Quiat, In re, s. 97SA121

Citation979 P.2d 1029
Decision Date26 April 1999
Docket NumberNos. 97SA121,97SA461,s. 97SA121
Parties1999 CJ C.A.R. 2192 In the Matter of Andrew L. QUIAT, Attorney-Respondent.
CourtSupreme Court of Colorado

Linda Donnelly, Attorney Regulation Counsel, Kenneth B. Pennywell, Assistant Regulation Counsel, Denver, Colorado, for Complainant.

George S. Meyer, Denver, Colorado, for Attorney-Respondent.

PER CURIAM.

The respondent in these two consolidated lawyer discipline cases, Andrew L. Quiat, was admitted to practice law in Colorado in 1972. A hearing board heard No. 97SA121, the bankruptcy matter, on May 8, 9, and 20, and June 6, 7, 25, and 26, 1996. At the conclusion of the hearing, the board found that Quiat had committed professional misconduct and recommended that he be suspended from the practice of law for six months. A hearing panel of the supreme court grievance committee approved the findings, but modified the recommendation to require Quiat to petition for reinstatement. Because we set aside several of the board's legal and factual determinations in the bankruptcy matter, we conclude that a three-month suspension without the requirement of reinstatement proceedings is appropriate.

In No. 97SA461, the collection matter, the hearing panel approved the findings and recommendation of a different hearing board that Quiat be privately censured for dishonest conduct. We dismiss this proceeding because the complaint did not adequately place Quiat on notice that he must defend against a charge of dishonest conduct, contrary to the requirements of C.R.C.P. 241.12(a)(2).

I. No. 97SA121
The Bankruptcy Matter

Despite the length of the hearing and size of the record, the relevant facts underlying No. 97SA121 are largely undisputed. In 1973, Quiat, John A. Vann, and another individual formed a general partnership called STAPO. STAPO was the general partner of a limited partnership, Mid-Continent Management Group (MMG). MMG owns ninety acres of undeveloped land in Douglas County. Quiat and Vann were among MMG's limited partners.

Vann tried to convey his interests in MMG and STAPO to his two children in 1987. The transfer of his partnership interest in STAPO was not effective because the partnership agreement required that he first offer his interest to the other partners, which he did not do. Vann asked Quiat to file an amended limited partnership document to reflect the transfer of his interests in MMG. Although Quiat agreed to do this, he never filed it.

On September 2, 1988, Vann filed a Chapter 7 bankruptcy petition, seeking to discharge nearly $4 million in debt. He was initially represented by a lawyer other than Quiat. The day before he filed for bankruptcy, Vann filed for legal separation from his wife, C. Jill Vann. In the legal separation proceeding, Vann and his wife were represented by separate lawyers. Jill Vann was listed as an unsecured cr

editor on her husband's bankruptcy schedules, and her claim was designated "disputed." Although the Vanns reconciled on November 1, 1989, the legal separation proceeding was pending throughout the time relevant to this case.

Assuming that Vann's attempted transfers of his partnership interests in STAPO and MMG were ineffective, Vann remained a general partner in STAPO and a limited partner in MMG at the time the bankruptcy was filed. Quiat also was a general partner and a limited partner of these entities. Further, Quiat represented the partnership.

In February or March 1989, Vann asked Quiat to represent him, his wife, and his two children in the bankruptcy. Quiat's two conflicts advisements and waivers to John and Jill Vann did not identify his relationship to STAPO and MMG. Quiat began working in the Vann bankruptcy in April 1989.

Quiat appeared on behalf of Vann in at least three adversary actions that were filed challenging the dischargeability of certain of Vann's debts. One of the proceedings challenged the validity of Vann's attempt to transfer his interests in STAPO and MMG to his children. Quiat was listed as a witness regarding the validity of these transfers. Count I of the complaint in this discipline case charged that Quiat violated DR 5-101(A), which prohibits a lawyer from accepting employment if the exercise of the lawyer's professional judgment on behalf of the client will be or reasonably may be affected by the lawyer's own financial, business, property, or personal interests--unless the client consents after full disclosure. 1 It also charged Quiat with violating DR 5-101(B) (providing that a lawyer shall not accept employment in contemplated or pending litigation if it is obvious that he ought to be called as a witness).

