as well as the Rules of Procedure, lies solely with this
Court. See, e.g., Ramstead v. Morgan; 219 OR 383, 399-400, 347 P2d 594
(1959) ("'No area of judicial power is more clearly marked off and identified
than the Courts' power to regulate the conduct of the attorneys who serve
under it.").
34
The MPO’s finding of violations that were not alleged by the Bar is also
inconsistent with the statutory requirement that attorneys receive prior
written notice of the charges against them. Every member of the Oregon
State Bar, "formally accused of misconduct by the [B]ar, shall be given
reasonable written notice of the charges against the member [and] a
reasonable opportunity to defend against the charges[.]" ORS 9.534(2). The
Bar Rules reinforce this requirement. Members of the Bar are entitled to a
formal complaint identifying "the acts or omissions of the accused, including
the specific statutes or disciplinary rules violated, so as to enable the accused
to know the nature of the charge or charges against the accused." BR 4.1(c).
Though amendments to formal complaints are permitted, the accused lawyer
is entitled to "a reasonable time* * *to answer the amended formal
complaint, to procure evidence and to prepare to meet the matters raised by
the amended formal complaint." BR 4.4(b)(l).
Deviation from the process described in the rules has consequences. This
Court has repeatedly held that a trial panel's findings of disciplinary
violations not alleged by the Bar are improper and violate the notice rules.
See In re Chambers, 292 Or 670, 676, 642 P2d 286 (1982) ("The proof
supports this finding, but the pleadings do not. The complaint contains no
allegation that would put [the accused lawyer] on notice that he was charged
35 with this misrepresentation.") (decided under former DR 6-101(A)(1), (2)
and (3); 7-101(A)(3); 7-102(A)(5)); In re Ainsworth, 289 Or 479, 487, 614
P2d 1127 (1980) ("It also appears from an examination of the first charge of
the complaint that it does not very clearly charge the accused with a conflict
of interest in violation of either DR 5-105 or DR 7-104(A), so as to give him
a fair opportunity to defend himself against a charge of violating the terms of
those disciplinary rules.") (decided in relevant part under former DR 5-105
and DR 7- 104(A)). See also In re Thomas, 294 Or 505, 526,659 P2d 960
(1983) ("The difficulty is that the Bar in this cause did not allege that [the
accused lawyer] had violated the [statute the trial panel found that he
violated]. An attorney shall be given reasonable written notice of the charge
against him.") (decided under former DR 1-102 and 9-102).
This prohibition applies not only when a trial panel finds a violation
based on a disciplinary rule not alleged in the Bar's complaint, but also when
a panel finds a violation based on facts, or a theory about the facts, not
alleged in the complaint, even if the disciplinary rule was cited. In re Fulop,
297 Or 354, 359-60, 685 P2d 414 (1984) (rejecting the Disciplinary Review
Board's finding of a violation of DR 5-101(A) because, although DR 5-
101(A) was alleged to have been violated, the Bar's allegation was based on
the lawyer's alleged “financial” interest, whereas the Board's finding was
36 based on the lawyer's alleged “personal” interest, and thus the lawyer was
not "given fair notice that he should defend against that interpretation”).
This Court also has held in analogous circumstances that notice to a
defendant of the charges made against him, including in an administrative
proceeding, is a constitutional right. See State ex rel. Currin v. Commission
on Judicial Fitness and Disability, 311 Or 530, 533, 815 P2d 212 (1991)
("Adequate notice is a necessary component of due process of law.").
Petitioner in this matter did not, and does not, consent to the adjudication of
any unalleged charges against her.
In the case at bar, the MPO’s findings were not based upon allegations
plead by the Bar, and thus its decision violated Klemp’s right to fair notice
and due process. For this reason, the MPO’s finding that Klemp violated
RPC 1.16(d) should be dismissed.
2. Second Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.16(d) based upon its determination that Klemp’s legal services had no value.
The MPO found that Klemp violated RPC 1.16(d) by placing a lien on
file because her legal services provided little or no benefit to
(ER-12.) the MPO found there was no evidence of what Klemp’s
“reasonable services were.” (ER 5.) This decision was entirely inconsistent
with the law and facts presented at the hearing.
