Case Number(s): 10-O-00132, 10-0-04786, 10-O-05180, 10-O-05183 [inv. matters]
In the Matter of: Scott B. Hayward, Bar #138582, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Suzan J. Anderson, Supervising Trial Counsel, 1149 S. Hill Street, Los Angeles, CA 90015, (213) 765-1209, Bar # 160559
Counsel for Respondent: In Pro Per Respondent, Scott B. Hayward, 101 Pacifica, Suite 100, Irvine, CA 92618, (949) 480-1767, Bar # 138582
Submitted to: Assigned Judge State Bar Court Clerk’s Office Los Angeles.
Filed: July 15, 2010
<<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 12, 1988.
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 15 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. Costs are added to membership fee for calendar year following effective date of discipline.
checked. Costs are to be paid in equal amounts prior to February 1 for the following membership years: 2011 and 2012. (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.
Case Number(s): 10-O-00132, et al.
In the Matter of: Scott B. Hayward
<<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/ 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 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:
Law Office Management Conditions
Case Number(s): 10-O-00132, et al.
In the Matter of: Scott B. Hayward
a. Restitution
<<not>> 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: Rick and Carolyn Bunfill
Principal Amount: $4,650
Interest Accrues From: May 2009
2. Payee:
Principal Amount:
Interest Accrues From:
3. Payee:
Principal Amount:
Interest Accrues From:
4. Payee:
Principal Amount:
Interest Accrues From:
<<not>> checked. Respondent must pay above-referenced restitution and provide satisfactory proof of payment to the Office of Probation not later than .
<<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.
IN THE MATTER OF: SCOTT B. HAYWARD
CASENUMBER(S): ET AL. 10-O-00132, et seq.
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.
CASE NUMBER 10-O-00132
FACTS
1. On May 1, 2009, Respondent entered into a business agreement (the "Agreement") with RJV Financial, Inc. (RJV), a loan modification business owned and operated by non-attorneys, Reinaldo Valdes and Donna Langston-Valdes (Donna). The Agreement called for Respondent, through his law firm, Loss Mitigation Law Group (LMLG) to provide legal supervision and guidance to RJV’s business of processing home mortgage loan modifications. RJV was responsible for obtaining the clients and Respondent was responsible for processing their loan modifications.
2. Pursuant to the Agreement, Respondent was to receive the larger of $250 per client or 6.25% of the total fee paid by the client. The Agreement provided that the client would pay the entire fee for -the loan modification to LMLG, then Respondent would deduct his attorney fee portion from the fee and pay the remainder to RJV. In order to facilitate the Agreement, Donna was to act as bookkeeper for LMLG solely as to LMLG’s business with RJV, and was made a signatory of the LMLG bank account.
3. In May 2009, Rick and Carolyn Bunfill retained Respondent through LMLG and sent a check for $4,900 in advanced legal fees made payable to LMLG. Pursuant to the agreement, Donna would have deposited the fees in LMLG’s account, paid Respondent his portion and deducted the remainder for RJV.
4. Respondent submitted the necessary information to their lender in order to obtain a loan modification, but on July 1, 2009, the lender denied the modification and informed Respondent that it was denied because the Bunfills were current on their mortgage.
5. Pursuant to their retainer agreement with Respondent, the Bunfills requested a refund of their advanced attorney fees pursuant to their retainer agreement with Respondent. On July 20, 2009, Respondent informed Donna, his bookkeeper, to issue their refund. Respondent assumed the refund had been issued to the Bunfills, but did not follow up on the issuance of the refund:
6. Several months later Respondent learned that the refund to the Bunfills had never been issued.
Attachment Page 1
7. On May 3, 2010, Respondent sent the Bunfills a check for $250 accompanied by a letter which reaffirmed his debt to them and that he would be making payments until the entire $4,900 was refunded to them.
CONCLUSIONS OF LAW
By entering into the agreement with RJV and accepting clients referred by RJB, Respondent formed a partnership with a person who is not a lawyer where the activities consisted of the practice of law in willfully violation of Rule 1-310 of the Rules of Professional Conduct.
By obtaining his payment from the advanced legal fee paid by the Bunfills and allowing the remainder of the advanced legal fee to be forwarded RJV, Respondent willfully shared legal fees with a person who is not a lawyer in violation of Rule 1-320(A) of the Rules of Professional Conduct.
By failing to follow up on the refund to the Bunfills upon their demand, and failing to make any payments to the Bunfills until May 10, 2010, Respondent willfully failed to promptly refund unearned fees in violation of Rule 3-700(D)(2) of the Rules of Professional Conduct.
CASE NUMBER 10-O-04786
FACTS
8. In March 2010, Respondent sent a letter to Ronald Hansen, a non-client, regarding Mr. Hansen’s mortgage and his mortgage lender. The letter contained such phrases as, "FINAL NOTICE", "LENDER MISCONDUCT INVESTIGATION", "IMPORTANT NOTICE REGARDING PREDATORY LENDING", "PREDATORY LENDING INVESTIGATION AND MISCONDUCT AUDIT", and "FAILURE TO RESPOND TO THIS NOTICE MAY AFFECT YOUR LEGAL RIGHTS." 9. The letter also identified Mr. Hansen’s mortgage lender and included Mr. Hansen’s mortgage loan amount.
