Case Title: Board of Attorneys Professional Responsibility v. John W. Gibson

Citation: 

Docket Number: 1998AP000112-D

State: wisconsin

Court: Wisconsin Supreme Court

Date: 1999-11-05T00:00:00Z

Document:
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-0112 
 
 
Complete Title 
of Case: 
 
 
In the Matter of Disciplinary Proceedings 
Against John W. Gibson, Attorney at Law. 
 
Board of Attorneys Professional Responsibility,  
 
Complainant-Appellant-Cross-Respondent, 
 
v. 
John W. Gibson,  
 
Respondent-Respondent-Cross-Appellant.  
 
DISCIPLINARY PROCEEDINGS AGAINST GIBSON 
 
 
Opinion Filed: 
November 5, 1999 
Submitted on Briefs: 
 
Oral Argument: 
October 12, 1999 
 
 
Source of APPEAL 
 
COURT: 
 
 
COUNTY: 
 
 
JUDGE: 
 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating: ABRAHAMSON, C.J., did not participate. 
 
 
ATTORNEYS: 
For the complainant-appellant and cross 
respondent, there were briefs by Marc. T. McCrory and Brennan, 
Steil, Basting & MacDougall, S.C., Janesville and oral argument 
by Marc T. McCrory. 
 
 
For the respondent-respondent and cross appellant 
there were briefs and oral argument by John W. Gibson, Madison. 
 
No. 
98-0112-D 
 
1 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear in 
the bound volume of the official reports. 
 
 
No. 98-0112-D 
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
In the Matter of Disciplinary Proceedings 
Against John W. Gibson, Attorney at Law. 
 
Board of Attorneys Professional  
Responsibility,  
 
          Complainant-Appellant-Cross- 
          Respondent, 
 
     v. 
 
John W. Gibson,  
 
          Respondent-Respondent-Cross- 
          Appellant.  
FILED 
 
NOV 5, 1999 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
ATTORNEY 
disciplinary 
proceeding.  Attorney's 
license 
suspended.  
¶1 
PER 
CURIAM   The 
Board 
of 
Attorneys 
Professional 
Responsibility 
(Board) 
appealed the 
recommendation of the 
referee that the license of John W. Gibson to practice law in 
Wisconsin be suspended as discipline for giving incompetent 
representation to clients in a bankruptcy matter and failing to 
communicate adequately with those clients concerning their 
opportunity to protect and promote their interests in that 
matter. The Board contended that the seriousness of that 
misconduct, viewed in light of prior discipline that has been 
imposed on Attorney Gibson for professional misconduct, warrants 
a six-month license suspension.  Attorney Gibson cross-appealed 
No. 
98-0112-D 
 
2 
from 
the 
referee's 
conclusions 
that 
his 
conduct 
in 
the 
bankruptcy matter violated the Rules of Professional Conduct for 
Attorneys.   
¶2 
We determine that the referee properly concluded that 
Attorney Gibson engaged in professional misconduct in his 
representation of the clients in the bankruptcy matter.  We 
determine further that a six-month license suspension is the 
appropriate discipline to impose for that misconduct.  By his 
conduct established in this proceeding, Attorney Gibson again 
has demonstrated that he is unfit to provide clients with the 
competent and diligent representation that they have a right to 
expect.  Under our rules,1 a six-month license suspension will 
                     
1 The 
rule on 
reinstatement, 
SCR 
22.28, 
provides in 
pertinent part:  Reinstatement 
 . . .  
(3) An attorney whose license is revoked, suspended 
for 6 months or more for misconduct, or suspended for 
medical incapacity shall not resume practice until the 
license is reinstated by order of the supreme court. A 
petition for reinstatement from a suspension for a 
definite term may be filed at any time commencing 3 
months prior to the expiration of the suspension 
period. A petition for reinstatement from a license 
revocation may be filed at any time commencing 5 years 
after the effective date of revocation. A petition for 
reinstatement from a suspension for medical incapacity 
may be filed at any time. A petition for reinstatement 
shall be filed with the court and a copy shall be 
filed with the administrator.  
(4) The petition for reinstatement shall show that:  
(a) The petitioner desires to have the petitioner's 
license reinstated.  
(b) The petitioner has not practiced law during the 
period of suspension or revocation.  
No. 
98-0112-D 
 
