Opinion
Docket No. DRB 17-027 Docket No. DRB 17-057
07-28-2017
IN THE MATTER OF JAMES WILLIAM KENNEDY AN ATTORNEY AT LAW
Disciplinary Review Board
District Docket Nos. IIIA-2015-0003E and IIIA-2015-0010E Decision Richard H. Archer, Jr., appeared on behalf of District IIIA (DRB 17-027). Karin K. Sage appeared on behalf of District IIIA (DRB 17-057). Respondent did not appear, despite proper notice.
To the Honorable Chief Justice and Associate Justices of the Supreme Court of New Jersey.
These matters were before us on recommendations for a reprimand (DRB 17-027) and a six-month suspension (DRB 17-057) filed by the District IIIA Ethics Committee (DEC), which we determined to consolidate for the imposition of a single form of discipline. In DRB 17-027, a two-count complaint charged respondent with violations of RPC 1.3 (lack of diligence) and RPC 1.4(b) (failure to communicate with the client) in a workers' compensation matter. In DRB 17-057, a six-count complaint charged respondent with having violated RPC 1.1(a) (gross neglect), RPC 1.3, RPC 1.4(b), RPC 1.15(b) (failure to promptly deliver funds to the client), RPC 1.16(a) (failure to decline or terminate the representation if the representation of the client will result in a violation of the RPCs), and RPC 1.16(d) (failure to return funds or other property to the client upon termination of the representation).
We determined to impose a censure for the totality of respondent's misconduct in the two matters.
Respondent was admitted to the New Jersey and New York bars in 1983. Effective October 13, 2003, he was suspended for six months after pleading guilty in the Superior Court of New Jersey to one count of fourth-degree child endangerment (N.J.S.A. 2C:24-4(b)(5)). Respondent had downloaded, from the internet, 20,000 to 30,000 images of children, some under the age of sixteen, engaged in sexual acts. In re Kennedy, 177 N.J. 517 (2003). Respondent was reinstated on May 4, 2004. In re Kennedy, 179 N.J. 532 (2004).
On December 9, 2015, respondent was temporarily suspended for failure to cooperate with an ethics investigation. He remains suspended to date. In re Kennedy, 223 N.J. 398 (2015).
Effective March 31, 2017, the Court again temporarily suspended respondent, this time for failure to comply with a fee arbitration determination in the Lepre matter, discussed below. In re Kennedy, 228 N.J. 336 (2017). I. The Brown Matter (DRB 17-027 — District Docket No. IIIA-2015-0003E)
On April 22, 2009, Vivian Brown retained respondent to represent her in a workers' compensation matter for injuries that she sustained while working as a certified nurse's assistant for Monmouth County (the County). Brown had been employed by the County for twenty-five years, when a patient kicked her in the head, causing injuries that rendered her disabled and caused her to leave her employment. In 2009, respondent filed a petition in Brown's behalf with the Division of Workers' Compensation in Freehold, New Jersey.
Respondent asserted that he diligently pursued Brown's claim, which resulted in a December 2012 or March 2013 in-court settlement for $40,000. The County retained a Florida company, Gould and Lamb (G&L), to determine whether a portion of the settlement proceeds should be placed in trust for future Medicare payments.
Respondent appeared in court on several occasions, filed a second claim for permanent disability, and engaged in motion practice on his client's behalf. Hearings in the case were adjourned numerous times, by respondent and the County's attorney, John Lane, while they awaited both G&L's findings, and subsequently, a letter from Medicare authorities accepting G&L's findings. Respondent expressed frustration over the delays, especially because he stood to earn an $8,000 fee. He asserted that the delays were beyond his control, and that, after March 2013, the only impediment to disbursing the settlement funds was the Medicare letter.
Respondent supported his claimed diligence with twelve documents, dated between May 2, 2013 and April 11, 2015. They include letters between respondent and Lane; letters from respondent and Lane to the judge, requesting adjournments while they awaited documentation from Medicare; two letters from Medicare, requesting additional information; and an April 11, 2015 letter from Lane to respondent, forwarding to him an e-mail from G&L, requesting information with which they could then "close out this matter."
