In Re Complaint as to the Conduct of Moore

703 P.2d 961, 299 Or. 496, 1985 Ore. LEXIS 1374
CourtOregon Supreme Court
DecidedJuly 23, 1985
DocketSC S30904; OSB 82-63
StatusPublished
Cited by16 cases

This text of 703 P.2d 961 (In Re Complaint as to the Conduct of Moore) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Complaint as to the Conduct of Moore, 703 P.2d 961, 299 Or. 496, 1985 Ore. LEXIS 1374 (Or. 1985).

Opinion

*498 PER CURIAM

The Oregon State Bar filed a complaint against David L. Moore accusing him of unethical conduct in five separate causes. All the causes arise, directly or indirectly, from Moore’s alleged representation of clients in connection with the negotiation and purchase of the corporate stock of Pinnacle Packing Corporation, Inc.

The Bar’s complaint is dated January 11, 1983, and Moore accepted service of it on January 31, 1983. 1 The Trial Board found Moore guilty of all causes and recommended that he be disbarred. The four member Disciplinary Review Board found that the Trial Board’s opinion was “thorough, reasonable and accurate,” but recommended that Moore be suspended from the practice of law for a period of three years. We find Moore guilty of all five causes and suspend him from the practice of law for a period of one year.

In 1979, the First National Bank of Oregon as testamentary trustee and executor wanted to sell all the corporate stock of the Pinnacle Packing Corporation, Inc. The assets of the corporation included real estate in downtown Medford, a packing plant and more than 1,000 acres of orchards. Early in that year, a group of investors headed by Cecilia Hardwick began negotiating with the bank. The proposed purchase of the packing company was to be made by Vanya Corporation of which Hardwick was president. Vanya was a corporate shell without assets. Hardwick’s equity in a Medford motel was to be used as her contribution to finance the purchase of Pinnacle Packing.

In the late summer of 1979, Charles L. McLaughlin joined the Hardwick group that was attempting to purchase the packing company. He gave the joint venture financial strength. He was a successful real estate developer from California. McLaughlin advanced the sum of $50,000 to the trust account of an Ashland lawyer to be used as the earnest money for the proposed purchase. It was agreed by the group that McLaughlin was to have 60 percent of the ownership and *499 that after the purchase was completed at least a portion of the orchard property was to be transferred to his individual name. On October 1, 1979, the bank’s main office in Portland received the $50,000 as part of an offer from Vanya to purchase Pinnacle Packing.

On October 5, 1979, another member of the group, John Lisac, contacted Moore and requested that he help them “put the Pinnacle deal together.” 2 Lisac was a real estate agent who had the property listed for sale. He was going to use the real estate commission as his contribution toward the purchase of the packing company.

On October 10, 1979, Vanya Corporation, through Hardwick as president, submitted a new offer to the bank to purchase all of the outstanding stock of Pinnacle Packing for the sum of $2,750,000 to be paid as follows: (1) earnest money in the amount of $50,000; (2) a first mortgage on Hardwick’s Cedar Lodge Motel in the sum of $900,000; and (3) the balance of $1,800,000 to be paid in cash on closing.

In late October 1979, Moore had several meetings with Hardwick, Lisac and Hardwick’s husband. Then on October 30, 1979, Moore traveled to Portland with Lisac and Hardwick and met with the bank officers. As a result of that meeting, the bank wrote a letter to “C. C. Hardwick, Individually and President of Vanya Corp., and David Moore, Attorney,” confirming its intention to accept the previous offer submitted by Hardwick, subject to certain conditions.

During November 1979, Moore met with Hardwick, Lisac and McLaughlin several times but was unable to complete the transaction and the bank extended its previous deadlines. At a meeting on November 8, Moore told the group that his contingent fee for the completion of the transaction would be $250,000.

On December 1,1979, Hardwick delivered to Moore a check payable to him in the sum of $5,000. The check was drawn on Mineral Extraction Corp., a corporation owned by Hardwick and her husband. Later, Hardwick claimed that the *500 $5,000 was a loan and Moore claimed that it was in partial payment of his legal fees.

Around December 10, 1979, Moore made a trip to Palm Springs, California to meet with McLaughlin, his banker, and his accountant. Arrangements were then made for Moore and McLaughlin to meet with the First National Bank officers in Portland in the near future.

On December 14,1979, Moore and McLaughlin traveled to Portland without Hardwick. Moore introduced McLaughlin to the bankers as a person “with a substantial balance sheet and ability to handle the transaction.” At that meeting, McLaughlin informed the bank that the $50,000 that had been tendered previously with the offer from Vanya was his money and not Hardwick’s. Moore delivered to the bank a letter signed by him as “Attorney for Celia L. Hardwick” purporting to assign the $50,000 to Charles L.McLaughlin. The letter read in part:

“The assignment of the above funds eliminates all rights and interests that were held by Mrs. Cecilia L. Hardwick, individually and as President of Vanya Corporation and assigns any and all rights, if any, to Charles L. McLaughlin, of Palm Springs, California.
“An assignment of the interest signed by Cecilia L. Hard-wick will be sent to you next week.”

Two days later, when Moore returned to Medford, he asked Hardwick to execute the assignment of the $50,000 to McLaughlin. Hardwick refused. 3

At the meeting on December 14, 1979, the bank learned for the first time that the purchase was to be made by JJ & L Properties, Inc., instead of Vanya Corporation. JJ & L was represented to be another shell corporation which Moore had incorporated during prior negotiations to purchase Pinnacle Packing. McLaughlin became its president and Lisac the vice-president. Although Moore refused an offer *501 from McLaughlin to acquire a beneficial interest in the transaction, he did become the secretary and a director of JJ & L.

On January 28, 1980, the First National Bank, as trustee and executor, entered into an agreement whereby JJ & L agreed to purchase all the common stock of Pinnacle Packing. The purchase was made possible by a loan from Connecticut General Life Insurance Company in the amount of $1,800,000. As part of the same transaction the shareholders of JJ & L were required to execute an agreement in favor of the bank by which they individually guaranteed performance by JJ & L in amounts exceeding one million dollars.

McLaughlin and Lisac offered Hardwick a 20 percent interest in JJ & L if she would execute the guaranty agreement. Hardwick refused.

On October 30, 1980, McLaughlin mailed Moore a check payable to him in the amount of $35,000. Later Moore claimed that the $35,000 was an advance on his legal fees and McLaughlin claimed that it was a loan.

This story does not have a happy ending. JJ & L ended up in a Chapter 11 proceeding in the bankruptcy court. Connecticut General foreclosed its mortgage.

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Bluebook (online)
703 P.2d 961, 299 Or. 496, 1985 Ore. LEXIS 1374, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-complaint-as-to-the-conduct-of-moore-or-1985.