3 
                                                                  
(c) The petitioner has complied fully with the terms 
of the order and will continue to comply with them 
until the petitioner's license is reinstated.  
(d) The 
petitioner 
has 
maintained 
competence 
and 
learning in the law, including a list of specific 
activities pursued.  
(e) The petitioner's conduct since the suspension or 
revocation has been exemplary and above reproach.  
(f) The petitioner has a proper understanding of and 
attitude toward the standards that are imposed upon 
members of the bar and will act in conformity with the 
standards.  
(g) The petitioner can safely be recommended to the 
legal profession, the courts and the public as a 
person fit to be consulted by others and to represent 
them and otherwise act in matters of trust and 
confidence and in general to aid in the administration 
of justice as a member of the bar and as an officer of 
the courts.  
(h) The 
petitioner 
has 
fully 
complied 
with 
the 
requirements of SCR 22.26.  
(i) The petitioner indicates the proposed use of the 
license if reinstated.  
(j) The petitioner has fully described all business 
activities 
during 
the 
period 
of 
suspension 
or 
revocation.  
(k) The petitioner has made restitution or settled all 
claims from persons injured or harmed by petitioner's 
misconduct or, if the restitution is not complete, 
petitioner's explanation of the failure or inability 
to do so.  
(5) The 
administrator 
shall 
investigate 
the 
eligibility of the petitioner for reinstatement and 
file a report and recommendation with the board. At 
least 30 days prior to the hearing on the petition 
before a professional responsibility committee, the 
administrator shall publish a notice in a newspaper of 
general circulation in any county in which the 
petitioner maintained an office prior to suspension or 
revocation and in the county of the petitioner's 
residence during the suspension or revocation and in 
an official publication of the state bar.  
The notice shall contain a brief statement of the 
nature and date of suspension or revocation, the 
matters required to be proved for reinstatement and 
the date on which a hearing on the petition will be 
No. 
98-0112-D 
 
4 
require that before his license may be reinstated he establish 
to the court's satisfaction that he is fit to represent others 
in the legal system.  
¶3 
Attorney Gibson was licensed to practice law in 1961 
and practices in Madison.  He has been disciplined twice for 
professional misconduct.  In 1985 the court suspended his 
license for 90 days for making sexual advances to a client.  
Disciplinary Proceedings Against Gibson, 124 Wis. 2d 466, 369 
N.W.2d 695.  In 1997 the court suspended his license for 60 days 
for continuing to practice law while suspended from membership 
in the State Bar, misrepresenting to an opposing party in 
litigation that his client had filed for bankruptcy, having 
clients sign bankruptcy petitions and forms in blank, delegating 
to nonlawyer staff in his office the decision whether and when 
to file bankruptcy petitions on behalf of clients and failing to 
supervise that staff properly, and opposing motions of the 
                                                                  
held before a professional responsibility committee. 
In the case of a license suspension, the hearing shall 
not be held prior to the expiration of the period of 
suspension.  
(6) The petitioner has the burden of demonstrating by 
clear and convincing evidence that the petitioner has 
the moral character to practice law in this state and 
that the petitioner's resumption of the practice of 
law will not be detrimental to the integrity and 
standing of the bar or the administration of justice 
or subversive of the public interest. The petitioner 
shall 
also 
demonstrate 
by 
clear 
and 
convincing 
evidence full compliance with the terms of the order 
of suspension or revocation and the requirements of 
SCR 22.26.  
 . . .  
 
