Title: In re Schneider (Published censure) video

State: kansas

Issuer: Kansas Supreme Court

Document:

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IN THE SUPREME COURT OF THE STATE OF KANSAS 
 
No. 117,361 
 
In the Matter of LAWRENCE E. SCHNEIDER, 
Respondent. 
 
ORIGINAL PROCEEDING IN DISCIPLINE 
 
Original proceeding in discipline. Opinion filed November 9, 2017. Published censure. 
 
Penny Moylan, Deputy Disciplinary Administrator, argued the cause, and Stanton A. Hazlett, Disciplinary 
Administrator, was with her on the formal complaint for the petitioner. 
 
Lawrence E. Schneider, respondent, argued the cause pro se. 
 
PER CURIAM:  This is an original proceeding in discipline filed by the office of the 
Disciplinary Administrator against the respondent, Lawrence E. Schneider, of Topeka, an 
attorney admitted to the practice of law in Kansas in 1977. 
 
 
On September 7, 2016, 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 filed an answer on October 3, 2016. A hearing was 
held on the complaint before a panel of the Kansas Board for Discipline of Attorneys on 
November 8, 2016, where the respondent was personally present. The hearing panel 
determined that respondent violated KRPC 1.3 (2017 Kan. S. Ct. R. 290) (diligence), and 
1.4(b) (2017 Kan. S. Ct. R. 291) (communication). 
 
Upon conclusion of the hearing, the panel made the following findings of fact and 
conclusions of law, together with its recommendation to this court: 
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"Findings of Fact 
 
 
. . . . 
 
 
"7. 
Throughout the respondent's career, he has been a solo practitioner. Over 
time, his practice has become focused primarily in the area of bankruptcy law. 
 
 
"8. 
In April, 2011, the Kansas legislature enacted K.S.A. 60-2315, which 
allows a debtor in bankruptcy to claim, as exempt, federal and state earned income tax 
credits. 
 
"A.J. and M.J. 
 
 
"9. 
On January 29, 2013, the respondent filed a chapter 7 bankruptcy 
petition on behalf of A.J. and M.J., husband and wife. At that time, the respondent's 
practice was to not list a possible federal and state earned income tax credit exemption on 
the schedule C to the bankruptcy petition. Rather, the respondent's practice was to amend 
the schedule C if a client received a federal or state earned income tax credit exemption. 
The respondent acknowledges that his practice was not the best practice. However, the 
respondent points out that a debtor may amend a schedule any time prior to discharge. 
 
 
"10. 
In this case, as a result of the respondent's practice, the respondent did 
not list the debtors' federal and state earned income tax credit exemption on the schedule 
C filed with the chapter 7 bankruptcy petition. 
 
 
"11. 
On April 8, 2014, the bankruptcy trustee filed a motion for the debtors to 
turn over their 2012 income tax refunds in the amount of $2,999.50. The respondent 
failed to file a response to the motion. On May 15, 2014, the court granted the trustee's 
motion and ordered the debtors to provide the trustee with their income tax refund in the 
amount of $2,999.50. 
 
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"12. 
On May 17, 2014, the respondent filed an amended schedule C to the 
bankruptcy petition. The amended schedule C listed $2,991.00 as exempt federal and 
state earned income tax credit. 
 
 
"13. 
The debtors did not pay the income tax refunds in the amount of 
$2,999.50 to the trustee as ordered by the court. 
 
 
"14. 
On July 1, 2014, the trustee filed a motion asking that the court order the 
debtors and the respondent to appear and show cause why the debtors should not be held 
in contempt for failing to comply with the court's May 15, 2014, order. The court issued 
an order to show cause. 
 
 
"15. 
The respondent and the trustee established a monthly payment plan and 
the respondent personally paid the $2,999.50 to the trustee in full. 
 
"J.R. and I.R. 
 
 
"16. 
On June 24, 2013, the respondent filed a chapter 7 bankruptcy petition on 
behalf of J.R. and I.R., husband and wife. Again, based on his pattern and practice, the 
respondent did not list the debtors' possible 2013 federal and state earned income credit 
exemption on the schedule C to their bankruptcy petition. On March 20, 2014, the 
bankruptcy court entered a discharge order, discharging the debtors' debts. 
 
