Case Number(s): 09-O-13111, 09-O-13251, 09-O-13257, 10-O-00017, 10-O-01033, 10-O-02503, 10-O-03046, 10-O-03437, 10-O-03561, 10-O-05954
In the Matter of: Karla C. Shippey, Bar # 113107, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Suzan J. Anderson, Supervising Trial Counsel
1149 South Hill Street
Los Angeles, California 90015
(213) 765-1209
Bar # 160559,
Counsel for Respondent: In Pro Per Respondent
Karla C. Shippey
Shippey Law PC
1111 East Commonwealth Avenue
Suite B
Fullerton, California 92831
(714) 209-7479
Bar# 113107
Submitted to: Assigned Judge – State Bar Court of 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 June 13, 1984.
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 18 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: Costs to be paid in equal amounts prior to February 1 for the following 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.) 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.
Please see Attachment, pages 11 through 17.
Case Number(s): 09-O-13111, et al
In the Matter of: KARLA C.SHIPPEY, 113107
a. Restitution
checked. Respondent must pay restitution (including the principal amount, plus interest of 10% per annum) to the payee(s) listed below. If the Client Security Fund (“CSF”) has reimbursed one or more of the payee(s) for all or any portion of the principal amount(s) listed below, Respondent must also pay restitution to CSF in the amount(s) paid, plus applicable interest and costs.
1. Payee: Please see Attachment, page for all Restitution to be paid by Respondent.
Principal Amount:
Interest Accrues From:
checked. Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than within 30 days of the end of Respondent’s probationary period..
<<not>> checked. Respondent must pay the above-referenced restitution on the payment schedule set forth below. Respondent must provide satisfactory proof of payment to the Office of Probation with each quarterly probation report, or as otherwise directed by the Office of Probation. No later than 30 days prior to the expiration of the period of probation (or period of reproval), Respondent must make any necessary final payment(s) in order to complete the payment of restitution, including interest, in full.
1. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
2. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
3. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
4. Payee/CSF (as applicable)
Minimum Payment Amount
Payment Frequency
<<not>> checked. 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.
1. If Respondent possesses client funds at any time during the period covered by a required quarterly report, Respondent must file with each required report a certificate from Respondent and/or a certified public accountant or other financial professional approved by the Office of Probation, certifying that:
a. Respondent has maintained a bank account in a bank authorized to do business in the State of California, at a branch located within the State of California, and that such account is designated as a “Trust Account” or “Clients’ Funds Account”;
b. Respondent has kept and maintained the following:
i. A written ledger for each client on whose behalf funds are held that sets forth:
1. the name of such client;
2. the date, amount and source of all funds received on behalf of such client;
3. the date, amount, payee and purpose of each disbursement made on behalf of such client; and,
4. the current balance for such client.
ii. a written journal for each client trust fund account that sets forth:
1. the name of such account;
2. the date, amount and client affected by each debit and credit; and,
3. the current balance in such account.
iii. all bank statements and cancelled checks for each client trust account; and,
iv. each monthly reconciliation (balancing) of (i), (ii), and (iii), above, and if there are any differences between the monthly total balances reflected in (i), (ii), and (iii), above, the reasons for the differences.
c. Respondent has maintained a written journal of securities or other properties held for clients that specifies:
i. each item of security and property held;
ii. the person on whose behalf the security or property is held;
iii. the date of receipt of the security or property;
iv. the date of distribution of the security or property; and,
v. the person to whom the security or property was distributed.
2. If Respondent does not possess any client funds, property or securities during the entire period covered by a report, Respondent must so state under penalty of perjury in the report filed with the Office of Probation for that reporting period. In this circumstance, Respondent need not file the accountant’s certificate described above.
3. The requirements of this condition are in addition to those set forth in rule 4-100, Rules of Professional Conduct.
checked. Within one (1) year of the effective date of the discipline herein, Respondent must supply to the Office of Probation satisfactory proof of attendance at a session of the Ethics School Client Trust Accounting School, within the same period of time, and passage of the test given at the end of that session.