No. 
98-0112-D 
 
5 
bankruptcy trustee to dismiss his clients' bankruptcy petitions 
for his own failure to include repayment plans.  Disciplinary 
Proceedings Against Gibson, 213 Wis. 2d 189, 570 N.W.2d 249.  
The referee in the instant proceeding, Attorney Norman Anderson, 
made the following findings of fact, which the parties do not 
contest.   
¶4 
In 
October 
1995, 
Attorney 
Gibson 
filed 
a 
debt 
adjustment plan under Chapter 13 of the federal bankruptcy law 
on behalf of a couple against whom a foreclosure action had been 
commenced the preceding month by their mortgagee.  The clients 
believed they had to sell their house because they needed to get 
out of debt, although they preferred to keep the house if they 
could.  When the clients failed to make mortgage payments called 
for in the plan, the bankruptcy court dismissed the plan in 
early 1996.  After Attorney Gibson filed a new plan in April 
1996, the mortgagee discovered that its mortgage had not been 
recorded.  As a consequence, the mortgagee was in the position 
of an unsecured creditor in the bankruptcy matter and would not 
be able to record its mortgage unless the bankruptcy court 
lifted the stay of further proceedings against the debtors that 
had been ordered.  
¶5 
If the mortgagee could not perfect its mortgage by 
recording 
it 
and 
the 
clients 
completed 
the 
Chapter 
13 
bankruptcy, the mortgage would be an unsecured debt and receive 
appreciably different treatment than if it had been recorded.  
In a Chapter 13 proceeding, mortgage holders with perfected 
mortgages must be paid in full, while unsecured creditors may be 
No. 
98-0112-D 
 
6 
paid only a percentage of their claims and, in some cases, 
nothing, depending on the debtor's income and liabilities and 
the bankruptcy plan that is approved.   
¶6 
The mortgagee filed a motion asking the bankruptcy 
court to lift the stay to allow it to record its mortgage.  
Copies of the motion and notice of motion were mailed to 
Attorney Gibson, to his clients, and to the bankruptcy trustee 
on April 24, 1996.  Pursuant to bankruptcy practice, the notice 
of motion stated that unless a written objection and request for 
hearing were filed by May 9, 1996, the bankruptcy court would 
enter an order granting the motion.  Counsel for the mortgagee 
estimated the chance that Attorney Gibson would file an 
objection to the motion at better than 50 percent.  If he did, 
the mortgagee's attorney considered the chance of having the 
stay lifted to be less than 50 percent.  
¶7 
During 
the 
time 
for 
objection, 
the 
mortgagee's 
attorney spoke to Attorney Gibson, who said he was not going to 
object to the motion.  When no objection was filed, the 
bankruptcy court signed the order lifting the stay, the mortgage 
was recorded, and the mortgagee became a secured creditor with a 
perfected lien.  The referee found that if Attorney Gibson had 
objected and the objection had been sustained, the mortgagee 
"would have been at the mercy of the debtors and the Court as to 
how much, if any, of the mortgage would be paid under the 
debtor's Chapter 13 Plan if it was confirmed."   
¶8 
Based on statements of the bankruptcy judge at the 
plan confirmation hearing, the mortgagee's attorney concluded 
No. 
98-0112-D 
 
7 
that he would have had no chance of succeeding on the motion to 
lift the stay if Attorney Gibson had filed an objection.  The 
judge said,  
 
Somehow [the mortgagee] went from being unsecured to 
being secured by virtue of the debtor sitting on its 
rights where they could have been knocked out and all 
creditors would have been paid.  It seems like a sad 
situation where the debtor had the secured creditor 
right where they wanted them and could have profited 
from the situation.  They had them in bankruptcy in a 
timely fashion and then really to the disadvantage of 
all other creditors let them out.   . . . .   
 
 . . .  
 
 
I really can't believe, Mr. Gibson, that you 
understood what you were doing on behalf of your 
clients or that you explained to them adequately for 
them 
to 
understand 
that 
they 
were 
essentially 
providing a mortgage that wouldn't otherwise exist on 
a debt that could have been discharged  . . . through 
regular payments.  These are people who could have 
kept their house if they wanted to.  I'm just 
staggered by it. 
The bankruptcy judge then declined to confirm the proposed debt 
adjustment plan.  Ultimately, the mortgagee foreclosed on its 
mortgage, and the clients' home was sold at a sheriff's sale. 
¶9 
The referee found that, on the basis of his own 
testimony, Attorney Gibson was uncertain of the full impact of 
the motion to lift the stay.  Attorney Gibson testified that he 
telephoned the bankruptcy trustee for advice about the motion, 
but the trustee was not able to discuss the matter with him at 
that time because he had to make a court appearance.  Attorney 
Gibson had no further discussion with the trustee about the 
motion until after it had been granted.  Then, when the trustee 
No. 
98-0112-D 
 
