In Re: Eric J. Snyder

• Decision Date: 27 December 2000
• Citation: 35 S.W.3d 380
• Parties: (Mo.banc 2000) . In Re: Eric J. Snyder, Respondent. Case Number: SC82299 Supreme Court of Missouri Handdown Date:
• Court: Missouri Supreme Court

35 S.W.3d 380 (Mo.banc 2000)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

In Re: Eric J. Snyder, Respondent.

Case Number: SC82299

Supreme Court of Missouri

Handdown Date: 12/27/2000

Appeal From: Original Disciplinary Proceeding

Counsel for Appellant: Sharon K. Weedin

Counsel for Respondent: Party Acting Pro Se

Opinion Summary:

Attorney Eric Snyder made fee agreements with two separate clients where he acquired adverse pecuniary interests in their residential properties. The Disciplinary Hearing Panel found that he violated rules of professional conduct related to conflict of interest and competence.

DISCIPLINE ORDERED.

Court en banc holds:

When a lawyer accepts an interest in property other than cash for a fee, and after the transfer both the lawyer and client hold a legal or equitable interest in the property, the transaction is subject to the heightened scrutiny and notice requirements of Rule 4-1.8(a). In both instances, Snyder failed to follow the procedural safeguards in the rules, avoid these conflicts, and withdraw, among other things. Snyder also provided incompetent representation to one client, lacking an understanding of the basic tenets of bankruptcy law. In determining the level of discipline, the Court considers mitigating factors and Missouri rules and American Bar Association model rules. Snyder's license is suspended indefinitely with leave to apply for reinstatement no sooner than six months from the date of this opinion and after completion of continuing legal education courses in bankruptcy and ethics as directed by the Chief Disciplinary Counsel.

Limbaugh, J., concurs in separate opinion filed. Concurring opinion summary:

The concurring author states that Snyder's motion for rehearing, like his earlier briefs and motions, is replete with factual mischaracterization and legal misapplication, and that he refused to concede trivial points. These items make it apparent that it may take a suspension, rather than a reprimand, to gain his attention and reform his conduct.

Opinion Author: PER CURIAM

Opinion Vote: DISCIPLINE ORDERED. Price, C.J., White, Holstein and Benton, JJ., concur;

Limbaugh, J., concurs in separate opinion filed; Wolff, J., concurs in opinion of Limbaugh, J.

Opinion:

Opinion modified on Court's own motion; separate dissenting opinion of Limbaugh, J., withdrawn; separate concurring opinion of Limbaugh, J., filed; Wolff, J., concurs in opinion of Limbaugh, J.

I.

Respondent obtained his Missouri license to practice law in 1975 and is engaged in a solo practice in the areas of tax, estate planning, criminal law, domestic law, and bankruptcy. Respondent's disciplinary action relates to fee agreements fashioned with two clients where he acquired adverse pecuniary interests in the clients' respective residential properties. In determining the level of discipline to impose, the Court considers Respondent's actions in light of the propriety of sanctions under the Missouri rules and the American Bar Association model rules for attorney discipline (ABA model rules). Respondent's license is ordered suspended indefinitely with leave to apply for reinstatement not sooner than six months from the date of this opinion and after completion of continuing legal education courses in bankruptcy and ethics as directed by the chief disciplinary counsel (CDC).

Client Jesse Henderson

On April 29, 1993, Respondent met with Jesse Henderson at the Chesterfield adult correctional facility to discuss representing him regarding a criminal complaint of rape and sodomy. Nine days prior to meeting, the two discussed the use of Henderson's life estate in a single-family residence to cover payment of bond and attorney's fees. Henderson also shared a remainder interest in the property with his eight brothers and sisters. Respondent convinced Henderson to execute two quitclaim deeds transferring his ownership interests to Respondent to effectuate the bond and fee arrangement. The terms of this agreement were not communicated in writing to Henderson prior to or during the transaction, nor was he advised to consult with independent counsel prior to entering into the arrangement. A written agreement memorializing the arrangement was executed on June 18, 1993, two months after signing the deeds.

The prosecuting attorney refused to accept one of the deeds in lieu of bond, because the other remaindermen would not join in signing over their interests. Henderson ultimately pleaded guilty to the criminal charges and remained incarcerated until February 24, 1994. Eight months after his release, Respondent provided Henderson with a document detailing attorney's fees of $26,123.76 and costs of $7,100. Respondent included in his bill time spent inspecting the house, time spent buying materials for improvement of the house, the actual home improvements, "protection and collection costs," and property taxes paid by Respondent in the amount of $10,383.