 
"17. 
On April 18, 2014, the bankruptcy trustee filed a motion requesting 
authority to allocate $1,994.52 of the debtors' $5,160.00 2013 federal and state income 
tax refund. On May 6, 2014, the respondent filed a response to the trustee's motion, 
arguing that $4,068.00 of the debtors' state and federal income tax refunds were exempt 
as earned income credit. 
 
 
"18. 
On May 9, 2014, the respondent filed an amended schedule C to the 
bankruptcy petition, listing $4,068.00 of the debtors' income tax refunds as exempt 
federal and state earned income credit. On May 15, 2014, the trustee filed an objection to 
the amended schedule C, arguing that the debtors' inexcusable delay in claiming the 
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exemption caused prejudice to the trustee and that the claimed exemption should 
therefore be denied as waived. 
 
 
"19. 
Later, the respondent and the trustee entered into a compromise and 
settlement whereby the debtors paid the trustee $500.00. 
 
"C.C. 
 
 
"20. 
On July 19, 2013, the respondent filed a chapter 7 bankruptcy petition on 
behalf of C.C. Again, the respondent failed to list the debtor's federal earned income tax 
credit as an exemption on schedule C of the bankruptcy petition. 
 
 
"21. 
While the chapter 7 bankruptcy petition was pending, at the debtor's 
request, the respondent filed a second bankruptcy petition on behalf of the debtor. The 
second bankruptcy petition was filed under chapter 13 and was designed to provide the 
debtor with an avenue to keep his motor vehicle. 
 
 
"22. 
On November 25, 2013, the court entered an order in the chapter 7 
bankruptcy proceeding discharging the debtor from bankruptcy. 
 
 
"23. 
On May 1, 2014, the chapter 7 trustee filed a motion to compel the 
debtor to turn over the 2013 income tax return so the trustee could pursue the bankruptcy 
estate's share of the federal income tax refund. The respondent did not object to the 
motion and, thereafter, on May 23, 2014, the court granted the motion to compel. 
 
 
"24. 
After receiving a copy of the debtor's 2013 federal income tax return 
which revealed that the debtor received a refund of $8,254.00, on June 12, 2014, the 
chapter 7 trustee filed a motion for the debtor to turn over $3,974.79, the estate's share of 
the refund. Again, the respondent did not object to the motion. 
 
 
"25. 
On June 26, 2014, the respondent filed an amended schedule C to the 
chapter 7 bankruptcy petition, claiming a $4,878.00 exemption for the federal earned 
income credit. 
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"26. 
On July 7, 2014, the court granted the chapter 7 trustee's motion and the 
debtor was ordered to turn over $3,974.79, the estate's share of the federal income tax 
refund. The court did not deduct a pro rata share of the refund for the earned income 
credit. The respondent did not file a motion for reconsideration. Likewise, the respondent 
did not appeal or otherwise move to set aside the order. 
 
 
"27. 
On July 18, 2014, the chapter 7 trustee filed an objection to the amended 
schedule C, arguing that the debtor engaged in a pattern of inexcusable conduct. The 
trustee further argued that the debtor's delay constituted a waiver of the exemption. The 
respondent again failed to respond to the trustee's motion. On August 18, 2014, the court 
sustained the trustee's objection to the amended schedule C. 
 
 
"28. 
The debtor did not pay $3,974.79 of the 2013 federal income tax refund 
to the chapter 7 trustee. Rather, the debtor paid the chapter 13 trustee the income tax 
refund, less the earned income credit. 
 
 
"29. 
On September 3, 2014, the trustee filed an adversary proceeding to 
revoke the bankruptcy discharge and to obtain a judgment against the debtor for the 
amount of $3,974.79, plus interest and costs. The respondent filed an answer to the 
adversary proceeding on behalf of the debtor. 
 
 
"30. 
On November 3, 2014, the chapter 7 trustee served discovery on the 
respondent. The respondent drafted responses to the discovery requests. However, the 
respondent did not forwarded the discovery responses to the trustee. Because the trustee 
included requests for admissions and because the respondent failed to respond, the debtor 
was left with no factual or legal defense to the trustee's adversary complaint. 
 