According to Brown, she met with respondent just once during the representation, early in the case. She asserted that, although she went to court in Freehold on numerous occasions thereafter, respondent was never present:
Okay. I would go there, I would call to make sure I still had a court date, because Mr. Kennedy would send a letter saying that I, you know, had to go to -- appear in court.
I would call, because I got tired of going and he wouldn't show up. There was an occasion that I went there and I waited, I signed my name in, I sit down, Mr. Lane, the public -- not the public defender -- the county lawyer, you know, he be looking for him. Oh, he's not here yet.
I, you know, get ready to go home, because he didn't show up, because I call, call, call. No answer. There was some times that his receptionist, Sharon, would answer the phone and she be like, Vivian, oh, I'm sorry, well, Jim -- I'll get Jim to reach out to you. Oh, Jim's running a little late, he -- he didn't call you back? Oh, all right. Well, -- well, I'll try to reach out to him so he'll reach out to you.
It had gotten so bad of me going to court and Mr. Kennedy not showing up, not calling, not letting me know, you know, if I — if the court date was on [or] if the court date was on [or] if the court date was off, he wouldn't reach out to me.
[T24-4 to T25-2.]
T refers to the transcript of the June 3, 2016 DEC hearing.
Despite Brown's repeated attempts to obtain information, respondent did not return her calls. As a result, Brown appeared for court dates that had been adjourned.
Brown was aware of the $40,000 settlement, and acknowledged that respondent had explained the matter to her. She also knew about an issue with Medicare, but did not understand its relevance to her situation, because she did not receive Medicare. Brown also testified that, at one point, respondent did not communicate with her for a two-year period.
Finally, the workers' compensation judge relieved respondent as counsel so that Brown could retain a new attorney, "Mr. Crocco." In his answer, respondent indicated that Brown retained subsequent counsel in August 2015. As of the date of the DEC hearing, June 3, 2016, Brown had not received the settlement funds from her new attorney, but did not know why they were not forthcoming.
Respondent testified that his office always apprised Brown of events in her case, noting that she had often called and spoken with Sharon, his secretary. Although respondent admitted that he had not written to Brown whenever the case was adjourned, he explained that he saw no need to contact her, because he had sent correspondence directing her to call his office, at 2:00 p.m. on the day before any scheduled court appearance, to ascertain whether the case had been adjourned.
In support of his contention, respondent produced two letters that he had sent to Brown. The first letter, dated September 18, 2013, referenced a September 30, 2013 court conference, and instructed Brown to call at 2:00 p.m. the day before, in order to ensure that the matter had not been rescheduled. A second letter, dated March 31, 2014, similarly instructed her to call before an April 7, 2014 court conference.
Although there were numerous other adjournments, the above two letters represent respondent's only correspondence to Brown in the case. Respondent criticized Brown for having contacted the workers' compensation court directly for information about her case and then appearing on court dates for which he and Lane had obtained adjournments.
Respondent testified that the case came to a head on May 11, 2015, when Brown appeared in court on her own:
Miss Brown always had my cell phone number. I talked to her numerous times. And with regard to this, she showed up in court and she complained about my not having appeared, when I had spoken to Mr. Lane and Mr. Lane and I were both aware that the matter was gonna be put off, because we still didn't have the written confirmation from Medicare.
So she complained to Judge Simon that I wasn't there, and -- and that's when Judge Simon relieved me as counsel of record
without even having an — an opportunity to say anything.
After that I was contacted by Mr. Crocco, Mr. Crocco indicated to me that there's nothing that I could have done differently. I mean, we had this conversation about it, said this is -- I've never seen something like this before, it's preposterous. But -- but it's -- is the case, that's what happened.
[T72-8 to 25.]
At the conclusion of his case, the presenter summarized the RPC 1.4(b) charge against respondent, and then rested, stating, "[a]nd with regard to the second count, in terms of diligence I'm just gonna submit on that. I'm gonna base, you know, my closing arguments on what you've heard just on the first count of the complaint."
The DEC found respondent guilty of the RPC 1.4(b) charge, determining that he failed to adequately communicate to Brown the reasons for the delays in her receipt of the settlement proceeds in her case.
