Case Number(s): 08-O-10685-DFM, 08-O-11593-DFM, 08-O-11735-DFM, 08-O-12195-DFM, 08-O-12287-DFM, 08-O-12730-DFM, 08-O-13538-DFM, 08-O-13543-DFM, 09-O-11257-DFM, 09-O-12632-DFM
In the Matter of: Fred Harold Middaugh, Bar # 62133, A Member of the State Bar of California, (Respondent).
Counsel For The State Bar: Larry DeSha, Deputy Trial Counsel
1149 S. Hill Street
Los Angeles, CA 90015
(213) 765-1336
Bar # 117910,
Counsel for Respondent: In Pro Per Respondent
Fred Harold Middaugh
1400 W. Washington St.; Ste. 104
Sequim, WA 98382-3236
(360) 681-2220
Bar # 62133
Submitted to: Assigned Judge – State Bar Court Clerk’s Office Los Angeles.
Filed: November 23, 2010.
<<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 December 20, 1974.
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 20 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):
checked.
Costs are awarded to the State Bar.
<<not>> checked. Costs are waived in part as set forth in a
separate attachment entitled "Partial Waiver of Costs".
<<not>> checked. Costs are entirely waived.
9.
ORDER OF INACTIVE ENROLLMENT:
The parties are aware that if this stipulation is approved, the judge will
issue an order of inactive enrollment under Business and Professions Code
section 6007, subdivision (c)(4), and Rules of Procedure of the State Bar, rule
5.111(D)(1).
State Bar Court case #06-O-12863-DFM
Date prior discipline effective November 1, 2007
Rules of Professional Conduct violation: Rule 3-110(A)
Degree of prior discipline: Private Reproval with Public Disclosure
IN THE MATTER OF: FRED HAROLD MIDDAUGH, State Bar No. 62133
STATE BAR COURT CASE NUMBER: 08-O-10685-DFM, 08-O-11593-DFM, 08-O-11735-DFM, 08-O-12195-DFM, 08-O-12287-DFM, 08-O-12730-DFM, 08-O-13538-DFM, 08-O-13543-DFM, 09-O-11257-DFM, 09-O-12632-DFM
WAIVER OF VARIANCE:
The parties waive any variance between the Notice of Disciplinary Charges filed on May 17, 2010 and the facts and/or conclusions of law contained in this stipulation. Additionally, the parties waive the issuance of an amended Notice of Disciplinary Charges. The parties further waive the right to the filing of a Notice of Disciplinary Charges and to a formal hearing on any charge not included in the pending Notice of Disciplinary Charges.
FACTS FOR CASE No. 08-O-10685-DFM:
1. On September 27, 2007, Jeffrey Adriance ("Adriance") hired Respondent to represent him on the issue of permanent disability compensation in a workers’ compensation case. Adriance had just completed medical treatment and expected a permanent disability offer from the workers’ compensation insurance carrier rather soon.
2. Respondent and Adriance signed a retainer agreement which was designed for a contingency fee personal injury case, rather than a workers’ compensation case. Contrary to the pertinent workers compensation statutes, the agreement required Adriance to advance costs, allowed Respondent to receive and endorse the check to Adriance for permanent disability, allowed Respondent to pay medical liens against funds received, required Adriance to submit any fee disputes to arbitration, and made no mention that Respondent’s fee was controlled by the Workers Compensation Appeals Board.
3. During the week of October 1, 2007, Adriance received the insurance company’ s offer for permanent disability. He promptly passed the offer to Respondent’s office and was told that Respondent would evaluate it and advise him whether to accept it or ask for a hearing.
4. Respondent took no further action on Adriance’s case. He never contacted the insurance company, and he never advised Adriance on whether to accept the offer or litigate.
5. Adriance made several calls to Respondent during the ten weeks after October 1, 2007, but he received no information other than that Respondent would get back to him.
6. In the middle of December 2007, Adriance drove by Respondent’s office and saw office furniture being loaded into a large moving van. Adriance spoke to Respondent, who advised Adriance that he was merely scaling back his office. Respondent advised Adriance that he would get back to him soon about the case.
7. Adriance heard nothing from Respondent thereafter. He made several calls to the office telephone number, but the telephone rang with no answer and no answer machine. In the last week of January 2008, Adriance drove by Respondent’s office, only to find it vacant and posted with a "For Rent" sign.
8. When Respondent told Adriance in mid-December 2007 that Respondent was not moving his office, Respondent knew that he was giving Adriance false information and that he was indeed moving his office to a location not disclosed to Adriance.
