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In re Magee

Supreme Court of Louisiana

January 30, 2019

IN RE: WILLIAM MAGEE

          ATTORNEY DISCIPLINARY PROCEEDING

          PER CURIAM

         This disciplinary matter arises from formal charges filed by the Office of Disciplinary Counsel ("ODC") against respondent, William Magee, an attorney licensed to practice law in Louisiana.

         UNDERLYING FACTS

         The ODC alleges that in three separate transactions between 1999 and 2001, respondent used false and deceptive practices to obtain the ownership of immovable property in St. Tammany Parish belonging to absentee owners.[1] To that end, respondent created three fictitious quitclaim deeds purporting to transfer the properties from his closely held corporation, Hickory Glade, Inc., to himself. Respondent then signed the name of Timothy Dunaway, his Hickory Glade co-owner, to the deeds as seller without Mr. Dunaway's knowledge or consent. Respondent affixed his own signature to the documents as buyer. No money changed hands in the transfers, and respondent acknowledges that Hickory Glade possessed absolutely no ownership interest in the St. Tammany Parish properties that the deeds purported to convey. Rather, the ODC alleges that by structuring the transactions in this way, respondent sought to create the illusion of a routine arms-length transaction signifying the bona fide transfers of the properties.

         After having the signatures on the deeds notarized, respondent inserted these false transactions into the chain of title of all three properties by filing them into the public records of St. Tammany Parish. Respondent then filed suits for declaratory judgment in the 22nd Judicial District Court for the Parish of St. Tammany seeking to have him declared as owner of the properties. In all material respects, the petitions for declaratory judgment were the same, as follows:

I.

Petitioner possesses as owner a particular parcel of land (description of land). Petitioner acquired his interest in the subject property by act dated (date) and recorded as Instrument (number).

II.

Petitioner has been in possession of the subject property as owner in excess of one (1) year, which possession has been uninterrupted and continuous.

III.

Petitioner has cut trees on the property, fenced the property, placed "For Sale By Owner" signs on said property, and otherwise possessed as owner the subject property during his period of possession.

IV.

An examination of the public records reveals a disturbance in law affecting the subject property. It appears as though the following person(s) purportedly owned interests in the subject property, having acquired said interests by acquisitions recorded in the official records of the Parish of St. Tammany, as follows:
(Previous owner(s), COB, date)

V.

The above named individuals are the last known owners or purport to have an ownership interest in and to the subject property, having acquired said interest by the acts dated and recorded as indicated above.

VI.

The said defendants are absentees and/or non-residents as those terms are defined in the Louisiana Code of Civil Procedure and it is therefore necessary that an attorney be appointed to stand in judgment for and receive service of citation for said defendants.

VII.

Petitioner alleges and shows that by his open, actual and notorious corporeal possession of the property made the subject of this litigation, that he is entitled to a judgment of this court maintaining him in possession of the subject property and ultimately declaring him to be the owner of said property.
WHEREFORE, Petitioner prays that an attorney at law be appointed to represent the absent defendants, (name), their spouses, heirs, successors and assigns, if they be known, and to receive service and citation for them, attempt to locate them, and to stand in judgment for said absent defendants.
Petitioner further prays, that after due proceedings had, there be judgment in his favor and against the absent defendants, recognizing the plaintiff's right to the possession of the immovable property described above, and maintaining him in possession thereof, and in the event that the defendants do not assert an adverse claim of ownership of the said immovable property in their answer herein that there be judgment herein ordering the defendants to assert any adverse claim of ownership of the said immovable property in a petitory action to be filed within a delay to be set by the court not to exceed thirty days after the date the judgment becomes executory, or be precluded thereafter from asserting any ownership thereof and declaring petitioner to be the owner of said property.

         Respondent testified on his own behalf at the default hearings. His testimony tracked the representations made in the petitions for declaratory judgment. He did not advise the court of the fact that he had drafted the quitclaim deeds himself, having assumed the role of both seller and purchaser. The ODC alleges that in failing to inform the court of this crucial fact, respondent sought to give the judges the false impression that the "acts" which he referenced in his petition were bona fide transfers of ownership.

         Once he obtained default judgments declaring him to be the owners of the tracts, respondent sold the properties to a third party, who in turn transferred lots to the complainants as home sites. At the time these individuals purchased their lots, they were unaware of respondent's title practices. They thereafter began to experience difficulties in trying to sell their properties or refinance their mortgages. Title insurers refused to issue title policies on the properties involved, citing respondent's quitclaim deeds as a "cloud" on the title, which resulted in failed home sales and refinancings.

         One of the purchasers, complainants Lloyd and Nicole Martin, filed suit in state court against their title insurer, Fidelity National Title Insurance Company, seeking to hold the insurer responsible for curing title defects and paying damages for harm and inconvenience caused by the defective title. The suit was later removed to the United States District Court for the Eastern District of Louisiana. In turn, the title company sued respondent as a third-party defendant, alleging that he had caused the defects by virtue of the suspect methods which he used to obtain prior title.

         Respondent answered the suit and filed a motion for summary judgment which the federal court denied in 2011. The following year, in 2012, the federal court granted judgment on the third party demand against respondent and in favor of the title company, finding respondent liable for improperly creating a cloud on the title by manufacturing a chain of title to the property using questionable quitclaim deeds. Respondent did not appeal the federal court's judgment and was ordered to pay the cost of the record owners' interest in the properties.

         DISCIPLINARY PROCEEDINGS

         In October 2012, the ODC received three complaints against respondent from persons who had purchased lots in St. Tammany Parish in which respondent and Hickory Glade had inserted themselves in the chain of title using the procedure set forth above. In April 2015, the ODC filed formal charges against respondent, alleging that his conduct violated the following provisions of the Rules of Professional Conduct: Rules 3.3(a) (candor toward the tribunal), 3.3(d) (in an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse, and 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation) of the Rules of Professional Conduct.

