| Description: |
Kristina Gibbs (WSBA No. 5361, admitted 1973), of Spokane, has been censured pursuant to a stipulation approved by the Disciplinary Board on May 21, 1999. The discipline is based on her failure to properly disburse third-party funds.
Ms. Gibbs represented clients who owned and operated a construction business. The clients asked Ms. Gibbs to represent them in a Chapter 13 bankruptcy proceeding because they were having trouble financing ongoing projects. The clients then received a $100,000 loan from a doctor to finish work on a residential project. Ms. Gibbs prepared a promissory note and deed of trust in favor of the doctor, which her clients signed. Just prior to closing, the title company suggested that Ms. Gibbs ask the doctor to release a portion of his security interest to pay other outstanding lien-holders. The sale was in jeopardy of failing if it did not close on time. Ms. Gibbs estimated the amount of outstanding liens on the project at $10,000, and the doctor agreed to waive this portion of his security. Ms. Gibbs used $6,376 of the doctor’s money to pay outstanding liens on the project. Instead of returning the remaining $3,624 to the doctor, Ms. Gibbs disbursed $620 to the clients for "punch list" items and family living expenses, $81 to another creditor, and $2,923 to the bankruptcy trustee to make payments to the clients’ creditors. Ms. Gibbs believed that the bankruptcy would fail if she did not make these payments to the trustee. By making these payments, an unrelated project in which the doctor had also invested ultimately succeeded. Consequently, the payments to the bankruptcy trustee may have indirectly benefited the doctor. The doctor retained counsel and requested an accounting. Ms. Gibbs promptly provided an accurate accounting. Ms. Gibbs agreed to repay the $3,624 to the doctor. By failing to return the doctor’s $3,624 to him, Ms. Gibbs’ conduct violated RPC 8.4(c), prohibiting engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.
Jonathan Burke represented the Bar Association. J. Donald Curran represented Ms. Gibbs.
|