Filed January 10, 2008
In re Bruce John Biagini
Commission No. 07 SH 13
Synopsis of Hearing Board Report and Recommendation
NATURE OF THE CASE: 1) overreaching the attorney-client relationship; 2) breaching a fiduciary duty; 3) engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation; 4) entering into a business transaction with a client where the lawyer knows or reasonably should know that the lawyer and the client have or may have conflicting interests therein; 5) failing to explain a matter to the extent reasonably necessary to permit a client to make informed decisions regarding the representation; 6) while representing a client, making a statement of material fact or law to a third person which the lawyer knows or reasonably should know is false; and 7) engaging in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute.
RULES DISCUSSED: Rules 1.4(b), 1.8(a)(1), 4.1(a), 8.4(a) (4) of the Illinois Rules of Professional Conduct; and Supreme Court Rule 770.
DATE OF OPINION: January 11, 2008.
HEARING PANEL: John L. Gilbert, Randall B. Rosenbaum, Albert O. Eck, Jr.
RESPONDENT'S COUNSEL: William F. Moran, III.
ADMINISTRATOR'S COUNSEL: Deborah Barnes.
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
BRUCE JOHN BIAGINI,
Commission No. 07 SH 13
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on June 27 and July 5, 2007, at the offices of the Attorney Registration and Disciplinary Commission, Springfield, Illinois before a Hearing Board Panel consisting of John L. Gilbert, Chair, Randall B. Rosenbaum, lawyer member, and Albert O. Eck, Jr., public member. The Administrator was represented by Deborah Barnes. The Respondent appeared at the hearing and was represented by William F. Moran, III.
On February 21, 2007, the Administrator filed a two count Complaint against the Respondent.
Count I of the Complaint alleged that in March 2003 the Respondent agreed to represent three adult brothers, Robert, Roger, and Richard Hummell in matters related to the estate of their deceased father who died intestate in November 2001. The
Respondent entered his appearance in the probate matter (In re Estate of Robert Earl Hummell, McDonough County, No. 01 P 104), as attorney for Roger Hummell, the independent administrator.
The only asset of the Hummell Estate was a house located in Macomb, which had an assessed value of $12,600. The debts of the estate totaled more than $17,000. The Respondent was aware that the Hummell brothers resided in the foregoing house (Hummell property) and that they had no steady source of income.
On about July 25, 2003, the Respondent learned that the Hummell property had been sold for delinquent taxes, and that a petition for tax deed had been filed. A few days later, the Respondent asked the Hummell brothers to meet with him, and they did so on August 19, 2003. The Respondent informed them that they had to pay a total redemption amount of $4,594.65 by October 29, 2003, or the property would be sold. After further discussion, the Respondent concluded that the Hummell brothers had no funds to pay the redemption amount and could not obtain a reasonable loan.
The Respondent and Kevin Breheny had previously owned an apartment building in Macomb. After the apartment building burned down, the Respondent and Breheny jointly purchased a vacation home in Osage Beach, Missouri, with part of the insurance proceeds. They deposited the balance of the proceeds into an account that they and their wives held jointly. The Osage Beach account, entitled "Bruce or Frances Biagini, Kevin or Camille Breheny," was number 214702 at the Central Bank Lake of the Ozarks.
On about July 28, 2003, the Respondent spoke with Breheny about the Hummell property, and they agreed to use funds from their Osage Beach account to fund a proposal to purchase the Hummell property. On about October 23, 2003, the Respondent proposed to the Hummell brothers that they enter into a contract for deed whereby they would quitclaim the Hummell property to Breheny for $18,000. He also told the Hummell Brothers that the contract would contain the following provisions:
a. "The $18,000 would be used to pay off estate debts and obligations.
b. The brothers would purchase the real estate from Breheny for $40,000, amortized over 15 years at 7 1/2 percent interest.
c. The brothers would make monthly payments of $500 into an escrow account maintained at a bank. A portion of the payment would pay the principal and interest on the loan and a portion would be escrowed to pay homeowners insurance premiums and real estate taxes."
The Respondent also informed the Hummell brothers that Breheny would pay for rehabilitating the residence on the property. The brothers agreed to assist with the labor for no compensation.
The Respondent did not advise the Hummell brothers that he had any personal or financial interest in the above transaction, as part of a joint venture with Breheny, or that he could have a conflict of interest. Also, he did not advise them to obtain independent legal advice.
On October 24, 2003, the Hummell brothers signed a contract for deed that contained the provisions set out above. The contract also provided that if any payment was in default, Breheny could cancel the contract, maintain an eviction against the brothers, and take possession of the property.
The Respondent represented to them that he would negotiate a resolution of the debt obligations of their father's estate (Hummell Estate) and make arrangements for the necessary payment of money.
Breheny paid the real estate taxes on the Hummell property by way of a check drawn on the Osage Beach account he had with the Respondent. The debts of the Hummell Estate initially totaled $17,045.13. After the Respondent negotiated with the creditors, the debts were reduced to $9,077.63. The amount of the debts, as reduced, was paid with funds from the Osage Beach account of the Respondent and Breheny.
The Respondent filed a Final Account for the Hummell Estate on August 1, 2005. In the Final Account, he listed the creditors and the initial indebtedness of $17,045.13, and stated that
such indebtedness had "been paid or claims released." The Estate was closed on August 11, 2005. The Respondent did not disclose to the Hummell brothers the amount that had been actually paid to satisfy or release the Estate indebtedness.
As of November 3, 2005, the Hummell brothers had made no payments as required by the contract of October 24 2003. After the Respondent and Breheny discussed the lack of payments, the Respondent telephoned attorney Joseph O'Donnell and asked him to initiate eviction proceedings against the Hummell brothers. On April 4, 2006, O'Donnell caused an eviction notice to be served on Robert Hummell.
On May 1, 2006, the Hummell brothers requested the ARDC to investigate the Respondent's conduct in this matter. After receiving notice of the request for investigation, the Respondent telephoned O'Donnell and asked him not to proceed with the eviction.
Based upon the above, the Administrator alleged that the Respondent committed the following misconduct: (a) overreached; (b) breached his fiduciary duty; (c) engaged in conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Rule 8.4(a)(4) of the Illinois Rules of Professional Conduct; (d) entered into a business transaction with a client where the lawyer knows or reasonably should know that the lawyer and the client have or may have conflicting interests therein, in violation of Rule 1.8(a)(1); (e) failed to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation, in violation of Rule 1.4(b); and (f) engaged in conduct which tends to defeat the administration of justice, or to bring the courts or the legal profession into disrepute, in violation of Supreme Court Rule 770.
Count II of the Complaint alleged that, between October 24, 2003, and August 1, 2005, the Respondent falsely represented to the creditors of the Hummell Estate that the Hummell brothers were the obligors of the debt. The Respondent knew or should have known the representation was false because he and Kevin Breheny had agreed to assume those obligations pursuant to the contract of October 24, 2003, described in Count I.
On September 14, 2005, the Respondent wrote a letter to Linda Dace, Director of Patient Financial Services for McDonough District Hospital, which had lien of $4,961.89 against the Hummell Estate. In the letter, the Respondent represented that the Hummell brothers were responsible for the foregoing debt and said that he "made one final attempt to get a response from any of the Hummell brothers concerning the bill for their parents." The Respondent's statement that he made one final attempt to get a response was false. He knew or should have known the statement was false because he had made no such attempt to get a response from the Hummell brothers.
Based upon the above, the Administrator alleged that the Respondent committed the following misconduct: (a) in the course of representing a client, made a statement of material fact or law to a third person which the lawyer knows or reasonably should know is false, in violation of Rule 4.1(a) of the Illinois Rules of Professional Conduct; (b) engaged in conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Rule 8.4(a)(4); and (c) engaged in conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute, in violation of Supreme Court Rule 770.
The Respondent filed an Answer on March 26, 2007. He admitted some of the factual allegations in the Complaint, denied others, and denied all of the allegations of misconduct in both Counts.
