ORIGINAL PROCEEDING IN DISCIPLINE
Original proceeding in discipline.
This is an original uncontested proceeding in discipline filed by the Disciplinary Administrator's office against Respondent James Paul Davidson, a Salina attorney licensed to practice law in Kansas since September 1980.
The formal complaint charged Respondent in Count I with violations of Kansas Rules of Professional Conduct (KRPC) 1.7 (2006 Kan. Ct. R. Annot. 411) (conflict of interest, own interests adverse to client); KRPC 1.8 (2006 Kan. Ct. R. Annot. 417) (conflict of interest, prohibited transactions with clients); KRPC 4.4 (2006 Kan. Ct. R. Annot. 488) (respect for rights of third persons); and KRPC 8.4 (2006 Kan. Ct. R. Annot. 510) (criminal act reflecting adversely on fitness as lawyer; misconduct prejudicial to the administration of justice); and in Count II with a second violation of KRPC 8.4.
Respondent filed an answer and appeared in person and through counsel at his April 17, 2007, disciplinary hearing. The panel filed its final hearing report on July 13, 2007.
"In a disciplinary proceeding, this court considers the evidence, the findings of the disciplinary panel, and the arguments of the parties, and determines whether violations of KRPC exist and, if they do, what discipline should be imposed. [Citation omitted.] Any attorney misconduct must be established by substantial, clear, convincing, and satisfactory evidence. [Citations omitted.]
"This court views the findings of fact, conclusions of law, and recommendations made by the disciplinary panel as advisory, but gives the final hearing report the same dignity as a special verdict by a jury or the findings of a trial court. Thus, the disciplinary panel's report will be adopted where amply sustained by the evidence, but not where it is against the clear weight of the evidence. [Citations omitted.]" In re Lober, 276 Kan. 633, 636-37, 78 P.3d 442 (2003).
This proceeding arose out of two series of events. The first had to do with Respondent's dispute with a client over a mutual business transaction, the second with Respondent's criminal conduct. The hearing panel made the following relevant findings of fact:
Mark Hughey is the president and sole stockholder of Phat Kat Enterprises, a Kansas corporation, which purchased a bar in Salina called the Red Kitten in the fall of 2003. In late May or early June 2005, Hughey received a letter from his landlords, Helen and Rusty Leister. The Leisters advised Hughey that he was 10 days behind in his rent and gave him 10 days to become current or face eviction.
Because Hughey believed the lease included terms different than those referred to by the Leisters, he contacted Respondent for legal advice. Respondent and his wife, Laurie Davidson, were frequent customers at the Red Kitten. Respondent met with Hughey and agreed with Hughey's interpretation of the lease terms; Respondent then drafted and forwarded a letter to the Leisters stating Hughey's position.
In addition to discussing the lease issue, Respondent and Hughey had discussed the financial situation of the Red Kitten. Hughey told Respondent that the Red Kitten was not making enough money and that Hughey was experiencing personal financial difficulties as a result. By mid-June 2005, Hughey decided to close the bar. Respondent was present at the time Hughey and his friends began removing liquor and personal property from the Red Kitten premises.
The next day, Respondent asked Hughey how much money it would take to keep the Red Kitten open. Hughey told Respondent that $10,000 would cover the bar's outstanding obligations. Respondent obtained $10,000 and provided it to Hughey as part of an agreement made between them at the time. Hughey asked Respondent to reduce their agreement to writing, but Respondent assured Hughey that a written agreement was not necessary and that the two of them would work "it" out.
Based on his discussions with Respondent, Hughey understood that the $10,000 represented a loan, that he would pay a total of $500 in interest on the $10,000, and that he would retire his debt over time by forwarding 51 percent of Red Kitten profits to Respondent. In addition, Hughey expected Respondent's wife to work at the bar to reduce payroll obligations.
Hughey was not given an opportunity to seek advice of independent counsel on the transaction and, as mentioned, neither had a copy of the transaction's terms in writing nor consented to them in writing.
At some later point, Respondent's wife told Hughey that she and Respondent owned a 51 percent interest in the bar. Hughey contacted Respondent to confirm that Respondent did not have an ownership interest; Respondent told Hughey that his was an investment interest. Hughey again asked Respondent to put their agreement in writing, and, again, Respondent told Hughey that a written agreement was not necessary.
In August 2005, Hughey decided to sell the Red Kitten. He contacted Respondent to see if he was interested in purchasing the bar. On the same day, Hughey met with Red Kitten employees and expressed concern about Respondent and his wife being behind the bar and pouring drinks for customers. Hughey believed Respondent and his wife had each been convicted of alcohol-related criminal offenses, and bars may be fined if they employ such persons to pour drinks.
Shortly thereafter, Hughey received a message from Respondent on his answering machine. In the message, Respondent demanded that Hughey turn over the keys to the Red Kitten. If Hughey did not do so, Respondent threatened, Hughey and his girlfriend would be arrested if they returned to the bar. Hughey attempted to reach the Respondent by telephone, but Respondent refused to take Hughey's calls. At this point, Hughey retained new counsel, Scott Condray.
Respondent posted a notice on the door of the Red Kitten. The notice stated that Respondent was now in charge of the bar and would ...