Opinion ID: 3135175
Heading Depth: 2
Heading Rank: 1

Heading: The Rzewnicki Transactions

Text: In count I of the complaint the Administrator alleged that respondent engaged in several ethical violations arising from a loan transaction between respondent and Rzewnicki. Among other things, the Administrator alleged that respondent: (1) engaged in conduct involving fraud, dishonesty, deceit, or misrepresentation (134 Ill. 2d R. 8.4(a)(4)); (2) entered into a business transaction with a client without making proper disclosures where the lawyer and client have conflicting interests and the client expects the lawyer to exercise his professional judgment on the client’s behalf (134 Ill. 2d R. 1.8); and (3) engaged in conduct “which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute” in violation of Supreme Court Rule 771 (134 Ill. 2d R. 771). Respondent represented Rzewnicki in a dissolution of marriage proceeding from 1980 through 1983 and assisted him in the sale of his marital residence in 1987 and 1988. Respondent performed no further legal work for Rzewnicki until 1992, when he defended Rzewnicki on a DUI charge and a building code violation. Approximately two months after the sale of the marital residence, Rzewnicki loaned respondent $35,000 from the proceeds of the sale. The loan was never repaid, and in January 1999, Rzewnicki obtained a default judgment against respondent. The judgment remains unsatisfied. Rzewniki claimed that he loaned the money to respondent because he trusted respondent as “his lawyer,” and because he was told he would receive a good return. However, in a pretrial deposition, Rzewniki described the services respondent performed for him in December of 1988 by testifying that he was an “ex-client” and that “[he] had nothing binding at that time.” Respondent argued before the Hearing Board that he and Rzewnicki did not have an attorney-client relationship at the time in question, and that the loan agreement arose out of their friendship rather than the relation of attorney and client. Therefore, although a debtor-creditor relationship existed with Rzewnicki, his receipt of the loan did not violate any of the provisions of the Rules. The Hearing Board disagreed. Relying on the reasoning in In re Imming , 131 Ill. 2d 239 (1989), the Hearing Board found that respondent and Rzewnicki had an attorney-client relationship at the time of the loan. The Hearing Board also found that respondent violated his fiduciary duty to his client by, among other things: (1) failing to advise Rzewnicki that there were limits on the types of transactions an attorney could enter into with a client; (2) failing to advise him to consult independent counsel before making the loan; and (3) providing no collateral for the loan and giving Rzewnicki no promissory note evidencing the loan or the interest rate until five years after the transaction. The Review Board noted that respondent did not challenge any of the factual findings of the Hearing Board and affirmed all of those findings.