Attorney Grievance Commission of Maryland v. Eugene Ignatius Kane, Jr., Miscellaneous
Docket AG No. 5, September Term, 2018
ATTORNEY DISCIPLINE – SANCTIONS – INDEFINITE SUSPENSION
Respondent Eugene Ignatius Kane, Jr., violated the Maryland Lawyers’ Rules of
Professional Conduct (“MLRPC”) 1.1, 1.2, 1.3, 1.4, 1.7, 1.16, 3.1, 3.3, 3.4, 8.1, and 8.4(a)
and (d). These violations arose from Respondent’s misconduct during his representation
of clients in two separate matters, as well as in his own personal bankruptcy filings and tax
return filings. Taken together, Respondent’s violations warrant the sanction of indefinite
suspension.
Circuit Court for Montgomery County
Case No.: 447490-V
Argued: June 6, 2019
IN THE COURT OF APPEALS
OF MARYLAND
Misc. Docket AG No. 5
September Term, 2018
ATTORNEY GRIEVANCE COMMISSION
OF MARYLAND
v.
EUGENE IGNATIUS KANE, JR.
Barbera, C.J.
*Greene
McDonald
Watts
Hotten
Booth
Battaglia, Lynne A.
(Senior Judge, Specially Assigned),
JJ.
Opinion by Booth, J.
Filed: August 26, 2019
*Greene, J., now retired, participated in the
hearing and conference of this case while an
Pursuant to Maryland Uniform Electronic Legal
Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document is authentic.
active member of this Court; after being recalled
pursuant to the MD. Constitution, Article IV,
2019-08-26 11:58-04:00 Section 3A, he also participated in the decision
and adoption of this opinion.
Suzanne C. Johnson, Clerk
This attorney discipline matter against Respondent, Eugene Ignatius Kane, Jr.
(“Respondent” or “Mr. Kane”) arises out of Mr. Kane’s representation of two clients, Mrs.
Lonergan and Mr. Arvin, in separate matters, as well as his personal bankruptcy filings in
the United States Bankruptcy Court for the District of Maryland, his personal tax return
filings and the related investigations of the Attorney Grievance Commission (“AGC”).
On May 1, 2018, the AGC, through Bar Counsel, filed a Petition for Disciplinary or
Remedial Action (“Petition”) against Mr. Kane alleging that he had violated several
provisions of the Maryland Lawyers’ Rules of Professional Conduct (“MLRPC”).
Specifically, Bar Counsel charged him with violating Rules 1.1 (Competence), 1.2 (Scope
of Representation and Allocation of Authority Between Client and Attorney), 1.3
(Diligence), 1.4 (Communication), 1.7 (Conflict of Interest: General Rule), 1.15
(Safekeeping Property), 1.16 (Declining or Terminating Representation), 3.1 (Meritorious
Claims and Contentions), 3.3 (Candor Toward the Tribunal), 3.4 (Fairness to Opposing
Party and Counsel), 8.1 (Bar Admission and Disciplinary Matters), and 8.4 (Misconduct)
of the Maryland Lawyers’ Rules of Professional Conduct.1 Mr. Kane was also charged
with violating Maryland Rule 16-606.12
1
Effective July 1, 2016, the MLRPC were renamed the Maryland Attorneys’ Rules
of Professional Conduct (“MARPC”) and recodified in Title 19 of the Maryland Rules.
Mr. Kane’s misconduct occurred before and after the recodification of the rules of
professional conduct. Because Mr. Kane violated the rules under both the MLRPC and the
MARPC, and there is no substantive difference in the two codifications, we shall use the
shorter designations of the MLRPC throughout this opinion, e.g., “Rule 8.4” rather than
“Maryland Rule 19-308.4.”
2
Effective July 1, 2016, this rule was re-codified as Maryland Rule 19-407.
Pursuant to Maryland Rule 19-722(a), this Court designated the Honorable David
W. Lease of the Circuit Court for Montgomery County to conduct an evidentiary hearing
(the “attorney grievance hearing” or “hearing”) regarding the alleged violations, and to
provide findings of fact and conclusions of law pursuant to Maryland Rule 19-272. The
attorney grievance hearing was held between December 10, 2018 and December 14, 2018.
Mr. Kane represented himself throughout the hearing.
The hearing judge issued Findings of Fact and Conclusions of Law on March 14,
2019, in which he found by clear and convincing evidence that Mr. Kane violated MLRPC
1.1, 1.2, 1.3, 1.4, 1.7, 1.16, 3.1, 3.3, 3.4, 8.1, and 8.4.3 The hearing judge did not find a
violation of Maryland Rule 16-606.1.
Bar Counsel filed one exception, which was to the hearing judge’s failure to find
Mr. Kane’s prior warning by the AGC to be an aggravating factor. Mr. Kane filed a number
of exceptions to both the hearing judge’s findings of fact, as well as his conclusions of
law.4
3
Following the hearing, Bar Counsel withdrew the allegation that Mr. Kane violated
Rule 1.15(e).
4
Mr. Kane’s pleading titled “Respondent’s Exceptions and Recommendations”
(“Exceptions”) contains a section titled “Introduction,” which sets forth many facts and
conclusions not contained in the record or found by the hearing judge. In his Exceptions,
Mr. Kane essentially asks this Court to accept his version of the facts and overturn the
hearing judge’s credibility determinations. To the extent that Mr. Kane’s “Introduction”
contains exceptions to facts that are not specifically discussed below, they are overruled.
As an initial matter, it should be noted that a “factual finding is not clearly erroneous ‘[i]f
there is any competent material evidence to support [it].’” Attorney Grievance Comm’n v.