37
As a starting point, RPC 1.16(d) states that a lawyer may “retain papers,
personal properly and money of the client to the extent permitted by other
law.” (Emphasis supplied.) Oregon law permits an attorney to assert a lien
against a client’s file. Specifically, ORS 87.430 provides that:
“An attorney has a lien for compensation whether specially agreed upon or implied, upon all papers, personal property and money of the client in the possession of the attorney for services rendered to the client. The attorney may retain the papers, personal property and money until the lien created by this section, and the claim based thereon, is satisfied, and the attorney may apply the money retained to the satisfaction of the lien and claim.” (Emphasis added.)
See also, Oregon Formal Ethical Opinion No. 2005-90 (“if the lien is
otherwise valid, and the client has sufficient resources to pay the lawyer
what is due but chooses neither to make payment nor to file a bond, the
lawyer may lawfully withhold the client’s materials.”) The amount claimed
can be fixed, unliquidated or contingent, or based upon an assertion of the
reasonable value of the services rendered in the absence of an express
agreement for compensation. Crawford v. Crane, 204 Or 60, 67, 282 P2d
348 (1955); accord Lee v. Lee, 5 Or App 74, 79 n.1, 482 P2d 745 (1971).
Therefore, Klemp had a legal and ethical right under both RPC 1.16(d) and
ORS 87.430, to retain file to secure payment of fees, whether the
fees were specifically agreed upon or implied.
38
There was substantial evidence of the value of Klemp’s legal services.
Most of the supporting evidence was furnished by herself.
testified “I knew that [Klemp] was keeping track of her hours. That was the
agreement.” ( 702; 783.) further testified “[Klemp] was going
to keep track of her time and that—that a billing has been submitted to me
by her accountant, but I wasn’t---I wasn’t really in much of a frame of mind
to keeping track of that at that point.” ( 785.) understood that
Klemp was keeping track of her time because “when we finally finished the
litigation, that she would have an accounting of her time so that she could be
paid.” ( 785.) When asked whether she expected Klemp to provide
legal services for free, responded “of course not.” ( 784.)
further admitted that she understood that Klemp had the right to
charge for the time she spent on her case ( 787), and the right to
charge at her reasonable rate. ( 787.)
The undisputed evidence at the hearing was that Klemp provided legal
services for Klemp met with representatives of the nursing facility.
( 787.) Klemp did legal research, reviewed the nursing home records,
outlined legal issues in the case, met with and outlined the civil
complaint. (Klemp 1785, 2023-2024; Klemp Ex. 218.) When asked whether
Klemp’ legal work provided her value, responded “certainly.”
39 ( 786.) (Emphasis supplied.)
When Klemp terminated as a client, her unpaid legal fees totaled
$4,252.50. (Klemp Exhs.122, 155.) Klemp testified that when she first took
the case, she informed that she would charge her normal rate of $225
per hour. (Klemp 1787, 1799.) Klemp provided with invoices
showing the time she spent on the case, as well as her hourly rate. (Klemp
Ex. 122.) Klemp testified that the time reflected on the invoices was for legal
services actually performed for (Klemp 1799.) Notably,
conceded at the hearing that Klemp had the right to lien her file until her
legal fees were paid. ( 823.)
Based upon own testimony and the evidence presented at the
hearing, Klemp provided legal services to that were beneficial to her.
Klemp tracked the time she spent on the case, invoiced for that time,
and charged her normal hourly rate. Under RPC 1.16(d) and ORS
ORS 87.430, Klemp had the right to assert a lien on file. It was this
exact evidence that led Taggart to write in his dissenting opinion: “[i]t is
clear there was an attorney-client relationship. It is also clear
recognized [Klemp’s] work to be compensated.*** Based upon the unpaid
attorney fees, [Klemp] claimed a possessory lien under ORS 87.430 on
file and records which included the medical records. ***By reason
40 of the aforesaid, OSB has not carried its burden of proof.” (ER 33-34) For
the reasons stated above, the MPO’s finding that Kemp violated RPC
1.16(d) should be dismissed.
B. Matter (Case No. 15-01)
1. First Assignment of Error: The Majority Erred in finding that Klemp violated RPC 4.3 based upon facts or evidence not pled by the Bar.