The Administrator presented the testimony of Roger Hummell, Robert Hummell, Richard Hummell, Linda Dace, Kevin Breheny, and the Respondent as an adverse witness. The Administrator also presented the deposition testimony of Joseph O'Donnell and Craig Pierce. The Administrator's Exhibits 1 through 34, 36, 37 and 38 were received into evidence. (Tr. 10, 70)
The Respondent testified on his own behalf, and presented the testimony of Robert Anstine, Jacqueline Thompson, James Schisler, Judge Steven Evans, Monsignor Richard Pricco, and Kevin Breheny. He also presented the deposition testimony of Judge William D. Henderson. The Respondent's Exhibits 1, and 5 through 18 were received into evidence. (Tr. 445-52)
Roger Hummell testified that he resides at 1133 East Washington, Macomb. This was his parents' residence and he has lived there most of his life. He is 42 years of age. He graduated from Macomb High School in 1984, and earned an associate degree at an automotive technical college, WAI, located in Wichita, Kansas. He said he has no problem with reading, writing, or understanding things. He is a mechanic, does construction work, and works on a farm. (Tr. 25-26, 37-38)
Roger was appointed the Independent Administrator for the estate of his father, (In re Estate of Robert Earl Hummell, No. 01 P 104, McDonough County). Attorney Craig Pierce initially represented the Hummell brothers as heirs of the Estate. He was allowed to withdraw in
December 2002. (Adm. Ex. 34, p. 33, 35) In March 2003, Roger and his two brothers, Robert and Richard, asked the Respondent to represent them and get the Estate settled. The Respondent told them he would "take care of everything" for them. The Respondent said his fee would be $800, but he subsequently sent them a bill for more than $2,500 (Adm. Ex. 31). (Tr. 26-28, 38-40)
At some point, the Hummell brothers met with the Respondent and discussed the matter of the family residence (hereafter Hummell property) having been sold for unpaid taxes. The Hummell brothers were aware they would lose the Hummell property unless they paid the redemption amount by some time in October 2003. Roger denied receiving a letter from the Respondent in regard to the redemption. (Adm. Ex. 1) Roger and his brothers then talked with a person in Monmouth, Illinois who indicated he would lend them the money to redeem the Hummell property. Roger said he did not recall the name of the proposed lender. Roger spoke with the Respondent about the lender and "might have" mentioned the high interest rate that would be charged. According to Roger, the Respondent replied that he "had another lender that would be cheaper to pay everything." The Respondent did not provide the name of the other lender. (Tr. 27-29, 42-46)
On about October 24, 2003, Roger and his brothers went to the Respondent's office. The Respondent handed them a document and told them to "sign here, everything would be taken care of." Roger said that he then signed the document (Adm. Ex. 4) without reading it. He had not received the document before he went to the Respondent's office. Roger said that he thought he and his brothers, by signing the document, were borrowing $18,000 to pay the back taxes on the Hummell property and the estate obligations. Roger further stated that, while the Respondent
gave him an opportunity to review the document, he did not do so because the Respondent said "don't worry about it, just sign here, I've got it taken care of." (Tr. 29-31, 46-49)
Roger said that the Respondent never informed him that estate debts would be paid with funds from a joint account the Respondent had with Kevin Breheny. He stated that the Respondent never mentioned a deed, or that the monthly payments of the Hummell brother might increase based upon the repair work on the residence. (Tr. 33, 46)
Roger acknowledged that he and his brothers were to begin making monthly payments after the contract (Adm. Ex. 4) was signed. However, about a month later, Roger received notice that some of the estate bills had not been paid. Also, Roger saw a newspaper article that reported the Hummell property had been sold to Breheny for $18,000. Roger was upset when he learned this, because he thought the $18,000 was a loan. He tried, on several occasions, to contact the Respondent, but was unsuccessful. Roger also said that the Hummell brothers did not make any payments under the contract. (Tr. 30-32, 35, 60-64, 68)
Roger acknowledged that Breheny paid for a new roof and new garage door for the Hummell property; that Breheny and the Respondent paid the back taxes on the property in 2003; and that since 2003, Breheny and the Respondent have paid the taxes on the property. He agreed that he should repay them for the amounts they paid on the foregoing matters. (Tr. 31, 50-53)
Roger further testified that the Respondent did not tell him about negotiating a reduction of the debts of the Hummell estate. Roger thought the $18,000 mentioned in the contract of October 2003 was going to be used to pay the estate debts. The Final Account for the Estate, submitted by the Respondent in August 2005, listed debts totaling $17,045.13, and mentioned no reduced amounts. (Adm. Ex. 34, p. 48) When Roger signed the Final Account, he thought the
amount of $17,045.13 had been paid by the Respondent and Breheny. He later found out that they had paid a considerably lesser amount for the Estate Debts. He acknowledged that the Final Account stated that the indebtedness of $17,045.13 "had been paid or claims released." He said he now understands that some of the debts were reduced. However, he still does not know what happened to the $18,000 that was to be paid under the contract of October 2003. (Tr. 33-35, 50-51, 65-68)
Roger said he did not feel very good about lawyers after his experience with the Respondent. Finally, he stated that he was previously convicted of misdemeanor deceptive practices. (Tr. 36-37)
Robert Hummell testified that he is 45 years of age, and resides at 1133 East Washington, Macomb (the Hummell residence). He graduated from Macomb High School in 1979. His work has consisted of "odd jobs." (Tr. 73-74)
In March 2003, Robert and his two brothers went to see the Respondent about representing them in regard to their father's probate estate (Adm. Ex. 34). The Respondent agreed to represent them in the matter for a fee of $700 to $800. The fee was to be paid when the matter was completed. Subsequently, the Respondent sent them a bill for about $2,700. (Adm. Ex. 31) The Respondent has taken no action to collect the fee. (Tr. 74-77, 81-82)
Robert said he recalled meeting with the Respondent in regard to unpaid taxes and redemption of the Hummell residence. Robert understood that he and his brothers needed to pay the back taxes or they would lose the residence. The brothers sought to obtain a loan to pay the taxes, and they found a lender in Monmouth Illinois. Robert said he did not recall the name of the proposed lender or the terms of the proposed loan. When they told the Respondent about the
lender, he said he would look into the terms of the loan and get back to them. Later, the Respondent told them that their lender was going to charge too much interest, and that he had a lender for them. Robert subsequently learned that the lender the Respondent suggested was Kevin Breheny. (Tr. 76-78, 79, 82-84, 92)
Robert, with his brothers, went to the Respondent's office where they signed a document (Adm. Ex. 4) that he thought pertained to a loan of $18,000 from Breheny to the Hummell brothers. He explained that "[Breheny] was going to lend us $18,000, which would have paid my dad's estate off." Robert said he did not know that the document was a contract for deed. Robert further stated that he may have "read part of it," but "it didn't make no sense to me." Robert did not recall having an opportunity to ask questions about the document because the Respondent "just kind of hustled us in and hustled us right out" since that was the last day the Hummell residence could be redeemed by paying the back taxes. (Tr. 78-80, 85-86)
Robert acknowledged that he understood he and his brother were to repay the "loan" by making monthly payments to Breheny. Robert said that the Respondent told them the Hummell residence was "going to go into a trust" and that the monthly payments "were going to go into a numbered account." However, the Hummell brothers made no payments to Breheny. When asked why no payments were made, Robert replied "he didn't pay all the bills off like he was supposed to have paid all of them." (Tr. 79-80, 84, 89)
Robert further testified that the Respondent did not tell the Hummell brothers that a joint account owned by the Respondent and Breheny was going to be used to pay the estate debts. Also, the Respondent did not tell the Hummell brothers that he had negotiated the estate debts to be either written off or reduced. However, all the debts, of about $18,000, were not paid, but were expunged in part, and Breheny paid $9,000 on the debts. Thus, Robert asked "where did the
other $9,000 go." When asked how he was harmed by the estate debts being reduced, Robert said "my brother kept getting dunns. It was just aggravating. Other than that, we—I don't think we was hurt." (Tr. 79-80, 89, 91-92)
Finally, Robert agreed they should repay the Respondent and Breheny for the money they spent on the Hummell residence for taxes and repairs. (Tr. 87-88)
Richard Hummell testified that he is 38 years of age, and resides at the Hummell residence. He graduated from high school in 1987. Thereafter he worked in factories. He is currently a meat cutter at Excel Corporation. (Tr. 93-94)
In March 2003, he and his brothers spoke with the Respondent about their father's estate and about saving the Hummell residence. The Hummell brothers found a lender who was going to provide the funds needed to pay the back taxes on he residence. The Respondent told them their lender was charging too much, and that he had another lender for them. (Tr. 94-96, 101)
Richard and his brothers went to the Respondent's office and signed what he thought was a loan agreement. (Adm. Ex 4) Richard said he thought, by signing the agreement, the Hummell brothers or their father's estate were "going to borrow money against the house to pay off all the bills and stuff like that." He thought Breheny was "just a lender," and he did not understand that he and his brothers were deeding the residence to Breheny. Richard further stated that he did not read the document (Adm. Ex. 4), before he signed it, but that the Respondent "probably" gave him an opportunity to ask questions about it. (Tr. 96-98, 101, 108, 110)
Richard knew the Hummell brothers were to make monthly payments to Breheny; however, no payments have been made. When asked why no payments were made, Richard replied because "I don't think we were treated fairly." (Tr. 98, 109)
Richard said that the Respondent never told him that the Respondent's money was going to be used to pay the estate debts; that Breheny was the Respondent's cousin-in-law; that the monthly payments might go up if Breheny thought the house needed more work; or that the Respondent had negotiated the debts of their father's estate to be either written off or reduced. Richard acknowledged that Breheny put a roof and garage door on the residence, and has paid taxes and his insurance on the property. Richard agreed that he and his brother owe a refund to Breheny. (Tr. 98-100, 106-07)
Linda Dace testified that she has worked at the McDonough District Hospital for 11 years. She is currently the Director of Patient Financial Services and supervises billings and collections. (Tr. 111-12)
The hospital filed a claim in the Estate of Robert E. Hummell in January 2002. (Adm. Ex. 34, p. 20-28) In September 2004, the Respondent sent Dace a letter stating that he made "one final attempt to get a response from the Hummell brothers concerning the [hospital] bill for their parents." (Adm. Ex. 18) He also stated in the letter that the Hummell brothers were unemployed, and that the Hummell residence was transferred to the party who paid the taxes thereon. Dace said that the statement in the foregoing letter about the Respondent making one final attempt to get a response from the Hummell brothers had no significance to her, because they were not responsible for their parents' hospital bills. (Tr. 113-14, 129-30)
Dace did not write off the hospital's claim against the Hummell estate after receiving the above letter from the Respondent. Instead, she wrote a letter to the Respondent asking for an inventory or other documents from the estate. (Adm. Ex. 19) The Respondent wrote again to Dace in December 2004, and attached an affidavit from attorney Craig Pierce, who had filed the
probate matter for the Hummell estate. (Adm. Ex. 20) In April 2005, the hospital released its claim in the Hummell estate (Adm. Ex. 24 and 25), based upon the belief that the estate had no money to pay the debts. (Tr. 114-15, 117, 127-28, 132)
Dace said that she had not seen the document entitled "Contract and Agreement for Deed" (Adm. Ex. 4) before the above debt was released by the hospital. She further stated that if she had seen it, she would have referred it to the hospital legal counsel to determine if it indicated there were any assets in the estate. (Tr. 115-17, 133)
On cross-examination, Ms. Dace testified that there was no indication that the Hummell brothers had any obligation to pay the hospital bills of their parents. She also said that the Respondent did not represent to her that the Hummell brothers were the obligators of the debts to the hospital. (Tr. 120, 130-31)
