Case Number(s): 06-J-12565
In the Matter of: Clayton Patrick, Bar # 45735, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Eli D. Morgenstern, Bar # 190560
Counsel for Respondent: Bar #
Submitted to: assigned 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 January 15, 1970.
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 13 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 284, Rules of Procedure.
checked. costs 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 billing cycles following the Disciplinary Order: 2007, 2008, 2009. (hardship, special circumstances or other good cause per rule 284, Rules of Procedure
<<not>> checked. costs waived in part as set forth in a separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. costs entirely waived.
IN THE MATTER OF: CLAYTON CORWIN PATRICK
CASE NUMBER(S): 06-J-12565
FACTS AND CONCLUSIONS OF LAW.
Respondent admits that the following facts are true and that he is culpable of violations of the specified Rules of Professional Conduct.
General Background
1. Respondent is, and at all relevant times herein, was a member of the Oregon State Bar. Respondent is, and at all relevant times herein, was a member of California and Washington State Bars, on voluntary inactive status.
2. Respondent and Michael Tandy (hereinafter, "Tandy") were close friends for several years. Prior to 1997, Tandy established the Tandy/Quan Trust, now known as the Clearspring Trust (hereinafter, "Trust"), with a business partner. One of the Trust’s income producing ventures was to make loans to individuals.
3 In June 1991, Respondent began borrowing money from Tandy. All of these loans were eventually transferred to the Trust.
4. In 2003, Respondent filed for Chapter 7 Bankruptcy in the United States Bankruptcy Court for the District of Oregon. Among the debts that Respondent sought to discharge were funds borrowed from the Trust. Thereafter, Tandy, on behalf of the Trust, filed an adversary action in Respondent’s Chapter 7 Bankruptcy.
5. In the Decision in the adversary action, which was filed on September 15, 2003, the Bankruptcy Court made factual findings relevant to the professional conduct of attorneys, and forwarded the Decision to the Oregon State Bar.
6. Thereafter, on January 6, 2006, the Oregon State Bar, Disciplinary Counsel’s Office, filed an Amended Formal Complaint against Respondent.
7. On March 3, 2006, Respondent and an Assistant Disciplinary Counsel executed a Stipulation for Discipline in Case No. 05-20, pursuant to which Respondent was ordered actually suspended from the practice of law for 30 days. On March 13, 2006, the Order Approving Stipulation for Discipline in Case No. 05-20 (hereinafter, "Order") was filed with the Oregon Supreme Court. Pursuant to the Order, Respondent’s 30 day actual suspension became effective on May 25, 2006. (Please see certified, true copy of Order Approving Stipulation for Discipline in Case No. 05-20, dated March 13, 2006, and certified, tree copy of Stipulation for Discipline, Case No. 05-20, executed on March 3, 2006, collectively attached hereto as Exhibit 1.)
Facts
The Holman Loan
8. In January 1997, Respondent suggested to Tandy that the Trust loan Timothy and Kimberly Holman (hereinafter, the "Holmans") money to operate and expand their business. The Holmans were also long time friends of Respondent. Tandy agreed on behalf of the Trust.
9. Respondent actively facilitated the loan transaction by performing legal services for the both the Holmans and Tandy/the Trust. At no time did Respondent obtain the informed written consent of either Tandy or the Holmans as defined by as defined by rule 3-310(C)(2) of the Rules of Professional Conduct.
10. Respondent negotiated and facilitated the loan on behalf of the Holmans. He also signed the promissory note as a guarantor for the Holmans. Respondent’s professional judgment on behalf of the Holmans was or could reasonably have been affected by his own financial, business, property, or personal interests as a guarantor for their loan. Respondent did not immediately recognize the conflict created by his role as guarantor for the Holmans and failed to describe the terms of the financial arrangement in writing in a manner which should have been reasonably understood by them, failed to advise them in writing that they may seek the advise of independent counsel, and thereafter failed to obtain their written consent to Respondent’s role as guarantor for the loan.
Conclusions of Law
By serving as a guarantor for the Holmans’ loan, Respondent engaged in a transaction with a client without complying with the requirements that the transaction and its terms were fair and reasonable to the client; that the transaction and its terms were fully disclosed and transmitted in writing to the client in a manner which should reasonably have been understood by the client; that the client was advised in writing that the client may seek the advice of an independent lawyer of the client’s choice; that the client was given a reasonable opportunity to seek that advice; and that the client thereafter consented in writing to the terms of the transaction, Respondent wilfully violated rule 3-300 of the Rules of Professional Conduct.
By representing both the Trust and the Holmans, whose objective interests as lender and borrowers respectively, were adverse, without their informed written consent, Respondent wilfully violated rule 3-310(C)(2) of the Rules of Professional Conduct.