The Bar alleged in its Formal Complaint that was an
unrepresented person. (ER-4.) It further alleged that, during Klemp’s initial
visit to the Jail on September 14, 2012, was confused about Klemp’s
role and that she “failed to make reasonable effort to correct the
misunderstanding.” (ER-4.) The Bar also alleged that Klemp failed to advise
that “she should secure her own counsel to advise her whether to sign
the power of attorney.” (Id.) The Bar additionally alleged that, during
Klemp’s third visit to the Jail on September 19, 2012, Klemp “took no steps
to clarify her role to nor did she advise to seek advice of
counsel prior to executing POA 2.” (ER-5.) Based upon this alleged conduct,
the Bar therefore accused Klemp of violating RPC 4.3. (ER-7.)
RPC 4.3 states:
“In dealing on behalf of a client or the lawyer’s own interests with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is
41
disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client or the lawyer’s own interests.” (Emphasis supplied.)
RPC 4.3 contains three distinct acts by a lawyer, to wit: (1) a lawyer dealing
with an unrepresented party shall not state or imply that the lawyer is
disinterested; (2) if the lawyer knows that the unpresented person
misunderstands the lawyer’s role, the lawyer must correct that
misunderstanding; and (3) the lawyer shall not give legal advice to a
unrepresented party, other than to secure legal counsel, if the interests of the
unrepresented party are in conflict with the interests of the lawyer or his/her
client. The Bar’s Formal Complaint, clearly alleged that Klemp violated
RPC 4.3 by engaging in conduct set forth in (2) and (3), above.
Notwithstanding the Bar’s allegations against Klemp, the MPO found
that Klemp violated RPC 4.3 by “implying that she was a disinterested party
and by not disclosing the fact that she was representing to obtain
the POA.” (ER-17.) Additionally, the MPO found that Klemp gave
legal advice, in violation of (3), above.
42
The MPO’s finding that Klemp violated RPC 4.3 by implying that she
was a disinterested party was in error, as this was never alleged by the Bar.
Klemp fully incorporates the points and authorities from pages 32-36 above
in into this section. For the reasons set forth in pages 32-36 above, and based
upon the holding in In re Fulop, 297 Or at 359-60, the MPO’s finding that
Klemp violated RPC 4.3 by implying that she was disinterested was
improper, as it was not alleged in the Formal Complaint, and thus violated
Klemp’s right to notice and due process. For these reason, the MPO’s
finding that Klemp violated RPC 4.3 by “implying that she was
disinterested” should be dismissed by this Court.
2. Second Assignment of Error: The Majority Erred in finding that Klemp Violated RPC 4.3 by implying that she was disinterested.
The only witnesses who testified at the hearing regarding Klemp’s
interactions with were Klemp and Boock. Both testified that Klemp
never stated that she was a disinterested party. (Boock 953; Klemp 1669.)
The Bar presented no evidence that Klemp even implied she was
disinterested. According to Boock’s testimony, Klemp told that “she
was there to have a power of attorney signed so her husband could take care
of the bills.” (Boock 954.) Klemp testified that told her: “I know who
you are. I told my attorney Angela Lee to tell you not to come. I’m not
signing that – I didn’t ask for it my husband did.” (Klemp 1662; Boock
43 931). therefore not only knew who Klemp was and who she
represented, but was unwilling to sign the POA on behalf of Klemp’s client.
The MPO’s finding that Klemp implied that she was disinterested during this
interaction with flatly contradicts the testimony of both Boock and
Klemp. Consistent with the testimony presented at the hearing, Taggart
stated in his dissenting opinion: “the evidence before the Panel does not
permit a finding that [Klemp] stated or implied to that [Klemp] was
disinterested….” (ER-36.) For these reasons, this Court should dismiss the
MPO’s finding that Klemp violated RPC 4.2 by implying that she was
disinterested.
3. Third Assignment of Error: The Majority Erred in finding that Klemp violated PRC 4.3 by failing to disclose that she was representing to obtain the POA.
