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In re Biscanin

Supreme Court of Kansas

March 24, 2017

In the Matter of John P. Biscanin, Respondent.

         Original proceeding in discipline. Two-year suspension, stayed after 6 months; respondent then to be placed on 2 years' supervised probation.

          Stanton A. Hazlett, Disciplinary Administrator, argued the cause and was on the brief for the petitioner.

          Steven R. Smith, of Gates Shields Ferguson Hammond, P.A., of Overland Park, argued the cause and was on the brief for respondent, and John P. Biscanin, respondent, argued the cause pro se.

          PER CURIAM:

         This is a contested original proceeding in discipline filed by the office of the Disciplinary Administrator against the respondent, John P. Biscanin, of Kansas City, an attorney admitted to the practice of law in Kansas in 1968.

         On June 16, 2015, the office of the Disciplinary Administrator filed a formal complaint against the respondent alleging violations of the Kansas Rules of Professional Conduct (KRPC). The respondent filed an answer on July 24, 2015, and an amended answer on September 14, 2015. A hearing was held on the complaint before a panel of the Kansas Board for Discipline of Attorneys on September 25, 2015, where the respondent was personally present and represented by counsel. The hearing panel determined that the respondent violated KRPC 1.8(a) (2017 Kan. S.Ct. R. 307) (conflict of interest), 1.15(a) and (b) (2017 Kan. S.Ct. R. 326) (safekeeping property), and 1.15(d)(1) and (d)(2) (preserving client funds).

         Upon conclusion of the hearing, the panel made the following findings of fact and conclusions of law, together with its recommendation to this court:

         "Findings of Fact

. . . .
"8. In 2010, R.K. retained the respondent to represent him concerning the estate of a friend, M.S. M.S. died March 10, 2010, leaving a holographic will that left the bulk of M.S.'s estate to R.K. The respondent agreed to represent R.K. on a one-third contingency fee basis.
"9. The administration of M.S.'s estate was complicated because after she executed the holographic will leaving the bulk of her estate to R.K., M.S. executed a subsequent will. In the subsequent will, M.S. left the bulk of her estate to K.D., another friend of M.S. The same day M.S. executed the subsequent will, M.S. had a stroke. It appears that M.S. lacked the requisite mental capacity for the subsequent will to be valid. In addition, M.S. also left a half-brother, D.S. D.S. was M.S.'s sole legal heir. According to R.K., M.S. intended to disinherit D.S. D.S. contested the two wills and sought administration of M.S.'s estate through intestate succession.
"10. K.D., D.S., and R.K. settled the dispute over M.S.'s estate. As a result of the settlement agreement, R.K. received a lump sum payment of $34, 350, a Harley-Davidson motorcycle, and up to $70, 000 in settlement proceeds from a pending wrongful death case regarding M.S.'s husband who died in 2006.
"11. On March 8, 2011, the respondent received a check in the amount of $34, 350 for R.K. in conjunction with the settlement of M.S.'s estate. The respondent deposited the settlement proceeds into his attorney trust account.
"12. On March 23, 2011, the respondent issued a check to R.K., in the amount of $10, 000. On April 8, 2011, the respondent issued a second check to R.K., in the amount of $13, 447. The balance in the respondent's trust account was the respondent's fee. [Footnote: The respondent agreed to a one-third contingent attorney fee. One-third of $34, 350 is $11, 450. However, only $10, 903 remained after R.K. received his share. A note on Exhibit 6, p. 95 explains the difference. The note provides '2/3 of settlement $547.' Two-thirds of $34, 350 is $22, 900. Adding $547 to $22, 900 is $23, 447, the amount paid to R.K. It is unclear what the $547 referenced.]
"13. R.K. received the checks and cashed the checks. Later, R.K. asked the respondent to hold $10, 000 in cash. The respondent agreed to hold the money on behalf of R.K. The respondent did not deposit the $10, 000 in his attorney trust account. Rather, the respondent placed $10, 000 cash in a safe located in the respondent's office. At some point, at the request of R.K., the respondent returned the money to R.K.
"14. Later, R.K. again gave the money to the respondent a second time. The respondent testified that R.K. asked him to hold it on his behalf. R.K. testified that the respondent asked to borrow $10, 000 to invest in a bar. Regardless of how it came to be, the respondent again held R.K.'s $10, 000 for him.
"15. The respondent did not deposit the entire $10, 000 into his attorney trust account. However, it appears that on September 18, 2012, the respondent deposited $8, 000 cash held on behalf of R.K., into his attorney trust account.
"16. The respondent agreed to pay R.K. 6% per annum on the $10, 000. The respondent testified that he executed a promissory note, but the respondent was unable to locate the promissory note. The respondent testified that he agreed to pay R.K. 6% per annum on the $10, 000 and created a promissory note, not because it was a business transaction or a loan, but because he wanted to show R.K. that someone did care for him and wanted to do something for him.
"17. The hearing panel finds the respondent's explanation of the agreement to pay 6% per annum and the purported promissory note to be unbelievable. Rather, the hearing panel finds that the respondent agreed to pay R.K. 6% per annum on the $10, 000 because the respondent and R.K. entered into a business transaction. The respondent did not inform R.K. that he had the right to and should seek independent counsel to advise him regarding the business transaction. Additionally, the respondent did not seek a waiver of the conflict of interest from R.K.
"18. From time to time, R.K. asked the respondent to pay the interest on the $10, 000. Additionally, from time to time, R.K. asked the respondent to pay the principal amount of $10, 000. The respondent failed to pay R.K. the principal and interest as requested by R.K.
"19. Because the respondent failed to pay the $10, 000 and interest, on November 3, 2014, R.K. filed a complaint with the disciplinary administrator's office. Thereafter, on December 18, 2014, the respondent paid R.K. $11, 966.81, for the principal and interest. In addition, the respondent paid R.K. $317.42, as the remaining amount held in trust for R.K.
"20. In accordance with the settlement of M.S.'s estate, in addition to the $32, 350, the respondent also received $70, 000 on behalf of R.K., as follows:

