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In re Miller

Supreme Court of Montana

August 1, 2013

IN THE MATTER OF LORI B. MILLER, An Attorney at Law, Respondent

ODC File No. 12-295


Shaun R. Thompson Chief Disciplinary Counsel

The Office of Disciplinary Counsel for the State of Montana ("ODC") hereby charges Lori B. Miller with professional misconduct as follows:

1. Lori B. Miller, hereinafter referred to as Respondent, was admitted to the practice of law in the State of Montana in 2000, at which time she took the oath required for admission, wherein she agreed to abide by the Rules of Professional Conduct, the Disciplinary Rules adopted by the Supreme Court, and the highest standards of honesty, justice and morality, including, but not limited to, those outlined in parts 3 and 4 of Chapter 61, Title 37, Montana Code Annotated.
2. The Montana Supreme Court has approved and adopted the Montana Rules of Professional Conduct ("MRPC"), governing the ethical conduct of attorneys licensed to practice in the State of Montana, which Rules were in effect at all times mentioned in this Complaint.
3. At all times pertinent hereto, Respondent was a member of Morrison & Frampton, PLLP, a Whitefish, Montana, law firm. At all times pertinent hereto, attorney Ryan D. Purdy ("Purdy") was also a member of the firm.
4. Robert T. Sagen ("Robert") died intestate on March 27, 2011. Robert owned certain real property located in Flathead County, Montana. The property, consisting of two parcels, has the address of 235 Skyles Lake Lane, Whitefish. Janice Sagen ("Janice"), Robert's daughter, hired Respondent to assist her with her father's estate. On March 29, 2011, Respondent filed an Application for Appointment of Special Administrator in Montana Eleventh Judicial District Court, Flathead County. On the same day, the Court appointed Janice special administer of the Estate of Robert T. Sagen ("Sagen Estate").
5. In March 2012, Respondent and Janice discussed the Sagen Estate's financial problems and the need to sell estate assets.
6. Purdy has represented an entity named Consulting, Investing, Management, LLC ("CIM") and its affiliates on a number of legal matters.
7. On June 5, 2012, the Sagen Estate and CIM entered into a Buy-Sell Agreement whereby CIM offered to buy part of the Sagen property. The closing date was set for July 5, 2012.
8. On June 21, 2012, Janice informed Respondent by email that: "I have an offer on the back property and set to close on the 5th ."
9. Purdy's invoice for work performed on June 27, 2012 for CIM states: "Receipt and review of title and ordering special exceptions."
10.CIM and the Sagen Estate were unable to complete the sale proposed under the initial Buy-Sell Agreement.
11. Purdy's invoice for work performed on July 3, 2012 for CIM states: "telephone call with client and agent re: termination and reorg of buysell."
12.On July 13, 2012, Janice informed Respondent by email that "the deal on the back fell through." Janice inquired whether the Sagen Estate could sell the property under a contract for deed.
13.CIM and the Sagen Estate continued to negotiate the terms for the sale of the Sagen property to CIM.
14.Purdy's invoice for work performed on August 21, 2012 for CIM states: "meeting with client and Joe Purdy re: property issues."
15.Purdy's invoice for work performed on August 27, 2012 for CIM states: "Telephone call from client re: structure of offer and proposed HUD."
16.Purdy's invoice for work performed on August 28, 2012 for CIM states: "Telephone call with Vik re: Counter and terms on property; Receive and review title report and order exceptions."
17.Purdy's invoice for work performed on August 29, 2012 for CIM states: "Telephone call from Vik and realtor; meeting with sellers counsel; review additional exceptions to title; telephone call with title company release of 1st Security Bank MTG."
18.On September 4, 2012, CIM and the Sagen entered into another Buy-Sell Agreement. Under the agreement, CIM agreed to purchase the entire property for $460, 000--$350, 000 of which was to be carried on a Montana Trust Indenture.
19.For the purpose of concluding the tentative sale, Purdy represented CIM and Miller represented Janice in her capacity of special administer of the Estate of Robert T. Sagen.
20.Respondent prepared a draft of a proposed contract for deed. An entity called 235 Skyles, LLC, which was formed by CIM, was named as the purchaser.
21.Regarding the tentative sale, Respondent and Purdy exchanged the following emails:
1) 9-14-12, Purdy to Miller: "Lori, can we meet to discuss the Sagen property to see what we can do to get the deal done. Your client met with Park Side and they have a problem with the Contract for Deed; therefore you and I have to facilitate the transaction a different way."