Facts
The Schultz Loan
11. In June 1997, Respondent referred another client, Thomas Schultz (hereinafter, "Schultz’) to Tandy for a loan.
12. Respondent represented Schultz in negotiating the loan from the Trust.
13. Respondent also performed legal services for Tandy. Specifically, Tandy sent draft documents to Respondent for review and Respondent was aware that Tandy was looking to him to ensure that the Trust’s interests were protected in the transaction. At no time did Respondent obtain the informed written consent of either Tandy or Schultz as defined by as defined by rule 3-310(C)(2) of the Rules of Professional Conduct.
Conclusions of Law
By representing both Tandy/Trust and Schultz, whose objective interests as lender and borrowers respectively, were adverse, without their informed written consent, Respondent wilfully violated rule 3-310(C)(2) of the Rules of Professional Conduct.
PENDING PROCEEDINGS.
The disclosure date referred to, on page one, paragraph A.(7), was July 12, 2006.
COSTS OF DISCIPLINARY PROCEEDINGS.
Respondent acknowledges that the Office of the Chief Trial Counsel has informed him that as of July 12, 2006, the estimated prosecution costs in this matter are approximately $1,983. Respondent 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.
AGREEMENTS AND WAIVERS PURSUANT TO BUSINESS AND PROFESSIONS CODE SECTION 6049.1.
1. Respondent’s culpability determined in the disciplinary proceeding in the Oregon Supreme Court would warrant the imposition of discipline in the State of California under the laws or roles in effect in this State at the time the misconduct was committed; and
2. The proceeding in the above jurisdiction provided Respondent with fundamental constitutional protection.
AUTHORITIES SUPPORTING DISCIPLINE.
Standards
Standard 2.8 of the Standards For Attorney Sanctions For Professional Misconduct, Title IV of the Rules of Procedure ("Standards") provides that culpability of a member of a wilful violation of rule 3-300 shall result in suspension unless the extent of the member’s misconduct and the harm to the client are minimal, in which case, the degree of discipline shall be a reproval.
Case Law
In In the Mater of Aguiluz (Review Dept. 1994) 3 Cal. State Bar Ct. Rptr. 41, the attorney undertook the concurrent representation of clients with potentially conflicting interests (a driver and his passenger in a personal injury matter arising out of an automobile accident); continued that representation when an actual conflict of interest arose without seeking the required written consent to the continued representation; and failed to handle competently the suit he filed for his clients, resulting in its dismissal. When one of the clients (the driver) died, the attorney failed to inform the surviving client that the case had been dismissed; he later unilaterally withdrew from employment of this client without client notice or consent. Because of the attorney’s inadequate supervision of staff and inadequate attention to his professional duties, his office sought damages from the insurer of the since deceased, former client, for the client as to whom he had already withdrawn from employment. Later, his staff filed a "first amended complaint" in the already dismissed suit in which the former client purported to sue the deceased client. (In the Matter of Aguiluz, supra, 3 Cal. State Bar Ct. Rptr. at 45-46.)
The attorney had been disciplined on one prior occasion, and was ordered suspended for one year, execution of the suspension was stayed, and the attorney was placed on probation for two years. (In the Matter of Aguiluz, supra, 3 Cal. State Bar Ct. Rptr. at 47.)
In Aguiluz, the Review Department recommended that the attorney be suspended for one year, execution of the suspension was stayed, and he was placed on probation for two years with conditions including 90 days actual suspension. (In the Matter of Aguiluz, supra, 3 Cal. State Bar Ct. Rptr. at 51.)
Respondent is deserving of less discipline than that received by Aguiluz in that Respondent was admitted to the California State Bar in 1970, the Washington State Bar in 1972, and the Oregon State Bar in 1977, and has no prior record of discipline. Respondent’s misconduct was less egregious than that committed by attorney Aguiluz, Respondent was cooperative in these disciplinary proceedings, as well as those conducted in Oregon, and unlike Aguiluz stated remorse for his misconduct. (In the Matter of Aguiluz, supra, 3 Cal. State Bar Ct. Rptr. at 50.)
STATE BAR ETHICS SCHOOL EXCLUSION
Respondent resides outside of California and is unable to attend State Bar Ethics School. As an alternative to State Bar Ethics School, the parties agree that within one year of the effective date of discipline, Respondent must provide sufficient proof to the Office of Probation of six (6) hours of Continuing Legal Education in General Legal Ethics.
SIGNATURE OF THE PARTIES
Case Number(s): 06-J-12565
In the Matter of: Clayton Patrick
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: Clayton Patrick
Date: 8-3-06
Respondent’s Counsel:
Date:
Deputy Trial Counsel: Eli D. Morgenstern
Date: 8-07-06
Case Number(s): 06-J-12565
In the Matter of: Clayton Patrick
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 953 (a), California Rules of Court.)
Signed by:
Judge of the State Bar Court: Robert Tattler
Date: 8-18-06
[Rule 62(b), Rules Proc.; 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 August 22, 2006, 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 , California, addressed as follows:
CLAYTON C. PATRICK, ESQ.
1030 SW. JEFFERSON ST STE 530
PORTLAND OR 97201-3467
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
ELI MORGENSTERN, Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on August 22, 2006.
Signed by:
Rose M. Luthi
Case Administrator
State Bar Court