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12/06/88 In Re Carroll L. Owens Et Al.

December 6, 1988


Before the instant disciplinary action was filed, the Beatty brothers filed and obtained a judgment in a seven-count complaint in the circuit court of Franklin County. In that complaint, the Beatty brothers alleged that respondents had fraudulently breached a partnership agreement entered into on July 15, 1970, and had fraudulently breached their corresponding fiduciary duty to the Beatty brothers. The Beatty brothers alleged in part essentially the same conduct that gave rise to this disciplinary action. Applying a "clear and convincing evidence" standard of proof, the trial court found that the allegations of fraudulent breach of a fiduciary duty and fraudulent breach of a partnership agreement had been established. On September 1, 1981, the court awarded the Beatty brothers $2,000 in compensatory damages and assessed against each defendant $60,000 in punitive damages. The judgment became a final order and was subsequently satisfied by conveyance of an interest in a radio station.


532 N.E.2d 248, 125 Ill. 2d 390, 126 Ill. Dec. 563 1988.IL.1758

Disciplinary proceeding.


JUSTICE CUNNINGHAM delivered the opinion of the court. JUSTICE MILLER took no part in the consideration or decision of this case.


This matter is before the court upon exceptions of respondents, Carroll L. Owens and Gerald Dee Owens, to the report of the Hearing Board, which was adopted by the Review Board, and which recommended a two-year suspension. Two members of the Review Board recommended that the matter be remanded for additional evidence.

On February 27, 1986, the Administrator of the Attorney Registration and Disciplinary Commission filed with the Hearing Board a two-count complaint based on a judgment against respondents in a civil fraud action entered on December 14, 1981.

Counts I and II of the complaint charge respondents with engaging in conduct involving dishonesty, fraud, deceit and misrepresentation in violation of Rule 1 -- 102(a)(4) of the Code of Professional Responsibility (Code) (107 Ill. 2d R. 1 -- 102(a)(4)); conduct that is prejudicial to the administration of Justice in violation of Rule 1 -- 102(a)(5) of the Code (107 Ill. 2d R. 1 -- 102(a)(5)); entering into a business transaction with clients (Bert Beatty and John Beatty (hereafter Beatty brothers)) in which they and their clients have conflicting interests, without the clients' consent after full disclosure in violation of Rule 5 -- 104(a) of the Code (107 Ill. 2d R. 5 -- 104(a)); intentionally prejudicing or damaging their clients (Beatty brothers) during the course of the professional relationship in violation of Rule 7 -- 101(a)(3) of the Code (107 Ill. 2d R. 7 -- 101(a)(3)); knowingly making a false statement of fact in violation of Rule 7 -- 102(a)(5) of the Code (107 Ill. 2d R. 7 -- 102(a)(5)); and engaging in conduct that tends to bring the courts and the legal profession into disrepute and gives the appearance of impropriety.

The Administrator sought to rely on the factual findings in the above civil case. On June 6, 1987, the Administrator filed a motion for summary determination of major issues, pursuant to section 2-1005(d) of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2-1005(d)). The motion requested that the Hearing Board enter an order stating that there are no genuine issues of fact due to the factual findings in the civil case. The Administrator filed with the motion certified copies of the jury verdict (which the trial court considered advisory due to the equity nature of the case), the special interrogatories submitted to the jury, the jury's answers, the findings of fact and Conclusions by the court, and the judgment. The motion was premised on the assumption (developed in a memorandum of law accompanying the motion) that the doctrine of "estoppel by verdict" precluded respondents from relitigating the factual findings in the civil case. In moving for summary judgment, the Administrator emphasized that the burden of proof in a civil fraud action is the same as in a disciplinary action: clear and convincing evidence. The motion was granted, and respondents were allowed to present evidence (including limited evidence regarding the underlying facts) only in extenuation and mitigation.

Because the underlying facts upon which disciplinable actions were found to have occurred were not litigated in this action, we herein summarize the factual findings in the civil proceeding involving the same conduct, factual findings as to which collateral estoppel was applied.

On July 15, 1970, Bert and John Beatty (Beatty brothers) and respondents (Owens brothers) entered into a written partnership agreement, for the stated purpose of operating a radio station in Benton. The Beatty brothers were to provide technical and financial support to the partnership, and respondents agreed to provide legal services to the partnership. As part of this agreement, respondents applied for and eventually received a Federal Communications Commission broadcasting license for an FM station.

In August 1970, respondents filed the first application for an FCC license, and attached thereto was a copy of the original partnership agreement of July 15, 1970.

In July 1971, the FCC denied this application. In November 1971, respondents filed another application with the FCC on behalf of the partnership. From November 1971 to October 19, 1972, respondents communicated with the FCC concerning amendments to the second application (November 1971). During this period of time the Beatty brothers never told respondents that they intended to withdraw ...

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