Opinion ID: 2004796
Heading Depth: 2
Heading Rank: 3

Heading: Ms. Seward's Purchase of a Residence in Trimble County.

Text: In 1993, Irene Long, an attorney and personal friend of Hensley, died. Hensley was requested to handle the probate of Ms. Long's will, and, while attorney of record for the Long estate, purchased, with the heir's approval, a small office in Trimble County. Next door to the office was a residence also owned by the Irene Long estate, which had been rented for $200.00 per month. In December 1994, while Hensley was still counsel of record for Long's estate, Hensley asked Seward if she would be interested in buying the residence as investment property. Hensley failed to tell Seward that she was representing the Long estate. Hensley stated that if Seward purchased the property, that Hensley would lease the residence from Seward for $400.00 per month. Hensley further advised Seward that the residence could be purchased for $50,000.00. Hensley failed to tell Seward that James F. Long, administrator of the Long Estate, had estimated the property's value at $45,300.00 four months earlier. And Seward authorized Hensley to offer the Irene Long estate $50,000.00 for the residence, and that offer was accepted. The property was appraised eleven months later at $54,000.00. Seward directed Hensley to obtain financing for the purchase of the property. Instead, Hensley contacted Fidelity Investments, and without disclosing that Hensley held a power of attorney for Seward, directed Fidelity to liquidate $50,000.00 in mutual funds owned by Seward to raise funds for purchasing the house. Hensley directed the Fidelity representative with whom she spoke to send the proceeds directly to Seward at Seward's home address. Instead of using the power of attorney that Hensley held for Steward, Hensley represented herself to the Fidelity representative with whom she spoke as Oranell Steward. Fidelity mailed the proceeds of the sale to Seward and they were received by Seward. Hensley handled all aspects of the real estate closing, including preparation of the deed, which was dated December 30, 2004, even though funds were not exchanged until after that date. Hensley was not paid by either Seward or the Irene Long Estate for preparing the closing documents. Seward had not seen the inside of the property at the time of the closing but visited several weeks later with her new husband. Seward was shocked by its condition. Seward later had the lot surveyed and found that Hensley's law office encroached approximately two feet over the property line between the parcels. This caused great concern for Seward, who later retained counsel to pursue her concerns. Ultimately, Hensley settled with Seward for a total of $86,000.00. Under the settlement agreement, Seward was reimbursed all money she invested in the investment partnership; all money she invested in the house in Trimble County; interest on these investments; her attorney's fees; and an additional $5,000.00. The settlement was funded primarily by Hensley and not her liability carrier. Hensley admits she violated SCR 3.130-1.8(a) in that she suggested Seward purchase the real property in Trimble County, Kentucky, on terms which appeared to benefit Hensley, while she was representing the Irene Long Estate in the sale; and by entering into the investment partnership with Seward, and failing to invest a portion of her client's money as directed by the client. Hensley acknowledges that she violated SCR 3.130-1.7(a) and (b), by representing both Seward and the Irene Long Estate in the sale and purchase of the Trimble County real estate. The representation of both clients was directly adverse, and Hensley did not inform Seward that she represented the Irene Long Estate, nor did she obtain Seward's consent to represent the Irene Long Estate. Furthermore, Hensley's representation of Seward in purchasing the real estate was adverse to Hensley's interest in renting the property. Hensley admits that she violated SCR 3.130-8.3(c) by misrepresenting and/or omitting relevant information to Seward in connection with both transactions. She also admits violating this rule by failing to disclose that her small office building extended onto the property that she suggested Seward purchase, even though Hensley had not previously had a survey made and was unaware that her office encroached on Seward's property; securing funds from Seward for an investment partnership to purchase stock in a real estate development but only investing a portion of the funds thereof and in her own name; and representing herself as Seward in the sale of stock held by Seward.