8 
asked him why he had not objected to the motion, Attorney Gibson 
responded that he was not aware the motion had been filed.  
¶10 At the confirmation hearing, Attorney Gibson told the 
court that he had explained the motion to his clients and told 
them an objection likely would be unsuccessful.  He stated that 
it was their decision not to object.  The trustee testified that 
he was surprised by Attorney Gibson's statements because of what 
he had said earlier.  The trustee promptly informed the court 
that when he asked him why he had not opposed the motion, 
Attorney Gibson told him he was unaware the motion had been 
filed.  The trustee testified that he was upset by Attorney 
Gibson's disservice to his clients and by the fact that the 
granting of the motion destroyed any chance that the debt 
adjustment plan would be confirmed.  
¶11 Following the confirmation hearing, Attorney Gibson 
and his clients went to the bankruptcy trustee's office to 
discuss with him why the plan had not been confirmed.  There, 
the trustee explained the advantages and disadvantages of 
objecting to the mortgagee's motion.  The trustee testified that 
the clients were "stunned," for they had not heard before that 
they had the option to oppose the motion.   
¶12 The clients testified at the disciplinary hearing that 
Attorney Gibson had not discussed the mortgagee's motion and its 
ramifications with them and that they first learned about the 
motion after it had been granted.  Attorney Gibson, on the other 
hand, testified that he had discussed the motion with the wife, 
who decided not to object because it might delay the sale of the 
No. 
98-0112-D 
 
9 
house.  Based on that conflicting testimony, the referee found 
that even if he did have a conversation with the wife about the 
motion, Attorney Gibson did not discuss the full consequences of 
the grant or denial of it in such a way that the clients could 
understand their options and make a rational decision whether to 
object to it.  The referee found the testimony of the clients 
clear and convincing that if the motion and its consequences had 
been explained to them, they would have objected to it.  
¶13 When he filed the initial plan and schedules in the 
matter, Attorney Gibson did not include a homestead exemption 
claim.  The bankruptcy trustee testified in the instant 
proceeding that it is unheard of that a debtor would not claim 
the $40,000 homestead exemption under state law or the $15,000 
per spouse exemption under federal law.  He said that if the 
mortgagee's 
motion 
had 
been 
opposed 
successfully, 
the 
unperfected mortgage would have been treated as an unsecured 
claim, the clients then could have claimed a $40,000 equity in 
their homestead, and there would have been additional money 
available to pay their creditors.  It was clear to the trustee 
that the court would have prevented the mortgagee from recording 
the mortgage and would have treated it as an unsecured creditor. 
 Accordingly, he testified, Attorney Gibson's failure to object 
to the motion caused the clients to lose the opportunity to use 
the $40,000 exemption to keep their home and have money 
available to pay their debts.  The referee found that the 
clients had been unaware that they could have retained a $40,000 
equity in their home if the homestead exemption claim had been 
No. 
98-0112-D 
 
10
made and that they learned of that opportunity for the first 
time in the trustee's office. 
¶14 The 
bankruptcy 
judge 
testified 
in 
the 
instant 
proceeding that Attorney Gibson should have objected to the 
mortgagee's motion and that there was virtually no potential 
financial detriment to the clients in doing so; not objecting to 
it, however, resulted in an enormous financial detriment, as it 
eliminated the clients' opportunity to use the $40,000 homestead 
exemption.  The judge testified further that if Attorney Gibson 
had objected to the motion, he could not imagine having denied 
it.  
¶15 The 
bankruptcy 
judge 
was 
familiar 
with Attorney 
Gibson's bankruptcy practice, which dealt predominantly with 
Chapter 13 proceedings.  That judge had issued punitive 
sanctions against Attorney Gibson on two occasions because of 
frivolous objections he had made to motions to dismiss plans 
when the grounds for dismissal were patently clear and it 
appeared he had not discussed the matters with his clients and 
obtained their authorization to object to the dismissals.  
Responding to Attorney Gibson's testimony that he was afraid to 
file an objection to the motion to lift the stay for fear that 
he would be sanctioned by the judge, the judge said he could not 
imagine sanctioning anyone for objecting to that motion.   
¶16 After the Board commenced its investigation into his 
conduct in this matter, Attorney Gibson telephoned the wife he 
had represented and insisted that she testify that she had had a 
conversation with him about the motion to lift the stay.  When 
No. 
98-0112-D 
 
