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In the Matter of

February 7, 2012

IN THE MATTER OF PATRICIA A. GREGORY, A MEMBER OF THE STATE BAR, NO. 226239.


The opinion of the court was delivered by: Remke, P. J.

PUBLIC MATTER - NOT DESIGNATED FOR PUBLICATION

OPINION AND ORDER

Respondent Patricia A. Gregory seeks review of the hearing judge's recommendation that she be disbarred based on her misappropriation of over $112,000 from two clients. Gregory stipulated to failing to properly maintain client funds in trust in each of the matters. However, she denies misappropriating any funds and argues disbarrment is excessive. Gregory asserts all funds were earned and properly collected as her attorney fees, the former clients lack credibility, and she is entitled to more mitigation than found by the hearing judge. The Office of the Chief Trial Counsel of the State Bar (State Bar) asks that we affirm the hearing judge's culpability findings and disbarrment recommendation.

Following our independent review (Cal. Rules of Court, rule 9.12), we conclude the record supports the hearing judge's findings that Gregory misappropriated over $112,000 from two clients and that her misconduct was surrounded by significant aggravating factors, including dishonesty. We agree that she should be disbarred to protect the public, the courts, and the legal profession.

I. FINDINGS OF FACT AND CONCLUSIONS OF LAW

On review, the hearing judge's findings are entitled to great weight. (Rules Proc. of State Bar, rule 5.155(A).) The appellant must reference the record to specify the particular findings of fact that are in dispute and any factual error that it is not raised is waived. (Rules Proc. of State Bar, rule 5.152(C).) We find that the factual findings and culpability determinations of the hearing judge are supported by clear and convincing evidence, which we adopt and summarize below.

A. The Luwain Ng Matter (09-O-12766)

In May of 2006, Luwain Ng employed Gregory to represent her in a marital dissolution case. On May 30, 2006, Gregory filed a petition for dissolution of marriage on behalf of Ng in the San Diego County Superior Court (Ng Case). Ng did not sign a written retainer agreement, but paid a $1,500 "retainer" and understood that she would pay Gregory $175 per hour based on invoices for the legal services performed. Gregory sent Ng seven invoices, totaling $12,876, which Ng paid in full.

During the pendency of the Ng case, Ng and her husband sold their family residence. On August 24, 2007, pursuant to the parties' agreement, $188,325 was deposited by wire in Gregory's client trust account at Washington Mutual Bank (CTA). These funds were deposited in the CTA with the restriction that they would "be held in trust for the benefit of the parties by [Gregory] as an officer of the court, and that no funds will be withdrawn without a prior written agreement of the parties of counsel or an order of the court expressly requiring the withdrawal." After Gregory received the $188,325 on behalf of Ng and her husband, and without authority to do so, Gregory repeatedly transferred sums from her CTA to another account that was not a designated client trust account. By March 3, 2008, Gregory had withdrawn approximately $85,046 for her personal use, leaving the CTA balance at $103,278.91.

On March 3, 2008, pursuant to a court order, Gregory disbursed $94,162.50 from the CTA to Ng, representing Ng's half of the proceeds of sale of the family residence. In its order granting the disbursement, the court noted that "[t]he balance of the funds is to be held in trust for further disposition at a later date." After March 3rd, Gregory's CTA should have held $94,162.50; however, the balance was $9,116.41. Gregory continued to make unauthorized withdrawals, and on April 23, 2008, the CTA balance was approximately $239.30. On August 1, 2008, the court ordered Gregory to disburse the remaining $94,162.50 as follows: $79,162.50 to Ng as her sole and separate property, and $15,000 to Ng's former husband's attorney, William Henrich. On August 27, 2008, Gregory paid Henrich $15,000 from legal fees she earned in other client matters and not from the Ng funds she was required to hold in trust. On September 11, 2008, although she should have held at least $79,162.50 on behalf of Ng, the balance in Gregory's CTA was $167.90.

In September 2008, Gregory told Ng for the first time that she no longer had $79,162.50 in her CTA. Gregory lied to Ng about what happened to the funds, falsely claiming that after they were transferred to Gregory's business account, they were seized to pay her outstanding student loans. On September 18, 2008, Gregory sent an e-mail to Ng acknowledging the fact that the money was no longer in trust and agreeing to send a promissory note the following day. Gregory told Ng "I unconditionally owe you the sum of $93,000 less the $15,000 already paid to [your former husband's] attorney." Shortly thereafter, Gregory signed a "Promissory Note" in favor of Ng that states:

"I, Patricia Gregory, owe Luwain Ng the sum of $79,162.50 as of 09/01/08. This total amount plus interest at a rate to be determined by Ms. Ng is due and payable on October 1, 2008."

On September 29, 2008, Gregory sent another e-mail to Ng, discussing the various options she was pursuing to repay the amount owed. Commencing in October 2008, when Gregory was unable to repay Ng in full as previously promised, Gregory began making monthly interest payments of approximately $1,300 on the outstanding principal. From October 2008 through April 2009, the parties exchanged many e-mails about the funds Gregory was seeking for repayment. Gregory continued to have problems raising money to repay Ng.

After nine months of waiting, and after discovering Gregory lied about one potential source for repayment, Ng was concerned she would not be repaid. On May 7, 2009, Ng sent a letter to Gregory demanding payment, and she also filed a State Bar complaint. On May 10, 2009, Gregory replied to Ng by e-mail begging her not to file a complaint with the State Bar, stating "If I am turned [in to] the State Bar my life is over ... If the State Bar is involved I will be disbarred."

On June 14, 2009, Gregory told Ng by e-mail that she had received a letter from a State Bar investigator, and would not make any further interest payments. Gregory stated: "If you wanted to punish me, you have succeeded. I am destroyed. You have $20,000, a ridiculously low legal bill and my obligation to pay the $80,000. I have nothing. Seems a bit unfair, no? But you did get your revenge. Hope it was sweet."

From October 2008 to June 2009, Gregory paid Ng approximately $1,300 a month for interest payments (total of nine payments) and one payment of $5,000 towards the principal. Gregory has not made any further payments ...


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