The hospital's billing file for one of the debts of the Hummell estate showed that, in June 2005, the Respondent telephoned Dace and told her there was no money in the estate, but that the Hummell brothers "are going to borrow some for these [accounts]." Dace replied that if Respondent sent a letter stating what he told her, the hospital would adjust the balance as uncollectible. (Resp. Ex. 4, p. 6) In July 2004, the Respondent again telephoned Dace, and he asked her if the hospital would accept $1,500 as payment in full for the claim in the Hummell estate. Dace asked him why the sons feel obligated to pay the debt if there is nothing in the estate. (Resp. Ex. 4, p. 7) In summary, Dace was asked if it was a "fair characterization" to say that the Respondent "offered money and [Dace and her assistant] responded and basically said if there's nothing in the estate, essentially why would they want to, they're crazy to pay that bill," and she replied, "yes." (Tr. 121-27)
Finally, Dace said her opinion regarding the collectibility of the debt for the Hummell estate would not change if the Respondent and/or Mr. Breheny had loaned money to the Hummell brothers to pay the back taxes and save their house. (Tr. 131, 133)
Kevin Breheny testified that he has known the Respondent since they were teenagers, and that they are cousins through marriage. Kevin has a "pretty close" relationship with the Respondent and his family. (Tr. 215, 268-72)
Kevin and the Respondent jointly own a house in Osage Beach, Missouri. They also have a joint checking account (Osage Beach account) at the Central Bank Lake of the Ozarks. Kevin said that he Respondent has put the "majority of the money" into their Osage Beach account. Also, Kevin and the Respondent have had "several" projects together involving the rehabilitation of real estate, and funds from the Osage Beach account have been used for their projects. (Tr. 216, 273-76, 305-06)
In about October 2003, the Respondent mentioned that he was representing the Hummell brothers and that they were going to lose the home in which they had lived most of their lives. The Respondent said that he thought Kevin "could make a little money" and help the Hummell brothers stay in their home. Kevin agreed to get involved. He then looked at the exterior of the Hummell residence, and saw that some repair was needed. He thought it needed a new roof, a new garage door, some windows, and paint. The assessed value of the residence was about $28,000. Kevin initially believed that he would make a profit in the matter. (Tr. 278, 280-81, 295, 299-300)
Kevin signed a contract with the Hummell brothers in October 2003 (Adm. Ex. 4). He said that, at that time, he thought $18,000 was a reasonable figure for the cost of repairing the
residence. Under the contract, title to the residence was transferred to Kevin. He explained that this was done to protect him after he spent money to repair the residence. Kevin also said that, at the time the contract was signed, he did not have any arrangement with the Respondent to share any profits that might be made in this matter. (Tr. 281-82, 304)
After the contract with the Hummell brothers was signed, Kevin used funds from the Osage Beach account to pay the taxes on the Hummell residence. He said that, at the time the contract was signed, he "was not sure" the funds to pay the obligations of the Hummell estate would come from the Osage Beach account, noting that the Respondent "takes care of anything economic." Kevin also paid more than $2,000 for materials and labor on the repair of the Hummell residence. (Adm. Ex. 9, Resp. Ex. 8) Kevin also paid subsequent property taxes and for insurance on the Hummell residence. (Resp. Ex. 9-11) All of the foregoing payments were made with funds from the Osage Beach account (No. 214702). Kevin explained that he did not have any business back account of his own. (Tr. 216-17, 222-23, 283-84, 291-95, 305)
Kevin acknowledged that Richard and Robert Hummell helped in regard to replacing the roof on the Hummell residence. He said that they picked up shingles stripped from the roof and helped carry new shingles and sheeting up to the roof. On one occasion while he was replacing the roof, Kevin went inside the residence and found it to be in "pretty bad shape." He then realized that the interior would require much more than cosmetic repair. (Tr. 286-89)
When the Hummell brothers failed to make any monthly payment during the first year, Kevin said he "pretty much walked away from" the residence. He would have continued with the repairs if the Hummell brothers started making payments, but they never did. (Tr. 290-91)
Ultimately, Kevin and the Respondent decided to contact an attorney named Joe O'Donnell about evicting the Hummell brothers. (Tr. 296-99)
Finally, Kevin acknowledged that he told an investigator from the ARDC that the funds used to pay the obligations of the Hummell estate were borrowed by him from Citizens Bank. When asked why he, incorrectly, said the funds had been borrowed, Kevin said "[b]ecause I presumed that's what happened because I was not prepared for an inquisition. (Tr. 215-17, 283)
The Respondent testified that he has been an attorney since 1972. He was an Assistant State's Attorney in McDonough County until he began a private practice in 1973. At the present time he is in a law firm with three other attorneys in Macomb. He was the city attorney for Macomb from 1973 to 1991. For the past eight years he has been the counsel for Western Illinois University. He also represents six municipalities in McDonough County. He has been married for thirty-seven years and has two adult children. (Tr. 136-39, 316-30; Resp. Ex. 18)
The Respondent also testified about his community activities. He formed the Public Building Commission in Macomb; he has done pro bono work; he has been a member of the Rotary Club since the 1970s and served as president; he has been active with the Transportation Committee of the Macomb Chamber of Commerce, helped obtain necessary funding for highways, and is currently the president of that committee; he has served on the Macomb Area Industrial Development Board since the 1970s; and he was very active in and spent considerable time on a reconstruction project at his church. (Tr. 328-44; Resp. Ex. 18)
In March 2003, the Respondent met with Roger, Robert and Richard Hummell (Hummell brothers) about representing them and completing the probate estate of their deceased father, Robert Earl Hummell. (Adm. Ex. 34) Attorney Craig Pierce had opened the estate, but the Hummell brothers wanted to obtain new counsel. The Respondent contacted and discussed the situation with Mr. Pierce. The Respondent then agreed to handle the estate matter for the
Hummell brothers. He was aware that the only significant asset in the estate was the family residence (Hummell property) on East Washington Street in Macomb. The claims against the estate totaled a little over $17,000. He thought the estate could be closed in a routine manner and that his fee would be $700 to $800. There was no written fee agreement. (Tr. 139-40, 344-49)
In late July 2003, the Respondent learned from a newspaper notice that the Hummell property had been sold to U.S. Bank for delinquent taxes, that U.S. Bank had filed for a tax deed, and that the property could be redeemed if the past and accruing taxes were paid by October 29, 2003. (Adm. Ex. 1, p. 2) On July 28, 2003, the Respondent wrote to Roger Hummell, who was normally the spokesman for the brothers, informed him of the newspaper notice and asked the brothers to meet with him on August 19, 2003. (Adm. Ex. 1, p. 1) The Respondent met with the Hummell brothers and explained that the Hummell property, which was in their father's estate, would be deeded to U.S. Bank unless they paid the amount to redeem it by October 29. The brothers indicated that someone was going to loan them the necessary funds, but they did not provide the name of such person to the Respondent. In September 2003, the Respondent spoke with Roger, and Roger again said the brothers were getting a loan. (Tr. 140-45, 203-07, 349-56, 364, 404)
On about October 21, 2003, the Respondent met with the Hummell brothers at his office. He knew that they had a hard time paying their bills and did not have substantial funds or even a bank account. The brothers told him they were going to get a loan from a person in Monmouth. However, they said they could not remember the lender's name and they had no loan documents. They also indicated that the interest on the loan would be 30 per cent. He told them that such interest was ridiculous, and said he would call the lender if they provided a name. No name or telephone was ever provided. The Respondent felt that the Hummell brothers were not going to
get a loan and that they would lose the family residence, particularly since the redemption date was a few days away. (Tr. 145-48, 356-58)
The Respondent said that, because he was concerned about the Hummell brothers losing their family residence, he tried to help them. He contacted Kevin Breheny about the matter. He explained the situation to Kevin, and asked Kevin if he would be receptive to fixing up the residence for the Hummell brothers if the Respondent was able to work out a deal. Kevin agreed. The Respondent mentioned the size of the residence to Kevin, and that Kevin indicated that he thought it would cost $25,000 to $30,000 to rehabilitate the residence. The Respondent said he did not discuss any specific terms of an agreement with Kevin. (Tr. 358-61)
The Respondent and Kevin were cousins-in-law, and they owned property together. They jointly own, rehabilitated, and rent out a property referred to as the South Randolph house. They previously owned an apartment, which was destroyed by fire. They currently own a house in Osage Beach, Missouri. Additionally, they have a joint checking account with their wives at a bank account in Osage Beach (Osage Beach account). (Adm. Ex. 7, 9) The Respondent said "I think I provided all the money that was in that account." (Tr. 163-65, 167, 378, 441-42)
The Respondent said he spoke with Roger Hummell about how much the Hummell brothers could pay each month for the residence. Roger said they could pay $500 a month. The Respondent then made notes (Resp. Ex. 3), and prepared a draft contract between Kevin Breheny and the Hummell brothers. The Respondent had to get the contract completed and the back taxes on the Hummell property paid by October 29, 2003, or the Hummell brothers would lose the property. (Tr. 358-63)
The first contract the Respondent prepared provided that the Hummell brothers were to pay $500 plus an additional amount for taxes. When the brothers came to the Respondent's
office to sign the contract, Roger said that they could only pay a total of $500 a month. While the Hummell brothers waited in his office, the Respondent revised the contract (Adm. Ex. 4), and the Hummell brothers signed the revised document. (Tr. 151, 362-65, 376-77)
The Respondent described the contract (Adm. Ex. 4) as a loan from Kevin to the Hummell brothers, whereby Kevin would redeem the Hummell property and obtain a deed thereto, and the brothers would make monthly payments and would be deeded the property after all payments were made. The "purpose" was that "we were going to pay their obligations so that they would have an opportunity to own the home." (Tr. 168-69, 371)
The express language of the contract provided, in part, that the Hummell brothers would quitclaim the Hummell property to Kevin Breheny for consideration of $18,000. Kevin agreed to "use said funds" for four purposes: (a) "to pay all existing claims in the Estate of their father…Case No. 01-P-104;" (b) "to pay and redeem all real estate taxes (including delinquent taxes)"; (c) "to pay for any and all expenses incurred in rehabilitating the residential premises as heretofore agreed between [the parties];" and (d) "to pay related attorney's fees and expenses." The Hummell brothers were to pay $500 per month into an escrow account, from which taxes and insurance would be paid. Kevin entered into a contract for deed, whereby the property would be deeded to the Hummell brothers after they paid a total of $40,000. The contract further provided that the Hummell brothers would be in "default by failing to pay when due any single installment or payment," and that Kevin had certain remedies in case of default. (Adm. Ex. 4, Tr. 155, 159, 368-71)
The Respondent explained that the figure of $18,000 consideration in the contract was the "best guess at the time" of the amount that would be needed to pay the delinquent taxes to redeem the property, other debts, and the expenses of rehabilitating the residence. He said that it
was mere coincidence that the total debts of the Hummell estate totaled a little more than $17,000, which was close to the $18,000 in the contract. (Tr. 153-54, 158, 201-02, 366-67, 373, 442)
The Respondent also explained that, under the contract, the Hummell brothers quitclaimed their interest in the Hummell property as heirs of the estate. (Adm. Ex. 6) Kevin obtained title to the Hummell property, which was previously in the estate, by paying the delinquent taxes and redeeming it by October 29, 2003. The Respondent said he explained to the Hummell brothers that Kevin would own the Hummell property under the contract. (Tr. 154-57, 369)
The Respondent further explained that the contract was directed at paying only the debts that the Hummell brothers were personally responsible for, and not the debts of their father's estate. The debts for which the brothers were responsible consisted of the fee of attorney Pierce and a funeral bill. Both of these bills were subsequently paid. The Respondent acknowledged that the express language in the contract stated that "all existing claims of the estate of their father" were to be paid, and that the foregoing language could be read as requiring payment of all estate debts. He described the language as "poorly drafted." (Tr. 152, 202-03, 209, 371, 373, 432, 432, 438)
The Respondent acknowledged that if the Hummell brothers did not make the payments as required in the contract, Kevin would "get the house." (Tr. 187)
After the above contract was signed on October 24, 2003, Kevin Breheny paid the delinquent taxes on the Hummell property and obtained a deed for the property. Kevin paid the delinquent taxes, in the amount of $7,077.63, from funds in the Osage Beach checking account held jointly by Kevin and the Respondent. The Respondent had provided most, if not all, of the
