Case Number(s): 06-O-13125
In the Matter of: William James Beverly, Bar # 81573, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Hugh G. Radigan, Bar # 94251,
Counsel for Respondent: In Pro Per, Bar #
Submitted to: Settlement Judge – State Bar Court Clerk’s Office San Francisco.
<<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 December 1, 1978.
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 14 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: two billing cycles following the effective date of the Supreme Court order. (Hardship, special circumstances or other good cause per rule 5.132, Rules of Procedure.)
<<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: William James Beverly, State Bar No. 81573
STATE BAR COURT CASE NUMBER: 06-O-13125
Respondent admits that the following facts are true and that he is culpable of violations of the specified statutes and/or Rules of Professional Conduct.
FACTS AND CONCLUSIONS OF LAW.
1. Beginning in 1989, Respondent was employed by Catherine Outland ("Catherine") and her daughters, Christine Outland Martell ("Martell") and Mary Outland Gleason ("Gleason") (collectively the "Outland parties"), to facilitate the development of a property they owned as joint tenants (the "property") and to provide legal counsel regarding the property development.
2. On September 3, 2002, Oliver Maupin filed an action in the Los Angeles County Superior Court to foreclose on a trust deed which had been assigned to him by Respondent entitled, Oliver Maupin v. Hamilton Properties, et al., case number NC040406. The Outland parties were defendants in the action.
3. On February 10, 2003, a cross-complaint was filed by the Outland parties against Respondent and his law firm alleging various claims, including but not limited to a claim for legal malpractice. The Outland parties also sought cancellation of the trust deed.
4. On November 10, 2003, summary judgment was entered in favor of Catherine and Gleason in Maupin’s foreclosure action. The court found that the deed of trust sued upon had been extinguished in 1992.
5. On April 5, 2004, the jury found that Respondent committed constructive fraud, breached fiduciary duties, and committed legal malpractice during his representation of the Outland parties.
6. On May 20, 2004, the court entered judgment against Respondent on the Outland parties’ cross-complaint in the amount of $424,450 and against his law firm in the amount of $145,150. Respondent did not report the May 20, 2004 entry of judgment to the State Bar of California ("State Bar") within 30 days of their notice of the entry of judgment or at any time thereafter.
7. On May 1’4, 2008, the Court of Appeal affirmed the judgment on certain claims, reversed the judgment on other claims, and specifically found that the statute of limitations had expired on the Outland’s claims for breach of fiduciary duty and constructive fraud arising out of Respondent’s ongoing failure to disclose conflicts of interest.
8. On May 27, 2008, the Outland parties filed a petition for rehearing.
9. On June 3, 2008, the Court of Appeal modified its opinion with no change in the judgment.
10. On July 30, 2008, the California Supreme Court denied the Outland parties’ petition for review.
Respondent’s Marital Dissolution
11. On July 15, 2002, Respondent’s wife filed for dissolution of marriage in the Los Angeles County. Superior Court identified as case number BD372806.
12. Respondent sent a series of letters to his wife and her attorney, about the threat of exposing their community property to the Outland parties should a judgment be entered against him in the Outland lawsuit. These letters demonstrated that the Outland litigation was the main reason Respondent desired to transfer his entire interest in the community assets of approximately $1 million in exchange for his retention of an equivalent amount as his exempt retirement plan.
13. On April 9, 2004, Respondent and his wife entered into a marital settlement agreement. Their primary asset was Respondent’s pension fund. In the settlement agreement reached, Respondent was entitled to his pension fund with assets over $1,000,000, and which was considered by them to be exempt from judgment, in exchange for a transfer of cash assets over $1,000,000 to his wife. Respondent had no other assets to attach. The intended effect of the settlement agreement was to leave Respondent essentially judgment proof and thus hinder the claims of his imminent judgment creditors, the Outland parties.
14. On July 26, 2004, judgment in the dissolution was filed.
Respondent’s Involuntary Bankruptcy
15. After Respondent informed the Outland parties that he lacked assets to pay the judgment, on September 15, 2004, Catherine filed an involuntary Chapter 7 petition against Respondent identified as United States Bankruptcy Court case number LA 04-29840 TD, claiming a right to funds based upon the May 2004 judgment.
16. On November 1, 2004, the Bankruptcy Court granted relief under Chapter 7 of the Bankruptcy Code.
17. On March 11, 2005, the bankruptcy trustee filed a complaint, identified as United States Bankruptcy Court case number AD05-O1254TD, objecting to a discharge of debts pursuant to 11 U.S.C. section 727(a) (6)(A) on the ground that Respondent had refused to obey the Bankruptcy Court’s November 1, 2004 order.
18. On March 11, 2005, the Outland parties filed an adversary proceeding, identified as United States Bankruptcy Court case no. LA05-01257-TD, to deny a discharge of the Outland parties’ judgment against Respondent.
19. On March 17, 2005, Respondent served his bankruptcy schedules and claimed over $1,000,000 of his pension fund as exempt from creditors and not property of the estate for distribution.
