In Re Disciplinary Proceeding Against Egger

98 P.3d 477
CourtWashington Supreme Court
DecidedSeptember 30, 2004
Docket11611-3
StatusPublished
Cited by37 cases

This text of 98 P.3d 477 (In Re Disciplinary Proceeding Against Egger) is published on Counsel Stack Legal Research, covering Washington 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 Disciplinary Proceeding Against Egger, 98 P.3d 477 (Wash. 2004).

Opinion

98 P.3d 477 (2004)
152 Wash.2d 393

In the Matter of the DISCIPLINARY PROCEEDING AGAINST Phillip E. EGGER, Attorney at Law.

No. 11611-3.

Supreme Court of Washington, En Banc.

Argued May 11, 2004.
Decided September 30, 2004.

*479 Scott G. Busby, WSBA, Seattle, for Petitioner/Appellant.

Philip Emmett Egger, Bellevue, James Laign Magee, Jeffrey August Beaver, Graham & Dunn PC, Seattle, for Appellee/Respondent.

BRIDGE, J.

Attorney Phillip Egger appeals from the Washington State Bar Association Disciplinary Board's (Board) recommendation that he be suspended from the practice of law for six months. The Washington State Bar Association's (WSBA) hearing officer concluded that Egger had committed misconduct arising out of his representation of Marietta Gudeman and recommended a one-year suspension. The Board agreed that Egger charged Gudeman an unreasonable fee in violation of RPC 1.5(a), and that he failed to disclose and get written consent to a potential conflict of interest in violation of RPC 1.7(b). In a split decision, the Board recommended a six-month suspension. Egger appealed to this court, arguing that various findings of fact are not supported by the evidence, that the resulting conclusions of law are erroneous, and that his sanction should be reduced to reprimand rather than suspension. The WSBA argues that the appropriate sanction is disbarment. We affirm the decision of the Board and impose a six-month suspension.

I

Statement of the Facts

Phillip Egger was admitted to the practice of law in 1981. In 1983 he became an associate with the Bellevue office of Williams, Kastner and Gibbs P.L.L.C. *480 (Williams Kastner), and in 1989 he became a partner.[1]

In June 1987, Egger began representing Marietta Gudeman, an elderly German widow whose only child had died in 1983. As of a 1986 valuation, her total assets were worth approximately $3.5 million and were generating an income of approximately $150,000 per year. Gudeman's assets had been invested in conservative, income-producing accounts, most of which were located in Germany and were managed by her longtime attorneys there.

In 1987 and 1988, Egger oversaw the transfer of Gudeman's investments to Rainier Bank trust accounts in Seattle. By August 1988, all of Gudeman's holdings had been transferred from Germany to the United States and Egger had power of attorney over Gudeman's person and assets. Egger then assisted Gudeman in making various investments and charitable donations, and he spent a significant amount of time with her outside of the office. The hearing officer found that during the course of the five-year lawyer-client relationship, "Mrs. Gudeman was a strong-minded and demanding person, but she was also very generous. She was very astute, she knew what she wanted, and she aggressively told people what she wanted and how she wanted it to be done." Hearing Officer's Finding of Fact (FOF) 3.149. However, in his oral findings, the hearing officer also concluded that Gudeman was particularly vulnerable because she was elderly, lived alone, English was her second language, and she was generous by nature. Moreover, even before Egger became involved with Gudeman both her lawyer and her financial adviser separately expressed concern regarding her dwindling ability to understand her investments.

Marsh Commons Loan: In early 1989 Egger signed a loan agreement on Gudeman's behalf, loaning more than $1 million to Marsh Commons, a condominium development in Kirkland, Washington.[2] The loan documents, prepared by Williams Kastner attorneys, provided that the borrower would pay the lender's legal fees up to $15,000. Egger billed Gudeman $21,000 for attorney fees and the costs incurred in drawing up and closing the Marsh Commons loan. Marsh Commons paid $15,000 for legal fees, but the payment was not credited to Gudeman's account and she also paid the full $21,000 bill. Egger claims that upon the successful closing of the loan, Gudeman directed the firm to keep the $15,000.

Kuniholm Loan: About 1984, Gudeman developed a close relationship with Bridgette Kirkham, a real estate agent who lived and worked in the condominium building in which Gudeman resided. In 1986 or 1987 Kirkham began helping to manage Gudeman's financial affairs, and she would sometimes recommend that Gudeman pursue particular investments. At times, those investments also benefited Kirkham. For example, Kirkham received a $15,000 finder's fee as a result of the Marsh Commons loan.

In 1985, Kirkham[3] loaned $66,000 to Richard and Rena Kuniholm. In 1986, the Kuniholms filed for bankruptcy and Kirkham was listed as an unsecured creditor. Kirkham contacted Williams Kastner regarding the Kuniholm bankruptcy hearing and later testified that she believed the firm represented her during at least part of the Kuniholm bankruptcy matter. Kirkham did not recover the amount of her unsecured loan.

In 1989 Kirkham discussed with Gudeman the possibility of making a $300,000 loan to the Kuniholms, to be secured by the Kuniholms' Seattle home. In November of that year, while Kirkham was listed as a client in the Williams Kastner client records, Egger facilitated the loan. Egger wrote a letter to the Kuniholms' attorney, attempting to secure a cash payment to Kirkham of $66,000 to be paid out of the money loaned by Gudeman. *481 Ultimately, however, Kirkham did not receive any of the loan proceeds from the Kuniholms.

Before the loan was completed, an associate at Williams Kastner wrote a memo to Egger, questioning whether Kirkham was a client and raising issues of actual and potential conflicts of interest involving the apparent representation of both Kirkham and Gudeman.

A second problem is exactly whom we represent in this matter. If we represent Ms. Gudeman exclusively, then we should advise against entering into this transaction if its primary purpose is to permit the Kuniholms to use the loan proceeds to pay off Brigitte Kirkham's $60,000 to $70,000 claim against the Kuniholm estate.... We should consider writing a letter to our client(s) explaining these difficulties and warning her/them of the risks involved.

Ex. 62, at 1-2. The memo also expressed doubt, based on the firm's prior experience with the Kuniholms, as to whether Gudeman would benefit from making the loan. Egger claims that Gudeman understood that the loan to the Kuniholms would be used, in part, to repay the Kirkhams.

In 1992, Gudeman's family became concerned about her competency and her ability to handle her financial affairs. After discovering that Gudeman's liquid assets had been reduced to $84,000, diminishing her ability to pay for her own care, her grandson took over his grandmother's affairs and discharged Egger as her attorney. In 1994, Gudeman's grandson filed a civil suit against Egger, Williams Kastner, and Kirkham, alleging various tort claims. The litigation was settled for approximately $1 million, of which Egger paid approximately $28,000. Gudeman's grandson then filed a grievance with the WSBA.

II

Procedural History

In September 1999, the WSBA charged Egger with 19 counts of misconduct arising out of his relationship with Gudeman. Only counts 8 and 9 are at issue here. Count 8 charged Egger with "billing and collecting from Ms. Gudeman legal fees and costs incurred in preparing the Marsh Commons loan documents, when the loan documents specify that the borrower shall pay the costs of preparing the loan documents" in violation of RPC 1.5(a) (fees shall be reasonable). FOF at 3.

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98 P.3d 477, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-disciplinary-proceeding-against-egger-wash-2004.