money in the Osage Beach account. Kevin drafted a check for $7,077.63 on the Osage Beach account payable to Citizen Bank (Adm. Ex. 7), and used the check to purchase a money order (Adm. Ex. 8) with which he paid the taxes. (Tr. 164-65, 191-92, 373, 378, 388, 441)
Some of the expenses for Kevin's rehabilitation of the Hummell residence were also paid with funds from the Osage Beach account. For example, Kevin wrote a check to a worker in the amount of $475, and a check to West Side Lumber for $1,847.12. (Tr. 191-93, 389-90, 441; Adm. Ex. 9)
Also, in accord with the above contract, the Respondent believed that the fee of attorney Craig Pierce for his work on the probate matter of the Hummell brothers' father had to be paid. Mr. Pierce initially had a claim for about $1,500, but after negotiation with the Respondent, agreed to accept $500. The Respondent wrote a check for $500 from the Osage Beach account to his law firm (Adm. Ex. 21), deposited the check in his law firm escrow account (Adm. Ex. 22), and then wrote a $500 check from his law firm escrow account to Mr. Pierce. (Adm. Ex. 23) (Tr. 179-80, 398-401, 417)
There was also a bill from the Dodsworth Funeral Home for which Roger Hummell was personally liable. The bill was initially $2,800, but the Respondent negotiated a reduction to $1,500. The Respondent prepared a check for $1,500 from the Osage Beach account (Adm. Ex. 12), and deposited it into the escrow account of his law firm (Adm. Ex. 13). He then paid the funeral home by preparing a check to Arthur Inman, the attorney for the funeral home, in the amount of $1,500 from the escrow account. (Tr. 179, 393-94, 397-98; Adm. Ex. 12, 13, 14)
In regard to the contract between Kevin and the Hummell Brothers, the Respondent said that he and Kevin had no agreement, either formal or informal. Also, they did not discuss where the money was going to come from to pay the obligations under the contract. The Respondent
explained that "Kevin always left financial things to me." The Respondent acknowledged that he "provided the bridge financing" for the contract, and that the Osage Beach account would be out money if the Hummell brothers did not make the payments. In fact, the Hummell brother made no payments as required in the contract. (Tr. 173, 378-79, 383, 395, 416,441-43)
The Respondent said that he did not recall if he told the Hummell brothers that he was Kevin Brehany's cousin-in-law; that he had a financial relationship with Kevin; or that he was involved financially in the matter regarding the Hummell resident. The Respondent acknowledged that he did not tell the Hummell brothers that he planned to take the funds to pay the contract obligations from a bank account he held jointly with Kevin; where the money to pay the contract obligations was coming from; that any of the money was going to come directly from the Respondent; or that, if the Hummell brothers made their payments, the Respondent was confident Kevin would "repay me." Finally, the Respondent did not advise the Hummell brothers to consult with another attorney. He explained that they had no money, "no attorney is going to basically do it for nothing," and this was not the kind of transaction legal aid would take. He added, "I understand that in a perfect world, they would have taken a contract and had another attorney look at it." (Tr. 157, 167, 193, 379, 383-85, 431, 443)
The Respondent further testified that he informed the Hummell brothers about negotiating the various claims against them or their father's estate. He said they "talked about it many times." He also said that he Hummell brothers never indicated to him that they were not going to make any payments because the full account of the debts of their father's estate had not been paid. Additionally, the Respondent said that the Hummell brothers did not complain to him about the contract after a newspaper article reported that the Hummell property sold for $18,000. (Tr. 179, 194, 393-93, 396, 433)
On November 21, 2003, the Respondent sent a letter to Robert Hummell requesting him to make the $500 mortgage payment as provided in the contract. (Adm. Ex. 10) The Respondent said he received no response to the letter. On January 7, 2004, the Respondent sent a letter to Roger Hummell pointing out that the December 2003 payment was not made and asking for a reply as to the status of the payments. (Adm. Ex. 11) The Hummell brothers did not reply. On September 14, 2004, the Respondent sent a letter addressed to all three Hummell brothers. (Adm. Ex. 17) In this letter, he mentioned a hospital and a funeral home bill. He also said Kevin had reported that no monthly payments were made, that Kevin had spent more than $2,000 on repairs to the Hummell residence, and that Kevin had paid the current real estate tax of $890. Finally, in the letter, the Respondent said that Kevin "cannot continue to carry the three of you without the monthly payment," and asked if they "intend to purchase the house." (Tr. 173-74, 391-92, 394-96)
On July 21, 2005, the Respondent sent Roger Hummell a copy of the Final Account in his father's estate. (Adm. Ex. 26) A few days later, the Respondent sent a notice of hearing on the Final Account (Adm. Ex. 27) and attached a copy of the Final Account. (Adm. Ex. 27, p. 3) On August 11, 2005, the Respondent notified Roger that the estate was closed and attached a copy of the order of discharge. (Adm. Ex. 28) The Respondent explained that the estate was insolvent and that, as set out in the final account, all claims against the estate had been paid or released. He acknowledged that he had negotiated a reduction or release of the claims, and said he had talked to the Hummell brothers "many times" about negotiating the claims. (Tr. 183-85, 194, 401-09, 433)
The Respondent and Kevin Breheny had "numerous conversations" about the failure of the Hummell brothers to make any payments under the contract. The Respondent said that
"Kevin kind of expected me to handle it," and the Respondent advised Kevin that Respondent was trying to get the brothers to make payments. On November 3, 2005, the Respondent sent a letter to Robert Hummell stating that Kevin had spent about $18,000 in repairing the Hummell residence, for taxes, and for insurance. The Respondent also stated that Kevin was willing to settle the matter for $24,000. (Adm. Ex. 29) The Hummell brothers did not reply. On November 18, 2005, the Respondent sent another letter to Robert setting out specific amounts that Kevin had paid in regard to the residence. (Adm. Ex. 30) The Respondent acknowledged that he had an interest in the Hummell brothers making payments because some of the funds used by Kevin, in regard to the Hummell residence, had come from the Osage Beach account, which was jointly owned by the Respondent. Subsequently, Roger Hummell wanted to know what the Respondent had done for the Hummell brothers, and the Respondent then prepared an itemized bill (Adm. Ex. 31). The Respondent said he had not intended to send a bill because, under the contract (Adm. Ex. 4), the Hummell brothers were not liable for the Respondent's fees. (Tr. 163, 174-77, 409-12, 435)
In about April 2006, Kevin told the Respondent that they had to do something about the Hummell brothers. The Respondent then contacted attorney Joseph O'Donnell. The Respondent did not remember if Kevin was aware that the Respondent was going to contact O'Donnell. The Respondent asked O'Donnell to try to get the Hummell brothers "to do something." O'Donnell filed an eviction notice on the Hummell brothers on April 4, 2006. (Adm. Ex. 32) The Respondent said he was not aware that an eviction notice was going to be filed. The Hummell brothers did not contact the Respondent after they received the eviction notice. (Tr. 187-89, 412-14, 434-35)
Sometime after the eviction notice was filed, the Respondent received a letter from the ARDC stating that the Hummell brothers had filed a complaint against him. He said he was "totally surprised" by the ARDC letter. He then asked Mr. O'Donnell to stop all legal actions against the Hummell brothers. The Respondent explained that he did not think it would be prudent to go forward with the eviction, and it might complicate the matter. The Hummell brothers have not made any monthly while they have remained in the Hummell residence, but no legal action has been taken against them. (Tr. 414-16)
The Respondent said that he did not engage in attorney misconduct. He said that he tried to help the Hummell brothers save their family residence, and he did not try to take advantage of them. He also stated that he made a mistake by getting so involved in the matter and did do something "wrong from a business point of view." The Respondent further stated that he suffered a significant financial loss in the Hummell matter and he regrets the embarrassment this caused to his wife, law partner, and others. (Tr. 190, 201, 418-19, 423-25)
In regard to Count II of the Complaint, the Respondent testified that the Hummell brothers were not liable for any of their father's bills at the McDonough District Hospital. However, Roger Hummell told the Respondent that the brothers wanted to pay some of their father's hospital bills, and authorized the Respondent to offer $1,500 on the bills. The Respondent sent a letter with the offer to the McDonough District Hospital. (Adm. Ex. 16) The Respondent then "kept calling" the Hummell brothers and asking them how they were going to pay the hospital. After he was unable to get a response from them, he wrote to Linda Dace, at McDonough District Hospital and told her that it was unlikely that the Hummell brothers would have any income. (Adm. Ex. 18) He also noted that their father's estate was insolvent, and asked that the hospital bills be forgiven or greatly reduced. (Tr. 167, 169-73)
Linda Dace wrote to the Respondent on September 22, 2004 and requested documentation for the insolvency of the Hummell father's estate. (Adm. Ex. 19) The Respondent provided an affidavit from attorney Pierce, who opened the estate. (Adm. Ex. 20) The hospital then released its claim against the estate (Adm. Ex. 24, 25). (Tr. 189-90)
Robert Anstine testified that he is 70 years of age and resides in Macomb. He has been a licensed pharmacist since 1959. He was the Mayor of Macomb from 1973 to 1991. Thereafter, he worked for the State of Illinois until he retired in 2003. (Tr. 231-34)
Mr. Anstine hired the Respondent as city attorney in 1973 and the Respondent remained in that position until Anstine left office in 1991. While the Respondent was city attorney, Anstine worked closely with him. Mr. Anstine said that the Respondent's reputation for honesty and integrity is "impeccable." He also stated that the Respondent has been involved in numerous projects in Macomb and McDonough County and is "a real asset to our community." (Tr. 234-37)
Jacqueline Thompsontestified that she resides in Macomb, has worked at Western Illinois University for 38 years, and is currently the Vice-President for Administrative Services at the University. She also has also been involved in various activities in the Macomb community. (Tr. 238-41)
Ms. Thompson said that he Respondent has been very active in the community and has played a major role in getting new roads in the area. He also has been the counsel for Western Illinois University for about 12 years. (Tr. 241-42, 246-47)
Ms. Thompson further testified that the Respondent has a reputation in the community for being honest and forthright. (Tr. 243)
James Schisler testified that he has lived in Macomb for about 46 years and recently retired from the position of CEO of Citizens National Bank. He served as City Treasurer for 12 years and has been a member of most civic organizations in the community. (Tr. 248-49)
Mr. Schisler said that he has known the Respondent since the middle of 1970 and that the Respondent's reputation for honesty and integrity is excellent. (Tr. 250-51)
Judge Stephen Evans
Judge Evans testified that he was a circuit court judge in the 9th Judicial Circuit until he retired in 2001. Judge Evans has known the Respondent since they were in law school together in the early 1970s. (Tr. 253-55)
Judge Evans stated that the Respondent has been involved in numerous community activities in the Macomb area. Judge Evans further stated that the Respondent has a very good reputation for honesty and integrity. (Tr. 256-58)
Monsignor Richard Pricco
Monsignor Pricco testified that he has been at St. Paul Catholic Church in Macomb for about 30 years. (Tr. 254-61)
The Respondent is a parishioner and was chairman of the St. Paul building committee. There was a "very big" project to construct an addition to the church. The Respondent spent a great deal of time on the project and secured donations for it. (Tr. 261-62, 264-65)
Monsignor Pricco also testified that the Respondent is active in the community. He is the chairman of the transportation committee for the Chamber of Commerce, and is the attorney for Western Illinois University. (Tr. 262-63)
Finally, Monsignor Pricco said that he has never heard any negative comments about the Respondent's honesty or integrity. (Tr. 265)
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In attorney disciplinary proceedings, the Administrator has the burden of proving the charges of misconduct by clear and convincing evidence. In re Timpone, 208 Ill. 2d 371, 380, 804 N.E.2d 560, 566 (2004). This standard of proof requires a high level of certainty, which is greater than a preponderance of the evidence (i.e. more probably true than not true) but not as great as proof beyond a reasonable doubt. Bazydlo v. Volant, 164 Ill. 2d 207, 213, 647 N.E.2d 273, 276 (1995). While a finding of misconduct may properly be based on circumstantial evidence (In re Holz, 125 Ill. 2d 546, 557, 533 N.E.2d 818, 822 (1989)), it may not be based on "suspicious circumstances, standing alone" (In re Winthrop, 219 Ill. 2d 526, 550, 848 N.E.2d 961, 976 (2006)).