11
the client told him that she could not recall such a 
conversation ever taking place and that she would not lie for 
him, Attorney Gibson became angry.   
¶17 On the basis of the foregoing facts, the referee 
concluded that Attorney Gibson's failure to object to the 
mortgagee's motion to lift the stay, forfeiting thereby his 
clients' ability to retain equity in their home and permitting 
the 
unsecured 
mortgagee 
to 
become 
a 
secured 
creditor, 
constituted incompetent representation and demonstrated a lack 
of 
legal 
knowledge, 
skill, 
thoroughness 
and 
preparation 
reasonably necessary for representing the clients, in violation 
of SCR 20:1.1.2  In the referee's words, Attorney Gibson "failed 
his clients miserably."  The referee concluded further that 
Attorney Gibson's failure to communicate adequately with the 
clients about their opportunity to oppose the motion and use the 
mortgagee's mistake to their advantage was a failure to 
communicate with his clients and keep them apprised of the 
status of their matter, in violation of SCR 20:1.4(a).3 
                     
2 SCR 20:1.1 provides:  Competence 
A lawyer shall provide competent representation to a 
client. Competent representation requires the legal 
knowledge, 
skill, 
thoroughness 
and 
preparation 
reasonably necessary for the representation. 
 
3 SCR 20:1.4(a) provides:  Communication 
(a) A lawyer shall keep a client reasonably informed 
about the status of a matter and promptly comply with 
reasonable requests for information.  
 
No. 
98-0112-D 
 
12
¶18 However, the referee concluded that there was not 
clear and convincing evidence to establish the other two counts 
of professional misconduct the Board had alleged.  First, it was 
not established that Attorney Gibson knowingly made a false 
statement 
to 
the 
bankruptcy 
court 
concerning 
his 
having 
discussed the motion with his clients and their decision not to 
object.  While expressing doubts that such a discussion 
occurred, the referee suggested that when he made that statement 
to the bankruptcy court, Attorney Gibson believed he had 
discussed the motion with one of his clients.  
¶19 Second, 
the 
referee 
concluded 
that 
there 
was 
insufficient 
evidence 
to 
establish 
that 
Attorney 
Gibson 
pressured his client to lie to the Board concerning a telephone 
discussion he claimed to have had with her about the motion.  
The referee considered the matter merely a difference in two 
persons' recollections of an event.   
¶20 As discipline for the professional misconduct in 
respect to the two counts the referee found supported by clear 
and satisfactory evidence, the referee recommended that Attorney 
Gibson's license to practice law be suspended for four months.  
In making that recommendation, the referee specifically took 
into account that the Board had sought a six-month license 
suspension, which the referee viewed as based on the misconduct 
the Board had alleged in all four counts of its complaint. 
¶21 In this appeal and cross-appeal, we address first 
Attorney Gibson's argument that the referee improperly concluded 
that he engaged in professional misconduct in his representation 
No. 
98-0112-D 
 
