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Timothy W. Carpenter (WSBA No. 5882, admitted 1974), of Bellingham, was suspended for two months, effective April 12, 2007, by order of the Washington State Supreme Court following a hearing. This discipline was based on his conduct in 1999 involving conflicts of interest. For additional information, see In re Discipline of Carpenter, 160 Wn.2d 16, 155 P.3d 937 (2007).
In the fall of 1996, Corporation A and the individual who controlled the corporation (hereinafter collectively “Client A”) bought a gas station from a seller. A California corporation (“Corporation B”) was used to facilitate the transaction, with all parties signing a real property exchange agreement. After acquiring the property, Client A stopped making payments on the note, and the seller sued both Client A and Corporation B. Mr. Carpenter represented both Client A and Corporation B in the action brought by the seller.
Corporation B was concerned that Mr. Carpenter represented both clients and that Corporation B had a potential cross claim against Client A that might not be pursued. Corporation B asked for additional assurances of indemnity in the action. Client A signed an additional indemnity statement in April 1999. In May, Mr. Carpenter sent a letter to Client A noting that he was overdue on his legal bill. Client A’s phone had been disconnected and he had not replied to correspondence, likely raising questions about the value of Client A’s indemnity. Corporation B asked to be dismissed from the action on grounds of not being a real party in interest, and requested that this claim be included in the answer. The appropriate language was added to the answer, but Mr. Carpenter decided it was unlikely that Corporation B would be dismissed. Consequently, Mr. Carpenter did not argue that Corporation B should be dismissed in the subsequent response to summary judgment.
In August 1999, judgment was entered against Client A and Corporation B, jointly and severally, for $343,516.11. Corporation B wanted Client A to post a bond to protect Corporation B’s assets from the judgment. Client A told an associate of Mr. Carpenter’s that he was leaning toward appealing the judgment without posting a bond. Meanwhile, Mr. Carpenter attempted to settle with the seller by offering to return the gas station, along with a cash payment of $20,000. This offer was rejected. Client A did not have any other assets that could be readily reached by judgment.
The seller attempted to attach Corporation B’s assets in California to satisfy the judgment. In September 1999, Corporation B filed a separate suit against Client A to enforce the indemnity provisions. In October 1999, Mr. Carpenter withdrew from the representation of Corporation B in the gas-station litigation. He then accepted service and entered a notice of appearance for Client A in the indemnity action. Mr. Carpenter never obtained written consent from Corporation B to represent Client A in the indemnity action.
Corporation B posted its own bond for $460,000 in the gas-station litigation. In January 2000, Corporation B obtained a summary judgment for $343,693.11 against Client A in the indemnity action. This award was then applied toward payment of Corporation B’s obligation in the gas-station litigation.
Mr. Carpenter’s conduct violated RPC 1.7, prohibiting a lawyer from representing a client if the representation will be materially limited by the lawyer’s responsibilities to another client, a third person, or the lawyer’s own interests, unless (1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client, and (2) each client consents in writing after consultation and a full disclosure of the material facts; RPC 1.9, prohibiting a lawyer who has formerly represented a client in a matter from thereafter representing another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client consents in writing after consultation and full disclosure of the material facts; and former RPC 1.15(a)(1), requiring a lawyer to withdraw from the representation of a client if the representation will result in a violation of the Rules of Professional Conduct or other law.
Nancy Bickford Miller, Special Disciplinary Counsel Loren G. Armstrong, and Special Disciplinary Counsel John H. Ridge represented the Bar Association. Kurt M. Bulmer represented Mr. Carpenter. Lee Grochmal was the hearing officer. |