4 Clients Whose Estates Enriched James D. Gunderson : Margaret Hough

Margaret Hough was a widow who was one of the early residents of Leisure World in Laguna Hills after it opened in the mid-1960s. Among her investments was a first mortgage on a square mile of land in San Bernardino County that she had sold in 1971. According to records in the San Bernardino County recorder’s office, Hough designated Gunderson, who was already her attorney, as her trustee for the mortgage in 1974.

In 1981, more than a year after Hough died, Gunderson recorded a document saying that Hough had assigned the mortgage to him in 1979. A few months later, he posted the property for foreclosure, and eventually took title in his name by tendering the original mortgage trust deed for the amount due. Earlier this year, in July, Gunderson transferred the land to his “Gunderson Family Trust.”

It is unclear how much, if anything, Gunderson paid to acquire the mortgage.

Records show that Gunderson’s daughter, Linda Gunderson, notarized Hough’s signature on the mortgage that granted the land to her father on Oct. 8, 1979, the same day that she signed as a witness to Hough’s final will. Hough died four months later.

Hough’s nephew and heir, William Wallace Hough, who lives in Wayne, Pa., said he discovered only recently that his aunt owned the land while leafing through some of her old legal documents. He said he asked his mother about the property and she informed him that “Gunderson told Aunt Margaret that it was worth nothing and he would take care of it.”

Under the Rules of Professional Conduct, governing lawyers in California at the time Hough signed over the mortgage, Gunderson would have been required to put in writing the terms of the transaction, give her “a reasonable opportunity to seek the advice” of another lawyer, and get her written consent to the specific deal.

Court records give no indication that Gunderson followed these procedures.

Gunderson, who handled the probate of Hough’s estate between the time of her death in 1980 and 1983 when the estate was closed out, attempted to make other business deals with beneficiaries of Hough’s estate.

At one point, Gunderson offered to buy some remaining assets with a book value of $32,500 for half that amount. The lawyer wrote to the heirs that the value of the assets had declined and he could not find buyers willing to pay their face value.

William Hough said his mother, another heir in the estate, bought the assets and realized at least $90,000 in profits from her $32,500 investment over the next four years. “I’m glad my mother didn’t let him get away with it,” Hough said. “She got the benefit that he would have gotten. She figured that if he was trying to get it, if might be worth more than he was willing to pay for it.”