In November 1994, unable to sell the home due to the remaindermen's refusal to consent, Respondent convinced Henderson to sign another agreement authorizing the partition, rental, and sale of his life estate. As part of this agreement, Respondent was able to lease the property to his daughter for $433 per month to be credited towards the total fees charged. Sometime thereafter, Respondent filed an action for partition with the Circuit Court of St. Louis County, but once Respondent fully explained the implications of the partition sale, Henderson reneged. Notwithstanding Henderson's objections, Respondent elected to continue with the action although it was ultimately dismissed. As of January 1998, Respondent claims a debt against Henderson in the amount of $36,000, including interest.

Client Bishweshwar Mahendra

Respondent represented Bishweshwar Mahendra in a criminal tax case. In satisfaction of his fees, Mahendra executed a promissory note secured by a deed of trust for up to $35,000 on his house. Prior to completion of this representation, Respondent learned that Mahendra's mortgagee was going to foreclose on the house. To protect the equity in the house, Respondent convinced Mahendra to file chapter 7 bankruptcy proceedings. The bankruptcy sale collected $17,171.64 on the house. After a dispute arose between Respondent and the bankruptcy trustee over the amount owed Respondent for his fees, Respondent filed a lien on the total amount of those proceeds. The bankruptcy court ordered payment to Respondent in the amount of $4,348 for the legal services provided in Mahendra's criminal defense and $1,000 for the bankruptcy services. The judge offset this award by $1,000 in sanctions against the Respondent for the conflict of interests created by his arguments for payment of his fees.

Respondent appealed the decision of the bankruptcy court to the federal district court. The district court not only affirmed the sanctions but also increased them by $4,352.80 -- the amount of fees the bankruptcy estate incurred in responding to the appeal -- for filing a frivolous appeal. Respondent then appealed to the Eighth Circuit Court of Appeals, arguing that "to the extent [he] held an interest in the property for his encumbrance the debtor did not hold an interest in the property." Thus, according to Respondent, the proceeds from the sale of the house were not part of the bankruptcy estate. The Eighth Circuit, however, determined that his lien argument against the estate was not supported by the law or a good faith argument for modification of the law. Respondent was assessed an additional $7,093 in sanctions for filing the second frivolous appeal. The bankruptcy estate incurred a total of $21,500 in attorney's fees defending against the Respondent's collateral claims, resulting in a complete depletion of the estate's assets.

II.

The disciplinary committee filed a two-count information against Respondent in January 1999. Count one alleged professional misconduct in violation of Rules 4-1.8 and 4-1.7 (conflict of interest) with regard to Henderson's representation. Count two alleged violation of Rules 4-1.1 (competence) and 4-1.8 and 4-1.7 with regard to Mahendra's representation. After a two-day hearing, Respondent was found to have violated the rules of professional conduct as charged in count one, and found in violation of the competency rule in count two. The Disciplinary Hearing Panel ("DHP") recommended a license suspension for eight months with leave to apply for reinstatement upon completion of continuing education credits in bankruptcy and ethics. The CDC seeks affirmation of the DHP's above recommendations, but also seeks a finding of violation of Rules 4-1.7 and 4-1.8 with respect to count two and Mahendra's representation.

III.

The DHP's findings of fact, conclusions of law, and recommendations are advisory. In re Oberhellmann, 873 S.W.2d 851, 852-53 (Mo. banc 1994). This Court reviews the evidence de novo, independently determining all issues pertaining to credibility of witnesses and the weight of the evidence, and draws its own conclusions of law. Id. Professional misconduct must be proven by a preponderance of the evidence before discipline will be imposed. In re Smith, 749 S.W.2d 408, 410 (Mo. banc 1988).

Missouri's general conflict of interest rule, Rule 4-1.7(b), states in part:

A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless: (1) the lawyer reasonably believes the representation will not be adversely affected; (2) the client consents after consultation.

Some conflicts of interest are considered to compromise the client's interests per se and are strictly prohibited or, at a minimum, require additional safeguards. With regard to prohibited transactions, Rule 4-1.8(a) states:

(a) A lawyer shall not enter into a business...