Case Number(s): 05-O-02531
In the Matter of: Leodis Clyde Matthews, Bar # 109064, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Brandon K. Tady
1149 S Hill St
Los Angeles, CA 90015
Bar # 83045
Counsel for Respondent: Ellen A. Pansky
1010 Sycamore Ave Unit 308
South Pasadena, CA 91030
Bar# 77688
Submitted to: Settlement Judge – State Bar Court Clerk’s Office Los Angeles .
<<not>> checked. PREVIOUS STIPULATION REJECTED
Note: All information required by this form and any additional information which cannot be provided in the space provided, must be set forth in an attachment to this stipulation under specific headings, e.g., "Facts," "Dismissals," "Conclusions of Law," "Supporting Authority," etc.
1. Respondent is a member of the State Bar of California, admitted August 1, 1983.
2. The parties agree to be bound by the factual stipulations contained herein even if conclusions of law or disposition are rejected or changed by the Supreme Court.
3. All investigations or proceedings listed by case number in the caption of this stipulation are entirely resolved by this stipulation and are deemed consolidated. Dismissed charge(s)/count(s) are listed under "Dismissals." The stipulation consists of 12 pages, not including the order.
4. A statement of acts or omissions acknowledged by Respondent as cause or causes for discipline is included under "Facts."
5. Conclusions of law, drawn from and specifically referring to the facts are also included under "Conclusions of Law".
6. The parties must include supporting authority for the recommended level of discipline under the heading "Supporting Authority."
7. No more than 30 days prior to the filing of this stipulation, Respondent has been advised in writing of any pending investigation/proceeding not resolved by this stipulation, except for criminal investigations.
8. Payment of Disciplinary Costs-Respondent acknowledges the provisions of Bus. & Prof. Code §§6086.10 & 6140.7. (Check one option only):
<<not>> checked. Until costs are paid in full, Respondent will remain actually suspended from the practice of law unless relief is obtained per rule 5.130, Rules of Procedure.
checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years: three (3) billing cycles following the effective date of the Supreme Court Order on this matter. (Hardship, special circumstances or other good cause per rule 5.132, Rules of Procedure.) If Respondent fails to pay any installment as described above, or as may be modified by the State Bar Court, the remaining balance is due and payable immediately.
<<not>> checked. Costs are waived in part as set forth in a separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. Costs are entirely waived.
IN THE MATTER OF: LEODIS CLYDE MATTHEWS, State Bar No. 109064
STATE BAR COURT CASE NUMBER: 05-O-02531
FACTS AND CONCLUSIONS OF LAW.
Respondent admits that the following facts are true and that he is culpable of the violations of the specified statutes and/or Rules of Professional Conduct.
Case No. 05-0-02531 (Complainant: Youless Jimmy Valentine)
FACTS:
1. Youless Jimmy Valentine ("Valentine") was the president and a member of the board of directors of Westland Architecture and Development Corporation ("Westland"), a corporation incorporated in 1998 to buy and develop distressed properties.
2. Lydia Soriano ("Soriano") of Interlink Development ("Interlink") managed a three-story office building located at 4322 Wilshire Boulevard, Los Angeles, California (the "Wilshire Property"). Interlink also owned an option to purchase the Wilshire Property for $2.9 million ("the Option").
3. In June 1998, Westland entered into an agreement to acquire the Option from Interlink in exchange for the payment of approximately $58,000.
4. In July 1998, Interlink attempted to rescind the agreement with Westland. In August 1998, Valentine and Westland filed a civil complaint in the Los Angeles County Superior Court alleging Soriano and Interlink violated a contractual obligation to sell the option.
5. After Westland filed its civil complaint, Interlink filed a Chapter 7 Petition in Bankruptcy in the United States Bankruptcy Court. Interlink’s Bankruptcy had the effect of staying Westland’s civil complaint. Attorney Benjamin Wyatt ("Wyatt"), acting on behalf of Westland, filed a creditor’s claim in the Bankruptcy Court against Interlink. Attorney Wyatt also filed an adversary proceeding on behalf of Westland in the Bankruptcy Court arguing that Westland was the rightful owner of the option to purchase the Wilshire Property.
6. On or about January 5, 1999, the Bankruptcy Court ordered a public sale of the Debtor’s assets that included the Option owned by Interlink and scheduled the sale date for February 3, 1999.
