Lawyer Disciplinary Bd. v. Kohout

• Citation: 798 S.E.2d 192
• Decision Date: 15 November 2016
• Docket Number: No. 15-0926,15-0926
• Parties: LAWYER DISCIPLINARY BOARD, Petitioner v. Edward R. KOHOUT, Respondent
• Court: Supreme Court of West Virginia

798 S.E.2d 192

LAWYER DISCIPLINARY BOARD, Petitioner

v.Edward R. KOHOUT, Respondent

No. 15-0926

Supreme Court of Appeals of West Virginia.

Submitted: October 25, 2016

Filed: November 15, 2016

Andrea J. Hinerman, Esq., Office of Disciplinary Counsel, Charleston, West Virginia, Counsel for the Petitioner.

Rachel L. Fetty, Esq., Big Tree Law, Morgantown, West Virginia, Counsel for the Respondent.

Benjamin, Justice:

This lawyer disciplinary proceeding arises from four separate complaints filed with the Lawyer Disciplinary Board ("LDB") concerning attorney Edward "Ed" R. Kohout. Following an evidentiary hearing, the Hearing Panel Subcommittee ("HPS") of the LDB issued a report in which it determined that Mr. Kohout engaged in unethical conduct, violating Rules 1.1, 1.2(a), 1.3, 1.4(a) and (b), 1.5(a), 1.15(a) and (b), 3.1, 5.4(a), 8.1(a), and 8.4(c) and (d) of the West Virginia Rules of Professional Conduct.¹ The HPS recommended that Mr. Kohout's law license be annulled, that he make restitution to client Sonja Richard in the amount of $2,059.66, and that he be ordered to pay the costs of the disciplinary proceedings. The Office of Disciplinary Counsel ("ODC"), on behalf of the LDB, urges that the Court adopt the sanctions recommended by the HPS. Mr. Kohout insists that annulment is too severe a penalty for his misconduct.

After careful consideration, we conclude that Mr. Kohout's unethical behavior warrants the annulment of his law license and the additional sanctions recommended by the HPS.

I. FACTUAL AND PROCEDURAL BACKGROUND

Mr. Kohout was admitted to the West Virginia State Bar on November 4, 1987, upon successful completion of the bar exam. At all times pertinent to this proceeding, he has maintained a law practice in Morgantown, West Virginia. This case arises from four complaints filed against Mr. Kohout with the LDB. Based on these complaints, the Investigative Panel of the LDB filed a Statement of Charges with the Court on September 25, 2015, to which Mr. Kohout filed an answer on October 19, 2015.

The HPS held a hearing on the Statement of Charges on January 25 and 26, 2016. During the hearing the HPS heard testimony from twelve witnesses, including Mr. Kohout. On June 3, 2016, the HPS filed its report, in which it examined each of the complaints filed against Mr. Kohout. The HPS determined that Mr. Kohout had violated the Rules and recommended sanctions.

A. Complaint of the ODC, No. 14-01-015

From 2012 through 2014, Mr. Kohout represented owners of property in Big Bear Lake Camplands ("Big Bear"), a deeded property development, in a case against the Big Bear Property Owners Association, Inc. and Nancy Friend, the operator of Big Bear. The property owners disputed the propriety of increases in their annual assessments and other fees.

By letter dated September 22, 2012, addressed to "the residents of Big Bear Camplands," Mr. Kohout wrote:

I have been asked to initiate a lawsuit challenging the manner in which [Nancy Friend] runs Big Bear.... Your names will need to be added to the Complaint as plaintiffs along with all the residents of Big Bear who wish to join in this. ...

Some of you have sent me money for a retainer fee, which I appreciate. I may need to bill you for additional funds as the case progresses for expenses, but it will [be] a modest sum evenly split among you and will be money well spent. ...

My fee arrangement will be as follows. In addition to the retainer, I'll keep track of my time at an hourly rate of $200/hr, which is modest by Morgantown standards. If we recover any money by way of settlement or jury verdict or judgment I'll keep the standard one-third contingent fee plus expenses (court reporter fees, court fees, etc[) ], and the rest will be split evenly among you.

At the time Mr. Kohout sent this letter, his records show that he had received approximately $1,500.00 from more than twenty Big Bear property owners. Mr. Kohout did not enter into a written fee agreement with any of the Big Bear property owners.

By letter dated December 11, 2012, Mr. Kohout wrote again to the residents of Big Bear, telling the property owners that a suit had been filed against Big Bear Owners Association, Inc. and Nancy Friend under the names of Charles and Lorraine Galford. In the letter, Mr. Kohout requested that the recipients "please accept this letter as an invoice for $50 from each of you to keep this case going. ... You can tell any other residents who have not yet joined this action can join by contacting me and paying the $50 filing fee."