2) 9-18-12, Miller to Purdy: "Attached is the Buy/Sell. I talked to Paul and he understood that your client is still trying to obtain financing. Is that incorrect? Let's talk about this today. If they can't figure out a way to make this work, and your client is asserting a damages claim, I think that we have a conflict."
3) 9-20-12, Purdy to Miller: "Lori, great! How do we expect to deal with the title exceptions 24 and 26? Your clients will be obligated to clear those exceptions; therefore, 1) wait to close the contract until these exceptions are cleared, or 2) If we close soon my client will be agreeing to enter the contract for deed subject to those exceptions being removed. Should these not be removed within some period of time, my client would be able to get back the monies paid your client? How would we structure that as I want to make sure that my client does not have to chase down their money in the event your clients fail to perform."
4) 10-24-12, Miller to Purdy: "Janice confirmed that the estate is not able to reduce the sale price or the monthly payments."
5) 10-24-12, Miller to Purdy: "One of the back-up offers is from another client. If this deal falls through, and that client calls for help with the transaction, think we should refer him elsewhere!"
6) 10-29-12, Miller to Purdy: "I accepted your changes on the C for D and then made some additional corrections."
7) 11-2-12, Miller to Purdy: "Looks okay to me. Would probably want to add that on demand the title company shall release the QCD. Also, think we need language in there about keeping payments. I don't see it in there. This is from one of your other contracts for deed: All sums of money paid, and all improvements made, by PURCHASER prior to the termination of this Agreement shall be retained by SELLER as reasonable rental for use of said Property and to reimburse Seller for their time and expense for having had the Property encumbered."
8) 11-2-12, Miller to Purdy: "Just spoke to Janice, she has been thinking about the value of the property if there is a default and is not willing to consent to tearing down the house."
9) 11-2-12, Purdy to Miller: "My client is defiantly objecting to the additional condition and you will have his formal response and position tomorrow. He is talking with other council [sic] tonight!"
10)11-3-12, Miller to Purdy: "Hi Ryan, I spoke with Janice today. Part of why she revoked her consent to tear down the house was due to a concern that it would violate the Parkside mortgage. She will go talk to them on Monday. She found someone to help her with legal bills and is going to talk to another attorney about her options next week."
22.On or about November 9, 2012, Janice retained attorney Thomas Tornow ("Tornow") to represent her, and CIM was advised that the Sagen Estate would not go through with the sale.
23.On November 26, 2012, CIM and 235 Skyles, LLC filed a lawsuit against the Estate of Robert T. Sagen. The Complaint asserted claims for breach of contract, breach of implied covenant of good faith and fair dealing, and fraud. Prior to the filing of the lawsuit, Purdy sent CIM's attorney documents, prepared a timeline, and reviewed a draft of the Complaint.
24.On January 24, 2013, a Substitution of Counsel was filed in the Sagen probate that substituted Tornow for Respondent as Janice's attorney.
25.Given Purdy's representation of CIM, he would have been prohibited by Rule 1.7, MRPC, from representing Janice in her capacity as special administrator of the Sagen Estate. Therefore, Respondent could not represent Janice in her capacity as special administrator of the Sagen Estate. Respondent's conduct, as described herein, constitutes a violation of Rule 1.10, MRPC.
26.Given Purdy's representation of CIM, Respondent should have withdrawn from her representation of Janice because her representation resulted in a violation of the MRPC. By failing to withdraw the representation, Respondent violated Rule 1.16, MRPC.

WHEREFORE, the Office of Disciplinary Counsel prays:

1. That a Citation be issued to the Respondent, to which shall be attached a copy of the complaint, requiring Respondent, within twenty (20) days after service thereof, to file a written answer to the complaint;
2. That a formal hearing be had on the allegations of this complaint before an Adjudicatory Panel of the Commission;
3. That the Adjudicatory Panel of the Commission make a report of its findings and recommendations after a formal hearing to the Montana Supreme Court, and, in the event the Adjudicatory Panel finds the facts warrant disciplinary action and recommends discipline, that the Commission also recommend the nature and extent of appropriate disciplinary action, and,
4. For such other and further relief as deemed necessary and proper.

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