In re Rankin

• Decision Date: 12 June 2015
• Docket Number: 113,235.
• Citation: 351 P.3d 1274,302 Kan. 181
• Parties: In the Matter of Rustin K. RANKIN, Respondent.
• Court: Kansas Supreme Court

302 Kan. 181

351 P.3d 1274

In the Matter of Rustin K. RANKIN, Respondent.

113,235.

Supreme Court of Kansas.

June 12, 2015.

Alexander M. Walczak, Deputy Disciplinary Administrator, argued the cause, and Kate F. Baird, Deputy Disciplinary Administrator, and Stanton A. Hazlett, Disciplinary Administrator, were on the formal complaint for the petitioner.

John J. Ambrosio, of Ambrosio & Ambrosio, Chtd., of Topeka, argued the cause, and Rustin K. Rankin, respondent, argued the cause pro se.

ORIGINAL PROCEEDING IN DISCIPLINE

PER CURIAM:

This is an attorney discipline proceeding against Rustin K. Rankin, of Fredonia, an attorney admitted to the practice of law in Kansas in 1999.

On August 12, 2014, 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 answered on September 4, 2014, admitting some allegations and denying others.

A panel of the Kansas Board for Discipline of Attorneys held a hearing on October 29 and 30, 2014, at which the respondent appeared in person and through counsel. The hearing panel determined the respondent violated KRPC 1.5(a) and (b) (2014 Kan. Ct. R. Annot. 515) (fees); 1.7(a)(2) (2014 Kan. Ct. R. Annot. 531) (conflict of interest); 1.8(a) (2014 Kan. Ct. R. Annot. 542) (conflict of interest); 1.15(a) (2014 Kan. Ct. R. Annot. 567) (safekeeping property); and 8.4(c) (2014 Kan. Ct. R. Annot. 680) (engaging in conduct involving misrepresentation) and (g) (engaging in conduct adversely reflecting on lawyer's fitness to practice law).

Upon conclusion of the hearing, the panel made the following findings of fact, conclusions of law, and disciplinary recommendation. The respondent took no exceptions to the hearing panel's report. We quote the report's pertinent parts below.

“Findings of Fact

....

“7. In addition to practicing law, the respondent is involved in a family farming operation, Rankin Family Farms. The respondent's family farms land near Fredonia, Kansas.

“8. In 2006, a representative from Wells Fargo contacted the respondent and asked him if he would serve as the closing agent in a real estate transaction. The real estate transaction involved P.M.'s purchase of 360 acres of property in Benedict, Kansas. At that time, P.M. was a 73–year–old widow. The respondent met P.M. for the first time at the closing.

“9. Following that contact, the respondent and P.M. discovered that they had many things in common. During the period of time that followed, P.M. engaged the respondent as her attorney, they became friends, and they became business associates. On a number of occasions, the respondent and his family traveled on vacations with P.M. Respondent testified he grew to care more for P.M. than his own mother. [Footnote: P.M. testified at the hearing on the formal complaint. She was 82 years old at the time. P.M. suffered an injury in her home in August 2014, and was still in the process of recovering from the injury. The respondent objected to her testimony on the grounds of competency. The competency objection was overruled. P.M. was unable to recall many facts but despite having a faulty memory contributed to by age and physical maladies, she appeared to understand her duty to tell the truth and she was capable of expressing herself to the hearing panel and counsel. However, the hearing panel has placed little weight on P.M.'s appearance, as it was apparent P.M.'s physical and mental capacities had significantly deteriorated since P.M.'s attorney-client and business relationships with her from 2007 through 2012.]

“10. In 2007, the respondent became P.M.'s attorney. The respondent did not send P.M. an engagement letter. There is no evidence that the respondent communicated the rate of his attorney fees to P.M.

“11. On October 10, 2008, the respondent drafted and P.M. executed a limited power of attorney, in favor of the respondent. The power of attorney granted the respondent extensive authority to act on behalf of P.M.

“12. On June 1, 2009, P.M. provided the following written statement:

‘To Whom It May Concern:

‘I, [P.M.], have chosen to enter into a business relationship with my friend Rustin Rankin. I have not been forced or coerced into this relationship and enter it with a sound and clear mind. Over the past several years, Mr. Rankin has helped me in numerous ways and I trust him fully and completely. He has advised me that it is my right to consult with another attorney regarding this relationship and have now decline [sic ] to do that. I understand that large sums of money will be involved in this partnership and will be transferred from time to time. It is my desire to allow these transactions and have communicated my wishes to Mr. Rankin and I believe that he has a clear understanding of them.