In determining whether the burden of proof has been satisfied, the Hearing Panel has the responsibility of assessing the credibility and believability of the witnesses, weighing conflicting testimony, drawing reasonable inferences from the evidence, and making factual findings based upon all the evidence. In re Howard, 188 Ill. 2d 423, 435, 721 N.E.2d 1126, 1133 (1999); In re Ring, 141 Ill. 2d 128, 138-39, 565 Ne.2d 983, 987 (1991). In assessing the evidence the Hearing Panel is not required to be "naïve or impractical" or to believe testimony that is "beyond human experience," "an unreasonable story," or "an inherent improbability." In re Discipio, 163 Ill. 2d
515, 523-24, 645 N.E.2d 906, 910 (1994); In re Holz, 125 Ill. 2d at 555, 533 N.E.2d at 821; Tepper v. Campo, 398 Ill. 496, 504-05, 76 N.E.2d 490, 494 (1948).
With the above principles in mind, and after carefully considering the testimony and exhibits, we make the findings set out below.
We find that the evidence clearly and convincingly established that the Respondent engaged in a business transaction with his clients Robert, Roger, and Richard Hummell (hereafter the Hummel brothers); he had a conflict of interest while doing so; and he failed to explain the nature of his conflict of interest to his clients.
In October 2003, the Respondent drafted and had executed a legal document entitled "Contract and Agreement for Deed." (Adm. Ex. 4) The named parties to the contract were Kevin Breheny and the Hummell brothers. It is clear from the evidence that the Respondent had a conflict of interest based upon his relationship with the parties to the contract.
The Respondent had an attorney-client relationship with the Hummell brothers from April 2003, when he began representing them in regard to their father's probate estate, until the estate was closed in August 2005. (Answer to Complaint par. 1 and 19; Adm. Ex. 34) An attorney for an executor of an estate not only has an attorney-client relationship with the executor, but also has the fiduciary duty to "protect the beneficiaries' interests." In re Beaupre, 03 SH 32, Hearing Board Report at 28 (Recommendation of Hearing Board adopted in M.R. 20233, September 26, 2005); In re Johnson, 01 SH 53, Hearing Board Report at 23-24 (Recommendation of Hearing Board adopted in M.R. 18594, March 19, 2003). Furthermore, an attorney's relationship with a client continues until the "completion and satisfaction of the matter
the attorney was employed to conduct." In re Timpone, 208 Ill. 2d 371, 382, 804 N.E.2d 560, 568 (2004).
In addition to having an attorney-client relationship with the Hummell brothers arising out of the probate matter, the Respondent was also representing the Hummell brothers when he drafted the document entitled "Contract and Agreement for Deed" (Adm. Ex. 4), which the Hummell brothers signed at the Respondent's office on October 24, 2003. (Tr. 28-29, 46-47, 77-78, 84-85, 95-97, 362-65, 376-77)
At the time the Respondent was representing the Hummell brothers, he had a personal and financial relationship with Kevin Breheny. For example, the Respondent and Breheny had been friends since they were teenagers and were cousins through marriage. They jointly owned rental properties and had "several" real estate projects together. They also jointly owned, with their wives, a residence at the Lake of the Ozarks, Missouri. Further, they had a joint checking account, referred to as the Osage Beach account. Funds from the Osage Beach account had been used to pay for repairs to the Lake of the Ozarks residence and for expenses relating to other joint projects and properties of the Respondent and Breheny. Both the Respondent and Breheny testified that the "majority" if not "all," of the funds in the Osage Beach account came from the Respondent. (Tr. 163-64, 216, 273 276, 305-06, 378, 441)
It is well established that a "conflict of interest arises whenever an attorney's independent judgment on behalf of a client may be affected by a loyalty to another party." In re La Pinska, 72 Ill. 2d 461, 469, 381 N.E.2d 700, 703 (1978) It has been stated that the "key consideration," as to whether an attorney's professional judgment on behalf of a client may be affected by a loyalty to another person, is "whether there is a potential for diverging interests." In re Gearhart, 05 SH 19, Review Board Report at 12-13 (Petition by Respondent to file exceptions to the Review
Board Report denied in M.R. 21335, March 19, 2007). Such a potential is clearly apparent in this case.
We also note that conflict of interest is a "rigid rule" that operates "to preclude the honest practitioner from putting himself in a position where he may be required to choose between conflicting duties," and does not require proof that the attorney's "professional judgment was actually compromised." In re La Pinska, 72 Ill. 2d at 469, 381 N.E.2d at 703; In re Rosin, 118 Ill.2d 365, 381, 515 N.E.2d 85, 93 (1987).
The Respondent had a loyalty to the Hummell brothers, based upon his attorney-client relationship and accompanying fiduciary duty to them, and a loyalty to Kevin Breheny, based upon his personal and financial relationship with Breheny. Thus, by drafting and having executed the contract between Breheny and the Hummell brothers, the Respondent had a clear conflict of interest. See In re Rosin, 118 Ill. 2d at 379-81, 515 N.E.2d at 92-93.
The evidence not only showed that the Respondent had conflict of interest, but also that the Respondent was personally involved in a business transaction with the Hummell brothers by virtue of the "Contract and Agreement for Deed" of October 23, 2003. (Adm. Ex. 4) Although the Respondent was not a named party to that contract, he was actively and financially involved in carrying out the provisions of, and fulfilling Breheny's financial duties under, the contract.
Pursuant to the contract, the Hummell brothers quit claimed their interest in their family residence (Hummell residence) to Breheny for consideration of $18,000, and could reside in and obtain title to the Hummell residence by making the monthly payments for fifteen years. (Adm. Ex. 4, p. 1-2) Breheny was responsible for paying existing claims against the probate estate of the Hummell brothers' father; to pay delinquent real estate taxes in order to redeem and obtain title to the Hummell residence, and to pay expenses of rehabilitating the residence. (Adm. Ex. 4,
p. 1; Tr. 154, 157-58, 281-83) The Respondent explained that the contract was "poorly drafted" and that only the debts of their father's estate that the Hummell brothers were "personally responsible for" were to be paid under the contract. (Tr. 202-03, 209)
The Respondent's financial involvement in the above contract was established by several facts. Breheny was asked if he knew where the money would come from to pay his obligations under the contract. In response, Breheny said "No. I was not sure. [Respondent] takes care of anything economic. I don't have anything to do with that." (Tr. 216-17) Similarly, the Respondent was asked if he and Breheny discussed where the money would come from to pay the delinquent taxes, and he replied "[n]o … Kevin always left financial things to me." (Tr. 378) Further, the Respondent acknowledged that he provided the "bridge financing" for the contract. (Tr. 379, 443) Thus, it is clear that both the Respondent and Breheny recognized and expected the Respondent to be financially involved in carrying out the provisions of the contract with the Hummell brothers.
As noted above, the Osage Beach checking account, in the name of the Respondent, Breheny, and their wives, contained funds that had come mainly, if not entirely, from the Respondent. (Tr. 276, 378, 441) The funds from the Osage Beach account, that is funds of the Respondent, were used to pay what Breheny was required to pay under the contract with the Hummell brothers. For example, the delinquent taxes on the Hummell property were paid with funds from the Osage Beach account. Such payment was required under the contract, redeemed the Hummell property, and allowed Breheny to obtain title to the property. (Adm. Ex. 1, p. 2; Adm. Ex. 7 and 8; Tr. 154-56, 191-92, 283, 373, 441) Subsequent payments for real estate taxes and insurance on the Hummell property also came from the Osage Beach account. (Resp. Ex. 9-11; Tr. 283, 296) Further, funds from the Osage Beach account were used to pay some expenses
of rehabilitating the Hummell residence. (Adm. Ex. 9; Tr. 192-93, 292-95) In fact, Breheny testified that he did not have his own business account, but that he used the funds in the Osage Beach account to pay expenses in the joint ventures of Breheny and the Respondent. (Tr. 305-06)
Additionally, the Respondent was personally involved in the payment of two debts of the Hummell brothers that were to be paid pursuant to the above contract. The first was a bill from the Dodsworth Funeral Home. (Resp. Ex. 13) The Respondent negotiated the bill down to $1,500. He then prepared a check from the Osage Beach account for $1,500, made payable to his law firm. (Adm. Ex. 12) He deposited the check into the law firm escrow account (Adm. Ex. 13), and paid the attorney for the funeral home $1,500 with a check from the escrow account (Adm. Ex. 14). The Respondent also paid attorney Craig Pierce, for his work while representing the Hummell brothers in regard to their father's probate estate, in a similar fashion. He prepared a check from the Osage Beach account for $500, made payable to his law firm (Adm. Ex. 21). He deposited the check into the law firm escrow account (Adm. Ex. 22), and paid attorney Pierce with a check from the escrow account. (Adm. Ex. 23).