The panel did not find a lack of diligence, concluding that respondent had filed a workers' compensation claim and negotiated a settlement satisfactory to Brown, and that, thereafter, he had no control over delays in the case. Rather, the DEC blamed G&L and Medicare for the years' long delays. Therefore, the panel dismissed the RPC 1.3 charge.
* * *
Following a de novo review of the record, we are satisfied that the DEC's finding that respondent's conduct was unethical is fully supported by clear and convincing evidence.
Respondent's documentation and testimony lend credence to his version of events that he did not lack diligence in Brown's case. Rather, G&L and Medicare caused persistent delays in the disbursement of the settlement proceeds. In fact, a year after respondent's removal from the case, Brown still had not received her settlement proceeds. Therefore, we dismiss the RPC 1.3 charge for lack of clear and convincing evidence.
Respondent, however, failed to keep Brown reasonably informed about the delays in her case. She testified that, because respondent did not reply to her, she was compelled to call the workers' compensation court to obtain information about upcoming hearings. Although respondent maintained that he had instructed Brown to call his office before appearing for hearings, he produced only two such letters to her during a representation in which numerous other adjournments had been granted. Moreover, Brown's testimony was credible and uncontested that, on those occasions when Brown reached respondent's secretary, she simply took messages for respondent to return her call, and then received no return calls from him.
Clearly, if respondent had communicated effectively with Brown, she neither would have resorted to calling him and the court, nor appeared needlessly for hearings that he and his adversary knew had been adjourned.
Worse, respondent blamed Brown for her predicament, stating that she should not have appeared in court without first contacting him — something that she obviously had tried to do. For all of these reasons, we find that respondent violated RPC 1.4(b). II. The Lepre Matter (DRB 17-057 — District Docket No. IIIA-2015-0010E)
On November 5, 2014, Jessica Lepre retained respondent to file a personal bankruptcy petition on her behalf. Lepre, whom respondent had represented previously, paid him $1,200 for the representation in two installments: an initial payment of $800 that day, followed by a $400 payment on December 14, 2014. Respondent deposited the funds in his attorney business account.
Having heard nothing from respondent after paying his fee, Lepre sent an e-mail to him and left voicemail messages, asking whether the bankruptcy court had accepted her petition. No one at respondent's office answered the telephone. Lepre never spoke with respondent again. Unable to reach respondent, Lepre called the bankruptcy court and learned that respondent had not filed a petition in her behalf. On May 13, 2015, Lepre filed a request for fee arbitration, resulting in a November 5, 2015 determination awarding her a refund of the entire $1,200 fee. According to Lepre, respondent did not file any opposition or appear for the fee arbitration hearing. On July 7, 2015, eight months after she retained respondent (and two months after she filed the within ethics grievance), Lepre sent respondent an e-mail in which she expressly requested the return of the $1,200 fee and her file, so that she could retain new counsel. Respondent returned neither the fee nor her file.
Respondent admitted that he had not filed a bankruptcy petition for Lepre, but sought to explain his inaction as the result of an unfortunate set of mishaps and personal setbacks. Specifically, respondent testified, on August 4, 2014, the New Jersey State Police raided his law office and confiscated computers, backup hard drives, thumb drives, and other electronic devices. Respondent believes that the search resulted from claims that he had been "running an escort service." As of the date of the DEC hearing, no criminal charges had been filed against him as a result of the raid.
The raid also generated bad publicity for respondent, and his business suffered. As a cost-saving measure, he changed telephone providers. Respondent suggested that this change might explain Lepre's inability reach him. Nevertheless, he claimed, Lepre also had his cellular telephone number available to her.
Respondent testified that he became a "one man show" when his staff left after the raid.
Respondent believed that, although he previously had not handled a bankruptcy petition, he could expand his practice by doing so. To that end, he attended two Continuing Legal Education courses on bankruptcy and, in 2013, purchased a software license for a program that would permit him to prepare and electronically file bankruptcy petitions. However, his secretary, who had some familiarity with bankruptcy practices, left his employ following the raid.
