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Jane G. Bitz (WSBA No. 22970, admitted 1993), of Spokane Valley, was ordered to receive a reprimand on December 3, 2007, by order of the Disciplinary Board following approval of a stipulation. This discipline was based on conduct involving failure to provide competent representation and conflicts of interest.
In October 1997, Ms. R created an inter vivos trust known as the R Farm Trust consisting of approximately 200 acres of farmland and 80 acres of timberland located in Idaho. One of her children, DR, was named as trustee. The beneficiaries of the trust were her children and grandchildren, including DR. Ms. R died in April 2000, leaving a will that provided that her estate was to go to her children and grandchildren, including the Idaho farm and the timberland. The will also provided that if any child desired to sell his or her interest in the Idaho farm, the other heirs would have right of first refusal to purchase the heir’s interest in the farmland, and that if the heirs chose to sell the farmland or timberland, they could do so with the consent of all the tenants in common.
In June 2000, Ms. Bitz was retained by DR to represent him concerning the handling of the R estate. In July 2000, Ms. Bitz met with DR’s family to discuss the distribution of the estate. At the meeting, DR presented two offers: one to buy the farmland and one to buy the timberland. One of the other heirs, ER, indicated he wanted to buy out the other heirs’ interest in the farmland at the same price as was offered. The heirs agreed to sell the farmland to ER and to give him until January 2001 to secure financing to purchase the property. Ms. Bitz was asked if the agreement should be in writing. She advised that it should be in writing, but the estate should not have to incur the expense, and that since everyone was present and joined in the decision, under the circumstances, the agreement need not be in writing.
In August 2000, Ms. Bitz wrote to ER and advised him that the trust called for all the property to be sold and the proceeds to be distributed equally among the beneficiaries. This was not a correct statement of the terms of the trust agreement or the legal status of the trust. Ms. Bitz’s letter also stated that ER’s offer was rejected, because the contract to sell to ER was not in writing and not enforceable. Other offers to buy the property were received. Ms. Bitz advised DR that copies of these offers should not go to ER, because he was not to be trusted and might get in the way of closing the other deals. When ER’s lawyer requested copies of the current offers, Ms. Bitz replied that the trustee would consider the request. She informed ER’s lawyer that ER was not trusted by DR, and this was the reason information concerning pending sales had not been given to ER. Ms. Bitz also informed ER’s lawyer that the trustee was given the power and discretion to distribute in cash or in kind under the terms of the trust. This was not a correct statement of the terms of the trust.
In October 2000, Ms. Bitz received an earnest-money agreement from ER’s new legal counsel. Ms. Bitz advised the new legal counsel that because the sale agreement with ER was not in writing, it was not enforceable. In January 2001, ER filed a lawsuit against DR and the other beneficiaries, seeking termination of the trust, distribution of all trust property, and specific performance of the oral contract to sell to him. Ms. Bitz’s firm was retained to represent the defendants. The fee agreement prepared by Ms. Bitz’s firm disclosed a potential conflict of interest among the defendants based on their responsibility for the “circumstances that led to the lawsuit being filed.” The fee agreement also disclosed a potential conflict of interest between DR and the other beneficiaries because of the duty he owed to them as trustee. The agreement contained the opinion of Ms. Bitz and her partner that the conflict of interest was outweighed by the economy of having one law firm defend the lawsuit. The opinion of Ms. Bitz and her partner stated that the claim brought by ER was without merit and would be quickly dismissed. The disclosure had all the defendants agree that DR had acted in the best interests of the beneficiaries in managing the trust and dealing with ER. If anyone did not agree, they were advised to seek separate representation. The conflict disclosure did not address Ms. Bitz’s conflict of interest based on her earlier advice to DR as trustee.
In May 2001, and during the pendency of the lawsuit, DR, as trustee, sold the 80 acres of timberland. Ms. Bitz did not advise DR to notify ER of the offer on the timberland, and DR did not do so until after the property was sold. There was no agreement by all of the parties to sell the timberland for the price for which it was sold. In July 2001, Ms. Bitz notified all of the beneficiaries that the trustee had sold the timberland and admitted that the trustee was acting on the advice of her firm to sell the property and close the transaction. Ms. Bitz also disclosed that she had failed to advise them that Washington law required prior written notice to all of the beneficiaries. Ms. Bitz continued to represent the beneficiaries in the pending lawsuit. In November 2001, the farmland was transferred to the beneficiaries.
Also in November, the court issued an oral decision in ER’s motion for summary judgment. The court found that the sale of the 80 acres of timberland violated RCW 11.10.140, as the sale was a non-routine transaction that required notice, and that DR as trustee breached his fiduciary duty by not giving said notice. The court also found that the trustee did not wind up the trust within a reasonable time and that the trust should have been wound up within six months, or by October 2000. ER was awarded attorney’s fees in the amount of $20,000. On DR’s cross-motion for partial summary judgment, the court denied DR’s claim for breach of contract. DR appealed the decision denying him specific performance. Ms. Bitz offered to represent DR and the beneficiaries on the appeal, but DR and the beneficiaries terminated her firm and retained new counsel.
Ms. Bitz’s conduct violated RPC 1.1, requiring a lawyer to provide competent representation to a client, which requires possessing the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation; and former RPC 1.7(b), 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.
Debra J. Slater represented the Bar Association. James B. King represented Ms. Bitz. |