Overview

The Review Department affirmed discipline against attorney Thomas Oscar Gillis arising from a business transaction with a client involving the sale of his residential property shortly after obtaining a $250,000 wrongful death settlement on her behalf. The court found violations of Rule 3-300 (business transactions with a client), Business & Professions Code § 6106 (moral turpitude), and § 6068(e) (duty to maintain client confidences).

Facts

Respondent represented a client in a wrongful death action involving the death of her minor son and obtained a $250,000 settlement. Shortly before disbursement of funds, discussions began about the client purchasing respondent’s residence in French Camp, California.

The client was financially unsophisticated, unemployed, receiving public assistance, had no credit history, and had never maintained a bank account. On the same day settlement funds were disbursed:

• Respondent paid himself attorney’s fees.
• The client received approximately $186,000.
• $60,000 was immediately paid to respondent for equity in the property.
• $50,000 was paid to reduce an existing deed of trust.

The property remained encumbered by an adjustable-rate loan containing an enforceable “due on sale” clause. Respondent failed to:

• Explain the due-on-sale risks.
• Provide title insurance.
• Use escrow.
• Provide a statutory real estate transfer disclosure statement.
• Explain recorded code violations.
• Ensure the client could assume the underlying loan.

The lender would not have permitted assumption due to the client’s lack of income and creditworthiness. The client made payments for several months before defaulting. The property was foreclosed, and she was evicted.

Additionally, respondent’s office sent a copy of the confidential settlement agreement to the lender to assist respondent in addressing his own delinquent mortgage payments.

Charges and Violations

• Rule 3-300 – Entering into a business transaction with a client without ensuring the transaction was fair and reasonable and fully disclosed in writing.
• Business & Professions Code § 6106 – Moral turpitude arising from breach of fiduciary duty and misleading statements to the State Bar.
• Business & Professions Code § 6068(e) – Failure to maintain client confidences by disclosing settlement terms to a third party.

Defenses Raised

Respondent argued:

• The sale price reflected fair market value.
• He advised the client in writing to seek independent counsel.
• The client strongly desired the property.
• His disclosure omissions reduced transaction costs.
• He lacked intent to deceive.

The Review Department rejected these defenses, emphasizing that Rule 3-300 requires the entire transaction to be fair and reasonable—not merely the purchase price. The client’s vulnerability, lack of sophistication, and the structure of the transaction demonstrated overreaching.

Moral Turpitude Findings

The court clarified that moral turpitude does not require intentional dishonesty. An intentional breach of fiduciary duty for personal benefit constitutes moral turpitude under § 6106.

The court also found moral turpitude where respondent attempted to mislead the State Bar investigator regarding whether the client had assumed the underlying loan.

Mitigation

• 26 years of discipline-free practice.

No significant pro bono mitigation was found.

Aggravation

• Multiple acts of misconduct.
• Foreseeable harm to a financially vulnerable client.

Although harm occurred, restitution was not ordered because responsibility for the ultimate foreclosure could not be clearly allocated between respondent and the client.

Sanctions Imposed

Key Takeaways

• Fair market value alone does not satisfy Rule 3-300.
• All risks must be fully disclosed in writing and understandable to the client.
• Vulnerable clients heighten fiduciary scrutiny.
• Using client confidential information for personal benefit violates § 6068(e) and § 6106.
• Misleading State Bar investigators constitutes moral turpitude.