 
"31. 
On January 6, 2015, the chapter 7 trustee filed a motion for partial 
summary judgment requesting revocation of the debtor's bankruptcy discharge and a 
monetary judgment in the amount of $3,974.79, plus interest and costs. 
 
6 
 
 
 
 
"32. 
The respondent did not file a response to the chapter 7 trustee's motion 
for partial summary judgment. On February 5, 2015, the court granted the trustee's 
motion for partial summary judgment and entered judgment against the debtor in the 
amount of $3,974.79 plus interest and costs. Further, the court revoked the debtor's 
discharge. The respondent did not appeal or otherwise move to set aside the order and the 
resulting judgment against the debtor. 
 
 
"33. 
After the judgment was entered against the debtor, the respondent 
entered into a payment plan with the chapter 7 trustee and paid the judgment in full with 
his personal funds. 
 
 
"34. 
At the hearing on this matter, the respondent testified that he does not 
believe that the debtor has a complete understanding of the effect of having the chapter 7 
bankruptcy discharge revoked. 
 
"D.T. 
 
 
"35. 
On September 3, 2013, the respondent filed a chapter 7 bankruptcy 
petition on behalf of D.T. Again, the respondent failed to list the debtor's 2013 state and 
federal earned income credit as an exemption under schedule C of the Chapter 7 
bankruptcy petition. 
 
 
"36. 
For tax year 2013, the debtor was entitled to receive income tax refunds 
totaling $5,746.00. On April 9, 2014, the trustee filed a motion for authority to allocate 
$3,549.75 of the debtor's 2013 income tax refunds. 
 
 
"37. 
On April 18, 2014, the respondent filed a response to the trustee's motion 
to allocate $3,549.75 of the debtor's income tax refund, arguing that $3,279.00 of the 
debtor's income tax refunds were exempt as earned income credit. That same day, the 
respondent filed an amended schedule C to the bankruptcy petition, listing $3,279.00 of 
the debtor's tax refunds as exempt earned income tax credits. 
 
7 
 
 
 
 
"38. 
On May 15, 2015, the trustee filed an objection to the amended schedule 
C to the bankruptcy petition arguing that the debtor's inexcusable delay in claiming the 
exemption caused prejudice to the trustee. The trustee argued that the claimed exemption 
should be denied as waived. Later, the respondent entered into an agreement with the 
trustee and the debtor paid $500.00 to the trustee to satisfy the trustee's request. 
 
"Disciplinary Complaint, Investigation, and Prosecution 
 
 
"39. 
On April 6, 2015, Judge Janice Karlin filed a complaint against the 
respondent regarding these cases. The respondent fully cooperated with the disciplinary 
investigation and prosecution. 
 
"Conclusions of Law 
 
 
"40. 
Based upon the findings of fact, the hearing panel concludes that the 
respondent violated KRPC 1.3 and KRPC 1.4, regarding the respondent's representation 
of A.J., M.J., and C.C., as detailed below. The hearing panel concludes that there is not 
clear and convincing evidence to show that the respondent violated the Kansas Rules of 
Professional Conduct with regard to his representation of J.R., I.R., or D.T. 
 
"KRPC 1.3 
 
 
"41. 
Attorneys must act with reasonable diligence and promptness in 
representing their clients. See KRPC 1.3. The respondent failed to diligently and 
promptly represent A.J., M.J., and C.C. by failing to timely respond to motions and by 
failing to respond to discovery requests. The respondent provided explanations as to the 
futility of filing such responses on numerous occasions or reasons why such responses 
may not have been filed, [however] the failure to take such action resulted in loss of the 
opportunity to meaningfully contest the orders entered against his clients in those cases. 
Because the respondent failed to act with reasonable diligence and promptness in 
representing his clients, the hearing panel concludes that the respondent violated KRPC 
1.3. 
 
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"KRPC 1.4 
 
 
"42. 
KRPC 1.4(b) provides that '[a] lawyer shall explain a matter to the extent 
reasonably necessary to permit the client to make informed decisions regarding the 
representation.' In this case, the respondent violated KRPC 1.4(b) when he failed to 
explain to C.C. the effect of the court's order revoking the bankruptcy discharge. 
Accordingly, the hearing panel concludes that the respondent violated KRPC 1.4(b). 
 