On January 16, 2013, Mr. Kohout sent another letter updating the Big Bear property owners on the status of the case and requesting additional funds. By letter dated February 7, 2013, Mr. Kohout advised that the case had been transferred to Preston County and that he required additional funds, asking that each recipient "send in another $50 payable to Ed Kohout." Mr. Kohout made a substantially similar request in a subsequent letter dated February 19, 2013. By letter dated February 25, 2013, Mr. Kohout clarified that he required that the residents pay "a simple $50 a month to keep this case going," and advised that he would withdraw from the case if he did not "receive everyone's payments by next week." With updates on the status of the case, Mr. Kohout sent more letters to the Big Bear property owners on May 17, 2013, August 5, 2013, and September 4, 2013, each time requesting a monthly fee of $50.

By letter dated October 21, 2013, Mr. Kohout informed the Big Bear property owners that their case had been dismissed. In addition, he wrote:

You have the right to file an appeal within 30 days, but I would need payment of at least $3,000 up front before starting to work on that and I am not optimistic that our Supreme Court will even hear the case. I think our chances, at best, are 50-50. If anyone of you wants to write me a check then I'll be happy to file the appeal. But for now, the case is over. ... I actually lost money on the case in terms of the value of my time spent verses what little I was paid, by some of you, and for which I am grateful.

Mr. Kohout's records show that at the time the case was dismissed, he had collected a total of $4,850.00 from the Big Bear property owners, $400.00 of which was paid to him by the Galfords. During the pendency of the litigation, all of the money Mr. Kohout received from the Big Bear property owners was deposited into his law office's operating account with United Bank.

On October 31, 2013, Mr. Kohout filed a notice of appeal with the Court in the Big Bear case, attaching a check for the $200 filing fee. The check, numbered 3149, was dated October 29, 2013, and was drawn on Mr. Kohout's operating account with United Bank. On December 3, 2013, Mr. Kohout gave the files associated with the case to Charles Galford, one of the named plaintiffs in the Big Bear action. By letter dated December 11, 2013, the Clerk's Office informed Mr. Kohout that on December 4, 2013, check number 3149 had been returned for non-sufficient funds. The Clerk's letter directed Mr. Kohout to provide the Clerk with a cashier's check or money order for the $200 filing fee within seven days of receipt of the letter. Mr. Kohout did not respond to this letter.

On December 13, 2013, Mr. Kohout filed a motion with the Court to withdraw as counsel in the case. On January 8, 2014, the Court denied the motion to withdraw for failing to comply with the Rules of Appellate Procedure. Ms. Edythe Nash Gaiser, Deputy Clerk, telephoned Mr. Kohout and advised him that his motion to withdraw had been denied, that he was expected to comply with the scheduling order and file a brief in the case, and that he continued to have an outstanding debt with the Court because of the unpaid $200 filing fee. In response, Mr. Kohout wrote a letter to the Court Clerk that same day, stating:

Your assistant (I think her name was Edie?) called today and advised me that the Court had denied my motion to withdraw from this case. I have already withdrawn from the underlying case² and my client[s] picked up their file and have moved on. I think my reaction to the decision may have offended her and for that I apologize. My secretary quit on me suddenly with a note last week for things have been hectic here. She then advised that the filing fee had not been paid and said it would be turned over to the ODC for action, which I did not understand. So I mailed you a check for the filing fee today and attached is a copy. Thank you for your understanding.

(footnote added). The check, number 093, was dated January 8, 2014, and was drawn on Mr. Kohout's new operating account with BB&T. The Court did not attempt to negotiate this check, requiring the filing fee be paid by cashier's check or money order.

Also on January 8, 2014, the Clerk's Office, at the direction of the Court, filed a disciplinary complaint against Mr. Kohout, directing that the ODC investigate the circumstances surrounding the unpaid filing fee. That same day, by letter, ODC advised Mr. Kohout of the complaint. On January 10, 2014, Mr. Kohout responded to ODC, writing:

My petition speaks for itself. ... The Galfords came and picked up their file. The Galfords paid me $50 along with some of the other campers at Big Bear. That's all. That money was properly accounted for. ... [T]he Galfords and the other campers failed and refused to continue to pay me for my time in working on this case. I sent them monthly letters urging them to pay, but we never heard back. ... There's no dishonesty, deceit or misrepresentation. To my knowledge, an ethics case has never been based on one bounced check. ...

I have not engaged in any conduct prejudicial to the administration of justice. This is simply about one bounced check, unbeknownst to me, which I paid promptly. It has been paid and this matter is moot. There are no ethical violations here that can be proven.

On January 15, 2014, Mr. Kohout again wrote to the Court, including with the letter an "Official Check" dated ...