In re Schneider

• Decision Date: 09 November 2017
• Docket Number: No. 117,361,117,361
• Citation: 404 P.3d 338
• Parties: In the MATTER OF Lawrence E. SCHNEIDER, Respondent.
• Court: Kansas Supreme Court

404 P.3d 338

In the MATTER OF Lawrence E. SCHNEIDER, Respondent.

No. 117,361

Supreme Court of Kansas.

Opinion filed November 9, 2017

Penny Moylan, Deputy Disciplinary Administrator, argued the cause, and Stanton A. Hazlett, Disciplinary Administrator, was with her on the formal complaint for the petitioner.

Lawrence E. Schneider, respondent, argued the cause pro se.

ORIGINAL PROCEEDING IN DISCIPLINE

Per Curiam:

This is an original proceeding in discipline filed by the office of the Disciplinary Administrator against the respondent, Lawrence E. Schneider, of Topeka, an attorney admitted to the practice of law in Kansas in 1977.

On September 7, 2016, 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 October 3, 2016. A hearing was held on the complaint before a panel of the Kansas Board for Discipline of Attorneys on November 8, 2016, where the respondent was personally present. The hearing panel determined that respondent violated KRPC 1.3 (2017 Kan. S. Ct. R. 290) (diligence), and 1.4(b) (2017 Kan. S. Ct. R. 291) (communication).

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

....

"7. Throughout the respondent's career, he has been a solo practitioner. Over time, his practice has become focused primarily in the area of bankruptcy law.

"8. In April, 2011, the Kansas legislature enacted K.S.A. 60-2315, which allows a debtor in bankruptcy to claim, as exempt, federal and state earned income tax credits.

"A.J. and M.J.

"9. On January 29, 2013, the respondent filed a chapter 7 bankruptcy petition on behalf of A.J. and M.J., husband and wife. At that time, the respondent's practice was to not list a possible federal and state earned income tax credit exemption on the schedule C to the bankruptcy petition. Rather, the respondent's practice was to amend the schedule C if a client received a federal or state earned income tax credit exemption. The respondent acknowledges that his practice was not the best practice. However, the respondent points out that a debtor may amend a schedule any time prior to discharge.

"10. In this case, as a result of the respondent's practice, the respondent did not list the debtors' federal and state earned income tax credit exemption on the schedule C filed with the chapter 7 bankruptcy petition.

"11. On April 8, 2014, the bankruptcy trustee filed a motion for the debtors to turn over their 2012 income tax refunds in the amount of $2,999.50. The respondent failed to file a response to the motion. On May 15, 2014, the court granted the trustee's motion and ordered the debtors to provide the trustee with their income tax refund in the amount of $2,999.50.

"12. On May 17, 2014, the respondent filed an amended schedule C to the bankruptcy petition. The amended schedule C listed $2,991.00 as exempt federal and state earned income tax credit.

"13. The debtors did not pay the income tax refunds in the amount of $2,999.50 to the trustee as ordered by the court.

"14. On July 1, 2014, the trustee filed a motion asking that the court order the debtors and the respondent to appear and show cause why the debtors should not be held in contempt for failing to comply with the court's May 15, 2014, order. The court issued an order to show cause.

"15. The respondent and the trustee established a monthly payment plan and the respondent personally paid the $2,999.50 to the trustee in full.

"J.R. and I.R.

"16. On June 24, 2013, the respondent filed a chapter 7 bankruptcy petition on behalf of J.R. and I.R., husband and wife. Again, based on his pattern and practice, the respondent did not list the debtors' possible 2013 federal and state earned income credit exemption on the schedule C to their bankruptcy petition. On March 20, 2014, the bankruptcy court entered a discharge order, discharging the debtors' debts.

"17. On April 18, 2014, the bankruptcy trustee filed a motion requesting authority to allocate $1,994.52 of the debtors' $5,160.00 2013 federal and state income tax refund. On May 6, 2014, the respondent filed a response to the trustee's motion, arguing that $4,068.00 of the debtors' state and federal income tax refunds were exempt as earned income credit.

"18. On May 9, 2014, the respondent filed an amended schedule C to the bankruptcy petition, listing $4,068.00 of the debtors' income tax refunds as exempt federal and state earned income credit. On May 15, 2014, the trustee filed an objection to the amended schedule C, arguing that the debtors' inexcusable delay in claiming the exemption caused prejudice to the trustee and that the claimed exemption should therefore be denied as waived.

"19. Later, the respondent and the trustee entered into a compromise and settlement whereby the debtors paid the trustee $500.00.