9. On March 13, 2008, the State Bar opened an investigation, case no. 08-0-10685, pursuant to a complaint from Adriance. On June 12, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to Adriance’s allegations not later than June 27, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent.
10. On June 24, 2008, Respondent requested an extension until July 11, 2008 to file his written response, which request was granted. Respondent did not send a written response.
11. On July 30, 2008, the State Bar investigator telephoned Respondent and left a voice mail message reminding Respondent that his response was overdue. On August 11, 2008, Respondent returned the call and informed the investigator that he was hiring counsel who would send his response to the State Bar. No response was subsequently received by the State Bar, and Respondent did not otherwise cooperate in the investigation.
CONCLUSIONS OF LAW FOR CASE No. 08-O-10685-DFM:
12. By failing to perform any legal services on behalf of Adriance, and by having Adriance sign a retainer agreement containing provisions for disbursement of funds prohibited by workers compensation laws, Respondent intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
13. By moving his office without informing Adriance and without giving Adriance an address or telephone number where he could be reached, Respondent failed to keep Adriance reasonably informed of a significant development in his case, in willful violation of section 6068(m) of the Business and Professions Code.
14. By falsely informing Adriance that Respondent was not moving his office, Respondent committed an act involving moral turpitude, dishonesty, or corruption, in willful violation of section 6106 of the Business and Professions Code.
15. By not providing a written response to the allegations in case no. 08-0-10685 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 08-O-11593-DFM:
16. On February 8, 2007, Respondent became the trustee of the Jack Francis Finnegan Trust, after the death of the prior trustee. Jack Finnegan, the settlor, was a former client of Respondent, and had died on September 18, 2002. The trust instrument provided that the trust would operate, for 20 years after the death of the settlor, or until September 18, 2022, at which time the trust corpus was to be fully disbursed and the trust terminated. When Respondent became the trustee, the assets of the trust had a total value of about $450,000.
17. Respondent promptly began a series of transactions to liquidate the trust’s assets and transfer them to his personal accounts. By October 1, 2007, Respondent had acquired all of the trust’s funds except for nominal amounts to keep a checking account and savings account open. Since becoming trustee, he made no payment to any beneficiary.
18. Respondent used the misappropriated funds to purchase a home in Sequim, Washington for $429,000, where Respondent moved in on October 25, 2007.
19. On June 25, 2009, the conservator of One of the trust beneficiaries sued Respondent in the U.S. District Court for the Western District of Washington, case no. 3:09-cv-5384-BHS, alleging that Respondent had converted $450,000.00 of the trust’s assets to his own use. On September 9, 2009, the Probate Court of Orange County, California removed Respondent as trustee and replaced him with the conservator as trustee.
20. On May 11, 2010, the federal lawsuit was settled by a Confession of Judgment in which Respondent admitted that he owed a total of $500,000.00 in principal and interest to the trust, with post-judgment interest to accrue at the rate of 6.0 percent per annum. This Confession of Judgment was filed in the case on October 4, 2010.
CONCLUSIONS OF LAW FOR CASE No. 08-O-11593-DFM:
21. By misappropriating approximately $450,000.00 from the Jack Francis Finnegan Trust, Respondent committed acts involving moral turpitude, dishonesty, or corruption, in willful violation of section 6106 of the Business and Professions Code.
FACTS FOR CASE No. 08-O-11735-DFM:
22. On August 21, 2006, brothers John Vlaic and Philip Vlaic employed Respondent to obtain a conservatorship of the person and estate of their elderly sister, with themselves to be named as co-conservators. They paid Respondent $2,500 for a fee advance and $330 for costs~;for a total of $2,830. A hearing on a petition for a temporary conservatorship of the sister’s person was already scheduled in Probate Court on August 25, 2006. The petition had been filed by the county Public Defender, and the two brothers had consented to serve as co-conservators.
23. On August 25, 2006, the petition was granted by the Probate Court, and the two brothers were issued temporary Letters of Conservatorship of the Person, with an expiration date of July 12, 2007.
24. Respondent did no work on the case. On May 7, 2007, Respondent assured the two brothers that he would get the permanent conservatorship established before the temporary conservatorship expired on July 12, 2007, but he still did nothing.
25. During the next eight months, the brothers and their wives made numerous telephone calls to Respondent’s office for a status report, but they received no information. In every case, they were promised a return call which never occurred, or there was no answer.
