Court Opinion

ID: 4219084
Source: CourtListenerOpinion
Date Created: 2017-11-09 16:08:57.471699+00
Date Added: 2024-06-11T14:15:02.300633
License: Public Domain

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.

                                               2
        "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.

                                              4
        "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.

                                             5
        "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.

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        "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.

                                              9
        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.

                                                10
               "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.

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