         Respondent answered the formal charges and denied any misconduct. According to respondent, after undertaking extensive legal research, he had determined that title to abandoned properties could be legally transferred via a declaratory judgment action, even if the transferor had no valid title to the property. In utilizing this procedure, respondent would identify an abandoned piece of property and would attempt to locate the last owners of record to explore purchasing the property. If the owners could not be located, respondent would insert himself into the chain of title by having someone execute a quitclaim in his favor. The quitclaim would then be recorded in the public records. Respondent has never contended or represented that the quitclaiming party had any actual ownership interest in the property. Rather, respondent created the quitclaim solely as a document in the public records that established civil possession of the property.[2]Both before and after recording the quitclaim, respondent would exercise open and obvious physical possession over the property by doing things such as having a survey of the property made, placing "For Sale by Owner" signs on the property, fencing the property, and mowing the grass and otherwise cleaning up the property.

         After a minimum of one year of possession, respondent would cause a declaratory judgment action to be commenced pursuant to La. Code Civ. P. art. 3654.[3] If the last titled owners of the property still could not be located and served, respondent would request that a curator be appointed to represent their interests. If still no one came forward, respondent would proceed with default judgment, at which time the court would declare him to be the rightful owner of the property.

         In 1996, when respondent was the Town Attorney for the Town of Abita Springs, he was instructed by the town to undertake a legal process whereby various vacant and abandoned properties within the city limits could be deeded to the town as green spaces and/or brought back into commerce. Respondent initially determined that ownership to these properties could be transferred to the town via the use of the declaratory/possessory actions procedure, but subsequently further research caused him to conclude that this procedure could not be used by a public entity. Respondent, however, continued to use the procedure for his or his private clients' use and development. In 1996, some members of the Board of Aldermen objected to this. The town had respondent's procedural methods of obtaining ownership over vacant property independently reviewed by two other attorneys, who according to respondent concluded that his actions were legal and authorized by Louisiana law. Nevertheless, because of the controversy and the potential for a conflict of interest, respondent resigned his position as the Town Attorney for the Town of Abita Springs.

         Respondent maintained that he has continued to use this procedure on a number of occasions, both on his own behalf and on behalf of clients.[4] He suggested that his actions were at all times open and obvious and were fully documented in the public and court records. No Louisiana court has held that respondent's practices of obtaining property through the declaratory/possessory actions procedure is illegal or unsupported under Louisiana law. Nevertheless, respondent stated that he ceased using this procedure in 2009 when certain title insurers began to refuse to issue title insurance on transactions involving the procedure.

         Regarding Hickory Glade, respondent stated that he incorporated the entity in 1991 to purchase and hold one piece of immovable property. At all times pertinent, respondent served as vice president of Hickory Glade. Respondent and his wife, and Timothy Dunaway and his wife, were the original incorporators of Hickory Glade. However, according to respondent, his wife and Mr. and Mrs. Dunaway played no role in the operation of Hickory Glade. Mr. Dunaway, the president of Hickory Glade, did not work for the corporation and only participated in charging revenues generated by Hickory Glade in the purchase and sale of one piece of campground property. Virtually all operations of Hickory Glade were conducted by respondent and it was the routine practice for him to act on behalf of Hickory Glade.

         Respondent does not deny that he signed Mr. Dunaway's name to the quitclaim deeds referenced in the formal charges. However, this was an act on behalf of Hickory Glade and not Mr. Dunaway personally. It did not injure any party, including Mr. Dunaway, and respondent's use of Mr. Dunaway's signature was subsequently ratified by authentic act of Hickory Glade. There has never been a finding of forgery. Moreover, respondent's signing of Mr. Dunaway's name to the quitclaim deeds was done under his longstanding belief that he had the apparent authority to act on behalf of Hickory Glade based on the consistent operations of Hickory Glade in the past.

         Respondent concluded:

Mr. Magee respectfully disagrees that there was something unethical in the above referenced procedure used by him in obtaining property. The procedure used by Mr. Magee and others, while admittedly unusual and "out of the box" as described by Mr. Magee, is not illegal. The procedure, however, was openly used and discussed for many years including while Mr. Magee was employed by the town of Abita Springs. Mr. Magee's procedure has been held valid by a number of judges in the 22nd Judicial District Court. In addition, two other independent lawyers retained by the town of Abita Springs and unrelated to Mr. Magee opined that his procedure was authorized under or supported by Louisiana law. Furthermore, the properties at issue were always vacant, abandoned and off the tax rolls. Mr. Magee's actions actually placed these properties back into the stream of commerce benefitting Mr. Magee, the subsequent owners, and the various taxing authorities in St. Tammany Parish.

         Formal Hearing

         Following the filing of respondent's answer, the matter was set for a hearing. The ODC called the following witnesses to testify before the hearing committee: Shreveport attorney David Cromwell, who was accepted as an expert in real estate law and practice; Judge William Burris of the 22nd JDC; New Orleans attorney Scott Gallinghouse, underwriting counsel for First American Title Insurance Company; Covington attorney Charlene Kazan, an employee of respondent's law firm; Judge Mary Devereux of the 22nd JDC, who was formerly respondent's law partner; and complainants Andre Lampo, Carol Robinson, and Lloyd and Nicole Morton.

         Respondent testified on his own behalf and on cross examination by the ODC. He also called the following witnesses to testify before the hearing committee: Covington attorney Michael Stone, who was accepted as an expert in real estate closings; Covington attorney Patricia Fox; Steve Scoggin, a real estate appraiser and broker; and Phillip Lynch, a character witness.

         Hearing ...


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