26. On July 12, 2007, the temporary conservatorship expired.
27. On February 11, 2008, Philip Vlaic visited Respondent’s office, only to find it vacant and posted for rent. Respondent had provided no notice of his move, and he had not provided the brothers any details of how to contact him. Mr. Vlaic then learned from mutual friends that Respondent had moved to the state of Washington.
28. On February 15, 2008, Philip Vlaic succeeded in getting a telephone call to Respondent’s office answered. The receptionist gave him a time and place for an appointment with Respondent on February 21, 2008.
29. On February 18, 2007, the brothers hired new counsel to establish the conservatorship.
30. On February 20, 2008, Respondent telephoned Philip Vlaic to change the time for their appointment due to a calendar conflict. Mr. Vlaic was not home, but his wife informed Respondent that there was no need for the meeting since new counsel had been hired. Respondent then apologized for the delay and promised a full refund.
31. On February 22, 2008, Philip Vlaic sent Respondent a letter requesting the full refund. Respondent did not reply, and he has never provided a refund.
32. Respondent provided no services of any value to John Vlaic and Philip Vlaic. As a result, he did not earn any part of the advance fee paid to him and he owes them a refund of the entire $2,830.
33. On May 2, 2008, the State Bar opened an investigation, case no. 08-O-11735, pursuant to a complaint from Philip Vlaic. On May 16, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to Mr. Vlaic’s allegations not later than June 2, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
34. On June 4, 2008, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to Mr. Vlaic’s allegations not later than June 20, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent.
35. On or about June 24, 2008, Respondent requested an extension until July 11, 2008 to file his written response, which request was granted. Respondent did not send a written response.
36. On July 30, 2008, the State Bar investigator telephoned Respondent and left a voice mail message reminding Respondent that his response was overdue. On August 11, 2008, Respondent returned the call and informed the investigator that he was hiring counsel who would send his response to the State Bar. No response was subsequently received by the State Bar, and Respondent did not otherwise cooperate in the investigation.
CONCLUSIONS OF LAW FOR CASE No. 08-O-11735-DFM:
37. By failing to perform any legal services on behalf of John Vlaic and Philip Vlaic, Respondent intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
38. By never refunding any of the legal fees paid in advance by John Vlaic and Philip Vlaic, Respondent failed to refund promptly any part of a fee paid in advance which had not been earned, in willful violation of rule 3-7000(D)(2) of the California Rules of Professional Conduct.
39. By failing to respond to the numerous requests for a status report made between May 7, 2007 and January 2008, Respondent failed to respond promptly to reasonable status inquiries of a client, in willful violation of section 6068(m) of the Business and Professions Code.
40. By not providing a written response to the allegations in case no. 08-O-11735 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 08-O-12195-DFM:
41. On November 15, 2007, Mary Eaton ("Eaton") hired Respondent to prepare estate planning documents which included a will and trust. She paid Respondent $500 against a fixed fee of $1,000.
42. Eaton heard nothing further from Respondent until February 23, 2008, when Respondent asked Eaton to come to his office to execute the documents. Eaton went to Respondent’s office that same day. Respondent took her to the nearby office of a notary public, where Eaton executed the trust instrument before the notary public, and then signed her will with the notary public and Respondent as witnesses.
43. Respondent agreed to reduce his fee to $750, and Eaton paid the remaining $250 on February 23, 2008. Respondent promised to send the original documents to Eaton within the next week, after he had made copies.
44. After waiting approximately 10 days without receiving the promised documents, Eaton began making calls to Respondent’s office approximately once per week during the months of March and April 2008. On every .call she left a message requesting an explanation for the delay, but Respondent failed to return any of the calls.
45. On May 7, 2008, Eaton sent Respondent an e-mail requesting a refund of her $750. On May 8, 2008, Eaton sent a letter notifying Respondent that his services were terminated and requesting a refund of the $750. Respondent did not reply to either of these requests.
46. On May 23, 2008, Respondent sent a formal complaint to the State Bar, complaining of Respondent’s failures to perform, communicate, and pay a refund.
47. On June 4, 2008, the State Bar opened an investigation of Eaton’s complaint, case no. 08-0-12195. On June 6, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to Eaton’s allegations not later than June 20, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
48. On June 20, 2008, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to Eaton’s allegations not later than July 8, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent.
49. On June 24, 2008, Respondent requested an extension until July 11, 2008 to file his written response, which request was granted. Respondent did not send a written response.