20. On June 14, 2005, the bankruptcy trustee filed an adversary proceeding against Respondent and his wife identified as United States Bankruptcy Court case number AD-05-01649 TD, to assert the rights of Catherine. The adversary proceeding sought the avoidance of transfers under various theories of recovery, including preferential payment under 11 U.S.C. sections 547 and 550, and fraudulent transfers under 11 U.S.C. sections 544(b), 548(a)(1), and 550, on the ground that at least $900,000 had been transferred from Respondent to his wife within one year of the filing of the bankruptcy petition.
21. The bankruptcy court rejected the trustee’s objections to the discharge, ruled that the marital settlement agreement did not embody a fraudulent transfer for purposes of 11 U.S.C. section 727(a)(2), and granted Respondent’s motion for summary judgment in the adversary proceeding. The trustee appealed the bankruptcy court’s findings.
22. On July 24, 2007, the Bankruptcy Appellate Panel ("BAP") reversed the bankruptcy court’s decision that Respondent’s transfer of assets through the marital settlement agreement was not a fraudulent transfer. The BAP stated: "The evidence demonstrates that the Outland litigation was the main reason Beverly structural the MSA so as to transfer his entire interest in the $1 million nonexempt fund. If there had been a simple equal division of community assets (as presumed by California law when a court makes the division), he would have had about $500,000 of non-exempt funds ($50,000 eligible to b¢ rolled over into a new homestead) that he knew would be vulnerable to collection of the $424,000 Outland judgment."
23. In addition to the direct evidence of Respondent’s intent to hinder, delay or defraud the Outland judgment creditors as shown by his correspondence with his wife’s attorney, the BAP further found circumstantial evidence of statutory "badges of fraud", as follows:
a. The transfer to Respondent’s wife was a transfer to an insider (Civil Code section 3439.04C0)(1));
b. The transfer to Respondent’s wife was made after Respondent had been sued in the Outland litigation (Civil Code section 3439.04(b) (4));
c. The transfer was of substantially all of Respondent’s assets (Civil Code section 3439.04(b)(5);
d. The transfer rendered Respondent insolvent (Civil Code section 3439.04(b)(9); and,
e. The transfer occurred shortly after a substantial debt was incurred (Civil Code section 3439,04(b)(10).
24. The BAP reversed the bankruptcy court’s decision granting Respondent a discharge and remanded the matter with instructions to enter judgment denying the discharge and to enter judgment in favor of the trustee,
25. On August 22, 2007, Respondent filed an appeal of the BAP’s July 24, 2007 decision and the reversal of the bankruptcy court’s grant of summary judgment in his favor.
26. On December 24, 2008, the Court of Appeal, Ninth Circuit, affirmed and adopted the July 24, 2007 decision that Respondent’s transfer of assets through the marital settlement agreement was an avoidable transfer under 11 U.S.C. section 544(b) and Civil Code section 3439.04, but the Court of Appeal found that it lacked jurisdiction to consider the section 727 claims.
Legal Conclusion:
27. By transferring his property and assets with the intern to hinder, delay or defraud the Outland judgment creditors, Respondent committed acts of gross negligence involving moral turpitude. Additionally, Respondent wilfully violated Business and Professions Code, section 6068(o)(2), by failing to report to the agency changed with attorney discipline, in writing, within 30 days of the time Respondent had knowledge of the entry of judgment against Respondent in any civil action for fraud, misrepresentation, breach of fiduciary duty, or gross negligence committed in a professional capacity.
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(6), was November 16, 2009.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of November 16, 2009, the prosecution costs in this matter are approximately $3654.00. 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.
AUTHORITIES SUPPORTING DISCIPLINE.
Standard 1.3 provides that the primary purpose of discipline is the protection of the public, the courts and legal profession; maintenance of high professional standards; and the preservation of public confidence in the legal profession.
Standard 2.3 provides for disbarment or actual suspension for those acts of moral turpitude depending upon the extent to which the victim of the act has been harmed and the magnitude of the act of misconduct.
Standard 2.6(a) similarly provides for disbarment or suspension depending upon the gravity of the offense or harm for a willful violation of Business and Professions Code section 6068(o)(2).
The parties submit that the stipulated discipline in this matter complies with the Standards both specifically and with regard to the general purposes and goals of the disciplinary process articulated within Standard 1.3 above-referred.
STATE BAR ETHICS SCHOOL.
Because respondent has agreed to attend State Bar Ethics School as part of this stipulation, respondent may receive Minimum Continuing Legal Education credit upon the satisfactory completion of State Bar Ethics School.
SIGNATURE OF THE PARTIES
Case Number(s): 06-O-13125
In the Matter of: William James Beverly, State Bar No.: 81573
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: William James Beverly
Date: November 24, 2009
Respondent’s Counsel:
Date:
Deputy Trial Counsel: Hugh G. Radigan
Date: November 25, 2009
Case Number(s): 06-O-13125
In the Matter of: William J. Beverly
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 135(b), 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: December 9, 2009
[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 San Francisco, on December 11, 2009, I deposited a true copy of the following document(s):
STIPULATION RE FACTS, CONCLUSIONS OF LAW AND DISPOSITION AND 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 San Francisco, California, addressed as follows:
WILLIAM JAMES BEVERLY
BEVERLY & HART
3424 CARSON ST #400
TORRANCE, CA 90503
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
HUGH RADIGAN, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in San Francisco, California, on December 11, 2009.
Signed by:
Laine Silber
Case Administrator
State Bar Court