Based upon the above, it is clear that the Respondent was personally and financially involved in the contract he drafted between the named parties, Mr. Breheny and the Hummell brothers. The Respondent stood to gain or lose financially under the contract, and he acknowledged that he has suffered a "significant" financial loss in this matter. (Tr. 420) However, whether his financial loss will be reversed remains to be seen because Breheny may still obtain the Hummell property under the contract due to the apparent default by the Hummell brothers. (Adm. Ex. 4) Thus, the Respondent was involved in a business transaction with a
client and had a conflict of interest. See In re Twohey, 191 Ill. 2d 75, 89, 727 N.E.2d 1028, 1036 (2000); In re Rosin, 118 Ill. 2d 365, 379-81, 515 NE.2d 85, 92-93 (1987).
We further find that the evidence, including the Respondent's own testimony, clearly and convincingly established that he failed to explain his relationship with Kevin Breheny, and the resulting conflict of interest, to the Hummell brothers. For example, the Respondent did not tell the Hummell brothers that he was the cousin in law of Breheny; that they owned property together; or that they were or had been in business together relating to real estate. (Tr. 79, 100, 167, 379) Even though the Respondent provided the "bridge financing" (Tr. 379, 443) for the contract between Breheny and the Hummell brothers (Adm. Ex. 4), the Respondent did not inform the Hummell brothers he was financially involved in the matter. (Tr. 193) Also, the Respondent did not tell the Hummell brothers that Breheny's obligations under the contract would be paid with funds that came from the Respondent or from a joint bank account held by the Respondent and Breheny. (Tr. 33, 79, 99-100, 167, 193, 385) Further, the Respondent did not tell the Hummell brothers that he hoped to be repaid by Breheny out of funds received under the contract the Respondent prepared. (Tr. 157, 383) Finally, the Respondent did not advise the Hummell brothers to seek advice from another attorney. (Tr. 383-84)
Clearly, disclosure of the above matters was necessary for the Hummell brothers to recognize that the Respondent had financial interests and conflicting loyalties in regard to the contract (Adm. Ex. 4) and the execution thereof. See In re Rosin, 118 Ill. 2d at 379-81, 515 N.E.2d at 92-93; In re Colon, 03 CH 121, Hearing Board Report at 2, 8-9 (Hearing Board Report approved in M.R. 20094, May 20, 2005).
We do not believe the remaining charges of misconduct were proved by clear and convincing evidence.
Overreaching occurs when an attorney takes undue advantage of or abuses the position of influence he or she holds in relation to a client. See In re Rinella, 175 Ill. 2d 504 516, 677 N.E.2d 909, 915 (1997); In re Crane, 96 Ill. 2d 40, 57-58, 449 N.E.2d 94, 101-02 (1983). We find no basis in the testimony of the Hummell brothers to conclude that the Respondent abused his position as their attorney or sought to unduly influence them. Before discussing the matter with the Respondent, the Hummell brothers recognized that they were going to lose their family residence due to delinquent taxes, and sought to obtain a loan in order to redeem the property. They were interested in a loan from a private lender, who was going to charge them a very high interest rate. (Tr. 27-28, 41-44, 76, 95-96) In fact, Roger Hummell acknowledged that the interest rate may have been "30 percent." (Tr. 45) After they discussed their situation with the Respondent, he spoke to Breheny, and then told them, accurately, that he found a lender who would be "cheaper." (Tr. 29, 77) The Hummell brothers agreed and the Respondent prepared the contract. (Adm. Ex. 4)
We note that there was no evidence that the Respondent attempted to pressure or persuade the Hummell brothers, or otherwise interfere with the Hummell brothers' ability to make their own choice, freely and willingly. Rather, the Respondent offered them an option, and they accepted it without undue influence from the Respondent. Consequently, we conclude that the evidence did not establish overreaching by the Respondent. (Compare In re Lipka, 03 CH 34, Hearing Board Report at 22 (attorney abused attorney-client relationship "by pressuring [client] into loaning him $4,000.") (Hearing Board Report approved in M.R. 20078, May 20, 2005); In re Colon, 03 CH 121, Hearing Board Report at 8-9 (attorney suggested plan to client to save her home, when client "expressed skepticism regarding the transaction" the attorney "reassured her and told her if she wanted to keep her home, she should follow his directions" and
the attorney requested and obtained a power of attorney from the client) (Hearing Board Report approved in M.R. 20094, May 20, 2005).
An attorney has a fiduciary relationship with his or her client, and thereby owes the client undivided fidelity, loyalty and obedience. See In re Winthrop, 219 Ill. 2d 526, 543-44, 848 N.E.2d 961, 972-73 (2006). Based upon the testimony presented, including the Respondent's, and the accompanying circumstances, we are unable to find by clear and convincing evidence that the Respondent breached his fiduciary duty to the Hummell brothers.
The evidence showed that the Respondent became aware the Hummell family residence had been sold for delinquent taxes and the Hummell brothers would lose the residence unless they could obtain funds and pay the amount necessary to redeem the property. They told the Respondent that they were trying to get a loan from a private lender, and the interest they were going to be charged, 30 percent, was clearly exorbitant. (Tr. 27-28, 41-43, 45, 76, 95-96, 147) Because the deadline for redeeming the property was fast approaching, the Respondent attempted to help them by talking with Breheny about a loan to them. The Respondent then drafted a contract that he thought would assist the Hummell brothers. (Adm. Ex. 4) Under the contract, the delinquent taxes would be paid, Breheny would get title to the property, the Hummell brothers could reside in the residence, the Hummell brothers would pay $500 per month, and Breheny would deed the property back to the Hummell brothers after they made the monthly payments for the duration of the contract. (Adm. Ex. 4 and 5; Tr. 159, 369-71)
While it is clear that the Respondent intended for Breheny to make a profit (Tr. 278), we did not find the contract to be unfair, unreasonable, or adverse to the Hummell brothers. In other words, the evidence fails to show that the Respondent intended to, or did, act contrary to the best interests of his clients. We note that in In re DiCaprio, 02 CH 8, cited by the Administrator, it
was determined that the attorney had a conflict of interest and breached his fiduciary duty where he represented both a borrower and lender. However, unlike in this case, in DiCaprio the "terms of the transaction" prepared by the attorney "weighed heavily in favor of [his] long-term client," his other client "was, in fact, adversely affected," and, thus, the attorney's "behavior reflected a conscious and intentional choice of the interests of one client over those of another." (DiCaprio, 02 CH 8, Hearing Board Report at 20-21; Review Board Report at 3 (leave to file exceptions to the Review Board Report denied in M.R. 20152, September 26, 2005) .
We also note that the Respondent acknowledged the contract he prepared (Adm. Ex. 4) was "poorly" or "not very artfully" drafted. (Tr. 209, 373) However, the Supreme Court has held that an "inartfully drafted" power of attorney did not demonstrate a breach of fiduciary duty. In re Winthrop, 219 Ill. 2d at 544-46, 848 N.E.2d at 973-74.
It could be speculated that the Respondent believed the Hummell brothers would not make the monthly payments required by the contract he prepared (Adm. Ex. 4), and that he was setting up the Hummell brothers to lose their family residence to Breheny. (Tr. 454-55) However, speculation or suspicious circumstances, standing alone, do not constitute clear and convincing proof. In re Winthrop, 219 Ill. 2d 526, 550, 848 N.E.2d 961, 976 (2006) Additionally, the evidence fails to show that the Respondent intentionally set up the Hummell brothers to lose their residence. The contract, executed in October 2003, required the Hummell brothers to make monthly payments. (Adm. Ex. 4, p.2) Under the same contract, Breheny could obtain possession of the residence if the Hummell brothers failed to make "any single" monthly payment, and the Hummell brothers could lose the right to repurchase the residence. (Adm. Ex. 4, p. 3-4) The Hummell brothers did not make any monthly payment. (Tr. 35, 80, 109, 290) However, Breheny and/or the Respondent did not immediately seek to obtain possession of the
Hummell residence. Instead, the Respondent sent letters to the Hummell brothers, trying to get them to make the monthly payments. Such a letter was sent in November 2003, January 2004, September 2004, and November 2005. (Adm. Ex. 10, 11, 17, 29, 30; Tr. 173-75, 391-92) Finally, in the spring of 2006, about two and one-half years after the initial default, Breheny and the Respondent took action to evict the Hummell brothers. (Tr. 187, 296-97, 412) Consequently, the evidence simply does not show that the Respondent intended for the Hummell brothers to default on the monthly payments so that Breheny could obtain the residence.
Finally, we find the evidence insufficient to prove that the Respondent engaged in dishonesty, fraud, deceit or misrepresentation. We note that the charge of dishonesty in Count I is based solely on the Respondent's failure to disclose certain matters. (Complaint, Count I, para. 11, 13, 20) Count I does not allege that the Respondent made any affirmative statements which were false. (Complaint, para. 11, 13, 20; Tr. 459-60)
In order to prove dishonesty, fraud, deceit or misrepresentation under Rule 8.4(a)(4), the evidence must clearly and convincingly establish that the attorney knowingly and intentionally acted to deceive another. Mere negligence or mistake is not sufficient. See In re Witt, 145 Ill. 2d 380, 390-92, 583 N.E.2d 526, 531-32 (1991); In re Chapman, 95 Ill. 2d 484, 490, 448 N.E.2d 852, 854 (1983). In In re Rosin, 118 Ill. 2d 365, 381, 387, 515 N.E.2d 85, 93, 95 (1987), the attorney had a conflict of interest and failed to disclose the conflicting relationship to his client. However, the evidence did not prove dishonesty or deceit. Similarly, in In re Twohey, 191 Ill. 2d 75, 84-85, 89-90, 727 N.E.2d 1028, 1033, 1035-36 (2000), the attorney had a conflict by having a loyalty to both parties of a transaction, and he entered into a business transaction with a client without full disclosures. However, the attorney's misconduct "did not involve fraud or deliberate misrepresentations."