7. On January 25, 1999, Westland hired Respondent to advise Westland on its interest in the scheduled Option sale. Attorney Wyatt was not substituted out and remained Westland’s attorney of record for the Adversary Proceedings.
8. On January 25, 1999, Respondent provided Westland with an Attorney Client Fee Contract ("Fee Contract") which Valentine signed on behalf of Westland. In the Fee Contract, Westland and Respondent agreed that, if Respondent was successful in acquiring the option to the Wilshire Property, then Respondent would receive an interest in the option.
9. Sometime after January 25, 1999 and before February 2, 1999, Respondent learned that the Trustee for Interlink’s Chapter 7 Bankruptcy intended to sell all of Interlink’s assets including the Option on February 3, 1999. Respondent notified Valentine of the Trustee’s sale. Respondent and Valentine agreed to-meet in the Bankruptcy Court on February 3, 1999 for the Trustee’s sale.
10. A letter dated February 2, 1999, addressed from Respondent to Valentine addresses actual and potential conflicts of interest between Respondent and Westland if Westland was successful in acquiring the option. In that letter, Respondent wrote, inter alia: "...the bar rules also require I recommend you consult with another attorney in deciding whether or not consent should be given. Another attorney could also identify and advise you further on other potential conflicts in our interests..." Valentine signed the conflict of interest letter.
11. On February 3, 1999, Respondent and Valentine, acting on behalf of Westland, attended the Trustee’s sale of Interlink’s assets. Respondent recommended that Westland purchase all of Interlink’s assets including the Option. Respondent also recommended that Westland dismiss both its civil complaint against Interlink and its Bankruptcy Court adversary proceeding if it was the successful bidder.
12. Respondent offered to arrange funding, through investors, to purchase Interlink’s assets on Westland’s behalf. Westland agreed. Westland was the successful bidder at the Trustee’s sale and it acquired all of Interlink’s assets including the Option. As a part of its purchase agreement with the trustee to acquire the Interlink assets, Westland dismissed any actions against the Trustee but not its civil complaint nor the adversary proceeding against the debtors.
13. After Westland acquired the Option in the Trustee’s sale, Westland’s Board of Directors voted to replace Valentine as President of Westland. The Board of Directors installed a new President, Folabi Lapido, and on March 16, 1999, it retained attorney Lorraine Loder ("Loder") to represent Westland in place of Respondent. Respondent was dismissed as Westland’s attorney.
14. On behalf of Westland, Attorney Loder began communicating with Valentine and Respondent about the Option. Under Westland’s new leadership, Westland decided it did not want to pursue the Option and purchase the Wilshire Property. On March 25, 1999, Loder wrote to Valentine, who on that date was not the President of Westland, and informed him that Westland no longer wanted to exercise the Option to purchase the Wilshire Property. On behalf of Westland, attorney Loder offered to sell Valentine the Option.
15. At one point prior to deciding not to pursue the purchase of the Wilshire Property, Westland applied for a loan to fund the purchase of the Wilshire Property. The proposed lender issued a conditional commitment letter. However, the conditions of the conditional commitment letter were never satisfied. Valentine did not obtain financing to purchase the Option and he did not exercise the Option.
16. When Valentine did not obtain financing, Respondent concluded that Valentine would be unable to purchase the option from Westland and buy the Wilshire Property. Respondent decided to attempt to acquire the option for a group of investors not including Valentine, and including Respondent. Respondent formed Retra Financial, Inc. ("Retra") and informed Westland that Retra was interested in acquiring and exercising the option. Valentine did not have an interest in Retra.
17. Respondent advised Westland that Respondent intended to acquire the option for Retra’s sole use and benefit and that Valentine would not be included as an investor in Retra, but did not then provide a written conflict of interest disclosure to Westland.
18. Retra made an offer to purchase the option and Westland’s Board of Directors decided to sell the option to Retra. At the time Westland decided to sell the option to Retra, Westland was represented by attorney Loder. On May 15, 1999, Westland’s Board of Directors adopted a resolution transferring to Retra the rights "... Westland may have acquired by reason of the Bankruptcy sale of assets of Interlink .... " Valentine signed the resolution as a member of Westland’s Board as did Westland’s other Board members.
