Friday, July 15, 2022

Vicki Victoria

The Idaho Supreme Court affirmed findings of misconduct but increased the proposed sanction in a matter involving, in the main, an attorney's dealings with his mother and its effects on his siblings.

The mother (Victoria) had executed a will that made Respondent her sole heir and disinherited the siblings; Victoria also executed two powers of attorney in his favor.

On February 14, 1990, about twenty-three years before she died, Victoria executed a holographic will that bequeathed all her assets to Smith and disinherited her two other children, Joseph Smith and Victoria (Vicky) Smith Converse. Smith was the only person with Victoria when she executed the will, and he served as the sole witness.

The documents came to light after Victoria's passing

The financial and legal relationship between Victoria and Smith was one of the matters Joseph testified to during the disciplinary hearing against Smith. In that disciplinary hearing, Joseph testified that he managed several pieces of Victoria’s real property when Victoria signed the will in 1990. Joseph testified that when Victoria executed the will, he was not estranged from her. He first learned about the will several days after her funeral in September 2013.

Count One alleges misconduct in those dealings.

Also complicating the situation was a desire to shield assets from his ex-wife

Victoria died on September 11, 2013. Joseph petitioned for formal adjudication of intestacy and formal appointment of personal representative on October 3, 2014, alleging her holographic will was the result of undue influence. Joseph asked the court to determine that the will was invalid and find that Victoria died intestate. Three days later, Smith recorded the first and second POAs. On October 6, 2014, Smith also recorded the July 6, 2012, deeds that transferred Victoria’s real property to VHS [an entity controlled by Respondent's new wife]. 

On September 6, 2018, Smith filed for Chapter 11 bankruptcy. He testified that he filed for bankruptcy because his ex-wife was trying to satisfy a judgment against him. The bankruptcy court dismissed Smith’s bankruptcy petition in an oral ruling on September 11, 2019, explaining that Smith had “displayed a steadfast dedication to protecting his own interests.”

Count Two

On January 8, 2016, Smith filed a certificate of organization for a limited liability company, creating the “law office of Vernon K. Smith, LLC.” Smith identified himself and his wife, Vicki, as the “governors” of the LLC. Smith and Vicki signed the certificate of organization as the organizers of the LLC. Vicki signed and filed the annual reports for the LLC during the reporting years 2017, 2018, and 2019, and identified herself as a member of the LLC.

Smith testified during the disciplinary hearing that he gave Vicki a 90 percent interest in the law firm and he “retained ten percent to show a right to use” the office.

The Bankruptcy Court concluded that 

Respondent entered into an arrangement whereby he effectively agreed to practice law for his wife as an employee. His wife is a non-lawyer. Fundamental first year law school instruction would suggest that there are ethical problems with a lawyer who agrees to be subject to the control of a non-lawyer in connection with the practice of law.

Count Three alleged failure to pay state and federal taxes.

In the disciplinary proceeding

Here, many of the facts that Smith contests have been the subject of past litigation and appeals, all of which were decided against Smith. For example, the following facts have been adjudicated and determined to be true: (1) Victoria’s holographic will resulted from undue influence, (2) the first power of attorney did not authorize the transfer of real property; and (3) second power of attorney terminated on Victoria’s death. These matters were all decided in prior litigation before this Court. Smith was a party to those proceedings, and in some cases, has tried to argue the merits before this Court repeatedly. But in each of these cases, he has had a full and fair opportunity for the issues to be decided, and a final judgment on the merits was issued in those cases.

As to Victoria's will

Smith first argues there was no risk of a conflict of interest in advising Victoria on drafting her will because she wanted him involved. Smith maintains he was a loyal son and contributed legal services when Victoria requested. Smith asserts the Bar failed to show undue influence or a conflict of interest related to the will.

As discussed above, we will not entertain an argument that the will was not the product of undue influence. This issue was soundly decided against Smith in Matter of Est. of Smith, 164 Idaho at 463, 432 P.3d at 12. Thus, the only question is whether the record supports the Committee’s findings that Smith failed to obtain informed consent, confirmed in writing prior to undertaking representation of Victoria before he witnessed the execution of her will. We hold it does.

POAs

As with the will, Smith has repeatedly tried to relitigate his claim that the POA did not terminate on Victoria’s death.

...the Committee concluded that Smith used the second POA to transfer Victoria’s personal and real property to VHS on July 4, 2012, for $10.00 consideration. The value of the transfer was estimated at twenty-seven million dollars. Despite executing the deeds in 2012, Smith did not record the deeds until October 2014—after his brother started probate proceedings. Smith claimed he forgot to record the deeds, but the Committee found, and we agree, the more probable explanation of why he failed to record the deeds was that he “intended to hide the transactions” from his ex-wife and siblings.

The court affirmed findings of dishonesty as well as the misconduct found in the other counts.

Sanction

Based on our case law, as well as the serious and continuous nature of the ethical violations discussed above, and the recommendation from the Committee, we conclude and will order that Smith be suspended from the practice of law in Idaho for a period of five years. I.B.C.R. 506(c). Two years of his suspension is withheld upon Smith being granted permission to transfer his license from affiliate to active status under the applicable Idaho Bar Commission Rules after three years. Before Smith is eligible for transfer or reinstatement to active practice in Idaho, he must receive approval pursuant to I.B.C.R. 304, 305, and 518(b). Prior to transfer to active status or reinstatement, Smith must also show that he fully complied with the requirements of I.B.C.R. 516 and 517 and that, during the time between the issuance of this Opinion and Smith’s reinstatement, he passed the MPRE with a scaled score of at least 85, or its equivalent should there be any changes to the test or its scoring regimen. Smith is also required to reimburse the Bar for the costs associated with this appeal and the underlying proceedings.

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2022/07/the-idaho-supreme-court-affirmed-findings-of-misconduct-but-increased-the-proposed-sanction.html

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