CONCLUSIONS OF LAW
By utilizing the wording in the March 2010 letter, Respondent sent a communication which contained material which was deceptive and which tended to confuse, deceive or mislead the public in willfull violation of Rule 1-400(D)(2).
By including Mr. Hansen’s mortgage lender and mortgage loan amount in the March 2010 letter, Respondent willfully violated sections 14701(a) and 14702 of the California Business and Professions Code in willful violation of Business and Professions Code section 6068(a).
Attachment Page 2
CASE NUMBER 10-O-04786
FACTS
12. In February 2010, Respondent sent a letter to Timothy Little, a non-client, regarding Mr. Little’s mortgage and his mortgage lender. The letter contained such phrases as, "Lender Misconduct Investigation", "Your lender may be under investigation for predatory, lending and lender misconduct.", "You may be a victim.", and %.. time to participate is very limited."
CONCLUSIONS OF LAW
By utilizing the wording in the March 2010 letter, Respondent sent a communication which contained material which was deceptive and which tended to confuse, deceive or mislead the public in willfull violation of Rule 1-400(D)(2).
CASE NUMBER 10-O-05183
FACTS
10. In April 2010, Respondent sent a letter to Alan Engard, a non-client, regarding Mr. Engard’s mortgage and his mortgage lender. The letter contained such phrases as, "FINAL NOTICE", "LENDER MISCONDUCT INVESTIGATION", "IMPORTANT NOTICE REGARDING PREDATORY LENDING", "PREDATORY LENDING INVESTIGATION AND MISCONDUCT AUDIT", and "FAILURE TO RESPOND TO THIS NOTICE MY AFFECT YOUR LEGAL RIGHTS."
11. The letter also identified Mr. Engard’s mortgage lender and included Mr. Engard’s mortgage loan amount.
CONCLUSIONS OF LAW
By utilizing the wording in the March 2010 letter, Respondent sent a communication which contained material which was deceptive and which tended to confuse, deceive or mislead the public in willfull violation of Rule 1-400(D)(2).
By including Mr. Engard’s mortgage lender and mortgage loan amount in the March 2010 letter, Respondent willfully violated sections 14701 (a) and 14702 of the California Business and Professions Code in willful violation of Business and Professions Code section 6068(a).
PENDING PROCEEDINGS.
The disclosure date referred to, on page 2, paragraph A(6), was June 21, 2010.
Attachment Page 3
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed respondent that as of June 18, 2010, the prosecution costs in this matter are $0. 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.
MITIGATING CIRCUMSTANCES.
Respondent has no record of prior discipline since being admitted to the State Bar of California and commencing his practice of law in December 1988.
Respondent displayed candor and cooperation with the State Bar during the investigation of these matters. In so doing, Respondent recognized and acknowledged the wrongfulness of his conduct.
Respondent also demonstrated his remorse by taking affirmative steps to address the misconduct committed in these matters. Respondent no longer has any affiliation with any non-attorney loan modification businesses. Respondent is doing a more comprehensive screening of any potential loan modification clients at no cost and has turned away more clients than he has accepted. Respondent has changed his advertising to comply with Rule 1-400 of the Rules of Professional Conduct.
Respondent has started making payments to the Bunfills and has stipulated that he will refund their entire legal fee although he did not receive the entire fee.
DISCUSSION RE STIPULATED DISCIPLINE.
Standard 1.3 of the Standards For Attorney Sanctions For Professional Misconduct 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 2.6 states that disbarment or suspension depending on the gravity of the offense or the harm, if any, to the victims, with due regard to the purposes of imposing discipline, for violations of section 6068 of the Business and Professions Code.
Standard 2.10 states that reproval or suspension is the appropriate discipline, with due regard to the harm suffered by any victim and the purposes of imposing discipline, for violations of any Rules of Professional Conduct not specifically specified in other Standards, such as the Rule violations here.
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.
Respondent’s misconduct is aggravated by the fact that it harmed his clients and deprived them of the fees they paid for a period of time. However, Respondent has already begun making payments to the clients to fully refund the fees.
Attachment Page 4
Respondent has also made changes to his practice as outlined above to avoid committing any further misconduct as outlined herein.
Given the aggravating and mitigating circumstances present in this case, a one year stayed suspension, along with the probationary conditions set forth herein, is consistent with Standards 2.6 and 2.10.
Finally, the parties submit that given Respondent’s recognition of wrongdoing, along with his conduct in attempting to rectify the harm he caused, 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.
Attachment Page 5
Case Number(s): 10-O-00132, et al.
In the Matter of: Scott B. Hayward
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: Scott B. Hayward
Date: June 25, 2010
Respondent’s Counsel:
Date:
Deputy Trial Counsel: Suzan J. Anderson
Date: June 28, 2010
Case Number(s): 10-O-00132, et al.
In the Matter of: Scott B. Hayward
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. Platel
Date: July 13, 2010
[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 July 15, 2010, 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:
SCOTT B HAYWARD
HAYWARD LAW GROUP PC
101 PACIFICA STE 100
IRVINE CA 92618
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
SUZAN ANDERSON, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on July 15, 2010.
Signed by:
Angela Owens-Carpenter
Case Administrator
State Bar Court