In this case, the Respondent did not affirmatively make any false or deceptive statements to his clients. He did, however, fail to disclose certain matters relevant to the conflict of interest. The Respondent explained his failure to make the disclosures (i.e., Tr. 15657, 167, 193-94, 379-80, 383-85, 431-32), and provided reasons other than the intent to deceive. We found the Respondent's explanations reasonable in light of the overall evidence presented. On the other hand, we do not believe that the evidence was sufficient for us to infer the intent to deceive from the Respondent's conduct and surrounding circumstances. Thus, as in Rosin and Twohey, the evidence did not clearly and convincingly establish that the Respondent engaged in dishonesty, fraud, deceit, or misrepresentation.
Therefore, we find that the Administrator proved by clear and convincing evidence that the Respondent committed the following misconduct charged in Count I: entered into a business transaction with a client where the lawyer knows or reasonably should know that the lawyer and the client have or may have conflicting interests therein, in violation of Rule 1.8(a)(1) of the Illinois Rules of Professional Conduct; and failed to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation, in violation of Rule 1.4(b);
We also find the Administrator did not prove that the Respondent committed the following misconduct; overreaching; breaching his fiduciary duty; engaging in conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Rule 8.4(a)(4); or engaging in conduct which tends to defeat the administration of justice, or to bring the courts or the legal profession into disrepute, in violation of Supreme Court Rule 770.
At the close of the Administrator's case, the Respondent made a motion for directed finding as to Count II. Argument was presented (Tr. 224-28), and the Hearing Panel granted the Respondent's motion. (Tr. 228-30)
In ruling on a motion for directed finding, a Hearing Panel must first consider whether the Administrator presented a prima facie case, that is, presented at least some evidence on every essential element necessary to prove the misconduct charged. If the Administrator has failed to present a prima facie case, the motion for directed finding should be granted. When a prima facie case has been presented, the Hearing Panel is then required to weigh the evidence to determine whether it is sufficient to satisfy the clear and convincing standard of proof. See People ex. rel. Sherman v. Cryns, 203 Ill. 2d 264, 275-77, 786 N.E.2d 139, 148-49 (2003); In re Conner, 04 CH 147, Review Board Report at 9 (petition to file exceptions to Review Board Report denied in M. R. 21856, November 20, 2007); In re Bub, 06 SH 07, Hearing Board Report at 15 (Hearing Board Report approved in M.R. 21636, September 18, 2007); In re Olivero, 01 SH 59, Hearing Board Report at 17-18; Review Board Report at 7-8 (petition to file exceptions to review Board Report granted in M.R. 19681, November 17, 2004, and sanction recommendation rejected).
In the case before us, the Respondent's motion for directed finding was granted because the Administrator failed to present a prima facie case. That is, there was no evidence tending to prove the misconduct charged in Count II.
Count II alleged that the Respondent made two false representations, and engaged in the misconduct of dishonesty and making a false statement of material fact or law to a third person. (Complaint, p. 8-9) The first factual allegation pertaining to dishonesty and deceit was that "[b]etween October 24, 2003 and August 1, 2005, Respondent [falsely] represented to the
creditors of the [Robert Earl Hummell] estate that the Hummell brothers were the obligors of the debts." (Complaint, para. 27-29) The second factual allegation pertaining to dishonesty and deceit was that, in a letter to Linda Dace (Adm. Ex. 18), the Director of Patient Financial Services for McDonough District Hospital, the Respondent falsely stated that he had "made one final attempt to get a response from any of the Hummell brothers concerning the [hospital] bill for their parents." (Complaint, para. 30-33) Count II did not allege any other false, deceitful or misleading statements or conduct by the Respondent.
In regard to the first factual allegation, Ms. Dace was the only representative of a creditor who testified. She testified that the Respondent did not make a representation that the Hummell brothers were responsible for or the obligors of the hospital debts. (Tr. 130-31) Ms. Dace further testified that there was no indication in any of the records of the hospital that the Hummell brothers had any obligation to pay their father's hospital bill. (Tr. 120) The Respondent, testifying during the Administrator's case, denied that he ever represented to any creditor that the Hummell brothers were obligors of the debts of their father's estate. (Tr. 195-96) There was no other evidence on this point, and neither the aforementioned testimony of Ms. Dace nor of the Respondent was contradicted. Thus, no evidence was presented to prove the allegation that the Respondent made a false representation to creditors. (Tr. 229)
In regard to the second factual allegation, the Respondent, testifying during the Administrator's case, denied that his representation to Ms. Dace regarding "one final attempt to get a response from any of the Hummell brothers concerning the bill of their parents" was false. He explained his reasons for making the representation, and said that he did not intend to mislead Ms. Dace. (Tr. 170-73, 198-99) Ms. Dace testified that the language in the Respondent's letter (Adm. Ex. 18) regarding one final attempt to get a response from the Hummell brothers had no
significance to her because she was aware that the Hummell brothers were not responsible for their parents' bills. (Tr. 129-30) There was no evidence presented that tended to show the representation at issue was either false or material. Thus, there was simply no evidence to prove the allegation that the Respondent made a false statement to Ms. Dace. (Tr. 229-30)
Consequently, the Administrator did not present any evidence on the essential elements necessary to prove the only factual allegations of dishonesty, deceit, or misrepresentation made in Count II.
The Administrator filed a Motion to Reconsider Dismissal of Count II. (Tr. 313) In the Motion, the Administrator asserted that "Count II charged Respondent with dishonesty and misrepresentation related to the payment of the hospital bill, and ample evidence supports that." (Motion, para. 1) However, there was no factual allegation pertaining to any dishonesty or misrepresentation related to the payment of the hospital bill except for the two factual allegations, discussed above, for which no proof was presented.
Also in the Motion to Reconsider, the Administrator referred to "the allegation that Respondent did not tell her [Ms. Dace] about the contract [Adm. Ex. 4]." (Motion, para. 5) However, there was simply no allegation in Count II that the Respondent failed to tell Ms. Dace about the contract.
The Administrator further stated in the Motion to Reconsider that the "unequivocal intent of Respondent's letter to Dace was to deceive her into believing that there was no source for payment of the hospital's debts despite the fact that the Respondent knew that Kevin Breheny had contractually agreed to "pay all existing claims' of the estate . . . [and] Respondent's representations to Dace were calculated to deceive her." (Motion, para. 6) Once again, however, Count II made no factual allegation about any statement or conduct by the Respondent that was
calculated to deceive Ms. Dace except for the two factual allegations for which no proof was presented. If the Administrator intended to charge the Respondent with deceit as set out in the Motion to Reconsider, Count II of the Complaint should have alleged it; but it did not.
Finally, in the Motion to Reconsider, the Administrator stated that by the "tenor of the letters," the "Respondent intended to exploit his clients' indigent status to reduce his cousin-in-law's [Breheny's] obligation under the contract." (Motion, para. 7) Once again, this allegation was made for the first time in the Motion to Reconsider, and there was no allegation in Count II that the Respondent made any statement or engaged in any conduct with the deceitful intent to hide or reduce Breheny's obligation for the hospital debts.
We find it surprising that the Administrator would make the above arguments in paragraphs 6 and 7 of the Motion to Reconsider. When the Respondent was asked if he was aware of "any theory under third-party contract law" that would make Breheny "responsible" for the hospital debts of the Hummell brothers' father, the Administrator's counsel objected on the ground that it was "not relevant." (Tr. 196-97) If Breheny's obligation, if any, for the hospital debts was not relevant, we fail to understand how the Respondent could act deceitfully by failing to disclose such an irrelevant matter.
The Supreme Court has stated that it would violate "procedural due process and our own motions of candor and fairness" to discipline an attorney for conduct that was not charged in the disciplinary complaint. In re Chandler, 161 Ill. 2d 459, 470, 641 N.E.2d 473, 478 (1994); In re Smith, 168 Ill. 2d 269, 289, 659 N.E.2d 896, 905 (1995). For at least twenty years, the Supreme Court has required specific factual allegations in a disciplinary complaint so that a respondent is reasonably informed of the acts of misconduct he or she is alleged to have committed.
"The rules of the Commission require that a complaint state the facts of the misconduct charged and inform the lawyer of what he or she is accused . . . A
complaint that does not allege facts, the proof of which are necessary to entitle a plaintiff to judgment, fails to state a cause of action. The complaint must contain factual allegations of every fact which must be proved in order for the plaintiff to be entitled to judgment on the complaint, and a judgment cannot be rendered on facts demonstrated by evidence at trial unless those facts were alleged in the complaint . . . While a pleading will not be held to be bad in substance if it contains sufficient information as will reasonably inform a defendant of what he must defend against, that liberality of pleading will not relieve the necessity that a complaint contain sufficient, factual averments and set out every fact essential to be proved." In re Beatty, 118 Ill. 2d 489, 499, 517 N.E.2d 1065, 1069-70 (1987). Accord, In re Komar, 125 Ill. 2d 427, 435, 532 N.E.2d 801, 805-06 (1988); In re Gerard, 132 Ill. 2d 507, 526-27, 548 N.E.2d 1051, 1058 (1989); In re Doyle, 144 Ill. 2d 451, 470-71, 581 N.E.2d 669, 678 (1991); In re Smith, 168 Ill. 2d at 289-90. 659 N.E.2d at 905.
It is clear to us that Count II of the Complaint in this matter did not set out, or reasonably inform the Respondent of, the facts upon which the alleged dishonesty and deceit were based under the rationale first asserted in the Motion to Reconsider. Count II alleged two specific instances of false representations (para. 27-29 and 30-33), and then stated that "[b]y reason of the conduct described above" the Respondent engaged in dishonesty and deceit. (para. 34) Our reading and understanding of Count II was that the Respondent was charged with dishonesty and deceit based solely on the two specific false representations alleged therein.
The Administrator pointed out (Motion, para. 2) that the Supreme Court has held that an attorney "may be disciplined for uncharged misconduct if it was effectively encompassed by the charged misconduct, and if [the attorney] was not misled or prejudiced." In re Gerard, 132 Ill. 2d at 526, 548 N.E.2d at 158, citing In re Broverman, 40 Ill. 2d 302, 239 N.E.2d 816 (1968). The facts of Broverman are substantially different than in this case. In Broverman, the attorney was charged with "misappropriation and conversion" of funds. He contended that the Board's finding of misconduct based upon his "commingling" funds was improper because "commingling" had not been charged. The Supreme Court rejected the attorney's argument, stating that "[w]e believe that ‘commingling' is in the sense of legal ethics comprehended in ‘misappropriated.' There is
no plausible reason to believe that the respondent in anyway was misled or prejudiced by any verbal variance." Broverman, 40 Ill. 2d at 306-07, 239 N.E.2d at 818.