"C.C.

"20. On July 19, 2013, the respondent filed a chapter 7 bankruptcy petition on behalf of C.C. Again, the respondent failed to list the debtor's federal earned income tax credit as an exemption on schedule C of the bankruptcy petition.

"21. While the chapter 7 bankruptcy petition was pending, at the debtor's request, the respondent filed a second bankruptcy petition on behalf of the debtor. The second bankruptcy petition was filed under chapter 13 and was designed to provide the debtor with an avenue to keep his motor vehicle.

"22. On November 25, 2013, the court entered an order in the chapter 7 bankruptcy proceeding discharging the debtor from bankruptcy.

"23. On May 1, 2014, the chapter 7 trustee filed a motion to compel the debtor to turn over the 2013 income tax return so the trustee could pursue the bankruptcy estate's share of the federal income tax refund. The respondent did not object to the motion and, thereafter, on May 23, 2014, the court granted the motion to compel.

"24. After receiving a copy of the debtor's 2013 federal income tax return which revealed that the debtor received a refund of $8,254.00, on June 12, 2014, the chapter 7 trustee filed a motion for the debtor to turn over $3,974.79, the estate's share of the refund. Again, the respondent did not object to the motion.

"25. On June 26, 2014, the respondent filed an amended schedule C to the chapter 7 bankruptcy petition, claiming a $4,878.00 exemption for the federal earned income credit.

"26. On July 7, 2014, the court granted the chapter 7 trustee's motion and the debtor was ordered to turn over $3,974.79, the estate's share of the federal income tax refund. The court did not deduct a pro rata share of the refund for the earned income credit. The respondent did not file a motion for reconsideration. Likewise, the respondent did not appeal or otherwise move to set aside the order.

"27. On July 18, 2014, the chapter 7 trustee filed an objection to the amended schedule C, arguing that the debtor engaged in a pattern of inexcusable conduct. The trustee further argued that the debtor's delay constituted a waiver of the exemption. The respondent again failed to respond to the trustee's motion. On August 18, 2014, the court sustained the trustee's objection to the amended schedule C.

"28. The debtor did not pay $3,974.79 of the 2013 federal income tax refund to the chapter 7 trustee. Rather, the debtor paid the chapter 13 trustee the income tax refund, less the earned income credit.

"29. On September 3, 2014, the trustee filed an adversary proceeding to revoke the bankruptcy discharge and to obtain a judgment against the debtor for the amount of $3,974.79, plus interest and costs. The respondent filed an answer to the adversary proceeding on behalf of the debtor.

"30. On November 3, 2014, the chapter 7 trustee served discovery on the respondent. The respondent drafted responses to the discovery requests. However, the respondent did not forwarded the discovery responses to the trustee. Because the trustee included requests for admissions and because the respondent failed to respond, the debtor was left with no factual or legal defense to the trustee's adversary complaint.

"31. On January 6, 2015, the chapter 7 trustee filed a motion for partial summary judgment requesting revocation of the debtor's bankruptcy discharge and a monetary judgment in the amount of $3,974.79, plus interest and costs.

"32. The respondent did not file a response to the chapter 7 trustee's motion for partial summary judgment. On February 5, 2015, the court granted the trustee's motion for partial summary judgment and entered judgment against the debtor in the amount of $3,974.79 plus interest and costs. Further, the court revoked the debtor's discharge. The respondent did not appeal or otherwise move to set aside the order and the resulting judgment against the debtor.

"33. After the judgment was entered against the debtor, the respondent entered into a payment plan with the chapter 7 trustee and paid the judgment in full with his personal funds.

"34. At the hearing on this matter, the respondent testified that he does not believe that the debtor has a complete understanding of the effect of having the chapter 7 bankruptcy discharge revoked.

"D.T.

"35. On September 3, 2013, the respondent filed a chapter 7 bankruptcy petition on behalf of D.T. Again, the respondent failed to list the debtor's 2013 state and federal earned income credit as an exemption under schedule C of the Chapter 7 bankruptcy petition.

"36. For tax year 2013, the debtor was entitled to receive income tax refunds totaling $5,746.00. On April 9, 2014, the trustee filed a motion for authority to allocate $3,549.75 of the debtor's 2013 income tax refunds.

"37. On April 18, 2014, the respondent filed a response to the trustee's motion to allocate $3,549.75 of the debtor's income tax refund, arguing that $3,279.00 of the debtor's income tax refunds were exempt as earned income credit. That same day, the respondent filed an amended schedule C to the

...