"American Bar Association 
Standards for Imposing Lawyer Sanctions 
 
 
"43. 
In making this recommendation for discipline, the hearing panel 
considered the factors outlined by the American Bar Association in its Standards for 
Imposing Lawyer Sanctions (hereinafter 'Standards'). Pursuant to Standard 3, the factors 
to be considered are the duty violated, the lawyer's mental state, the potential or actual 
injury caused by the lawyer's misconduct, and the existence of aggravating or mitigating 
factors. 
 
 
"44. 
Duty Violated.  The respondent violated his duty to his clients to provide 
diligent representation and adequate communication. 
 
 
"45. 
Mental State.  The respondent negligently violated his duties. 
 
 
"46. 
Injury.  As a result of the respondent's misconduct, the respondent caused 
potential injury to his clients. 
 
 
"47. 
Aggravating and Mitigating Factors.  Aggravating circumstances are any 
considerations or factors that may justify an increase in the degree of discipline to be 
imposed. In reaching its recommendation for discipline, the hearing panel, in this case, 
found the following aggravating factors present: 
 
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a. 
A Pattern of Misconduct.  The respondent repeatedly failed to 
respond to motions in bankruptcy cases. Accordingly, the hearing panel 
concludes that the respondent engaged in a pattern of misconduct. 
 
b. 
Substantial Experience in the Practice of Law.  The Kansas 
Supreme Court admitted the respondent to practice law in the State of 
Kansas in 1977. At the time of the misconduct, the respondent has been 
practicing law for more than 35 years. 
 
 
"48. 
Mitigating circumstances are any considerations or factors that may 
justify a reduction in the degree of discipline to be imposed. In reaching its 
recommendation for discipline, the hearing panel, in this case, found the following 
mitigating circumstances present: 
 
a. 
Absence of a Prior Disciplinary Record.  The respondent has not 
previously been disciplined. 
 
b. 
Absence of a Dishonest or Selfish Motive.  The respondent's 
misconduct does not appear to have been motivated by dishonesty or 
selfishness. 
 
c. 
Timely Good Faith Effort to Make Restitution or to Rectify 
Consequences of Misconduct.  The respondent paid $2,999.50 to the 
trustee in the A.J. and M.J. bankruptcy and the respondent paid 
$3,974.79 to the trustee in C.C.'s bankruptcy case. The hearing panel 
concludes that the respondent timely made restitution which rectified the 
consequences of his misconduct. 
 
d. 
The Present and Past Attitude of the Attorney as Shown by His 
or Her Cooperation During the Hearing and His or Her Full and Free 
Acknowledgment of the Transgressions.  The respondent fully 
cooperated with the disciplinary process. Additionally, the respondent 
admitted the facts that gave rise to the violations. 
10 
 
 
 
 
e. 
Previous Good Character and Reputation in the Community 
Including Any Letters from Clients, Friends and Lawyers in Support of 
the Character and General Reputation of the Attorney.  The respondent is 
an active and productive member of the bar of Topeka, Kansas. The 
respondent also enjoys the respect of his peers and generally possesses a 
good character and reputation. 
 
f. 
Imposition of Other Penalties or Sanctions.  Even though the 
court did not order him to do so, the respondent paid $6,974.29 on behalf 
of his clients, which amounts to the imposition of another penalty. The 
hearing panel is impressed with the respondent's payment of full 
restitution on behalf of his clients. 
 
g. 
Remorse.  At the hearing on this matter, the respondent 
expressed genuine remorse for having failed to timely respond to the 
motions and for having failed to fully advise his client. 
 
 
"49. 
In addition to the above-cited factors, the hearing panel has thoroughly 
examined and considered the following Standards: 
 
'4.43 
Reprimand is generally appropriate when a lawyer is negligent 
and does not act with reasonable diligence in representing a 
client, and causes injury or potential injury to a client.' 
 
"Recommendation 
 
 
"50. 
The disciplinary administrator recommended a 3-month suspension. 
Further, the disciplinary administrator also recommended that the respondent undergo a 
hearing before a hearing panel prior to consideration of reinstatement. The respondent 
argued that suspension seemed harsh, that his actions were the result of his negligence, 
and not done knowingly. 
 