Case Number(s): 09-O-13111, et al
In the Matter of: KARLA C.SHIPPEY, 113107
<<not>> checked. a. Within days/ months/ years of the effective date of the discipline herein, Respondent must develop a law office management/organization plan, which must be approved by the Office of Probation. This plan must include procedures to (1) send periodic reports to clients; (2) document telephone messages received and sent; (3) maintain files; (4) meet deadlines; (5) withdraw as attorney, whether of record or not, when clients cannot be contacted or located; (6) train and supervise support personnel; and (7) address any subject area or deficiency that caused or contributed to Respondent’s misconduct in the current proceeding.
checked. b. Within days/ SIX months/ years of the effective date of the discipline herein, Respondent must submit to the Office of Probation satisfactory evidence of completion of no less than SIX hours of Minimum Continuing Legal Education (MCLE) approved courses in law office management, attorney client relations and/or general legal ethics. This requirement is separate from any MCLE requirement, and Respondent will not receive MCLE credit for attending these courses (Rule 3201, Rules of Procedure of the State Bar.)
<<not>> checked. c. Within 30 days of the effective date of the discipline, Respondent must join the Law Practice Management and Technology Section of the State Bar of California and pay the dues and costs of enrollment for year(s). Respondent must furnish satisfactory evidence of membership in the section to the Office of Probation of the State Bar of California in the first report required.
Other:
IN THE MATTER OF: Karla C. Shippey, State Bar No. 113107
STATE BAR COURT CASE NUMBER: 09-O-13111, et al
Respondent admits that the following facts are true and that she is culpable of violations of the specified statutes and/or Rules of Professional Conduct.
LOAN MODIFICATION MATTERS (09-O-13111, 09-O-13251, 09-O-13257, 10-O-00017,
10-O-02503, 10-O-03046, 10-O-03561)
STATEMENT OF FACTS
1. In October 2008, Respondent entered into a Independent Contractor Agreement with a loan modification company entitled RMR Group Loss Mitigation, LLC ("RMR"). Respondent hired RMR as independent contractors to process loan modification cases for her law office, Shippey Law, PC. The agreement provided that RMR would provide services for loan modification/loss mitigation contracts made between Respondent’s office and its clients. RMR was to be paid in installments upon the completion of distinct services. RMR was to provide services in compliance with the practices required by Respondent for maintenance of her office’s reputation and licenses.
2. Respondent utilized RMR’s services to process the loan modifications/loss mitigation packages of the following clients with their home mortgage lender:
Case Number: 09-O-13111, Client: Rosalind de Salinas, Date Client employed Respondent: February 10, 2009, Advanced fees Client paid to Respondent:$1,900;
Case Number: 09-O-13251, Client: Vilma Moline, Date Client employed Respondent: November 10, 2008, Advanced fees Client paid to Respondent:$3,144;
Case Number:09-O-13257, Client: Juan Manzano, Date Client employed Respondent: November 27,2008, Advanced fees Client paid to Respondent:$6,000;
Case Number:10-O-00017, Client:Vernon Rodgers, Date Client employed Respondent: December 23, 2008, Advanced fees Client paid to Respondent: $1,700;
Case Number:10:O-02503, Client: Ismael R. Rojo, Date Client employed Respondent: January 29,2009, Date Client employed Respondent $2,500;
Case Number:10-O-03046, Client: Joel Perez, Date Client employed Respondent: December 10,2008, Date Client employed Respondent $3,295;
Case Number:10-O-03046, Client: Audie Muphy, Date Client employed Respondent: January 12,2009, Date Client employed Respondent: $2,800;
TOTAL ADVANCED FEES PAID RESPONDENT $21,339
3. Respondent, by virtue of RMR’ s failures, failed to provide the legal services necessary to obtain loan modifications for the clients listed above, and failed to perform any other legal services of any value to the clients listed above in connection with negotiating and obtaining home mortgage loan modifications. Thus, Respondent did not earn the advanced fees collected from the clients.