19. On May 24, 1999, Westland sold the option to Retra.
20. Sometime after May 15, 1999 and before August 5, 1999, Valentine was re-elected President of Westland. On August 5, 1999, Valentine, individually and on behalf of Westland filed a civil complaint against Respondent, Retra, and others. In the civil complaint, Westland alleged that Respondent breached the Fee Contract with Westland, that Respondent committed legal malpractice against Westland and Valentine, and that Respondent breached fiduciary duties to Westland and Valentine when he acquired the Option for Retra.
21. On May 21, 2004, following a civil jury trial of Westland’s and Valentine’s civil complaint, the jury rendered a verdict in favor of Westland and against Respondent. The jury awarded damages in favor of Westland in the amount of $2,016,709. Pursuant to the jury instructions given to the jury by the Trial Court, the jury did not consider whether Respondent was liable to Valentine or whether Valentine had suffered damage by Retra’s purchase of the Option. Valentine’s claims against the Respondent were dismissed.
22. In September 2004, Respondent filed a Motion for Judgment Notwithstanding the Verdict ("JNOV") and a Motion for New Trial.
23. On November 1, 2004, the Trial Court issued a draft opinion granting the motion for JNOV. The Trial Court found there was no substantial evidence to support the jury’s verdict that Respondent breached his professional duties to Westland. The Trial Court also found that, as a matter of law, Respondent’s breach of California Rules of Professional Conduct, rule 3-310 did not cause Westland any damages because Westland was represented by attorney Loder who the Trial Court described as "independent counsel." In its Draft Option, the Trial Court stated that it had not yet ruled on the Motion for New Trial.
24. On November 12, 2004, Westland and Valentine filed a Motion to Strike the Order granting JNOV and a new trial on the basis that the Trial Court was divested of its jurisdiction to rule on the Motion for JNOV and the Motion for New Trial because the time expired before the Trial Court filed its final orders on these motions.
25. On December 7, 2004, the trial court denied Westland’s and Valentine’s motion to strike the Order.
26. Westland, Valentine, and Respondent appealed to the Second District Court of Appeal ("Court of Appeal"). On October 1, 2007, the Court of Appeal filed its Opinion ruling on the procedural ground that the Trial Court did not have jurisdiction to grant the Motion for JNOV and the Motion for New Trial because, pursuant to California Code of Civil Procedure, sections 629 and 660, it did not timely file its final orders. The Court of Appeal directed the trial court to reinstate the verdict in favor of Westland and against Respondent.
27. Respondent sought reconsideration before the Court of Appeal arguing that the Trial Court should have granted his Motion to Vacate a Judgment. On February 11, 2010, the Court of Appeal filed its Opinion finding the Trial Court did not have jurisdiction to rule on the Motion to Vacate Judgment.
CONCLUSIONS OF LAW:
28. By willfully making an inadequate written disclosure of the conflict of interest that arose once Westland’s Board resolved to sell the option to Retra, a company in which Respondent held a financial interest, and by failing to obtain a supplemental written conflict of interest waiver from Westland when the transaction occurred, Respondent violated the provisions of California Rules of Professional Conduct, Rule 3-310(C).
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(7), was April 17, 2012.
AUTHORITIES SUPPORTING DISCIPLINE.
Pursuant to Standard 1.3 of the Standards for Attorney Sanctions for Professional Misconduct, the primary purposes of disciplinary proceedings and imposing sanctions for professional misconduct are "the protection of the public, the courts and the legal profession; the maintenance of high professional standards by attorneys and the preservation of public confidence in the legal profession."
Standard 2.10 states that culpability of a member of a violation of any provision of the Business and Professions Code not specified in the standards or of a willful violation of any Rule of Professional Conduct not specified in the standards shall result in reproval or suspension according to the gravity of the offense or the harm, if any, to the victim, with due regard to the purposes of imposing discipline set forth in standard 1.3. Here, Respondent’s violation of Rules of Professional Conduct, rule 3-310 (C) is governed by this Standard. The applicable range of discipline is reproval to suspension.
The Supreme Court gives the Standards "great weight," and will reject a recommendation consistent with the Standards only where the Court entertains "grave doubts" as to its propriety. (In re Naney (1990) 51 Cal. 3d 186, 190; see also In re Silverton (2005) 36 Cal. 4th 81, 91.) Further, although the Standards are not mandatory, it is well established that the Standards may be deviated from only when there is a compelling, well-defined reason to do so. (See Aronin v. State Bar (1990) 52 Cal. 3d 276, 291; see also Bates v. State Bar (1990) 52 Cal. 3d. 1056, 1060, fn. 2,)
Here, the stipulated discipline of one (1) year stayed suspension, (2) years probation with conditions, and thirty (30) days actual suspension is consistent with the Standards for Attorney Sanctions for Professional Misconduct and with applicable case law.