The hearing board found that Quiat violated DR 5-101(A) when he undertook to represent Vann in the bankruptcy because he had a business relationship with Vann both as a limited partner in MMG and as a general partner in STAPO. Since Quiat's advisement and waiver of conflict letter to Vann did not mention these business relationships, the board concluded that the disclosure was incomplete, rendering Vann's conflict waiver ineffective. The board also found that Quiat violated DR 5-101(B) because at the time he accepted employment by Vann, he was aware from the bankruptcy schedules that MMG and STAPO were listed as assets. Quiat knew that Vann had asked him to transfer Vann's partnership and limited partnership interests to his children and that he had not done so. In the board's view, Quiat had reason to believe that he would be called to testify concerning who owned the interests in MMG and STAPO, and that a conflict would exist between Vann and him, especially since Quiat had failed to complete the transfers of the partnership interests before the bankruptcy was filed. The trustee's lawyer advised Quiat in December 1989 that he would be called as a witness, which the board said was "an event Quiat should have anticipated without the least uncertainty."

One of Vann's creditors was Paul Fairchild, a limited partner in MMG. Fairchild was listed as an unsecured creditor for a contingent and disputed amount in a matter unrelated to MMG, and he never actually filed a claim in Vann's bankruptcy. Quiat admitted that as a general partner in STAPO and a limited partner in MMG he stood in a fiduciary relationship to Fairchild. See Elk River Assocs. v. Huskin, 691 P.2d 1148, 1152 (Colo.App.1984). Nevertheless, the board found that Quiat undertook to represent Vann in his bankruptcy even though the interests of the other general and limited partners, including his own and Fairchild's, were actually or potentially adverse to Vann's.

Usually a general partner's liability is joint and several with the other general partners for all debts of the general partnership and any limited partnership of which the general partnership is a general partner. See Black v. First Federal Savings & Loan Ass'n, 830 P.2d 1103, 1111 (Colo.App.1992), aff'd sub nom., La Plata Med. Ctr. Assocs. v. United Bank of Durango, 857 P.2d 410 (Colo.1993). A limited partner's liability is normally limited to the extent of the limited partner's contribution. See id. The hearing board found that MMG's limited partnership agreement created additional liability for the limited partners in that the limited partners were to contribute to the maintenance of the property and the payment of taxes. The board continued:

The general partners have a fiduciary relationship with the limited partners. As Vann's counsel, however, the respondent would be attempting to discharge Vann's debts, including his obligations to MMG, thereby increasing the financial exposure of the other limited partners. Doing so would compromise the fiduciary relationship the respondent had with the other partners, even in cases such as this where the assets and liabilities of MMG and STAPO were not substantial.

The board concluded that by representing Vann in the bankruptcy, "the respondent placed himself in the position of breaching his fiduciary relationship to his other partners in MMG and STAPO." The board therefore found that Quiat engaged in conduct that adversely reflected on his fitness to practice law, in violation of DR 1-102(A)(6).

Quiat began work on Vann's bankruptcy in April 1989. On April 19, 1989, Quiat entered into an agreement with Jill Vann to represent her interests in her husband's bankruptcy, with her husband guaranteeing the payment of her legal fees to Quiat. Quiat in fact billed John Vann for the services he rendered to both John and Jill Vann.

On May 31, 1989, when he entered into a retention agreement with John Vann to represent him in at least three of the adversary proceedings, Quiat included a conflict disclosure addressed to both John and Jill Vann. The letter indicated that Quiat had been retained by Jill Vann to protect her interests in approximately $15,000 worth of personal property and to explore with Jill the advisability of filing a claim as an unsecured creditor in John's bankruptcy. The letter stated that John had asked Quiat to represent him in three section 727 adversary proceedings. 2 "If any one of these actions are successful against John, it would totally bar John from discharging any debt to any of his creditors. Jill would be a creditor once she files her claim." On the other hand, if Quiat were successful in defending against the section 727 proceedings, "this would create or further an interest to Jill in the bankrupt estate." Therefore, "[a]ny of the actions I [Quiat] undertake for John may be in detriment to Jill's interest in the bankruptcy as a large potential unsecured creditor." Quiat's letter also stated, "I have indicated to each of you that there is a clear and blatant conflict of interests between my aggressively and zealously representing Jill and doing the same for John." Nevertheless,

you have both indicated to me that you desire that I represent each of you with the clear understanding that the overall goal is to bring John through the bankruptcy with as many...

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