50. On July 7, 2008, Respondent called Eaton and informed her that her estate planning documents were ready for pickup at his office. Respondent told him to keep the documents, and demanded a refund of her $750.
51. On July 8, 2008, Respondent came to Eaton’s place of employment and delivered the estate planning documents. He promised to send a full refund within the next week, but he never sent one.
52. On July 30, 2008, the State Bar investigator telephoned Respondent and left a voice mail message reminding Respondent that his response was overdue. On August 11, 2008, Respondent returned the call and informed the investigator that he was hiring counsel who would send his response to the State Bar. No response was subsequently received by the State Bar, and Respondent did not otherwise cooperate in the investigation.
CONCLUSIONS OF LAW FOR CASE No. 08-O-121 95-DFM:
53. By taking more than three months to prepare the will and trust, and then by delaying delivery of the documents for more than four months after they had been executed, Respondent failed to apply the diligence reasonably necessary for performance of the legal services, and he thereby intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
54. By failing to respond to Eaton’s multiple requests in March and April 2008 for an explanation for the delay in delivery of her documents, Respondent failed to respond promptly to reasonable status inquiries of a client, in willful violation of section 6068(m) of the Business and Professions Code.
55. By not providing a written response to the allegations in case no. 08-0-12195 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 08-O-12287-DFM:
56. In early July 2007, Respondent was employed by the family of a 16 year-old boy ("client") to defend the client on gang-related murder charges pending in Juvenile Court. Respondent had previously represented the client on automobile theft charges, for which the client had been made a ward of the court and placed on probation at home commencing on May 24, 2006. Respondent had last appeared in Juvenile Court on June 13, 2007, after the client had been arrested for violating probation by running away from home.
57. On July 16, 2007, Respondent appeared in Juvenile Court and substituted into the murder case as the client’s attorney. There were 11 hearings within the next nine months concerning the client’s fitness to stand trial as a juvenile or as an adult. Respondent attended six of the hearings and sent a substitute to the other five hearings.
58. Respondent made his last court appearance for the case on April 10, 2008. The hearing was continued to April 28, 2009, and all parties present were ordered to return.
59. On April 28, 2008, Respondent failed to appear at the fitness hearing. The court clerk called Respondent’s office several times, and left recorded messages for Respondent to come to court for the hearing. Respondent did not return any of the calls. The court continued the hearing to the next day in order to give Respondent time to reply to the clerk’s calls.
60. On April 29, 2008, Respondent did not appear at the hearing and had not called the clerk. The court then removed Respondent as counsel and appointed a public defender for the client. Respondent did not thereafter explain his failure to appear to the court or client.
61. On June 6, 2008, the State Bar opened an investigation, case no. 08-0-12287, concerning Respondent’s abandonment of the client. On June 18, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to the allegations of abandonment not later than July 7, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
62. On July 29, 2008, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to the allegations of abandonment not later than August 14, 2008. The letter was sent to Respondent’s State Bar membership records address and was received by Respondent.
63. On August 11, 2008, Respondent called the investigator and informed her that he was hiring counsel who would send his response to the State Bar. No response was later received by the State Bar, and Respondent did not otherwise cooperate in the investigation.
CONCLUSIONS OF LAW FOR CASE No. 08-O-12287-DFM:
64. By failing to appear at the hearings on April 28 and April 29, 2008, and by failing to contact the court or the client thereafter to explain his absence or intentions, Respondent failed to apply the diligence reasonably necessary for performance of the legal services, and he thereby intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
65. By failing to appear at the hearing on April 28, 2008, and by failing to offer the court any explanation for his failure to appear, Respondent disobeyed an order of the court requiring him to do an act in the course of his profession, which he ought in good faith to do, in willful violation of section 6103 of the Business and Professions Code.
66. By not providing a written response to the allegations in case no. 08-0-12287 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 08-O-12730-DFM:
67. On March 6, 2006, John Cavanaugh ("Cavanaugh") hired Respondent to oppose a Petition for Guardianship of his grandson, which had been filed in a distant county by a casual acquaintance of Cavanaugh’s daughter. Cavanaugh’s daughter was hospitalized with a serious illness, and Was unable to care for the child. Cavanaugh, as grandfather, had received the statutory notice of the Petition. Respondent’s task included filing a petition for Cavanaugh to be appointed guardian.
68. The Petition filed by the acquaintance was denied by the Probate Court. Respondent had not filed any opposition to it nor filed a petition on behalf of Cavanaugh.