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"51. 
Since the time of the misconduct, the respondent has made 
improvements to his practice to ensure that he timely responds to all motions filed. 
Additionally, in the 2 years between the misconduct and the hearing on the formal 
complaint, the respondent did not fail to respond to any additional motions. The hearing 
panel is convinced that the respondent's diligence issues have been resolved. To resolve 
the communication issue, the hearing panel urges the respondent to fully explain to C.C. 
the ramifications of the court's order revoking the discharge. The hearing panel also feels 
strongly that the respondent should notify the disciplinary administrator in writing 
confirming that he has rectified the previous failure to properly communicate with C.C., 
by fully explaining the ramifications of the court's order revoking the discharge. 
Nevertheless, while the hearing panel urges the respondent to take this corrective action, 
the hearing panel's formal recommendation, stated below, is not contingent upon the 
respondent's compliance with these steps. 
 
 
"52. 
Based upon the findings of fact, conclusions of law, and the significant 
mitigating evidence, the hearing panel unanimously recommends that the respondent be 
censured. The hearing panel further recommends that the censure be published in the 
Kansas Reports. 
 
 
"53. 
Costs are assessed against the respondent in an amount to be certified by 
the Office of the Disciplinary Administrator." 
 
DISCUSSION 
 
In a disciplinary proceeding, this court considers the evidence, the findings of the 
disciplinary panel, and the arguments of the parties and determines whether violations of 
KRPC exist and, if they do, what discipline should be imposed. Attorney misconduct 
must be established by clear and convincing evidence. In re Foster, 292 Kan. 940, 945, 
258 P.3d 375 (2011); see Supreme Court Rule 211(f) (2017 Kan. S. Ct. R. 251). Clear 
and convincing evidence is "'evidence that causes the factfinder to believe that "the truth 
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of the facts asserted is highly probable."'" In re Lober, 288 Kan. 498, 505, 204 P.3d 610 
(2009) (quoting In re Dennis, 286 Kan. 708, 725, 188 P.3d 1 [2008]). 
 
Respondent was given adequate notice of the formal complaint, to which he filed 
an answer, and adequate notice of the hearings before the panel and this court for which 
he appeared. The respondent did not file exceptions to the panel's final hearing reports. 
As such, the findings of fact are deemed admitted. Supreme Court Rule 212(c), (d) (2017 
Kan. S. Ct. R. 255). Furthermore, the evidence before the panel establishes by clear and 
convincing evidence the charged misconduct violated KRPC 1.3 (2017 Kan. S. Ct. R. 
290) (diligence); and 1.4(b) (2017 Kan. S. Ct. R. 291) (communication), and it supports 
the panel's conclusions of law. We adopt the panel's conclusions. 
 
 
The only remaining issue before us is the appropriate discipline for respondent's 
violations. At the panel hearing, the office of the Disciplinary Administrator 
recommended a 3-month suspension from the practice of law and that respondent 
undergo a reinstatement hearing pursuant to Supreme Court Rule 219 (2017 Kan. S. Ct. 
R. 263). The respondent argued that suspension seemed harsh and that his actions were 
the result of negligence and not done knowingly. The panel recommended published 
censure. 
 
At the hearing before this court, the attorney for the office of the Disciplinary 
Administrator reported that after the panel hearing she had twice contacted Hon. Janice 
Miller Karlin, United States Bankruptcy Judge, the complainant in this case. Judge Karlin 
was contacted to discern whether she had observed any continuing concerns with 
respondent's practice. Both times, Judge Karlin responded that she had not witnessed 
further concerns. Due to the panel's recommendation and the observation from Judge 
Karlin, the office of the Disciplinary Administrator recommended that respondent be 
disciplined by published censure. We agree with the recommendation of both the 
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Disciplinary Administrator and the panel, and we hold that respondent is to be disciplined 
by published censure. 
 
CONCLUSION AND DISCIPLINE 
 
IT IS THEREFORE ORDERED that Lawrence E. Schneider be and is hereby 
disciplined by published censure in accordance with Supreme Court Rule 203(a)(3) (2017 
Kan. S. Ct. R. 234), effective on the filing of this decision. 
 
IT IS FURTHER ORDERED that the costs of these proceedings be assessed to the 
respondent and that this opinion be published in the official Kansas Reports.