In re Sutton

• Decision Date: 01 December 2017
• Docket Number: No. 117,395,117,395
• Citation: 307 Kan. 95,405 P.3d 1205
• Parties: In the MATTER OF Brandy L. SUTTON, Respondent.
• Court: Kansas Supreme Court

307 Kan. 95

405 P.3d 1205

In the MATTER OF Brandy L. SUTTON, Respondent.

No. 117,395

Supreme Court of Kansas.

Opinion filed December 1, 2017

Kimberly Knoll, Deputy Disciplinary Administrator, argued the cause, and Stanton A. Hazlett, Disciplinary Administrator, was with her on the brief for the petitioner.

Daniel F. Church, of Morrow Willnauer Church, L.L.C., of Kansas City, Missouri, argued the cause, and Peggy A. Wilson, of the same firm, was with him on the briefs for respondent. Brandy L. Sutton, 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, Brandy L. Sutton, of Lawrence, an attorney admitted to the practice of law in Kansas in 1998.

On April 21, 2016, the office of the Disciplinary Administrator filed a formal complaint against the respondent alleging violations of the Kansas Rules of Professional Conduct (KRPC); on April 29, 2016, a corrected formal complaint was filed; and on June 16, 2016, an amended formal complaint was filed. After the hearing panel granted the respondent's motion for an extension of time to file an answer to the formal complaint, the respondent filed an answer on June 13, 2016; an answer to the amended formal complaint was filed on July 6, 2016. A hearing was held on the complaint before a panel of the Kansas Board for Discipline of Attorneys on November 1, 2016, where the respondent was personally present and represented by counsel. The hearing panel determined that the respondent violated KRPC 8.4(c) (2017 Kan. S. Ct. R. 379) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation).

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

....

"10. The respondent is the sole owner of the law firm, Pendleton & Sutton. The respondent offered a Simple Individual Retirement Account plan as a benefit to her employees. If an employee agreed to defer up to 3% of the employee's salary, the law firm would match the amount contributed.

"11. For the employees that signed up for the Simple IRA plan, the respondent withheld the employee contribution from their paychecks but failed to consistently deposit the employee's contribution as well as the employer's contribution to the IRAs. For each pay period, the respondent issued a pay stub to the employees which indicated that the withheld funds had been deposited into the IRA accounts. Employees received quarterly account statements from the IRA custodian showing that these funds had not been deposited (or had been deposited later than the time indicated on the pay stub).

"12. In May, 2015, L.M., who had been employed as an associate attorney employed with Pendleton & Sutton, left her job to work for another law firm. At that time, L.M. discovered that the respondent failed to consistently deposit L.M.'s contribution and the employer's contribution to the Simple IRA plan. On June 2, 2015, L.M. sent the respondent a demand letter:

‘While employed at Pendleton and Sutton, LLC from January 2012-May 2015, the firm offered its employees a 3% match on a Simple IRA program. As such I fully partook and chose to have 3% of each pay period deferred and applied to a Simple IRA. Each paystub over the years reflects the 3% employee deferral and 3% employer contribution. However, upon recent detailed review of my American Funds Simple IRA transaction history, I came across a large discrepancy between the deferrals and contributions listed on my paystubs (which I still have) and ones actually paid into the fund.

‘I have conducted a detailed review of almost 3.5 years of paystubs and my fund's historical value, and based upon my calculations, it appears my portfolio is short almost $9,000.00. This calculation includes the deferrals and contributions that the paystubs reflect, but you have fraudulently and consistently withheld from my Simple IRA portfolio. The calculation also includes interest I have lost out on over the years due to your mishandling of the deferrals and contributions. I believe these actions constitute breach of contract and fraud, and may also be in violation of K.S.A. 21-5801.

‘In effort to resolve this situation as amicably as possible, I am willing to forego instituting legal proceedings against you in exchange for a lump sum of $20,000.00, half of which is to be paid directly into my Simple IRA portfolio, and half of which is to be paid directly to me via certified funds.

‘If I have not received contact from you or both disbursements stated above by June 15, 2015, I will have no other choice but to obtain legal counsel and pursue remedies available under the law. My contact information is below, and I look forward to hearing from you to settle this matter amicably.’

According to the respondent, she did not timely receive this letter, as it was buried on her desk.