Other problems beset respondent after the 2014 raid, when he was unable to install an operational copy of his bankruptcy software on an older computer that the State Police had left behind. About a month after Lepre retained him, respondent realized that he had purchased a one-year license to use the bankruptcy software, and that it had expired. Moreover, when the software manufacturer sought $800 to reactivate the license, respondent determined that it would be cost-prohibitive to do so for one client, and abandoned the software completely. Respondent also claimed to have attempted thereafter to input Lepre's bankruptcy information using an electronic "PDF format," but it was "very cumbersome," so he ceased working on Lepre's petition altogether.
Respondent conceded that he never informed Lepre that: (1) he had difficulty with his bankruptcy software program; (2) he decided not to renew his software license due to the cost; (3) he was unable or unwilling to manually complete and file her petition; and (4) she should retain another attorney to prepare and file her petition.
In respect of his failure to return the client file, respondent claimed that he had not received Lepre's July 7, 2015 e-mail requesting the return of the fee and her file. He acknowledged that she had used his correct e-mail address, but surmised that her message might have gone to the "spam" folder for his e-mail account.
Respondent also blamed a temporary employee for misfiling Lepre's bankruptcy file, which he finally located among other documents when preparing for the June 3, 2016 DEC hearing. Respondent returned those documents to Lepre at the hearing.
Respondent sought to excuse the more than two-year delay in returning the client file:
But, quite frankly, the items that Miss Lepre sought were really of her own generation, they weren't -- they weren't anything particular. I know she indicates about the -- about the credit cards and everything, but -- but the credit reports
could have been run or could have been obtained from any credit agency and -- and printed out and they would have had all the information that was necessary to file the bankruptcy, were one to have been filed at the time.
[T41-20 to T42-4.]
T refers to the transcript of the June 3, 2016 DEC hearing.
As to reimbursement of the fee, respondent explained that he always intended to repay Lepre, but his circumstances would not permit it. Respondent claimed that his financial situation was so dire that he had only $1.50 in his pocket at the hearing, and had access to very little money beyond that.
In addition, respondent testified that he had undergone two bowel-obstruction surgeries and another surgery for a perforated ulcer. Although he provided no specific dates, respondent asserted that one surgery was performed in late 2014.
Respondent also resorted to selling personal items on eBay and Amazon to raise cash, but someone stole the items from his home before he could ship them to buyers.
Finally, respondent alleged that he was diagnosed with depression, in December 2015, for which he takes medication and treats with a psychiatrist. When the presenter asked whether he had any documentation to support his medical claims, respondent replied, "I don't have the documents with [me], but I -- I certainly -- I could show you the scars."
The DEC concluded that respondent's failure to file the bankruptcy petition for which he was retained constituted gross neglect and lack of diligence, violations of RPC 1.1(a) and RPC 1.3, respectively. The DEC further determined that respondent's failure to inform Lepre about important aspects of the representation, such as his unwillingness to purchase the software necessary to file the bankruptcy petition, violated RPC 1.4(b).
According to the panel, respondent had a duty to either decline or terminate the representation when he realized that he did not have the skillset or requisite computer software with which to file bankruptcy documents. His failure to do so violated RPC 1.16(a).
Although the complaint did not charge respondent with a violation of RPC 1.15(a), the panel also concluded that respondent was required to keep the $1,200 fee separate from his own funds, and that he should have deposited them in his attorney trust account. The panel believed that his failure to provide Lepre with a written fee agreement specifically authorizing him to deposit the fee into his business account constituted a violation of RPC 1.15(a).
The hearing panel report marks the first reference in the record to RPC 1.15(a). Moreover, the issue was not raised in any respect during the DEC hearing. --------
The panel declined to find the charged RPC 1.15(b) violation for respondent's alleged failure to promptly deliver funds or property to Lepre because "the designation in the Complaint as RPC 1.15(b) was in error."
Finally, the panel concluded that respondent failed to take steps reasonably necessary, upon termination of the representation, to return Lepre's unearned fee and client file. The panel concluded that, once respondent decided not to purchase the software necessary to complete and file Lepre's petition, he "had an affirmative duty" to return the fee and the file, and to give her reasonable notice to find other counsel. By his failure to do so, respondent violated RPC 1.16(d).
