Attorney Grievance Comm'n of Md. v. Kane

• Decision Date: 26 August 2019
• Docket Number: Misc. Docket AG No. 5, Sept. Term, 2018
• Parties: ATTORNEY GRIEVANCE COMMISSION OF MARYLAND v. Eugene Ignatius KANE, Jr.
• Court: Court of Special Appeals of Maryland

465 Md. 667

215 A.3d 242

ATTORNEY GRIEVANCE COMMISSION OF MARYLAND

v.Eugene Ignatius KANE, Jr.

Misc. Docket AG No. 5, Sept. Term, 2018

Court of Appeals of Maryland.

August 26, 2019

Argued by Erin A. Risch, Deputy Bar Counsel (Lydia E. Lawless, Bar Counsel, Attorney Grievance Commission of Maryland), for Petitioner.

Argued by William C. Brennan, Jr., Brennan, McKenna, Manzi, Shay, Chtd. (Greenbelt, MD), for Respondent.

Argued before: Barbera, C.J.,^* Greene, McDonald, Watts, Hotten, Booth, Lynne A. Battaglia (Senior Judge, Specially Assigned), JJ.

Booth, J.

This attorney discipline matter against Respondent, Eugene Ignatius Kane, Jr. ("Respondent" or "Mr. Kane") arises out of Mr. Kane's representation of two clients, Mrs. Lonergan and Mr. Arvin, in separate matters, as well as his personal bankruptcy filings in the United States Bankruptcy Court for the District of Maryland, his personal tax return filings and the related investigations of the Attorney Grievance Commission ("AGC").

On May 1, 2018, the AGC, through Bar Counsel, filed a Petition for Disciplinary or Remedial Action ("Petition") against Mr. Kane alleging that he had violated several provisions of the Maryland Lawyers' Rules of Professional Conduct ("MLRPC"). Specifically, Bar Counsel charged him with violating Rules 1.1 (Competence), 1.2 (Scope of Representation and Allocation of Authority Between Client and Attorney), 1.3 (Diligence), 1.4 (Communication), 1.7 (Conflict of Interest: General Rule), 1.15 (Safekeeping Property), 1.16 (Declining or Terminating Representation), 3.1 (Meritorious Claims and Contentions), 3.3 (Candor Toward the Tribunal), 3.4 (Fairness to Opposing Party and Counsel), 8.1 (Bar Admission and Disciplinary Matters), and 8.4 (Misconduct) of the Maryland Lawyers' Rules of Professional Conduct.¹ Mr. Kane was also charged with violating Maryland Rule 16-606.1² Pursuant to Maryland Rule 19-722(a), this Court designated the Honorable David W. Lease of the Circuit Court for Montgomery County to conduct an evidentiary hearing (the "attorney grievance hearing" or "hearing") regarding the alleged violations, and to provide findings of fact and conclusions of law pursuant to Maryland Rule 19-272. The attorney grievance hearing was held between December 10, 2018 and December 14, 2018. Mr. Kane represented himself throughout the hearing.

The hearing judge issued Findings of Fact and Conclusions of Law on March 14, 2019, in which he found by clear and convincing evidence that Mr. Kane violated MLRPC 1.1, 1.2, 1.3, 1.4, 1.7, 1.16, 3.1, 3.3, 3.4, 8.1, and 8.4.³ The hearing judge did not find a violation of Maryland Rule 16-606.1.

Bar Counsel filed one exception, which was to the hearing judge's failure to find Mr. Kane's prior warning by the AGC to be an aggravating factor. Mr. Kane filed a number of exceptions to both the hearing judge's findings of fact, as well as his conclusions of law.⁴

Concerning the appropriate sanction, Bar Counsel recommends that Mr. Kane be disbarred for his violations of the MLRPC. Mr. Kane requests that this Court impose a reprimand as the appropriate sanction. On June 6, 2019, this Court heard oral arguments in this matter. Mr. Kane appeared and was represented by counsel. We address the parties' exceptions below. For the reasons set forth herein, we hold that Mr. Kane's violations warrant the sanction of indefinite suspension.

I. The Hearing Judge's Findings of Fact

When no exception is made to a hearing judge's finding of fact, we accept it as established. Md. Rule 19-741(b)(2)(A). When a party excepts to a finding, we must determine whether the finding is established by the requisite standard of proof—in the case of an allegation of misconduct, clear and convincing evidence. Md. Rules 19-741(b)(2)(B), 19-727(c). The standard of review for a hearing judge's factual findings where a party excepts to the findings is the clearly erroneous standard. Attorney Grievance Comm'n v. Chanthunya , 446 Md. 576, 588, 133 A.3d 1034 (2016) (cleaned up). We summarize the hearing judge's findings of fact and other undisputed matters in the record. We also address any exceptions in relation to the findings to which they pertain as follows.

Mr. Kane's Credentials and Practice⁵

Mr. Kane graduated from Georgetown Law School in 1983 and was admitted to the Maryland Bar on December 20, 1983.