"13. On June 25, 2015, L.M. filed a complaint with the disciplinary administrator's office against the respondent. On June 25, 2015, the respondent responded to L.M.'s complaint, as follows:

‘As we discussed, [L.M.] has filed a complaint regarding my failure to fund the SIMPLE IRA. [L.M.] was aware of the fact I was having financial difficulties and was unable to fund the SIMPLE IRA. I have been trying to get a loan to resolve numerous outstanding financial issues the firm has experienced. Unfortunately a lot of this has been fueled by lawsuits brought against the firm for FDCPA and Bankruptcy stay violations by two of my former associate attorneys.

‘On June 12, 2015, I was finally able to secure a line of credit from Central Bank of the Midwest. I have been waiting on that to fund so that I could resolve this along with various other financial obligations. The loan has funded and is now available for me to draw down on. I will be paying this over the weekend.

‘I understand the firm's financial issues are my responsibility and do not excuse me from handling these issues.

‘Please feel free to contact me to discuss this matter further. I will provide proof of payment as soon as I receive it.’

"14. On June 29, 2015, the respondent sent L.M. an email message.

‘I came across your letter on my desk over the weekend. Unfortunately, someone had laid it under other documents on my desk.

‘I have manually reviewed every paycheck you have received during your tenure at Pendleton and Sutton. I have attached a QuickBooks report detailing this. ... Thus, your allegation that I have failed to pay $9000.00 into your account is false.

....

‘As for the remaining sums, I was able to secure a loan on June 12, 2015, in order to resolve numerous financial issues here at the firm including the remaining contributions of $2071.14 and deductions in the sum of $2221.10. Unfortunately, I was unable to secure enough funds to resolve the $7500.00 incurred by the firm due to your gross negligence in the [S] case wherein you violated the bankruptcy stay not once but twice. Obviously, I am reviewing the firms options in regard to this liability.

‘As for your demand for $20,000 I believe it to be absurd, regardless the firm nor I have those kinds of funds.’

"15. On July 17, 2015, the respondent provided a supplemental response. The respondent's supplemental response included the following:

‘This letter is intended to supplement my original response to the claim in this case. Unfortunately since, [sic] the beginning of 2014 the firm has suffered significant financial issues. This has impacted me personally resulting in severe anxiety and depression for which I am in treatment. My personal situation was further impacted by the loss of my grandfather (who was a father to me) on December 24, 2015. I have been working diligently to try to improve my health as well as the firm's.

‘I believe it would be useful to provide some background to the complaint as there have been several items involving [L.M.] that have further complicated the financial situation of Pendleton & Sutton. One is a lawsuit that was filed as a result of [L.M.]'s negligence .... On September 12, 2014, [S]'s attorney filed a suggestion of bankruptcy in a Johnson County, Kansas limited actions case. ... On September 25, 2014, [L.M.] filed a Journal Entry of Judgment in the limited actions case. On October 29, 2014, [L.M.] filed a wage garnishment. On November 20, 2014, a telephone call was received from [S]'s attorney indicating that Pendleton & Sutton had violated the bankruptcy stay. On November 20, 2015, a release of garnishment was filed along with a motion and order to set aside judgment. When this matter was discussed with [L.M.], she blamed the para-legal [R] who processed the Suggestion of Bankruptcy for not properly noting the file. I advised [L.M.] that the document was in the images associated with the file. This did not change her position. On January 23, 2015, Pendleton & Sutton was notified that a new bankruptcy attorney was re-opening the case in order to bring an adversary action against the firm and our client. On March 2, 2015, Pendleton & Sutton was served with the Petition. In the petition the Plaintiffs were seeking statutory damages, punitive damages as well as attorney's fees. In April 2015, I was notified by our insurance company that the [S] claim may not be fully covered. On April 7, 2015, I notified [L.M.] as follows: "Please be advised that The Bar Plan has notified me that the claim which has been filed for your actions in Ameri Best LLC v. Taylor [S] will not be fully covered. If a payment is made for intentional misconduct, punitive damages or attorney's fees to [S]'s attorney there will be NO insurance coverage. This means that you may have personal liability in this matter." Our minimum exposure at this point was $7,500.00 for the insurance deductible.

‘On December 19, 2014, [E.S.], a legal assistance [sic] gave notice of her resignation. I discussed with her

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