4. To date, Respondent has not provided any refunds to the clients listed above, despite their requests for refunds.
CONCLUSIONS OF LAW
1. By failing to obtain loan modifications or perform any other legal services of value in the representation of the above-listed clients, Respondent intentionally, recklessly, or repeatedly failed to perform legal services with competence in willful violation of rule 3-110(A) of the Rules of Professional Conduct.
2. By failing to refund promptly any part of the advanced fees paid to Respondent by each of the clients listed above, despite not having earned that fee, Respondent willfully violated rule 3-700(D)(2) of the Rules of Professional Conduct.
PATENT MATTERS (10-O-01033, 10-O-03437, 10-O-05954)
Case Number 10-O-01033
STATEMENT OF FACTS
1. On May 27, 2005, Kevin Foor employed Respondent to file an application and secure a patent on .his behalf. Mr. Foor paid $2,000 on June 27, 2005 and another $3,925 in September 2005.
2. On May 29, 2008, Respondent’s office filed Mr. Foor’s patent application with the United States Patent and Tradmark Office ("USPTO"). On June 12, 2008, the USPTO forwarded a letter to Respondent’s office regarding Notice of the Missing Parts of the patent application. Respondent’s office received the letter.
3. Respondent’s office did not respond to the USPTO’s June 12, 2008 letter and did not submit any further information regarding Mr. Foor’s patent application.
4. On February 13, 2009, the USPTO forwarded a letter to Respondent’s office regarding Notice of Abandonment of Mr. Foor’s patent application for failure to reply to the USPTO’s letter of June 12, 2008.
5. On November 20, 2009, Mr. Foor obtained a copy of his file and learned that the patent application was not submitted until May 2008.
6. In January 2010, Mr. Foor learned that his patent application had been abandoned.
7. On June 23, 2010, Mr. Foor forwarded a letter to Respondent, terminating her services and requesting a refund of the $5,925 legal fees.
8. To date, Respondent has not refunded Mr. Foor’s legal fees.
CONCLUSIONS OF LAW
By failing to respond to the USPTO’s letter of June 12, 2008 and allowing Mr. Foor’s patent application to be abandoned, Respondent intentionally, recklessly, or repeatedly failed to perform with competence in willful violation of rule 3-110(A) of the Rules of Professional Conduct.
By allowing Mr. Foor’s patent application to be abandoned, Respondent performed no legal series of value for Mr. Foor and did not earn the $5,925 in legal fees paid by Mr. Foor. By failing to refund Mr. Foor’s unearned legal fees, Respondent willfully violated rule 3-700(D)(2) of the Rules of Professional Conduct.
Case Number 10-O-03437
STATEMENT OF FACTS
9. On May 7, 2007, Kevin and Beth House employed Respondent to file an application and
secure a patent on their behalf. On that same date, Mr. and Mrs. House paid Respondent $2,000 in legal fees. On May 30, 2008, Mr. and Mrs. House paid another $1,070 to Respondent in legal fees.
10. On July 20, 2007, Respondent’s office filed the patent application on behalf of Mr. and Mrs.
House.
11. Due to Respondent’s office’s failure to respond to all correspondence from the USPTO, the
application filed on behalf of Mr. and Mrs. House was abandoned by the USPTO on September 4, 2009.
12. In an effort to revive the patent, Respondent’s office filed a new application for a patent on
behalf of Mr. and Mrs. House on May 4, 2010.
CONCLUSIONS OF LAW
By failing to respond to all the correspondence from the USPTO and causing Mr. and Mrs. House application for a patent to be abandoned, Respondent intentionally, recklessly, or repeatedly failed to perform in willful violation of rule 3-110(A) of the Rules of Professional Conduct.
