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In re Complaint as to Conduct of Webb

Supreme Court of Oregon

May 24, 2018

In re Complaint as to the Conduct of SANDY N. WEBB OSB No. 086527, Respondent.

          Argued and submitted November 9, 2017

          On review of the decision of a trial panel of the Disciplinary Board OSB No. 1609, 1610, 1611, 1612, 1618; dated January 20, 2017.

          Kevin Keaney, Portland, argued the cause and fled the briefs on behalf of Respondent.

          Susan R. Cournoyer, Assistant Disciplinary Counsel, Tigard, argued the cause and fled the briefs on behalf of the Oregon State Bar.

          Before Balmer, Chief Justice, and Kistler, Walters, Nakamoto, Flynn, Duncan, and Nelson, Justices. [*]

         Case Summary: The Oregon State Bar brought a disciplinary action against the accused lawyer, alleging multiple violations of the Rules of Professional Conduct, based on her mishandling of client funds, including violating RPC 8.4(a)(3) (conduct involving dishonesty) by knowingly converting client funds. A trial panel of the Disciplinary Board found that the respondent had committed all of the charged violations and concluded that the respondent should be suspended from the practice of law for two years. Held: On de novo review, the Court concluded that there was clear and convincing evidence that the respondent committed all of the charged violations of the disciplinary rules and held that the respondent should be disbarred.

         [363 Or. 43] PER CURIAM

         In this lawyer discipline proceeding, the Oregon State Bar charged respondent[1] with multiple violations of the Rules of Professional Conduct (RPC) based on her mishandling of client funds, including violating RPC 8.4(a)(3) (conduct involving dishonesty) by knowingly converting client funds. A trial panel of the Disciplinary Board conducted a hearing and determined that respondent had committed all of the charged violations. Although this court has repeatedly imposed disbarment as the presumptive sanction for a lawyer who converts client funds, the trial panel determined that mitigating factors, in particular respondent's mental disabilities, supported imposing a two-year suspension from the practice of law.

         The Bar seeks review of the trial panel's sanction determination, urging this court to impose a sanction of disbarment. Respondent, for her part, does not challenge the trial panel's determinations that she committed the charged violations in the ways alleged, but she urges this court to affirm the trial panel's decision that suspension is the appropriate sanction in this case. For the reasons that follow, we affirm the trial panel's determination that the respondent committed all of the charged violations, and we conclude that the appropriate sanction is disbarment.

         I. FACTS

         Respondent was admitted to practice law in Maryland and Pennsylvania in 2000. She moved to Oregon and was admitted to the Oregon Bar in 2008. From 2011 to 2015, respondent was a solo practitioner, handling many matters for which she represented clients on a contingent-fee basis. Respondent was solely responsible for bookkeeping and managing her client trust account. In the spring of 2014, respondent found herself in financial trouble. In June, her landlord agreed to forbear collecting rent for six months and, in August 2014, respondent stopped regularly paying [363 Or. 44] her employees their full wages. The disciplinary charges arise out of respondent's mishandling of client funds between August 2014 and January 2015.

         A. The Brown Matter

         Respondent represented Brown and negotiated a settlement in which the opposing party agreed to pay Brown $6, 000. On August 28, 2014, Brown emailed respondent, emphasizing that she urgently needed her portion of the settlement funds and asking why it was taking so long for the other side to pay. Respondent initially responded, falsely, that the settlement check had not yet been delivered. At the end of the day, however, respondent sent an email to Brown reporting that she had received and "just" deposited the check. In fact, respondent had deposited the $6, 000 check into her client trust account the day before those emails, and, by the time that responded reported having deposited Brown's check, most of the funds from that deposit had been used to honor three outstanding checks that had been written on respondent's client trust account. The following day, August 29, a fourth check was paid from trust account funds, bringing the balance of the account to $44.31. Also on August 29, respondent sent an email to Brown, claiming that the Bar would not allow her to disburse any of the $6, 000 until she received approval from the bank, likely some time the following week.

         In mid-September 2014, Brown again contacted respondent to ask when she would receive her portion of the settlement. Respondent claimed, on September 18, that Brown's check had been sent out in the mail days earlier, but she prepared Brown for the possibility that the check might not arrive, offering to "place a stop check on the one mailed and walk into a local branch and deposit" a new check in Brown's account. Ultimately, on September 22, respondent wrote Brown a trust account check for $3, 590. By then, respondent had made three new deposits of funds from other sources, bringing her trust account back to a level that was almost, but not quite, sufficient to cover the check that she wrote to Brown. The bank, nevertheless, honored the check and sent respondent a notice that she had overdrawn her trust account by $70.73.

         [363 Or. 45] Respondent deposited $80 of her own money into the trust account and, when asked to explain the overdraft to the Bar, claimed that she "accidentally wrote the client check for $3590 instead of $3509 as was appropriate." However, calculations that respondent had written on a copy of her fee agreement with Brown listed a total due to Brown of $3, 590. Moreover, when respondent provided the Bar with an account statement to support her claim that fees and costs left only $3, 509 due to Brown, respondent listed fees for service and filing Brown's case that were $66 more than the actual service and filing fees.