There is much more than a verbal variance in the case before us. As mentioned above, Count II alleged that the Respondent made two false representations, falsely saying that the Hummelll brothers were obligors of the hospital debts and falsely saying that he made one final attempt to get a response from the Hummell brothers. We fail to see how the allegations raised in the Administrator's Motion to Reconsider could possibly be encompassed in the foregoing, specific factual allegations in Count II.
For the above reasons, we conclude that the Administrator failed to present a prima facie case as to any of the factual allegations underlying the misconduct charged in Count II, and that the Respondent's motion for directed finding was properly granted as to Count II.
The purpose of the attorney disciplinary system is not to punish an attorney for misconduct, but rather "to protect the public, maintain the integrity of the legal profession, and protect the administration of justice from reproach." In re Winthrop, 219 Ill. 2d 526, 559, 848 N.E.2d 961, 981 (2006). In determining the appropriate sanction, we are to consider the nature of the misconduct as well as the aggravating and mitigating factors. In re Gorecki, 208 Ill. 2d 350, 360-61, 802 N.E.2d 1194, 1199-1200 (2003). In addition, we may consider the deterrent value of the sanction, the "need to impress upon others the seriousness of the misconduct at issue," and whether the sanction will help preserve public confidence in the legal profession." In re Twohey, 191 Ill. 2d 75, 85, 727 N.E.2d 1028, 1034 (2000); In re Gorecki, 208 Ill. 2d at 361, 802 N.E.2d at 1200.
Although each disciplinary case "is unique and must be resolved in light of its own facts and circumstances," the sanction imposed should be "consistent with those imposed in other cases involving comparable misconduct." In re Howard, 188 Ill. 2d 423, 440, 721 N.E.2d 1126, 1135 (1999); In re Chandler, 161 Ill. 2d 459, 472, 641 N.E.2d 473, 479 (1994).
In this matter, the Administrator requested the sanction of suspension for a period of one year. (Tr. 468, 471) We note that the Administrator's recommendation was based upon all of the misconduct charged in Count I (Tr. 455-65), and that we found the evidence insufficient to prove the charges of overreaching, breach of fiduciary duty, and dishonesty or deceit. The Respondent requested that the charges be dismissed and did not suggest an appropriate sanction. (Tr. 486)
The Respondent's misconduct in this case consisted of entering into a business transaction with his clients, the Hummell brothers, when he knew or should have known he and the clients had conflicting interests, and failing to sufficiently explain the conflict of interest to permit the clients to make informed decisions about the representation.
In aggravation, we consider that the Respondent's misconduct involved his relationship with clients, and that he did not recognize his clear conflict of interest or the need to make disclosures to his clients. Also, his testimony showed that he still does not understand that he committed ethical misconduct. (Tr. 190, 420) See In re Gerard, 132 Ill. 2d 507, 541, 548 N.E.2d 1051, 1065 (1989) ("unethical conduct, especially in attorneys' relationships with clients, must not and will not be taken lightly by the profession or by this court"); In re Twohey, 191 Ill. 2d 75, 89, 727 N.E.2d 1028, 1036 (2000) ("Respondent's failure to recognize such a clear conflict of interest in his representation of both a lender and a borrower reveals a lack of understanding of his ethical obligations as an attorney").
On the other hand, there is substantial mitigation in this case. The Respondent has been a licensed attorney for about 35 years and has had no prior discipline. (Tr. 136, 325) See In re McLennon, 93 Ill. 2d 215, 219, 443 N.E.2d 553, 555 (1982) (attorney practiced law for nearly 30 years with no other disciplinary complaints). The Respondent did not engage in an ongoing pattern of misconduct, but rather his misconduct occurred in only one matter, during an otherwise lengthy and unblemished legal career. There was evidence that the Respondent has provided a substantial amount of volunteer services to his community for a number of years. (Tr. 237, 241-42, 256-57, 262-63, 333-35; Resp. Ex. 16, 18) The Respondent has also been active in his church (Tr. 256, 263-65, 338-43), and has provided some pro bono services (Tr. 330-31, 336). Additionally, the Respondent presented character witnesses who testified about his good reputation for honesty and integrity. (Tr. 235, 243, 250-51, 257, 265; Resp. Ex. 16) (Resp. Ex. 5, p. 9) It also appears that the Respondent was cooperative during the course of these disciplinary proceedings.
Although evidence of the Respondent's good character, previously unblemished record, and numerous volunteer services do not excuse his misconduct, they tend to show his misconduct was a departure from his normal practice. See In re Myers, 98 SH 88, Review Board Report at 19 (attorney made a "serious mistake in an isolated incident" and "his misconduct was a aberration and departure from his otherwise distinguished career and good character") (Review Board Report approved in M.R. 17766, January 28, 2002). Based upon the evidence presented, we conclude that it is unlikely that the Respondent will engage in further misconduct in the future.
While recognizing that each disciplinary case is unique, we believe the following cases support a sanction of reprimand in this matter.
In In re Magro, 02 CH 58 (April 3, 2003), a reprimand was issued by the Hearing Board. The attorney represented both the buyer and seller in a real estate transaction, failed to advise either party of his conflict, and failed to make other necessary disclosures.
In In re Dooley, 01 CH 116 (August 18, 2003), a reprimand was issued by the Hearing Board. The attorney attempted to pursue a business relationship with a client without making the appropriate disclosures or obtaining a waiver. Mitigation included that the attorney had practiced law for more than 15 years with no prior discipline, and several lawyers would testify as to his good reputation for truth and veracity.
In In re Oklepek, 98 CH 133 (April 14, 1999), a reprimand was issued by the Hearing Board. The attorney prepared a will for a friend/client in which he and his wife received one-half of the residue of the estate, and he was the named executor. It was stipulated that the attorney overreached, and violated Rule 1.8(c) by preparing a will in which he or his wife was a beneficiary. The attorney had practiced law for about 25 years without prior discipline, provided volunteer services to his church for about 15 years, cooperated during the disciplinary proceedings, and admitted the misconduct and expressed remorse.
In In re Alleman, 01 SH 14 (September 18, 2001), a reprimand was issued by the Hearing Board. The attorney entered into a business transaction with a client, and failed to disclose to the client the possible conflict of interest and other appropriate matters. Mitigation included the absence of any prior discipline, other lawyers would testify as to his good reputation for truth and veracity, and the attorney "believed that at the time he entered into the business transaction that the transaction was equitable to his client."
In In re Pasley, 97 CH 9 (June 11, 1998), a reprimand was issued by the Hearing Board. The attorney failed to comply with her client's directives, failed to withdraw after being
discharged, and misrepresented the status of the client's case in a letter to the client. In mitigation, the attorney presented witnesses who testified as to her good reputation for truthfulness, her pro bono work, and her volunteer activities. Also, the attorney had no prior discipline and was cooperative during the disciplinary proceedings. (Hearing Board Report at 16-18, 24)
In In re Casson, 06 SH 23 (June 29, 2007), a reprimand was issued by the Hearing Board. The attorney failed to sufficiently explain a matter so that his client could make an informed decision regarding hiring the attorney as private counsel or continuing to have the attorney represent him as public defender. The attorney also failed to disclose to the court that he had switched from being appointed counsel to privately retained counsel in the case. The attorney had no prior discipline during his 25 years of practice, was involved in community activities, and had a good reputation for honesty and integrity. (Hearing Board Report at 26-29, 32)
In In re Keefe, 95 CH 560 (December 15, 1997), a reprimand was issued by the Hearing Board. The attorney had agreed to handle the financial affairs of his elderly aunt, breached his fiduciary duty by failing to keep accurate records of his financial transactions on her behalf, and as a result was unable to fully apprise the aunt or her heirs of her financial condition. The attorney asserted before the Hearing Board that he did not engage in misconduct. The Hearing Board noted that the attorney "had no intent to lie or cause harm," and had practiced law for more than 35 years without being previously disciplined. (Hearing Board Report at 16-17, 20-21)
In this case, as discussed above, the evidence showed that the misconduct of the Respondent was not the result of a dishonest or corrupt motive, but rather a misguided effort to devise a plan and get financially involved in a transaction he intended to benefit both his clients and his business partner/cousin. After considering the nature of the misconduct, the overall facts
and circumstances shown by the evidence, the purposes of the disciplinary system, and the cases set out above, we conclude that a reprimand is the appropriate sanction in this matter. We believe it is very unlikely that the Respondent will engage in future misconduct, and that a reprimand will adequately protect the public, maintain the integrity of the legal profession, and safeguard the administration of justice.
Therefore, the following Reprimand will be issued to the Respondent on March 26, 2008, 9:30 a.m., at the offices of the Attorney Registration and Disciplinary Commission, Springfield, Illinois.
To: Bruce John Biagini
1. This Hearing Board Panel has found that the evidence clearly and convincingly established that you, Bruce John Biagini, engaged in conduct that violates Rules 1.8(a)(1) and 1.4(b) of the Illinois Rules of Professional Conduct. Your misconduct consisted of entering into a business transaction with clients, when you knew or reasonably should have known that you and the clients had or may have had conflicting interests; and for failing to explain a matter to the extent reasonably necessary to permit your clients to make informed decisions regarding your representation.
2. We have determined that you have not been previously disciplined, you have cooperated in these proceedings, you did not act with a dishonest or corrupt motive, you have performed commendable volunteer work for your community and church, and you have a good reputation for truthfulness and integrity.
3. Your misconduct as fully described in the Report and Recommendation was improper and cannot be condoned. Therefore, you are reprimanded and admonished not to repeat the conduct that has resulted in the imposition of this discipline.
4. You are advised that while this reprimand is not formally presented to the Supreme Court, it is not to be taken lightly. This reprimand is a matter of public record and is on file with the Attorney Registration and Disciplinary Commission and may be admitted into evidence in subsequent disciplinary proceedings against you.
5. Because reprimands are now public, it is the hope and desire of this Hearing Board Panel that this reprimand will discourage you and other attorneys from engaging in the same or similar misconduct in the future.
Date Entered: January 11, 2008
|John L. Gilbert, Chair, with Panel Members Randall B. Rosenbaum and Albert O. Eck, Jr., concurring.|