‘We will be engaged in property management as well as various farming and ranching pursuits. I clearly understand that I will be contributing more capital to our project and Mr. Rankin will be providing more management and oversight. I believe this to be fair and reasonable. I have known Mr. Rankin and his family for several years and have always enjoyed a fair and beneficial relationship.’

“13. At some point in time, P.M. created an entity called Madden Ventures. P.M. opened a checking account for the entity at the First National Bank in Fredonia.... The first check written on [the] account ... was written by the respondent on April 24, 2009. (A typographical error occurred and checks were issued under the name Madden Adventures. Any references to Madden Adventures in the record should be recognized as synonymous with Madden Ventures. Later, Madden Ventures evolved into Madden Ventures, LLC.)

“14. On July 15, 2009, the respondent obtained a personal loan for $15,000 from P.M. The respondent repaid P.M. with $7,500.00 in cash and $7,500 in ‘in kind services.’ (The respondent stipulated that he violated KRPC 1.8 when he obtained the loan from P.M.)

“15. P.M. wished to own property located near the Rankin Family Farm property. Thereafter, a neighbor to the Rankin Family Farm property offered to sell 75 acres (the ‘Donahey property’) to the respondent and his family for $125,000. On October 1, 2009, the respondent and his brother purchased the property using $125,000 from P.M.

“16. Immediately after purchasing the Donahey property, the respondent and his brother sold the property to Madden Ventures for $125,000. Further, the respondent and his brother had an agreement with P.M. that if she chose to sell the Donahey property at a future date, she would sell it to the respondent and his brother for the same purchase price, $125,000.

“17. There was no closing statement offered into evidence to prove the financial transaction wherein the respondent and his brother, Richard Rankin, sold the property to Madden Ventures. However, the following financial transactions do evidence the same.

a. On September 22, 2009, the respondent caused to be transferred, the sum of $75,000 from P.M.'s Individual Retirement Account (hereinafter ‘IRA’) funds ... unto [sic ] the Madden Adventures account....

b. On September 22, 2009, the respondent caused $50,000 from the Madden Adventures account ... to be transferred to and deposited in the Rankin Law Offices Trust Account....

c. On October 2, 2009, the respondent caused a check of $140,000 to be written on [the Madden Adventures] account ... and deposited in the Rankin Law Offices Trust Account....

d. On October 22, 2009, the respondent caused to be transferred the sum of $125,000 from P.M.'s IRA ... unto [sic ] the Madden Adventures account....

“18. In addition, the respondent testified that the funds ($125,000) went from P.M.'s IRA account to the Madden Adventures account to Rankin Law Offices Trust Account to the sellers, Donahey.

“19. On October 7, 2009, the respondent formally established a limited liability company with P.M., called Madden Ventures, LLC. The respondent and P.M. were each 50% owners of Madden Ventures, LLC. Additionally, there is evidence and testimony that the parties formed a business relationship and acted as partners prior to this date.

“20. P.M. contributed all the capital to Madden Ventures, LLC, including the proceeds from an IRA. Additionally, the respondent effected the transfer of real property, located in Kansas and elsewhere, owned by P.M. to Madden Ventures, LLC. (The respondent stipulated that he violated KRPC 1.8 by transferring his client's property to an entity in which he was an owner.)

“21. Despite the 50% ownership interest, the respondent did not contribute any capital to Madden Ventures, LLC. Likewise, the respondent did not transfer any of his real property into Madden Ventures, LLC. Respondent testified his contributions to Madden Ventures, LLC, were his management skills and his financial standing enabling him to guarantee loans for the LLC. Thus, with regard to the Donahey property, notwithstanding that respondent was the seller, settlement agent, and attorney for P.M., the respondent also acquired an ownership interest in the Donahey property as a buyer because of his 50% interest in Madden Ventures LLC.

“22. Madden Ventures, LLC, purchased additional real property, which included working farm land, established a cattle ranching operation, and received income from a hunting lease. P.M. built a house on a portion of the real property owned by Madden Ventures, LLC.“23. P.M. informed the respondent that she wished to make a change to her will and leave all her property upon her death to the respondent. The respondent informed P.M. that he could not draft a new will for her which named him as her heir. The respondent referred P.M. to John Chenoweth, a local attorney. P.M. consulted with Mr. Chenoweth and on November 24, 2009, P.M. executed a new will, naming the respondent as the executor and sole heir of her estate upon her death. The respondent paid Mr. Chenoweth's bill and then sought reimbursement from P.M.

“24. Respondent testified h

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