As stated above, Boock and Klemp were the only two witnesses to the
interaction between Klemp and Both clearly testified that did
not appear to be confused about Klemp’s role. Boock testified that Klemp
never told that she was her attorney. (Boock 950, 952.) Boock also
testified that Klemp did not give legal advice. (Boock 954.) Boock
testified that Klemp advised that she was at the Jail to obtain a power
of attorney for so that he could pay the bills. (Boock 971.) There
was nothing about Klemp’s interactions with that led Boock to believe
that misunderstood Klemp’s role. (Boock 971.)
44
Klemp also testified that she told that she was at the Jail to obtain a
power of attorney for (Klemp 1662.) specifically told Klemp
that she knew who Klemp was, and that she would not sign the power of
attorney for (Klemp 1662; Boock 931.) Klemp also testified that
never appeared to be confused about her role. (Klemp 1669.) Before
leaving the jail, Klemp told that she should call an attorney if she had
questions about the power of attorney. (Klemp 1666.)
RPC 4.3 requires a lawyer to make a reasonable effort to correct an
unrepresented party if the unrepresented party misunderstands the
attorney’s role. The evidence in this case was that never appeared to
be confused about Klemp’s role. As Taggart wrote in his dissenting opinion:
“ fully understood who [Klemp] represented and why [Klemp] was
meeting with in jail. *** The evidence before the Panel does not
permit a finding that misunderstood [Klemp’s] role.” (ER-36.)
Because the evidence presented at the hearing did not support a finding that
misunderstood Klemp’s role, the MPO’s holding that Klemp violated
RPC 4.3 by failing to clarify her role to an unpresented party should be
dismissed.
4. Fourth Assignment of Error: The Majority Erred in finding that Klemp violated PRC 4.3 by giving legal advice.
45
The Majority found that Klemp violated RPC 4.3 by failing to advise
to seek legal counsel. (ER-16.) However, Klemp could only have
violated RPC 4.3 by failing to advise to seek legal counsel if she gave
legal advice, which she did not. The MPO’s finding that Klemp
violated RPC 4.3 is predicated on a finding that Klemp also gave legal
advice. However, the evidence at the hearing did not support this finding.
Both Klemp and Boock testified that Klemp never gave legal advice.
(Klemp 1669, Boock 954). Additionally, Klemp testified that she told
to contact an attorney if she had any questions about the power of attorney.
(Klemp 1666).
In his dissenting opinion, Taggart wrote that under RPC 4.3 “the lawyer
shall not give legal advice to an unrepresented person if the lawyer
reasonably knows the interests of the unpresented person have a reasonable
possibility of being in conflict with the interest of the lawyer’s client; the
evidence before the Panel does not permit a finding that [Klemp] gave legal
advice to (ER 36.) Because there was no evidence that Klemp gave
legal advice, this Court must dismiss the MPO’s finding that Klemp violated
RPC 4.3.
5. Fifth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by modifying a residential lease based upon facts or evidence not pled by the Bar.
46
The Bar alleged that Klemp violated RPC 1.2(c) when she “drafted one
or more leases in which she falsely and fraudulently identified as
the lessor of property that she knew belonged to the trust.” (ER 5.)
In its Opinion, the Majority held that Klemp violated RPC 1.2(c) by
“modifying the leases with the Trust properties to require payment to
be made to (Er-22.) Not only did the Majority not make a finding
that Klemp modified the May Lease, but its holding was not plead in the
Bar’s formal Complaint. The Bar alleged that Klemp “drafted one or more
leases.” (Id.) Because the MPO’s holding was not alleged in the Formal
Complaint nor supported by the evidence in the record, the MPO’s decision
violated Klemp’s right to fair notice and due process, and thus, should be
dismissed by this Court.
6. Sixth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by demanding Vinson pay rent to
when Klemp knew that he was no longer successor trustee.
In holding that Klemp violated RPC 1.2(c) by modifying the leases, the
MPO made specific findings. It found that Klemp was present when Vinson
executed the May Lease. (ER-21.) It found that Vinson continued to pay rent
to because “Ted and Lisa Klemp” told her that was
going to evict her. (Id.) The MPO found that “Klemp knew that had
been substituted as successor trustee under the Trust and yet both
47
and Klemp continued to demand that rent payments be made to
knowing full well that he was no longer the successor trustee.”
(Id.) Based upon the above findings, the MPO held that Klemp violated RPC
1.2(c) by “modifying the lease with the Trust properties to require
repayment to be made to (ER-22.)