69. As of November 17, 2006, Cavanaugh had paid $8,229.65 to Respondent, but nothing had been done. In June 2007, Cavanaugh requested Respondent to obtain a restraining order to keep the former petitioner away from the grandson. Respondent obtained the restraining order, but he still did not file Cavanaugh’s own petition to be guardian.
70. Respondent stopped work on Cavanaugh’s case in late 2007, having provided no useful service other than obtaining the restraining order. As a result, he earned less than the $8,229.65 paid in advance and owes an accounting and refund. Respondent has thus far not refunded anything to Cavanaugh.
71. In 2008, Cavanaugh sent e-mails to Respondent on January 9, January 14, March 2, and April 18, inquiring as to when there would be a hearing re Cavanaugh’ s appointment as guardian. Respondent did not reply. Cavanaugh also sent e-mail inquiries on February 10 and March 26, to which Respondent promised to provide a hearing date soon. Respondent never filed a guardianship petition on behalf of Cavanaugh.
72. On July 16, 2008, the State Bar opened an investigation, case no. 08-0-12730, concerning Respondent’s abandonment of the client. On July 29, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to the allegations of abandonment not later than August 14, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
73. On August 18, 2008, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to the allegations of abandonment not later than September 4, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
CONCLUSIONS OF LAW FOR CASE No. 08-O-12730-DFM:
74. By failing to oppose the filed Petition for Guardianship, and by failing to file a Petition for Guardianship on behalf of Cavanaugh, Respondent failed to apply the diligence reasonably necessary for performance of the legal services, and he thereby intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
75. By failing to respond to Cavanaugh’s e-mails of January 9, January 14, March 2, and April 18, 2008, Respondent failed to respond promptly to reasonable status inquiries of a client, in willful violation of section 6068(m) of the Business and Professions Code.
76. By providing no refund, Respondent failed to refund promptly any part of a fee paid in advance which had not been earned, in willful violation of rule 3-700(D)(2) of the California Rules of Professional Conduct.
77. By not providing a written response to the allegations in case no. 08-0-12730 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 08-O-13538-DFM:
78. On July 6, 2005, Rosemary McCauley ("McCauley") hired Respondent to defend a civil lawsuit. Respondent failed to answer the complaint, and a default judgment for $16,000 was entered against McCauley on January 17, 2006. McCauley complained to the State Bar, and a formal Notice of Disciplinary Charges was filed in State Bar Court Case No. 06-0-12863 on June 4, 2007, alleging misconduct for various acts up to that time.
79. On August 14, 2007, Respondent filed a motion to get the default judgment set aside, which was granted on September 21, 2007.
80. On December 12, 2007, the court set the matter for a jury trial commencing on March 24, 2008, but Respondent never notified McCauley of the trial date.
81. On January 20, 2008, plaintiffs counsel sent a notice for McCauley’s deposition on February 22, 2008. Respondent replied that he was not available that date and would provide an alternate date, but he failed to do so. Respondent did not notify McCauley that her deposition had to be scheduled.
82. Plaintiff’s counsel sent letters to Respondent on February 26, 2008 and March 4, 2008, requesting a date for McCauley’s deposition, but Respondent did not reply nor contact McCauley for a suitable date.
83. On March 12, 2008, the court ordered the trial continued until April 28, 2008, and ordered McCauley to appear for her deposition no later than March 25, 2008. Respondent did not notify McCauley of these orders.
84. On April 10, 2008, Respondent sent McCauley a letter recommending that she offer to settle the case by a payment of $7,500 rather than proceed to trial "later this month." Respondent did not mention that the there was an order for her deposition and it had been disobeyed.
85. On April 16, 2008, plaintiff’s counsel filed a motion to strike McCauley’s Answer as a sanction for failing to be deposed. Respondent did not oppose the motion nor inform McCauley of it.
86. On April 23, 2008, McCauley’s Answer was stricken and her default was entered. Respondent did not inform McCauley of either event.
87. On July 9, 2008, a second default judgment against McCauley was entered for $22,153.00. Respondent did not notify McCauley of this. McCauley first learned of the judgment on August 15, 2008, when plaintiff’s counsel served her with an order for a debtor examination.