Date Deposited into Attorney Trust Account

Amount

June 22, 2012

$15, 344.13

July 6, 2012

$427.55

September 18, 2012

$2, 138.15

January 8, 2013

$19, 642.37

January 9, 2013

$2, 161.06

March 15, 2013

$10, 721.32

July 25, 2013

$19, 565.42

TOTAL

$70, 000.00

"21. The respondent's one-third contingent attorney fee from the $70, 000 was $23, 333.33. However, from the records, it is unclear when the respondent removed his attorney fees from the attorney trust account.
"22. R.K. should have received $46, 666.67 of the $70, 000. It appears that R.K. received $41, 644.26 as follows:

Date Amount Paid

Amount

August 13, 2012

$10, 086.90

October 18, 2012

$11, 425.00

October 30, 2012

$150.00

February 1, 2013

$14, 686.00

July 10, 2013

$5, 296.36

TOTAL

$41, 644.26

"23. In addition to the amounts paid to R.K., it appears that the respondent paid out attorney fees to Philip Carson, attorney fees for additional representation to the respondent, and a bond, as follows:

Date

Recipient

Amount

April 23, 2013

Respondent

$2, 500.00

May 3, 2013

Philip Carson

$415.00

June 24, 2013

Philip Carson

$811.18

July 25, 2013

Respondent

$5, 000.00

July 31, 2013

Respondent

$1, 000.00

November 22, 2013

Respondent

$1, 000.00

December 9, 2013

Metro Bonding

$1, 500.00

August 1, 2014

Respondent

$500.00

TOTAL

$12, 726.18

         Whether the respondent was authorized to make the payments reflected in this paragraph is unclear from the record.

         "Conclusions of Law

"24. Based upon the findings of fact, the hearing panel concludes as a matter of law that the respondent violated KRPC 1.8 and KRPC 1.15, as detailed below.
"KRPC 1.8
"25. KRPC 1.8(a) provides:
'(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client; and
(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client in the transaction.'
In this case, the respondent borrowed $10, 000 from R.K., agreed to pay R.K. 6% per annum, and, according to the respondent, executed a promissory note. The respondent failed to advise R.K. of the desirability of seeking independent counsel. Further, R.K. did not provide written informed consent, as required by KRPC 1.8(a)(3). As a result, the hearing panel concludes that the respondent violated KRPC 1.8(a).
"KRPC 1.15
"26. Lawyers must keep the property of their clients safe. See KRPC 1.15. In pertinent part, that rule provides:
'(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state of Kansas. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept ...

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