13
of the clients in the bankruptcy matter.  We find no merit to 
Attorney Gibson's contention that his decision not to object to 
the motion to lift the stay was reasonable, as it was possible 
that the objection would have been rejected.  The testimony of 
the bankruptcy trustee and of the bankruptcy judge provides 
adequate support for the referee's conclusion that Attorney 
Gibson's failure to object to the motion constituted incompetent 
representation.  By permitting an unsecured creditor to become a 
secured creditor, to the detriment of the unsecured creditors, 
he deprived his clients of an equity in their homestead and 
caused the proposed debt adjustment plan to fail. 
¶22 Likewise without merit is Attorney Gibson's assertion 
that he acted competently in the matter by consulting the 
bankruptcy trustee about the motion to lift the stay.  That 
assertion ignores the fact that Attorney Gibson did not receive 
advice 
from 
the 
trustee 
concerning 
the 
matter 
when 
he 
telephoned, and he made no other attempt to contact the trustee 
while time remained to object to the motion.  Further, we agree 
with the referee that the reason Attorney Gibson gave for his 
decision not to object to the motion, namely, that he was afraid 
the bankruptcy judge who had sanctioned him in the past might do 
so again, is "ludicrous on its face."   
¶23 Attorney Gibson next argued that his client suffered 
no harm by virtue of the mortgagee's change from unsecured to 
secured creditor status.  On the contrary, in addition to 
depriving them of the opportunity to have $40,000 available to 
pay their debts, Attorney Gibson's failure to oppose the motion 
No. 
98-0112-D 
 
14
to lift the stay prevented confirmation of the debt adjustment 
plan the clients had retained him to secure.  
¶24 Attorney Gibson made no persuasive argument that the 
referee improperly concluded that he did not discuss the full 
consequences of the success or failure of the motion to lift the 
stay in such a way that his clients could understand their 
options and make a rational decision whether to object to it.  
The testimony of the clients and of the bankruptcy trustee 
provide adequate support for the referee's conclusion that 
Attorney Gibson failed to communicate adequately with his 
clients in the matter.  
¶25 On 
the 
issue 
of 
what 
constitutes 
appropriate 
discipline for Attorney Gibson's professional misconduct in 
failing to provide his clients competent representation and 
communicate adequately with them, the Board contended that even 
without the additional counts of false representation to the 
bankruptcy court and interference with the Board's investigation 
of the matter by attempting to have his client make statements 
she did not believe to be true regarding Attorney Gibson's 
claimed discussion with her, the seriousness of Attorney 
Gibson's misconduct warrants a six-month suspension of his 
license to practice law.  That suspension is appropriate, in the 
Board's view, in light of the harm the misconduct caused the 
clients, 
the 
fact 
that 
Attorney 
Gibson's 
two 
previous 
suspensions for professional misconduct, including frivolous 
opposition to dismissals in several bankruptcy matters, and two 
sanctions from the bankruptcy court apparently were insufficient 
No. 
98-0112-D 
 
15
to ensure his competent practice of law, and the need to protect 
the public from further misconduct on his part.  It is the 
Board's position that a six-month license suspension is required 
so that Attorney Gibson may not again be authorized to practice 
law without first assuring the court that, among other things, 
he has a proper understanding of the professional conduct rules 
and he will conform his conduct to them.   
¶26 We agree.  Of particular concern is Attorney Gibson's 
repeated insistence in his cross appeal that his conduct 
considered here did not violate any of the attorney professional 
conduct rules.  A six-month license suspension will entail a 
reinstatement proceeding, which is necessary to establish that 
Attorney Gibson understands his obligations to clients and the 
legal system and will act competently in representing clients in 
that system.  In addition, a six-month suspension will require 
Attorney Gibson to show that he has made restitution to the 
clients harmed by his misconduct in the bankruptcy matter or 
provide a satisfactory explanation of his failure or inability 
to have done so.  SCR 22.28(4)(k). 
¶27 IT IS ORDERED that the license of John W. Gibson to 
practice 
law 
in 
Wisconsin 
is 
suspended 
for 
six 
months, 
commencing December 10, 1999, as discipline for professional 
misconduct. 
¶28 IT IS FURTHER ORDERED that within 60 days of the date 
of this order John W. Gibson pay to the Board of Attorneys 
Professional Responsibility 
the costs 
of this 
proceeding, 
provided that if the costs are not paid within the time 
No. 
98-0112-D 
 
16
specified and absent a showing to this court of his inability to 
pay the costs within that time, the license of John W. Gibson to 
practice law in Wisconsin shall remain suspended until further 
order of the court.   
¶29 IT IS FURTHER ORDERED that John W. Gibson comply with 
the provisions of SCR 22.26 concerning the duties of a person 
whose license to practice law in Wisconsin has been suspended.   
¶30 SHIRLEY S. ABRAHAMSON, C.J., did not participate.   
 
 
 
1