88. On September 16, 2008, the State Bar opened an investigation, case no. 08-0-13538, concerning Respondent’s abandonment of McCauley. On September 24, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to the allegations of abandonment not later than October 10, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
89. On October 10, 2008, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to the allegations of abandonment not later than October 27, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
CONCLUSIONS OF LAW FOR CASE No. 08-O-13538-DFM:
90. By failing to arrange for McCauley to be deposed after the initial request, failing to arrange for her deposition after ordered by the court, and failing to oppose the motion to strike her Answer, Respondent failed to apply the diligence reasonably necessary for performance of the legal services, and he thereby intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
91. By failing to inform McCauley that a trial date had been set, her deposition had been requested, the trial had been continued to a new date, the court had ordered her deposition, her Answer had been stricken, her default had been entered, and a default judgment had been entered against her, Respondent failed to keep McCauley reasonably informed of significant developments in her case, in willful violation of section 6068(m) of the Business and Professions Code.
92. By not providing a written response to the allegations in case no. 08-0-13538 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 08-O-13543-DFM:
93. On March 23, 2007, Gail Zimmerman ("Zimmerman") employed Respondent to complete the a dissolution of her marriage, which had been filed in 1997 but never finalized. She paid $4,000.00 against $350 per hour.
94. On April 10, 2007, Respondent informed Zimmerman that he was waiting to receive the dissolution file from the court. Respondent never obtained the file and never did any work on Zimmerman’s case. Zimmerman never heard from Respondent again.
95. Beginning in early 2008, Zimmerman sent numerous e-mails and left many voice mail messages to Respondent’s office, but never received a reply. In early July 2008, Zimmerman visited Respondent’s office only to find that he had moved to the state of Washington.
96. Respondent provided no services of any value to Zimmerman. As a result, he did not earn any part of the advance fee paid to him and he owes a refund of the entire $4,000.
97. On September 16, 2008, the State Bar opened an investigation, case no. 08-0-13543, pursuant to a complaint from Zimmerman’s husband. On September 24, 2008, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to Mr. Zimmerman’s allegations not later than October 10, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
98. On October 10, 2008, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to the allegations of abandonment not later than October 27, 2008. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
CONCLUSIONS OF LAW FOR CASE No. 08-O-13543-DFM:
99. By failing to perform any legal services on behalf of Zimmerman, Respondent intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
100. By never refunding any of the legal fees and costs paid in advance by Zimmerman, Respondent failed to refund promptly any part of a fee paid in advance which had not been earned, in willful violation of rule 3-700(D)(2) of the California Rules of Professional Conduct.
101. By failing to respond to the numerous e-mail requests and many voice mail messages sent during the first half of 2008, Respondent failed to respond promptly to reasonable status inquiries of a client, in willful violation of section 6068(m) of the Business and Professions Code.
102. By not providing a written response to the allegations in case no. 08-0-13543 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
FACTS FOR CASE No. 09-O-11257-DFM:
103. On March 5, 2008, Daretta Ivey ("Ivey") employed Respondent for dissolution of her marriage. She paid him $3,500.00 against $350 per hour. Respondent collected information for filing the petition for dissolution, but he never prepared the petition or did any other work on the case.
104. Beginning in June 2008, Ivey began making weekly calls to Respondent and leaving voice mail requests for a status report. Respondent did not return any of the calls until March 3, 2009, at which time Respondent promised to call with a status report the next day. Ivey never heard from Respondent again.
105. Respondent provided no services of any value to Ivey. As a result, he did not earn any part of the advance fee paid to him and he owes a refund of the entire $3,500.
106. On March 19, 2009, the State Bar opened an investigation, case no. 09-0-11257, pursuant to a complaint from Ivey. On April 3, 2009, a State Bar investigator mailed Respondent a letter requesting Respondent to send a written response to Ivey’s allegations not later than April 20, 2009. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
107. On April 20, 2009, a State Bar investigator mailed Respondent a second letter requesting Respondent to send a written response to Ivey’s allegations not later than May 6, 2009. The letter was mailed to Respondent’s State Bar membership records address and was received by Respondent. Respondent did not reply.
CONCLUSIONS OF LAW FOR CASE No. 09-O-11257-DFM:
108. By failing to perform any legal services on behalf of Ivey, Respondent intentionally, recklessly, or repeatedly failed to perform legal services with competence, in willful violation of rule 3-110(A) of the California Rules of Professional Conduct.
109. By never refunding any of the legal fees and costs paid in advance by Ivey, Respondent failed to refund promptly any part of a fee paid in advance which had not been earned, in willful violation of rule 3-700(D)(2) of the California Rules of Professional Conduct.
110. By failing to respond to the numerous voice mail messages left during 2008 and 2009, or to otherwise communicate with Ivey, Respondent failed to respond promptly to reasonable status inquiries of a client, in willful violation of section 6068(m) of the Business and Professions Code.