The MPO’s above findings were erroneous is several respects. First,
the Bar never alleged Klemp violated RPC 1.2(c) by modifying leases.
Additionally, there was no evidence that Klemp drafted or modified the May
Lease to require Vinson to pay Klemp and Nichols specifically
testified that Klemp had no involvement in drafting or reviewing the May
Lease. (Klemp 1745; Nichols 1534-1535.) When Vinson (the Bar’s only
witness regarding the leases) was asked at the hearing whether Klemp
drafted the May Lease, she testified that “I never saw who actually drafted
[the leases].” (Vinson 921.) The only evidence of Klemp’s alleged
involvement with the May Lease came from the Vinson’s Declaration.
(Bar’s Ex. 25.) In her Declaration, Vinson stated “[ suggested
several changes to the July Lease, and [Klemp] made the changes on her
computer.” (Bar’s Ex. 25, p. 3, ¶14.) However, Vinson’s Declaration made
clear that the change to the May Lease involved a provision regarding horse
care. (Id., ¶14.) Vinson’s hearing testimony was less clear regarding
48 Klemp’s involvement. When asked about the execution of the second lease
and who was present, Vinson testified that “So [ came to me and
said were going to sign, were going to fill out this new lease—we’re going
to do a new lease for you, and were going to backdate it to May….” (Vinson
898.) Vinson made no mention of Klemp. (Vinson 898.) The Trial Panel
members later sought clarification regarding who instructed her to sign the
May Lease. (Tr. 900). In response, Vinson testified that “my ex-boyfriend
and I, when we—when we were going over this new lease and Ted was
telling us everything.” (Vinson 900.) Unsatisfied with her answer, the Bar
asked Vinson the following leading question “[s]o both Ted and Lisa were
talking to you at that time…”, to which Vinson responded, “Yes.” (Vinson
900.) Contrary to Vinson’s Declaration, both Klemp and Nichols testified
that Klemp never spoke to Vinson, nor directed Vinson to pay rent to
(Klemp 1744-45; Nichols 1538); see also, ER-30 (Taggart found
that Klemp to be a “very credible witness.”); In re Fulop, 297 Or 354, 360,
685 P2d 414 (1984) (conflicting testimony between equally credible
witnesses is not clear and convincing evidence of an ethics violation.)
Nichols also testified that Klemp was not present during the execution of the
Lease and made no changes to the Lease. (Nichols 1535-36.)
49
Second, the Majority erred when it found that Klemp violated RPC
1.2(c) on the basis that Vinson “was scared” not to pay rent
because “Ted and Lisa Klemp” told her that would evict
her. [ER-21.]. The Bar’s Formal Complaint alleged that Klemp “assisted
by directing tenant of the trust properties to pay rent directly
to (Er-5.] The Majority’s Opinion did not find that Klemp directed
Vinson to pay rent; instead, it found that Klemp told Vinson that was
going to evict her. [Er-21.] Even if this were true, which it is not, there was
no evidence that this representation was fraudulent. Moreover, Vinson’s
Declaration does not state that Klemp ever “demanded” that she pay
rent. (Bar’s Ex. 25, p. 3, ¶17.) Even in its own Opinion, the
Majority recognized that was the only person who “in the months
of June and July, 2013 […] “continued to require the rent money to be given
to him and not given to Linda [ER-22.]
Third, the MPO erred by finding that Klemp “knew” had been
substituted as successor trustee, and nevertheless continued to demand that
rent payments be made to [ER-21-22.] The Bar never presented
any evidence that Klemp “knew” that was the successor trustee when
the May Lease was executed. The May Lease is dated May 1, 2013. (Klemp
Ex. 142). This, coincidently, was the same time that Vinson’s prior lease
50 with expired. (Klemp Ex. 125.) Nichols testified that the May
Lease was executed in May. (Nichols 1535, 1568; Klemp Ex. 192.)
Assuming the date appearing on the May Lease, and the consistent
testimony of Nichols is correct, then the May Lease was executed before
May 20, 2013, i.e., the date the bar contended that appointed
successor trustee. (Klemp Ex. 145, p. 3). As such, had the authority
to execute the May Lease and demand payment of rents as successor trustee.