         B. The McCarty Matter

         On November 3, 2014, respondent deposited into her trust account a $70, 000 settlement check that she had received on behalf of McCarty, of which McCarty was to receive $44, 000. When respondent deposited the McCarty settlement check in her trust account, it brought the account balance to $70, 303. The day of that deposit, respondent disbursed $45, 000 of the trust account funds to herself for her own personal and office expenses and paid another creditor $260, immediately reducing the trust account balance to $25, 043. By November 14, respondent had also withdrawn an additional $24, 443 of the trust account funds to pay two other clients settlement distributions that she had owed them since at least July 2014, as well as other expenses. Thus, respondent spent all but $297 of McCarty's settlement proceeds to pay other clients, her creditors, and herself.

         On December 8, 2014, notwithstanding having depleted the trust account of McCarty's settlement funds, respondent wrote a check to McCarty for $44, 000 from the trust account. When McCarty deposited the check, it was dishonored for insufficient funds, and McCarty paid a $35 overdraft fee. McCarty immediately called respondent, who falsely claimed that the bank had made an error and said that she would look into it and fix it.

         C. The Godier Matter

         On December 11, 2014, respondent received and deposited into her client trust account a check for $100, 000, paid in settlement to Godier by one of two defendants in a [363 Or. 46] case that was going to trial the following month. Of that $100, 000, $52, 000 was due to Godier after accounting for attorney fees and expenses. The day that respondent deposited Godier's check, however, respondent used trust account funds to pay McCarty $44, 030-McCarty's share of the settlement plus reimbursement for the overdraft fee that McCarty had paid. Respondent also made two other withdrawals of trust account funds, which she described in her records as "law offices withdrawals"-one for $35, 510, and one for $15, 010. The deposit and those withdrawals left a balance of $6, 080 in respondent's trust account, and respondent disbursed $6, 000 to Godier.

         On the first day of Godier's trial against the non-settling codefendant, January 12, 2015, respondent wrote a check to Godier on the trust account for $46, 000, the remainder of the settlement funds due to Godier. At the time when respondent wrote that check, there was only about $1, 300 in her trust account, and the $46, 000 check to Godier was dishonored for insufficient funds. Respondent made false excuses to Godier and told him to redeposit the check. He did so, but the check was dishonored again on January 15. Godier by then had overdrawn his own checking account and was desperate for his settlement funds. Respondent's husband mailed Godier $1, 000 in cash, but respondent never paid Godier the $46, 000 that she owed him from the settlement. Godier eventually applied to the Bar's Client Security Fund (CSF) for help, and CSF paid him $46, 000. Respondent has since agreed that she will reimburse CSF for the amount paid to Godier.

         D. Respondent's Mental Health

         In the middle of the Godier trial, on January 14, 2015, respondent was involved in a one-car accident and was diagnosed with a concussion. Several days later, respondent was admitted to the hospital complaining that she was "overwhelmed with life" and had been experiencing suicidal thoughts for the preceding two weeks. Health care professionals hospitalized respondent for four days out of concern that she presented a suicide risk and discharged respondent with a diagnosis of major depressive disorder. She attended an outpatient treatment program for impaired professionals [363 Or. 47] through March 2015, during which she received a diagnosis of major depressive disorder as well as Post Traumatic Stress Disorder (PTSD). In May 2015, respondent was living in Maryland and began therapy with psychologist Dr. Kronfli, who also diagnosed major depressive disorder and PTSD.

         Respondent told her various mental health providers that she had suffered from untreated PTSD since experiencing a traumatic event as a young adolescent. At the disciplinary hearing, respondent testified that she had also been very strongly affected by the terrorist attacks of September 11, 2001, because she had been a student in Washington, D.C. at that time and could see the smoke from the attack on the Pentagon. Respondent testified that she always struggled around the anniversary of the attacks and that, beginning around September 11, 2014, she suffered symptoms of her depression and PTSD that were triggered both by her memories of the terrorist attack and by her financial difficulties.

         Kronfli continued to treat respondent for her psychiatric conditions through the time of the disciplinary hearing in September 2016, and respondent relied on his testimony at the hearing. Kronfli testified that, based on respondent's report in January 2015 that she was "overwhelmed with life, " her symptoms of depression "had gotten to a point where she did not have * * * the appropriate amount of coping tools" to deal with the "stressors that she was experiencing at that time which would make it very hard for her to function in her job." He explained that, if respondent was under an "overwhelming amount of stress, " then the symptoms of her untreated mental conditions likely "caused her enough distress to perhaps influence or cause her to do something that she normally would not have done" if she were managing her stressors "in an appropriate or adaptive way."

         The Bar offered testimony from another psychologist, Dr. Warford, who reviewed respondent's treatment records but did not examine her. Warford testified that respondent's records showed inconsistencies that caused him to question whether she was impaired. For example, Warford explained that a cognitive assessment that respondent took in March 2015 showed a profile "essentially within [363 Or. 48] normal range, with no overt evidence of depression, anxiety or anything that would suggest a psychotic disorder." This is not the profile that Warford would have expected to see in a person who had recently been suffering from a major depressive disorder.

         II. DISCIPLINARY VIOLATIONS

         The Rules of Professional Conduct impose significant restrictions on how lawyers must keep and manage client funds. RPC 1.15-1. ...


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