Case Number 10-O-05954
STATEMENT OF FACTS
13. On April 28, 2008, Gabriel Durante employed Respondent to file an application and secure a patent on his behalf. On that same date, Mr. Durante paid Respondent $3,000 in advanced legal fees.
14. On October 30, 2008, Respondent’s office filed the patent application on behalf of Mr. Durante with the USPTO. On March 5, 2009, the USPTO forwarded a letter to Respondent’s office regarding the allowance of the patent and the request for issuance fee by June 5, 2009.
15. On May 13, 2009, Respondent’s office forwarded a letter to Mr. Durante regarding his patent being allowed and the necessity of the issuance fee being paid by June 5, 2009.
16. On June 2, 2009, Mr. Durante presented a cashier’s check to Respondent’s office for $980, covering legal fees and the issuance fee. The cashier’s check was cashed on June 2, 2009.
17. On June 29, 2009, USPTO forwarded a letter to Respondent’s office regarding abandonment of the application due to failure to submit the issuance fee.
18. After learning about the abandonment of his application, Mr. Durante corresponded with USPTO himself and on April 19, 2010, paid the $430 issuance directly to USPTO. Mr. Durante then requested the $430 back from Respondent’s office that was never received by the USPTO. To date, Respondent has not refunded the $430 to Mr. Durante.
CONCLUSIONS OF LAW
By failing to forward the issuance fee paid to Respondent’s office to the USPTO and causing Mr. Durante’s application to be abandoned, Respondent intentionally, recklessly, or repeatedly failed to perform with competence in willful violation of rule 3-110(A) of the Rules of Professional Conduct.
By not forwarding the issuance fee to the USPTO and allowing Mr. Foor’s patent application to be abandoned, and by failing to refund Mr. Foor’s $430, Respondent willfully violated rule 3-700(D)(2) of the Rules of Professional Conduct.
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(7), was February 18, 2011.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of December 17, 2010, the prosecution costs in this matter are $8173. 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.
FACTORS IN MITIGATION
Respondent has been practicing law for 26 years with no record of prior discipline.
Respondent has fully recognized her wrongdoing and by entering into this stipulation has fully demonstrated her remorse.
Respondent has displayed candor and cooperation with the State Bar throughout these investigations and in resolving this matter without trial.
Respondent has provided many letters of reference regarding her good character by a wide range of people in the general community.
If Respondent were to testify to mitigation, she would so state:
"It is my position that the RMR Group is in breach of the contract for not maintaining the required reporting systems, failing to provide the required refunds, and not complying with the required guidelines regarding client contact provided by my office - including contacting clients THROUGH my office period.
I had to leave California for 5 months to attend to my father during his cancer treatments in 2007. This set me back financially in a significant way. In fall 2007, I fell and splintered my wrist, requiring surgery and medical payments of more than $35,000. The result of no marketing, slowing economy, and medical bills in 2007/2008 is that we lost our home to foreclosure in August 2008. November 2008 (while I was trying to work out the systems with the RMR Group), my office was in the evacuation zone for the Yorba Linda fire storm (Nov. 15). We had to move very quickly - to an Anaheim office.
My husband, a patent agent and PhD Chemist, was laid off from Chevron in 2000. After several years trying to get another job, he enrolled in law school (2004) and graduated in 2009. He has yet to pass the Bar, and so except for the occasional patent client, he does not have a job.
I laid off all staff in August 2009 and then relocated my office in January 2010 because I could not afford the Anaheim office. I have no staff now. Business is extremely slow in the transactional law field - there is a very strong "self-help" industry that is adversely affecting what I do.
I am under a towering load of debt, somewhere in the neighborhood of $430,000. I am trying to work out settlements and am considering bankruptcy in addition to dissolution of my corporation, Shippey Law PC."
FACTORS IN AGGRAVATION
Respondent’s clients were harmed by the above described misconduct. Most, if not all of the loan modification clients who hired Respondent to assist them with their home loan modification did so because they were financially distressed. Thus, the loss of the use of the money they paid to Respondent for services that were not performed, causes harm to Respondent’s clients.