Assuming arguendo that was removed as successor on May 20,
2013, the Bar never proved that either or Klemp knew of
appointment as successor trustee. (Ratcliffe 1372-73, 1377) The only
testimony regarding Klemp’s knowledge came from Klemp, who testified
that she never received a copy of the Amendment appointing nor
was she aware of it. (Klemp 1724, 1897, 1903.) Further, there was never any
evidence presented by the Bar that Klemp demanded or directed Vinson to
pay rent money after the May Lease was executed.
For the reasons state above, the MPO’s finding that Klemp violated
RPC 1.2(c) by “modifying the leases” was not supported by the evidence,
and should be dismissed.
7. Seventh Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by preparing a Trust Deed for
personal expenses, which was not pled by the Bar.
51
The Bar alleged in it Formal Complaint that Klemp “fraudulently
executed a trust deed “against Trust property, knowing that “
had not in fact loaned $53,530 of his own money to the Trust.” [ER-
7.] (Emphasis supplied.) The Bar further alleged that Klemp “[k]new that
had no legal ability to execute the trust deed as trustee for the
trust.” (Id.) The Bar had to prove these allegations by clear and convincing
evidence.
The MPO found that Klemp violated RPC 1.2 by allowing to
procure a “promissory note and a deed trust against the Trust
property.” [ER-23.] However, this conclusion was not based upon a finding
that had not “loaned his own money.” Rather, the MPO’s
conclusion was based upon its finding that had, in fact, paid money,
but he improperly sought reimbursement for his personal expenses, not
expenditures made on behalf of the Trust. [ER-22.] As noted above, this was
not the allegation in the Bar’s Formal Complaint. Klemp fully incorporates
the point and authorities from pages 32-36 above into this section. Because
the MPO’s conclusion was not based upon facts alleged in the Formal
Complaint, the MPO’s decision violated Klemp’s right to fair notice and due
process, and thus should be dismissed by this Court.
52
8. Eighth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by preparing a Trust Deed to secure repayment of personal expenses versus expenses made on behalf of or the Trust.
The Bar’s estate and probate experts testified that it is not uncommon
for a trustee (or successor trustee) to loan or advance money to a trust.
(Bertalan, 396.) After reviewing the Trust language, Bertalan testified that
successor trustee could pay for Trust expenses out of his/her own
personal account. (Bertalan 398.) She further testified that the successor
trustee could secure repayment by executing a trust deed on trust property.
(Bertalan 396.); see also Bryant 1307, 1309-1310; ORS 130.680. Bertalan
testified that she advises successor trustees to document any such
expenditures. (Bertalan 397.) Bertalan testified that she advises successor
trustees to maintain receipts or checks documenting payment of expenses.
(Bertalan. 396-398, 402; see also, Bryant 1334-35; Klemp Ex. 103, p. 7,
¶¶13.2 and 13.4). If the provided to Bertalan appear valid, she testified that
she would execute a securing agreement. (Bertalan 402.)
In this case, it was uncontroverted that Klemp received substantial
documents from - including ledgers, receipts, invoices, and checks
- showing that he expended money from his own account on behalf of
or the Trust. (Klemp Exhs. 136, 137). and set out in the
ledger the basis by which the expense benefited or the Trust. (Klemp
53 Ex. 136, pp. 1-16). Even the MPO conceded this when it stated “[i]t is
undisputed that Klemp reviewed receipts and his list of
expenditures and, to some extent, relied on review of the same since
at that time had been substituted as both power of attorney and
successor trustee.” ([ER-23.] Bryant testified that the documents Klemp
relied upon to execute the Trust deed are the same documents other
practitioners in this area rely upon. (Bryant, 1335.) Based upon these
supporting documents, Klemp drafted the Trust Deed. (Klemp 1753.)
Disregarding all the above evidence and testimony, the MPO found
that all of the documented expenditures were personal expenses.