The panel found no mitigating factors. In aggravation, it considered respondent's prior six-month suspension and his "pattern of conduct in this matter" by failing to: (1) decline the representation, (2) file the petition, (3) return the fee, (4) "remediate the misconduct," (5) adequately communicate with the client, and (6) comply with the fee arbitration determination that he return the fee.
The panel recommended the imposition of a six-month suspension.
* * *
Following a de novo review of the record, we are satisfied that the DEC'S finding that respondent's conduct was unethical is fully supported by clear and convincing evidence.
Lepre retained respondent to file a bankruptcy petition, paying him $1,200 for that purpose. Thereafter, respondent took virtually no meaningful action to prepare or file it. He first blamed the State Police's confiscation of his computers and other devices for his inability to pursue Lepre's bankruptcy, because that equipment contained needed bankruptcy software. Only later did he admit that the software license that he had purchased in 2013 had expired. Ultimately, respondent decided the software was too expensive to renew for Lepre's representation alone and, instead, he simply stopped working on her case. By doing so, he grossly neglected and lacked diligence in her case, violations of RPC 1.1 and RPC 1.3(a), respectively.
Almost immediately upon his retention, respondent completely failed to communicate with his client regarding her matter. He did not tell her that his bankruptcy software license had expired; he did not tell her that he considered it cost-prohibitive to renew that license; he did not tell her that he was not able or willing to complete and file her petition manually; and, finally, he did not advise her to seek counsel who could accomplish her goal. By his failure to do so, respondent violated RPC 1.4(b).
RPC 1.16(a)(1) requires an attorney to decline or terminate a representation if "the representation will result in violation of the Rules of Professional Conduct or other law." The DEC based its finding of unethical conduct, in part, on respondent's failure to decline or terminate the representation once he realized that he did not have the skills or computer software with which to file bankruptcy documents. Here, respondent found himself incapable of handling Lepre's bankruptcy for a variety of reasons, not the least of which was an inability to process bankruptcy petitions without the software program he had once purchased for that purpose. Having decided against renewing his software license, respondent ran the risk of violating RPC 1.1(a) and RPC 1.3. Thus, by failing to terminate the representation before that happened, respondent violated RPC 1.16(a)(1).
The RPC 1.16(d) charge is well-supported in the record. Indeed, respondent ultimately conceded that he had a duty, upon termination of the representation, to return both the unearned fee and the client file to Lepre. Yet, he did not do so, a violation of RPC 1.16(d). We dismiss the RPC 1.15(b) charge as duplicative to the extent that it pertains to respondent's failure to promptly deliver to Lepre the $1,200 unearned fee.
Finally, although the DEC found a violation of RPC 1.15(a), based on respondent's failure to deposit Lepre's fee into his trust account, we note that the complaint did not charge respondent with having violated that Rule, it was not amended to include that charge, and it was not mentioned, let alone litigated, below. Moreover, on a substantive basis, we note that, in the absence of a specific understanding to the contrary, attorneys are not required to deposit unearned retainers into their trust accounts. For all of those reasons, we decline to find a violation of RPC 1.15(a).
* * *
In summary, in the Brown matter, respondent violated RPC 1.4(b). In the Lepre matter, he violated RPC 1.1(a), RPC 1.3, RPC 1.4(b), RPC 1.16(a), and RPC 1.16(d). We dismissed the RPC 1.15(b) charge.