He is a solo practitioner with a virtual office located in Montgomery County, Maryland. While Mr. Kane's mail was delivered to his virtual office, he conducted meetings in public places, such as restaurants and coffee shops, and otherwise worked from his home, also located in Montgomery County. Mr. Kane did not have any administrative support, other than a receptionist at his virtual office.

The Lonergan Matter

In 2006, Brian Lonergan and his wife ("Mrs. Lonergan") purchased a PostNet franchise. Soon thereafter, Mr. Lonergan established Montgomery Business Solutions, LLC ("MBS") to operate the printing and shipping franchise. MBS traded under the names PostNet and PostNet MD 112 (hereinafter "PostNet"). Mr. Lonergan was the sole member and owner of MBS and managed the day-to-day operations of the store. Mrs. Lonergan, an attorney, was not involved in the operation of the MBS business venture.

1. PNC v. MBS

In November 2010, Mr. Lonergan retained Mr. Kane to represent MBS in connection with collection efforts by PNC Merchant Services Company ("PNC") after it was discovered that MBS had been the target of a credit card scam. The transaction at issue involved a large order placed by a third-party that was paid for with a stolen credit card. PNC claimed that MBS owed approximately $50,000 due to a charge back to MBS's account after the transaction was determined to have been fraudulent. PNC cancelled MBS's merchant account and placed MBS on a "blacklist," preventing MBS from conducting credit card transactions.

During their initial meeting, Mr. Kane indicated that he could attempt to negotiate a resolution with PNC. Mr. Lonergan, through PostNet, retained Mr. Kane. Mr. Lonergan testified that he did not recall discussing an hourly rate with Mr. Kane, but he understood that Mr. Kane would charge him an hourly rate for his services.

Mr. Kane attempted to negotiate a resolution with PNC, to no avail. PNC would not agree to remove MBS from the blacklist, which had the effect of preventing MBS from accepting credit card payments from its customers. As a result, in September of 2011, PNC filed a complaint against MBS in the Circuit Court for Montgomery County. Prior to trial, PNC offered to settle the matter by removing MBS from the blacklist in exchange for a payment of $50,719.25. It became apparent to Mr. Kane that MBS had no defense, so he investigated other options.

In early June of 2012, Mr. Kane advised Mr. Lonergan that he had consulted with a bankruptcy attorney, who recommended that they create a new entity to operate PostNet so that the business could continue to operate.⁶ Mr. Kane indicated that the new entity would be able to process credit cards. Mrs. Lonergan, skeptical of this advice, asked Mr. Kane whether his proposed course of action could be successful, and whether there would be any associated risk. Mr. Kane told Mrs. Lonergan that there was nothing wrong with attempting to operate under the new entity, although it might not be successful. Mr. Kane advised that the only potential risk was that the credit card processing company might discover a connection between MBS and the newly formed company, which could lead to the loss of the filing fees paid to create the new entity.

Based upon Mr. Kane's advice, the Lonergans agreed that Mr. Lonergan would form a new company. The day before the PNC trial, Mr. Kane filed articles of organization with the Maryland State Department of Assessment and Taxation ("SDAT") establishing Matrix Printing, LLC ("Matrix"). Matrix was registered to the same address as MBS and was intended to control and continue MBS's printing and shipping franchise.

The following day, Mr. Kane appeared in the circuit court on behalf of MBS. Mr. Kane advised PNC and the court that MBS would not contest the matter. The circuit court entered judgment in favor of PNC against MBS in the amount of $50,719.25. Mr. Kane did not inform PNC or the circuit court of the formation of Matrix prior to the entry of the judgment; however, there was no duty to disclose such information.

PNC commenced efforts to collect on the judgment and garnished MBS's bank accounts. Mr. Kane advised Mr. Lonergan that MBS should explore filing bankruptcy because PNC was unrelenting. Mrs. Lonergan requested a telephone call with Mr. Kane regarding the potential bankruptcy filing. She again asked if there was risk or anything illegal about the creation of Matrix. Mr. Kane was adamant that there was no risk. Mr. Kane spoke with MBS's accountant, Mr. Burstein, as well as a bankruptcy attorney, and they both agreed with his recommendation.

2. MBS Chapter 7 Bankruptcy

Mr. Kane filed a Chapter 7 Bankruptcy petition on behalf of MBS in the United States Bankruptcy Court for the District of Maryland ("Bankruptcy Court") in March of 2013. The filing contained numerous deficiencies, including the failure to file many schedules. On April 2, 2013, the Bankruptcy Court dismissed the petition because the deficiencies had not been cured.

The following day, Mr. Kane filed an appearance of counsel and an affidavit for explanation of non-compliance and disclosure, wherein Mr. Kane advised that he did not have an account to electronically file MBS's pleadings. Mr. Kane also filed a motion to reinstate Chapter 7, associated schedules, and a statement of financial affairs. Mr. Kane's filings once again contained deficiencies. He failed to include the required declaration from the debtor or to file a certificate of service as required by the bankruptcy rules.

The Bankruptcy Trustee ("Trustee") retained counsel, Jeffrey M. Orenstein, to investigate MBS and Matrix. The bankruptcy judge...