[ER-22.] What is shocking about this conclusion is that no evidence nor
testimony was presented at the hearing regarding the individual
expenditures. Instead, the evidence showed that provided Klemp
with a ledger of 91 different expenditures paid by (Klemp Ex. 136,
pp. 1-16.) Every entry reflected on the ledger was supported by a check
written by out of his own personal bank account. (Klemp Ex. 136,
pp. 20-53.) The ledger showed that wrote checks for expenditures
such as: (1) “Lauren’s Employees for antique store” in the amount of $45
(Ex. 136, p. 1); (2) Mini Pet Mart in the amount of $97.79 for “Care and
feed for Laurens [sic] dogs (Klemp Ex. 136, p. 1); (3) “Laurens [sic] SR22
54 filing in the amount of $114.98 (Klemp Ex.136, p. 3); (4) attorney
fees in the amount of $14,000 (Klemp Ex.136, p. 1); and (5) a water bill for
commercial property in Grants Pass (account #36635-278448) in the
amount of $69.21 (Klemp Ex. 136, p. 3). At the end of the ledger,
documented credits that he owed in the amount of $19,505, which he
deducted from the amount owed. (Klemp Ex. 136, p. 7.)
Even Ratcliffe testified that she was never able to determine whether
claimed expenditures were inappropriate. (Ratcliff 1399-1401.)
When asked about payment of $14,000 for attorney fees,
Bertalan testified: “Okay, so that seems legitimate. He sold his truck to come
up with the $14,500 that he gave to Lauren. ***I would want to make sure
that that really happened, and I think that would be fine if that’s truly what
happened.” (Bertalan 442). The Bar presented no evidence that did
not sell his truck, or that he did not pay attorney fees.
The MPO focused its Opinion on one of the expenditures, to wit,
request for reimbursement for the cost of domestic violence
counseling. ([ER-14.] Although the panel called this cost “egregious,”
Bryant disagreed. Bryant testified the possibility that this expense benefitted
or the Trust could not be ruled out. (Bryant 1333.) Bryant suggested
that, if could show that the domestic violence counseling improved
55 his relationship with this would benefit to (Id.) In short, there
was no testimony from or specific testimony from Klemp regarding
each and every expense, and therefore no way for the MPO to have come to
the broad conclusion that all of the expenses were personal and, therefore,
illegitimate.
Perhaps the most glaring omission in the MPO’s Opinion is the failure
to determine whether Klemp knew that the expenditures were not for the
benefit of the Trust. This is because the Bar never established Klemp has
such knowledge. All the evidence at the hearing supported a finding that the
expenditures documented, and Klemp relied upon in drafting the
Trust Deed, benefitted either or the Trust, and thus were valid. To find
that Klemp knew that none of these expenditures benefited or the
Trust is entirely inconsistent with the evidence and testimony at the hearing.
Taggart correctly concluded in his dissenting opinion that “ had a
monetary claim against individually, and the corpus of the Trust.”
[ER-39.]
9. Ninth Assignment of Error: The Majority Erred in finding that Klemp violated RPC 1.2(c) by representing that had a valid power of attorney to execute the $9,500 check.
The Bar alleged in its Formal Complaint that Klemp violated RPC
1.2(c) by falsely representing to Washington Federal that was
56 acting under a valid power of attorney to sign the $9,500 check.” [ER-6.]
The Bar further alleged Klemp’s representation was “false and material and
Klemp knew it was false and material when she made it.” (Id.)
Setting aside many of its factual misstatements in this section of its
Opinion,6 the MPO found that Klemp violated PRC 1.2(c) by representing to
Washington Federal that had a valid power of attorney when he
signed a $9,500 check on June 17, 2013. (Klemp Ex. 166.) The basis of its
finding is the conclusion that Klemp received notice from Ratcliffe on June
10, 2012 that no longer had a valid power of attorney, and thus, she
knew did not have authority to sign the check. This conclusion was
based upon the Majority’s erroneous assumption that Klemp was aware of
the June 10 Letter, and the documents allegedly attached thereto. (Klemp
Ex. 177.) The Bar presented no evidence that Klemp was aware of the June
10 Letter or Power of Attorney when she represented to Washington
6 The MPO misstates numerous facts in this section of its Opinion. To avoid any confusion, the MPO’s misstatements should be corrected, as follows. The Majority stated that sent Klemp and notice on July 10, 2013. In truth, Ratcliffe sent Alexander a letter on July 10, 2013. (Klemp Ex. 165.) The MPO stated that Klemp attempted to “cash a $9,500 check; yet, there was never any evidence that Klemp “attempted to cash a $9,500 check. The MPO found that Klemp had violated RPC 1.2(c) by falsely claiming to Evergreen Bank that had a valid power of attorney; but Klemp actually sent a letter to Washington Federal, not Evergreen Bank. (Klemp Ex. 177.)
