Opinion ID: 1232513
Heading Depth: 1
Heading Rank: 6

Heading: counts 13, 14, 15, 16, and 17east johnson street property

Text: ¶ 49. Count 13 alleged a violation of SCR 20:1.7(b). [13] ¶ 50. This rule, in general, prohibits a lawyer from acting in the face of a conflict of interest with his client. The rule provides that a lawyer shall not represent a client if that representation may be materially limited by the lawyer's responsibility to another client or to a third person or by the lawyer's own interest unless certain conditions are met including the client's consent in writing, to the lawyer's continued representation. ¶ 51. Count 14 alleged a violation of SCR 20:1.3. [14] This rule requires a lawyer to act with reasonable diligence and promptness in representing a client. ¶ 52. Count 15 alleged another violation of SCR 20:1.15(a). ¶ 53. This rule requires a lawyer to hold in trust, separate from the lawyer's own property, property of a client that is in the lawyer's possession. ¶ 54. Count 16 alleged a violation of SCR 20:1.15(b). However, the referee determined that the evidence presented at the hearing was insufficient to establish that Knickmeier had violated this rule which requires the lawyer to promptly notify the client of the receipt of funds; accordingly, the referee dismissed this count. ¶ 55. Count 17 alleged another violation of SCR 20:8.4(c). ¶ 56. This was the fifth count in the OLR's complaint alleging that Knickmeier engaged in conduct involving dishonesty, deceit, or misrepresentation. ¶ 57. This cluster of misconduct counts involved Knickmeier's conflict of interest regarding his handling of J.R.'s house on East Johnson Street in Madison, while J.R. was incarcerated. At the same time Knickmeier was representing J.R. and seeking tenants for the house, Knickmeier also represented D.S. Knickmeier rented J.R.'s house to D.S. without revealing to either J.R. or D.S. that the other person was his client too. Knickmeier rented J.R.'s house to D.S. after he had just recently represented D.S. in an eviction action brought against her for nonpayment of rent; at that time he was also representing D.S. in a small claims action brought against her. Knickmeier did not tell J.R. of that fact nor of D.S.'s past rental history. ¶ 58. The evidence established that at the time J.R. was incarcerated in the fall of 1999, he and Knickmeier agreed that Knickmeier would take care of J.R.'s Johnson Street residence; J.R. asked Knickmeier, among other things, to pay the property taxes on the residence as they became due in 2000. ¶ 59. In the summer of 2000, Knickmeier arranged for another one of his clients, D.S., to rent J.R.'s property. Knickmeier, had represented D.S. in March 2000 in an eviction action brought against her in connection with her tenancy at a different location. Knickmeier was at that time also representing D.S. in a small claims action brought against her for nonpayment of medical fees. At the time he rented J.R.'s house to D.S., she remained his client. ¶ 60. The testimony presented at the hearing before the referee revealed that although Knickmeier had negative information regarding D.S. as a tenant, he did not disclose that information to J.R. Knickmeier explained at the hearing that he did not disclose this negative information because he believed it was privileged information based on his lawyer/client relationship with D.S. ¶ 61. Testimony before the referee also established that at the time Knickmeier negotiated the lease agreement between his clients, J.R. and D.S., Knickmeier was indebted to both: he had owed $2000 to D.S. and he had previously borrowed money from J.R. for the purchase of an airplane and a motorcycle. As was true with respect to the loans Knickmeier had obtained from J.R., Knickmeier had not informed D.S. prior to obtaining the $2000 loan from her, that Knickmeier's own financial history included numerous bankruptcy petitions; nor had he disclosed to her his current indebtedness or the fact that at that time, he was in default on his loans from J.R. ¶ 62. Knickmeier had borrowed $2000 from D.S. in April of 2000; Knickmeier acknowledged at the hearing before the referee that he had not provided D.S. with a full disclosure of his financial history nor had he told her about the default status of the airplane and motorcycle loans from J.R. Again, according to Knickmeier, he had not disclosed that information because he thought it was confidential and privileged; he also thought he did not have to do so. Those failures on his part to disclose this information formed the basis for the misconduct alleged in Count 17 of OLR's complaint. ¶ 63. The testimony before the referee also established that when D.S. moved into the Johnson Street premises, she paid $600 in rent to Knickmeier. Knickmeier then used $300 of that payment to reduce his indebtedness on the outstanding $2000 loan he had previously obtained from her. Knickmeier made no trust account entries at that time indicating his use of the $300 rental payment that belonged to his client J.R. Those facts were the basis for the misconduct alleged in Count 15. ¶ 64. Count 16 alleged a violation of SCR 20:1.15(b). It was alleged that Knickmeier had not notified J.R. of the receipt of rent money and security deposit from D.S. The referee determined, however, that the credible evidence established that Knickmeier in fact notified J.R. of the receipt of the security deposit and rental payment from D.S. Therefore, the referee dismissed Count 16. ¶ 65. The referee made several other specific findings. For example, with respect to Count 14, the referee determined that although Knickmeier had paid the insurance premiums on the residence, Knickmeier had failed to pay the property taxes that were due on the property. The evidence before the referee indicated that the Dane County Treasurer had sent J.R. a notice of real estate taxes due in the amount of $2695.95. Knickmeier replied to that tax notice on behalf of J.R. acknowledging receipt of the tax due form but asserting that even though J.R. had substantial assets, . . . we are having a liquidity problem at the moment. ¶ 66. The referee further determined that it was Knickmeier's responsibility, under his agreement with J.R., to manage J.R.'s residence and to pay the property taxes while J.R. was incarcerated. According to the referee, the cash shortage J.R. was experiencing was the result of Knickmeier's actions in depleting J.R.'s funds and defaulting on his loans from J.R. which totaled $17,000. Knickmeier's failure to pay the property taxes put J.R.'s property at risk. This, according to the referee, amounted to Knickmeier's violation of SCR 20:1.3 because he failed to act with diligence and promptness in paying the property taxes and failed to protect his client's property. This referee believed that these failures were compounded by Knickmeier's failure to provide current and complete accountings and by his telling his incarcerated client that the tax matter was of no consequence. ¶ 67. Similarly, with respect to Count 15, the referee concluded that the evidence established that Knickmeier had violated SCR 20:1.15(a) because he failed to keep J.R.'s property (i.e., the rental payments made by D.S.) separate from Knickmeier's own property. The testimony established that Knickmeier had received money from D.S. for the rent and a security deposit but then he had used those funds for himself without first depositing them into the trust account for disbursal to J.R. ¶ 68. With respect to Count 17, the referee determined that Knickmeier had violated SCR 20:8.4(c) because he had failed to disclose to D.S. his own negative financial history before he borrowed money from her. According to the referee, this amounted to obtaining money from the client by deceit and dishonesty; furthermore, the referee found that Knickmeier's repeated acts of obtaining client funds and then not repaying the debt, established that his deceitful and dishonest conduct was intentional. The referee wrote that Knickmeier's actions constituted an intentional fraud upon [D.S.]. ¶ 69. The referee was not persuaded by Knickmeier's arguments that disclosure was not required because D.S. was receiving a fair interest rate on the loan, because the loan was secured by two motorcycles, and that in any event, the $2000 loan was subsequently repaid. According to the referee, that argument missed the point because  . . . It was unreasonable and a fraud for the lawyer to obtain this loan without advising the client of material, negative information which was essential to the decision of the client on whether or not to grant the loan.