111. By not providing a written response to the allegations in case no. 09-O-11257 or otherwise cooperating in the investigation, Respondent failed to cooperate in a disciplinary investigation, in willful violation of section 6068(i) of the Business and Professions Code.
DISMISSALS:
The State Bar respectfully requests the Court to dismiss the following alleged violations in the interests of justice:
Case No.: 09-O-12632-DFM, Count: Thirty, Alleged Violation: Rule 3-700(D)(2)
Case No.: 09-0-12632-DFM, Count: Thirty-One, Alleged Violation: B&PC section 6068(i)
RESTITUTION:
1. In case no. 08-O-11593-DFM, Respondent owes restitution to Judy Cook, as Conservator of James Finnegan, or as Trustee of the Jack F. Finnegan Trust, of the sum of $500,000.00, plus interest of 6.0 percent per annum from October 4, 2010. Respondent has executed a promissory note with a payment schedule for that amount, and Judy Cook has accepted it. Respondent acknowledges that willful failure to make the payments when due is a ground for denying an application for his reinstatement as a member of the State Bar of California.
2. In case no. 08-O- 11735-DFM, Respondent must pay restitution of $2,830.00 to the Conservatorship of Goldie Vlaic, or its successor, plus interest of 10.0 percent per annum from August 21, 2006.
3. In case no. 08-0-12730-DFM, Respondent shall settle the issue of a refund to former client John Cavanaugh to the satisfaction of Cavanaugh, or, in the alternative, shall have that issue resolved by the State Bar fee arbitration program, pursuant to Business and Professions Code sections 6200 et seq. The amount of restitution shall be fixed no later than six months after the effective date of the Supreme Court order in this matter, and the payment shall be made no later one year after the effective date.
4. In case no. 08-O-13543-DFM, Respondent must pay restitution of $4,000.00 to former client Gaff Zimmerman, plus interest of 10.0 percent per annum from March 23, 2007.
5. In case no. 09-0-11257-DFM, Respondent must pay restitution of $3,500.00 to former client Daretta Ivey, plus interest of 10.0 percent per annum from March 5, 2008.
6. Respondent acknowledges that the Client Security Fund may pay restitution of up to $50,000.00 in case no. 08-O-11593-DFM and also pay the full amount of principal owed for the four cases listed in paragraphs 2 through 5 above. Any such payment plus applicable costs shall be an enforceable money judgment pursuant to Business and Professions Code section 6140.5 (d), and shall earn interest at the rate of 10.0 percent per annum. Respondent further acknowledges that any amount owed to the Client Security Fund must be paid as a condition of reinstatement of membership, pursuant to Business and Professions Code section 6140.5(c).
AGGRAVATING CIRCUMSTANCES:
1. Dishonesty. In case no. 08-O-10685-DFM, Respondent admits that he gave the client false information, as set forth in paragraphs 6, 8, and 14 above. In case no. 08-O-11593-DFM, Respondent admits that he misappropriated about $450,000.00 from a trust while acting as trustee in 2007, and still owes $500,000:00 to that trust, as set forth in paragraphs 16 thru 21 above.
2. Trust Violation. In case no. 08-O-11735-DFM, Respondent admits that he should have placed all of the clients’ $2,830.00 into his Client Trust Account ("CTA") but he failed to do so, and he admits that he still owes $2,830.00 plus interest to those clients, as set forth in paragraphs 22 thru 32 and 38 above.
3. Significant Harm to Clients. In case no. 08-O-13538-DFM, Respondent admits that he caused his client significant harm by causing a default judgment for $22,153.00 to be entered against her on July 9, 2008, as set forth in paragraphs 78 thru 87, 90, and 91 above.
4. Multiple/Pattern of Misconduct. Respondent admits to 29 counts of misconduct in eight client matters, with the misconduct occurring during the period from August 21, 2006 through April 3, 2009, a period of only 31 months. In addition to that pattern of misconduct toward the eight clients, Respondent also misappropriated some $450,000 from a trust during the period from February 8, 2007 through September 2007, a period of only eight months.
SUPPORTING AUTHORITY:
Standard 1.7(b) of the Standards for Attorney Sanctions for Professional Misconduct provides that a third imposition of discipline shall result in disbarment unless the most compelling mitigating circumstances clearly predominate. Respondent has two prior impositions of discipline, no mitigating circumstances whatsoever, and extremely serious aggravating circumstances.