57 Federal that had a valid power of attorney. Instead, the evidence
showed that Klemp believed possessed a valid power of attorney,
executed in September 2012. (Klemp 1725.) See In re Hockett, 303 Or 150,
162 n. 3, 734 P2d 877 (1987) (a lawyer with “a reasonable and good faith
basis for concluding that the conduct is legal” ought to be able to so advise a
client without the risk of discipline). The strongest evidence in support of
Klemp’s representation that had the authority to sign the check was
Evergreen Bank’s decision to authorize transfer of the funds. After
investigating the matter, Evergreen Bank’s attorney could not find that
did not have the authority to sign the check. (Klemp Ex. 187, p. 2.).
Klemp did not have burden to prove that had the authority to sign
the check; rather, it was the Bar’s burden to prove Klemp made a fraudulent
representation. A finding that Klemp committed fraud by misrepresenting
authority would mean Evergreen Bank’s representation was also
fraudulent, which is absurd. Because there was no evidence to support a
finding that Klemp made a fraudulent representation, The MPO’s finding
that Klemp violated RPC 1.2(c) should be dismissed.
10. Tenth Assignment of Error: The Majority Erred in Finding that Klemp violated RPC 4.1(b).
At the conclusion of the MPO’s Opinion, the Majority found that Klemp
violated RPC 4.1(b) by “draining and attempting to drain individual
58 assets and trust assets as outlined in paragraph 3 [modification of lease]; 4
[preparing a Trust Deed]; and 5 [$9,500 check], above.” [ER-24.] For the
reasons previously stated in this brief, the MPO’s findings and conclusions
were in error, and therefore Klemp could not be found to have violated RPC
4.1(b).
III. CONCLUSION
The finding and conclusions underlying the MPO’s Opinion were either
not plead in the Bar’s Formal Complaint, or were not supported by the
evidence. Each of the Majority’s holdings of violation should be dismissed
because they are based on the demonstrable errors of fact and law, and glaring
inconsistencies delineated in this brief. Justice requires that the Court put
these cases to an end, and vindicate Klemp with an order dismissing all claims.
Respectfully submitted,
s/ Nathan G. Steele
Nathan G. Steele, OSB 004386 The Steele Law Firm 125 NW Greeley Ave. Bend, Oregon 97703 Attorney for Accused-Petitioner
Filed on July 26, 2017
CERTIFICATE OF COMPLIANCE WITH BRIEF LENGTH AND TYPE SIZE REQUIREMENTS
Brief Length
The undersigned hereby certifies that (1) this Brief complies with the
word-count limitation on ORAP 5.05(2)(b); and (2) the word count of this
brief (as described in ORAP 5.05(2)(a)) is 13,147 words.
Type Size
I certify that the size of the type in this brief is not smaller than 14 point
for both the text of the brief and footnotes, as required by ORAP 5.05(2)(d)(ii)
and 5.05(4)(g).
s/ Nathan G. Steele
Nathan G. Steele, OSB No. 004386 Attorney for Accused-Petitioner
PROOF OF SERVICE
The undersigned hereby certifies that, on the 26th day of July, 2017, the original foregoing Petitioner’s Brief was delivered to the Supreme Court Administrator by filing through the Appellate Court’s efiling System, pursuant to ORAP 1.35(1)(a)(ii)(A). The undersigned further certifies that, on the 26th day of July, 2017, pursuant to agreement by counsel for the Oregon State Bar-Respondent, a true and accurate copy of the foregoing Petitioner’s Brief was served upon the following:
Theodore W. Reuter OSB #084529 Oregon State Bar P.O. Box 231935 Tigard, OR 97281 [email protected] Attorney for Oregon State Bar-Respondent
via electronic service through the Appellate Court’s efiling System, and by email at the last known email address of counsel as shown above.
s/ Nathan G. Steele
Nathan G. Steele, OSB No. 004386 Attorney for Accused-Petitioner