AUTHORITIES SUPPORTING DISCIPLINE.
Standards
Standard 1.3 provides that the primary purposes of attorney discipline are, "the protection of the public, the courts and the legal profession; the maintenance of high legal professional standards by attorneys and the preservation of public confidence in the legal profession."
Standard 2.4(b) provides that culpability of a member for failing to perform shall result in reproval or suspension depending upon the extent of the misconduct and the degree of harm to the client.
Standard 2.10 provides that any violation of the Business and Professions Code and the Rules of Professional Conduct not specified in these standards shall result in reproval or suspension according to the gravity of the offense or the harm, if any, to the victim.
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.
Given the aggravating and mitigating circumstances present in this case, a six month suspension, along with the probationary conditions set forth herein, is consistent with the Standards.
Finally, the parties submit that given Respondent’s recognition of wrongdoing, along with her conduct in attempting to rectify the harm, the stipulated discipline and probationary conditions in this matter are sufficient to assure that Respondent will conform his future conduct to ethical standards and, therefore, protect the public, courts and profession. This is consistent with Standard 1.3.
STATE BAR ETHICS AND CLIENT TRUST ACCOUNT SCHOOLS
Because Respondent has agreed to attend State Bar Ethics School and State Bar Client Trust Account School as part of this stipulation, Respondent may receive Minimum Continuing Legal Education credit upon the satisfactory completion of State Bar Ethics School and State Bar Client Trust Account School.
FINANCIAL CONDITIONS, RESTITUTION.
Within two years from the effective date of discipline in this matter, respondent must make restitution to the clients listed below or the Client Security Fund if it has paid, in the principal amount next to each client’s name plus interest at the rate of 10% per annum from the date each client paid Respondent, and furnish satisfactory evidence of restitution to the Office of Probation. Respondent shall include, in each quarterly report required herein, satisfactory evidence of all restitution payments made by him or her during that reporting period.
Rosalind de Salinas -$1,900, interest from date: 2/10/09;
Vilma Moline -$3,144, interest from date: 11/10/08;
Juan Manzano -$6,000, interest from date: 11/27/08;
Vernon Rodgers -$1,700, interest from date: 12/23/08;
Ismael R. Rojo -$2,500, interest from date: 1/29/09;
Audie Murphy -$2,800, interest from date: 1/12/09;
Joel Perez -$3,295, interest from date: 12/10/08 ;
Kevin Foor -$2,000, interest from date: 6/27/05;
Kevin Foor -$3,925, interest from date: 9/05;
Kevin & Beth House -$2,000, interest from date: 5/7/07;
Gabriel Durante -$430, interest from date: 6/2/09;
FINANCIAL CONDITIONS, RESTITUTION.
Respondent waives any objection to payment by the State Bar Client Security Fund upon a claim for the principal amount of restitution set forth herein.
Case Number(s):09-O-13111, et al
In the Matter of: KARLA C. SHIPPEY, 113107
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: KARLA C. SHIPPEY
Date: February 22, 2011
Respondent’s Counsel:
Date:
Deputy Trial Counsel: SUZAN J. ANDERSON
Date: February 23, 2011
Case Number(s): 09-O-13111, et al
In the Matter of: KARLA C. SHIPPEY, 113107
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:
<<not>> checked. The stipulated facts and disposition are APPROVED and the DISCIPLINE RECOMMENDED to the Supreme Court.
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.
Page 2 – Section (A). (8)- Insert after word “cycles” – (2012, 2013)
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. PLATEL
Date: March 9, 2011
[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 March 10, 2011, 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 Los Angeles, California, addressed as follows:
KARLA C. SHIPPEY
SHIPPEY LAW PC
1111 E. COMMONWEALTH AVE STE B
FULLERTON, CA 92831
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
Suzan J. Anderson, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on March 10, 2011.
Signed by:
Johnnie Lee Smith
Case Administrator
State Bar Court