Ky. Bar Ass'n v. Wagenseller
| Decision Date | 17 June 2021 |
| Docket Number | 2020-SC-0294-KB |
| Citation | 626 S.W.3d 649 |
| Court | United States State Supreme Court — District of Kentucky |
| Parties | KENTUCKY BAR ASSOCIATION, Movant v. Judson Bayard WAGENSELLER, Respondent |
Judson Bayard Wagenseller was admitted to the practice of law in the Commonwealth of Kentucky on November 18, 1983.1 The KBA Inquiry Commission issued a seven-count charge against Wagenseller on January 11, 2019, in KBA File Number 17-DIS-0034. The disciplinary action was heard before the Trial Commissioner on September 17, 2019. The Trial Commissioner's report, containing findings of fact, conclusions of law, and recommendation, was filed with the Disciplinary Clerk on December 6, 2019. The Trial Commissioner's report came to the Court in due course, as required by SCR 2 3.360(4).
Neither party appealed the Trial Commissioner's recommendations, but our order entered August 20, 2020 gave notice to the KBA and Wagenseller under SCR 3.370(8) of our intention to review this matter. Accordingly, the KBA then submitted its brief asking the Court to adopt the Trial Commissioner's findings of misconduct and impose upon Wagenseller a minimum suspension of 180 days. Wagenseller has not filed a response. For reasons explained below, we impose a one-year suspension from the practice of law.
Wagenseller represented Anthony Huff for nearly 20 years, from 1996 to 2015, until Huff was imprisoned for federal fraud convictions. During those years, Wagenseller provided Huff's affiliate companies with general counsel legal services. Wagenseller maintained an office space in Huff's offices from 1998 until 2015. In 2010, Brandon Simmons, Huff's son-in-law, joined into business ventures with Huff. Thereafter, Huff, Simmons, and Wagenseller maintained adjacent offices in the same building. While Huff had roughly thirty business ventures, Wagenseller was primarily involved in three: Trinity HR, LLC; Trinity HR Services, LLC; and OBE LLC.3
When Huff went to prison, Simmons took over running the business ventures and Wagenseller continued providing legal representation. Wagenseller never entered into any form of representation or fee agreement with Huff or Simmons, and he never kept an accounting of legal work he performed or legal fees he earned.
But beginning around 2007 or 2008, Huff paid Wagenseller $2,000 weekly for legal work associated with Huff's extended family and myriad business ventures. After Huff's indictment in 2012, payment became sporadic. But Wagenseller, maintained representation, and companies associated with Huff or Simmons paid his fees. Wagenseller's fees were most often paid through transactions that had already generated funds in his IOLTA account. Wagenseller would typically ask Huff's former assistant, Michelle Brown, for permission to withdraw payments from his escrow account as needed and as the funds were available. This verbal consent was rarely documented but might have been documented via email.
In 2014, Wagenseller received a $12,500 advance from Huff through either Trinity HR or OBE. Information about this exchange is lacking because it was not documented in any way. Additionally, Huff and Simmons were not represented by outside counsel, nor were they advised to retain outside counsel. Wagenseller did not deposit these funds into the IOLTA account, but instead, maintains he repaid this advance through his legal services. But he made no accounting other than his own calculation that he worked off his debt by doing their "corporate legal" and "litigation" work every week at a rate of $2,000 per week.
In 2013, Wagenseller represented himself, Simmons, Simmons's wife, and two of their business affiliates in a suit in the Jefferson Circuit Court for defamation, wrongful use of civil proceedings, and abuse of process. Wagenseller was co-counsel with Kentucky attorney Michael A. Valenti. The suit was ultimately dismissed, but Wagenseller did not obtain informed written consent from the Simmonses to represent them in this suit while he was also a named plaintiff. He did not enter into a representation agreement relating to this litigation, nor did he explain to the Simmonses the potential conflict of representing their interests while also representing his own.
The suit was eventually settled, generating multiple settlement agreements, and the dates and terms of settlement are unconfirmed. Wagenseller produced a blank "Settlement Agreement, General Release, and Covenant Not to Sue," although he produced no evidence that the document was ever signed. Wagenseller did produce a document dated December 6, 2013, purporting to document receipt of $158,000 in settlement of this suit.
In 2012, when Huff's criminal charges became clear, Wagenseller asked Huff be allowed keep the $158,000 settlement for payment of his continued legal services, even though Huff was not a party to defamation suit. The Simmonses were never informed of this deal. Huff initially agreed to the payment, but later retracted full payment, insisting the money should go to the Simmonses. Wagenseller refused, claiming that the Simmonses had no damages in the defamation suit, so it was fair for him to take the entire amount. Wagenseller later accepted $75,000 of the settlement proceeds. This was documented in a settlement agreement, but the Simmonses were never aware that Wagenseller signed it on their behalf. Wagenseller maintains that he believed Huff was authorized to act as the Simmonses’ representative. Wagenseller kept these funds for his personal use and continued providing legal services to the Simmonses, Huff's family, and business affiliates but did not receive any additional payment.
Around the time Huff went to jail, Wagenseller loaned Simmons $43,000 through OBE. In fact, the settlement proceeds from the defamation suit funded the loan. At the time of loan, Wagenseller was providing legal services to Simmons and OBE and no separate counsel was consulted. Some $37,000 of the loan was paid directly to Simmons while $6,000 was paid to Kagen Law Firm. The payment to the law firm was made via a check signed by Wagenseller on behalf of Simmons.
In 2016, Wagenseller's representation of Simmons ended. No formal documents have been produced. Simmons defaulted on the loan to Wagenseller. Wagenseller eventually filed suit against Simmons and OBE to recover the loan amount and won a judgment in his favor against OBE.
The charge against Wagenseller, consisting of seven counts, is based upon the above facts and include:
We find adequate support in the record to support the Trial Commissioner's findings. The Trial Commissioner recommended that Wagenseller be suspended from the practice of law for at least 180 days’ suspension and complete the Ethics and Professionalism Enhancement Program offered by the KBA. We find a one-year suspension is more appropriate considering Wagenseller's professional misconduct.
In Kentucky Bar Association v. Ward ,4 we imposed a one-year suspension on an attorney who commingled client funds with his own and violated client confidences. In that case, we stated that we will impose sanctions for commingling funds ranging from a public reprimand to a two-year suspension. Here, not only has Wagenseller commingled funds but he...
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