MITIGATING CIRCUMSTANCES
Absence of Prior Record of Discipline.
Standard 1.2 (e) (i) provides that absence of any prior record of discipline over many years of practice coupled with present misconduct not deemed serious is a mitigating factor. Here, Respondent was admitted to practice law on August 1, 1983 and he does not have a prior record of discipline.
Candor and Cooperation.
Standard 1.2 (e) (v) provides that spontaneous candor and cooperation to the victims of the member’s misconduct and to the State Bar during disciplinary investigation and proceedings is a mitigating factor. Here, Respondent fully cooperated with the State Bar in its disciplinary investigation and in this proceeding (In the Matter of Spaith (Review Dept. 1996) 3 Cal. State Bar Ct. Rptr. 96, 106, fn. 13.)
DISMISSALS.
The parties respectfully request the Court to dismiss the following alleged violations in the interest of justice:
Case No.: 05-0-02531, Count: Two, Alleged Violation: Rules of Professional Conduct, rule 3-300
WAIVER OF VARIANCE BETWEEN NOTICE OF DISCIPLINARY CHARGES AND STIPULATED FACTS AND CULPABILITY.
The parties waive any variance between the Notice of Disciplinary Charges filed on December 30, 2011 and the facts contained in this Stipulation. Additionally, the parties waive the issuance of amended Notices of Disciplinary Charges. The parties further waive the right to a formal hearing on any charge not included in the Notices of Disciplinary Charges.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of April 17, 2012, the prosecution costs in this matter are $3668. Respondent further acknowledges that should this stipulation be rejected or should relief from the stipulation be granted, the costs in this matter may increase due to the cost of further proceedings.
Case Number(s): 05-O-02531
In the Matter of: Leodis Clyde Matthews, State Bar No.: 109064
By their signatures below, the parties and their counsel, as applicable, signify their agreement with each of the recitation and each of the terms and conditions of this Stipulation Re Facts, Conclusions of Law and Disposition.
Signed by:
Respondent: Leodis Clyde Matthews
Date: May 15, 2012
Respondent’s Counsel: Ellen A. Pansky
Date: May 21, 2012
Deputy Trial Counsel: Brandon K. Tady
Date: May 21, 2012
Case Number(s): 05-O-02531
In the Matter of: Leodis Clyde Matthews, State Bar No.: 109064
Finding the stipulation to be fair to the parties and that it adequately protects the public, IT IS ORDERED that the requested dismissal of counts/charges, if any is GRANTED without prejudice, and:
checked. The stipulated facts and disposition are APPROVED and the DISCIPLINE RECOMMENDED to the Supreme Court.
<<not>> checked. The stipulated facts and disposition are APPROVED AS MODIFIED as set forth below, and the DISCIPLINE IS RECOMMENDED to the Supreme Court.
<<not>> checked. All Hearing dates are vacated.
The parties are bound by the stipulation as approved unless: 1) a motion to withdraw or modify the stipulation, filed within 15 days after service of this order, is granted; or 2) this court modifies or further modifies the approved stipulation. (See rule 5.58 (E) & (F), Rules of Procedure.) The effective date of this disposition is the effective date of the Supreme Court order herein, normally 30 days after the file date. (See rule 9.18(a), California Rules of Court.)
Signed by:
Judge of the State Bar Court: Richard A. Honn
Date: May 30, 2012
[Rules Proc. of State Bar; Rule 5.27(B); Code Civ. Proc., § 1013a(4)]
I am a Case Administrator of the State Bar Court of California. I am over the age of eighteen and not a party to the within proceeding. Pursuant to standard court practice, in the City and
County of Los Angeles, on June 12, 2012, I deposited a true copy of the following document(s):
STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION ORDER APPROVING
in a sealed envelope for collection and mailing on that date as follows:
checked. by first-class mail, with postage thereon fully prepaid, through the United States Postal Service at Los Angeles, California, addressed as follows:
ELLEN ANNE PANSKY
PANSKY MARKLE HAM LLP
1010 SYCAMORE AVENUE, UNIT 308
SOUTH PASADENA, CA 91030
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
BRADON TADY, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on June 12, 2012.
Signed by:
Angela Carpenter
Case Administrator
State Bar Court