We now turn to the appropriate quantum of discipline to be imposed for respondent's misconduct. Conduct involving gross neglect, lack of diligence, and failure to communicate with clients ordinarily results in either an admonition or a reprimand, depending on the number of client matters involved, the gravity of the offenses, the harm to the clients, and the seriousness of the attorney's disciplinary history. See, e.g., Tn the Matter of Walter N. Wilson, DRB 15-338 (November 24, 2015) (admonition for attorney retained for a tax appeal from the loss of a special assessment; the attorney neither filed an appeal nor advised his client of the deadline, thus depriving the client of the opportunity to perfect an appeal, violations of RPC 1.1(a) and RPC 1.3; in mitigation, we considered that the attorney had no prior discipline, that his misconduct involved only one client matter and did not result in significant injury to him, that his misconduct was not for personal gain, and that, at the time of the misconduct, he was caring for his girlfriend, who was seriously ill); In re Sachs, 223 N.J. 241 (2015) (reprimand imposed on attorney who had represented two sisters in the sale of a home, against which two liens had attached; the title company required the amount of the liens to be held in escrow, and the sisters provided the funds; despite his promise to do so, the attorney did not negotiate the payoff of the judgments, instead leaving the title company to do so, with the escrowed monies, and retaining the balance as its fee; the attorney neither obtained a bill from the title company justifying its fee, nor told his clients that the title company had taken a fee; he also failed to return one of the client's telephone calls for several years after the escrow funds had been disbursed, violations of RPC 1.1(a), RPC 1.3, and RPC 1.4(b); reprimand imposed due to economic loss suffered by the clients); and In re Aranguren, 172 N.J. 236 (2002) (reprimand for attorney who was retained to file a bankruptcy petition; he accepted a $1,200 fee, and then failed to file the petition; after two years and numerous unsuccessful attempts to obtain information about the case, the client retained new counsel, who completed the bankruptcy in three months; lack of diligence, failure to communicate with the client, and failure to memorialize the basis of the fee found; prior admonition and six-month suspension for similar misconduct).
Cases involving failure to return the unearned portion of a fee or property to the client upon termination of the representation have, without more, yielded admonitions, even when accompanied by other non-serious infractions. See, e.g., In the Matter of Gary A. Kraemer, DRB 14-085 (June 24, 2014) and In the Matter of William E. Wackowski, DRB 09-212 (November 25, 2009).
Here, respondent's conduct is similar to that of the attorney in Aranguren, above, who received a reprimand for similar conduct for which respondent is guilty — failure to file a bankruptcy petition and failure to communicate with the client. Aranguren, like respondent, had a disciplinary history that included a six-month suspension. Although respondent's matter differs from Aranguren in that respondent's prior suspension was not imposed for a violation of the same rules (respondent's was based on his conviction for possession of child pornography), his disciplinary history, nevertheless, is a relevant factor in determining the appropriate discipline in these matters.
Troubling, too, was respondent's tendency, during the hearing below, to shift blame to others for his own misconduct. For example, he sought to minimize his failure to return Lepre's client file to her, claiming that she easily could have obtained copies of her documents elsewhere. He also blamed a temporary employee for misfiling her materials, which he fortuitously found, at the last minute, when preparing for the DEC hearing.
In mitigation, respondent offers anecdotal evidence of medical issues including bowel-obstructions, ulcer surgeries, and depression that he claims plagued him at about the time in question. While there is no reason to doubt respondent's truthfulness in this regard, he provided virtually no proof in support of these claims, other than a facetious proposal that the panel view his scars.
Although a reprimand, as in Aranguren, might have sufficed for respondent's misconduct in these two matters, he has demonstrated an insensitivity to his clients' needs and a tendency to blame others, including clients, for his own wrongdoing. Thus, we determine that a censure more appropriately addresses the totality of respondent's misconduct in these two, combined matters.
Member Gallipoli did not participate.
We further determine to require respondent to reimburse the Disciplinary Oversight Committee for administrative costs and actual expenses incurred in the prosecution of this matter, as provided in R. 1:20-17.
Disciplinary Review Board
Bonnie C. Frost, Chair
By:/s/_________
Ellen A. Brodsky
Chief Counsel
VOTING RECORD
Argued: April 20, 2017 Decided: July 28, 2017 Disposition: Censure
| Members | Censure | Recused | Did not participate |
|---|---|---|---|
| Frost | X | ||
| Baugh | X | ||
| Boyer | X | ||
| Clark | X | ||
| Gallipoli | X | ||
| Hoberman | X | ||
| Rivera | X | ||
| Singer | X | ||
| Zmirich | X | ||
| Total: | 8 | 1 |
/s/_________
Ellen A. Brodsky
Chief Counsel