In Re Complaints as to the Conduct of Williams

UNIS, J.,

dissenting.

In the first of the two disciplinary proceedings involved in this case (discussed in Parts A and C of the majority opinion), the trial panel found, the Bar does not dispute, and the majority struggles to accept, that the intent of the accused was accurately represented by the letters of December 2 and December 10 at the time that he wrote them, i.e., that at the time the accused wrote the December 2 and 10 *549 letters, he intended to hold Nugent’s rent payments in trust. 1 See 314 Or at 535. The majority bases its finding of a misrepresentation on the accused’s failure to inform landlords several days later that his client’s plans had changed and that the accused had been instructed not to hold the rent money in trust because his client intended to terminate the tenancy. The majority concludes that “whether the rent money was in the accused’s trust account was material in December 1986.” 314 Or at 537.

Although the majority concludes that the alleged misrepresentation was intentional 2 and material, the majority does not define the term “material.” Rather, the majority confuses the significance of the facts in light of the landlords’ statutory rights. The majority derives the materiality of the alleged misrepresentation from the landlords’ rights in ORS 90.400(2) based on the significance of whether “rent was unpaid” and in ORS 90;370 based on the significance of whether “tenant has deposited the rent into court.” 314 Or at 536. The answer to both of these questions is totally independent of whether the rent was being held in trust by tenant’s lawyer. That is, rent is not paid under ORS 90.400(2) by depositing it in trust with one’s lawyer, and rent is not deposited into court under ORS 90.370 by depositing it in trust with one’s lawyer. Even if the accused was holding the rent money in trust, the rent was still unpaid and had not been deposited into court.

Although the majority accepts the trial panel's finding, which the Bar does not dispute, that the accused’s representations in the December 2 and 10 letters were true when he made them (i.e., that at the time the accused wrote the December 2 and 10 letters, he intended to hold Nugent’s rent payments in trust, but was not yet doing so), 314 Or at 535, the majority makes statements contrary to this finding that are significant to the majority’s analysis.

*550 The majority states that the accused’s statement that “[t]he cost of this work will be paid out of the rent payments held in trust” “suggested that the tenant was not * * * behind in her rent payments.” 314 Or at 536. Rent was due on December 1. The majority accepts that the representations in the accused’s letters were true when he made them. The majority states as fact (and it is not disputed) that “[o]n December 10, the accused had none of the Durhams’ rent money in his trust account.” 314 Or at 534. Therefore, it is clear that on December 10 the tenant was behind in her rent payments and that the majority agrees that the accused did not state to the contrary. Nevertheless, the majority bases its finding that the accused made a material misrepresentation on the conclusion that the accused’s statements “suggested that the tenant was not * * * behind in her rent payments.” 314 Or at 536. 3 Thus, the majority is basing its finding of intentional material misrepresentation on representations that even the majority agrees the accused did not make.

The majority suggests that the “tenant’s right to counterclaim may turn on whether the tenant has deposited the rent into court. ORS 90.370.” 314 Or at 536. In determining why the accused’s statements were intentional, material misrepresentations, the majority concludes that “[t]he accused himself testified that this [determination of the right to counterclaim] was one of the reasons that he represented that the rent payments were held in trust.” 314 Or at 536 (emphasis added). The trial panel found, the Bar accepts, and the majority accepts that the accused did not represent in his letters that he was holding rent money in trust. Unfortunately, the majority resorts to statements contradicting the very premise it accepts in order to find an intentional, material misrepresentation.

In addition, the majority states that “[t]he accused’s statement that the rent would be held ‘in trust’ suggested *551 that the tenant was delivering (or had delivered) the rent to the accused, and that the rent money would be held (or was being held) by the accused for the benefit of the landlords, either for repairs or for rent, or both.” 314 Or at 536. By suggesting that money which the accused was holding or would hold in trust was “for the benefit of the landlords,” the majority misconstrues the nature of the lawyer’s role and implicitly suggests that the accused should have done something which itself would have been a disciplinary violation, even while the majority must strain to conclude that what the accused did was a disciplinary violation. Lawyers are obligated by disciplinary rule to deposit client funds in a “separate interest bearing account for a specific and individual matter for a particular client,” DR 9-101(C)(3)(a), unless they are in a pooled account with subaccounting, DR 9-101 (C)(3)(b), or are nominal or held for a short period of time, DR 9-101(0(2). DR 9-101(B)(4) provides that “[a] láwyer shall * * * [p]romptly pay or deliver to a client as requested by the client the funds, securities or other properties in the possession of the lawyer which the client is entitled to receive.” The majority’s suggestion that money held in trust by the lawyer would be held for the benefit of the landlords rather than for the benefit of the client contravenes the very nature of the attorney/client relationship and the rules of client trust funds.

The majority must strain too hard to establish a disciplinary violation. That is not palatable, particularly when the standard of proof is clear and convincing evidence.

I would hold that the Bar has failed to establish by clear and convincing evidence that the accused violated DR 1-102(A)(3), i.e., that there was a misrepresentation or that, if there was a misrepresentation, it was intentional and material. Notwithstanding the analytical problems in the majority opinion, I would hold that the Bar has failed to establish, as the majority holds, see 314 Or at 537, that it was material for landlords to know whether the rent money was in the accused’s trust account in December 1986. 4 I therefore dissent from Part A of the majority opinion. I would impose a *552 lesser sanction than the sanction imposed by the majority in Part C consistent with my conclusion that the only violations established are those discussed in Part B, with which I agree.

The trial panel found that “[a]t the time the Accused wrote the two letters to the Durhams the representations contained therein were true.” The Bar in its brief before this court agrees with that finding: “The Bar does not dispute [the accused’s] assertion that the December 12 [sic: 2] and December 10 statements regarding his intent to hold Ms. Nugent’s rent in trust were true when he made them.” (Emphasis added.)

I disagree with the majority’s conclusion, 314 Or at 546, that any misrepresentation was intentional.

The majority includes in its analysis two other parenthetical statements that contradict its acceptance of the finding that the representations in the December 2 and 10 letters were true when they were made: “The accused’s statement that the rent would be held ‘in trust’ suggested that the tenant was delivering (or had delivered) the rent to the accused, and that the rent money would be held (or was being held) by the accused for the benefit of the landlords, either for repairs or for rent, or both.” 314 Or at 536 (emphasis of majority’s statements contradicting majority’s premise added).

The Bar argues that there were continuing misrepresentations for failure to inform landlords after the termination of the tenancy {i.e., after December) that he was not holding money in trust. In my view, even assuming, arguendo, a material misrepresentation in December, the changed circumstance of the termination of the *552 tenancy meant that there was no continuing misrepresentation after that date. That is, even if the question whether the accused was holding rent in trust was legally significant in December, it was no longer relevant after December, and termination of the tenancy was adequate to apprise landlords of this fact without affirmatively informing landlords that the accused was no longer holding rent money in trust.

If there was a continuous misrepresentation beyond December, the accused’s disciplinary rule violation would be more severe. I therefore take the majority’s silence on the issue of a misrepresentation continuing after December to imply that no continuous misrepresentation existed. If that is the case, I agree.