Standard 2.2(a) of the Standards for Attorney Sanctions for Professional Misconduct provides that the willful misappropriation of entrusted funds shall result in disbarment. Respondent misappropriated some $450,000.00 from a trust while acting as its trustee. The settlor was a former client, who had died more than four years before Respondent became the trustee.
Standard 2.3 of the Standards for Attorney Sanctions for Professional Misconduct provides that an act of moral turpitude, fraud, or dishonesty toward any person shall result in actual suspension or disbarment, depending upon the extent to which the victim is harmed, the magnitude of the act of misconduct, and the degree to which it relates to the practice of law. The moral turpitude act here is the misappropriation of $450,000.00, for which restitution has been owed for more than three years, and for which the outstanding balance is $500,000.00 as of October 4, 2010.
Standard 2.4(a) of the Standards for Attorney Sanctions for Professional Misconduct provides that a pattern of willfully failing to perform services demonstrating the member’s abandonment of the causes for which he was retained shall result in disbarment. This matter demonstrates the abandonment of eight clients.
In In the Matter of Priamos (Review Dept. 1998) 3 Cal. State Bar Ct. Rptr. 824, a former client gave Priamos $2,100,000 to invest and manage for her. During the fifth year of his management, Priamos bought a horse farm and 13 horses with $458,000 of the funds, but he pocketed the entire proceeds when the farm was sold three years later. The client fired Priamos and sued him for breach of fiduciary duty and fraud, only to learn that he had taken an additional $450,000 in bogus management and legal fees. Priamos filed bankruptcy, naming the client as an unsecured creditor for $1,000,000. The bankruptcy judge held the debt to be nondischargeable and entered a judgment for the client of $1,000,000.00. Priamos did not pay it.
The Review Department held that the situation was little different from traditional trust fund misappropriation cases, and recommended that Priamos be disbarred. The aggravating factors were serious harm to the victim and indifference to rectification.
PENDING PROCEEDINGS:
The disclosure date referred to on page 2, paragraph A.(7), was November 12, 2010.
COSTS:
Respondent acknowledges that the Office of the Chief Trial Counsel has informed Respondent that as of November 10, 2010, the costs in this matter are $ 8,606.00. Respondent further 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.
Case Number(s): 08-O-10685-DFM, 08-O-11593-DFM, 08-O-11735-DFM, 08-O-12195-DFM, 08,O-12287-DFM, 08-O-12730-DFM, 08-O-13538-DFM, 08-O-13543-DFM, 09-O-11257-DFM, 09-O-12632-DFM
In the Matter of: Fred Harold Middaugh
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: Fred Harold Middaugh
Date: November 12, 2010
Respondent’s Counsel:
Date:
Deputy Trial Counsel: Larry DeSha
Date: November 12, 2010
Case Number(s): 08-O-10685-DFM, 08-O-11593-DFM, 08-O-11735-DFM, 08-O-12195-DFM, 08,O-12287-DFM, 08-O-12730-DFM, 08-O-13538-DFM, 08-O-13543-DFM, 09-O-11257-DFM, 09-O-12632-DFM
In the Matter of: Fred Harold Middaugh
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 9.18(a), California Rules of Court.)
Respondent FRED HAROLD MIDDAUGH is ordered transferred to involuntary inactive status pursuant to Business and Professions Code section 6007, subdivision (c)(4). Respondent’s inactive enrollment will be effective three (3) calendar days after this order is served by mail and will terminate upon the effective date of the Supreme Court’s order imposing discipline herein, or as provided for by rule 490(b) or the Rules of Procedure of the State Bar of California, or as otherwise ordered by the Supreme Court pursuant to its plenary jurisdiction.
Signed by:
Judge of the State Bar Court: Donald F. Miles
Date: November 23, 2010
[Rules Proc. of State Bar; Rule 5.27(B); 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 November 23, 2010, I deposited a true copy of the following document(s):
STIPULATION RE FACTS, CONCLUSIONS OF LAW 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 Los Angeles, California, addressed as follows:
FRED HAROLD MIDDAUGH
LAW OFCS FRED H MIDDAUGH
1400 W WASHINGTON ST STE 104
SEQUIM, WA 98382-3236
checked. by interoffice mail through a facility regularly maintained by the State Bar of California addressed as follows:
LARRY DESHA, ESQ., Enforcement, Los Angeles
I hereby certify that the foregoing is true and correct. Executed in Los Angeles, California, on November 23, 2010.
Signed by:
Rose Luthi
Case Administrator
State Bar Court