McDonald, 437 Md. 1, 16 (2014) (alterations in original) (quoting YIVO Inst. for Jewish
Research v. Zaleski, 386 Md. 654, 663 (2005)). “The hearing judge is entitled to ‘pick and
choose which evidence to rely upon’ from a conflicting array when determining findings
2
Concerning the appropriate sanction, Bar Counsel recommends that Mr. Kane be
disbarred for his violations of the MLRPC. Mr. Kane requests that this Court impose a
reprimand as the appropriate sanction. On June 6, 2019, this Court heard oral arguments
in this matter. Mr. Kane appeared and was represented by counsel. We address the parties’
exceptions below. For the reasons set forth herein, we hold that Mr. Kane’s violations
warrant the sanction of indefinite suspension.
I. The Hearing Judge’s Findings of Fact
When no exception is made to a hearing judge’s finding of fact, we accept it as
established. Md. Rule 19-741(b)(2)(A). When a party excepts to a finding, we must
determine whether the finding is established by the requisite standard of proof—in the case
of an allegation of misconduct, clear and convincing evidence. Md. Rules 19-741(b)(2)(B),
19-727(c). The standard of review for a hearing judge’s factual findings where a party
excepts to the findings is the clearly erroneous standard. Attorney Grievance Comm’n v.
Chanthunya, 446 Md. 576, 588 (2016) (cleaned up). We summarize the hearing judge’s
findings of fact and other undisputed matters in the record. We also address any exceptions
in relation to the findings to which they pertain as follows.
of fact.” Attorney Grievance Comm’n v. Guida, 391 Md. 33, 50 (2006) (quoting Attorney
Grievance Comm’n v. Fezell, 361 Md. 234, 253 (2000)). Additionally, as set forth infra,
although Mr. Kane notes many exceptions to both findings of fact and conclusions of law
made by the hearing judge, he admits in many instances that he engaged in the conduct
upon which the violation is based.
3
Mr. Kane’s Credentials and Practice5
Mr. Kane graduated from Georgetown Law School in 1983 and was admitted to the
Maryland Bar on December 20, 1983. He is a solo practitioner with a virtual office located
in Montgomery County, Maryland. While Mr. Kane’s mail was delivered to his virtual
office, he conducted meetings in public places, such as restaurants and coffee shops, and
otherwise worked from his home, also located in Montgomery County. Mr. Kane did not
have any administrative support, other than a receptionist at his virtual office.
The Lonergan Matter
In 2006, Brian Lonergan and his wife (“Mrs. Lonergan”) purchased a PostNet
franchise. Soon thereafter, Mr. Lonergan established Montgomery Business Solutions,
LLC (“MBS”) to operate the printing and shipping franchise. MBS traded under the names
PostNet and PostNet MD 112 (hereinafter “PostNet”). Mr. Lonergan was the sole member
and owner of MBS and managed the day-to-day operations of the store. Mrs. Lonergan,
an attorney, was not involved in the operation of the MBS business venture.
5
Mr. Kane excepts to the fact that, in the hearing judge’s summary of his practice,
the hearing judge did not find that Mr. Kane “was also experiencing some personal
financial difficulties with his mortgage lender—Wells Fargo—which necessitated the
filing of personal bankruptcy petitions by [] [Mr. Kane].” We overrule this exception.
Although the hearing judge did not incorporate this finding into his initial description of
Mr. Kane’s practice, he found that, on the eve of Mr. Kane’s five personal bankruptcy
filings, Mr. Kane was facing a foreclosure on his home. Mr. Kane’s serial bankruptcy
filings related to his attempts to negotiate his mortgage with his lender, a fact noted by the
hearing judge in his written Findings of Fact and Conclusions of Law.
4
1. PNC v. MBS
In November 2010, Mr. Lonergan retained Mr. Kane to represent MBS in
connection with collection efforts by PNC Merchant Services Company (“PNC”) after it
was discovered that MBS had been the target of a credit card scam. The transaction at
issue involved a large order placed by a third-party that was paid for with a stolen credit
card. PNC claimed that MBS owed approximately $50,000 due to a charge back to MBS’s
account after the transaction was determined to have been fraudulent. PNC cancelled
MBS’s merchant account and placed MBS on a “blacklist,” preventing MBS from
conducting credit card transactions.
During their initial meeting, Mr. Kane indicated that he could attempt to negotiate
a resolution with PNC. Mr. Lonergan, through PostNet, retained Mr. Kane. Mr. Lonergan
testified that he did not recall discussing an hourly rate with Mr. Kane, but he understood
that Mr. Kane would charge him an hourly rate for his services.
Mr. Kane attempted to negotiate a resolution with PNC, to no avail. PNC would
not agree to remove MBS from the blacklist, which had the effect of preventing MBS from
accepting credit card payments from its customers. As a result, in September of 2011, PNC
filed a complaint against MBS in the Circuit Court for Montgomery County. Prior to trial,
PNC offered to settle the matter by removing MBS from the blacklist in exchange for a
payment of $50,719.25. It became apparent to Mr. Kane that MBS had no defense, so he
investigated other options.
In early June of 2012, Mr. Kane advised Mr. Lonergan that he had consulted with a
bankruptcy attorney, who recommended that they create a new entity to operate PostNet
5
so that the business could continue to operate.6 Mr. Kane indicated that the new entity
would be able to process credit cards. Mrs. Lonergan, skeptical of this advice, asked Mr.
Kane whether his proposed course of action could be successful, and whether there would
be any associated risk. Mr. Kane told Mrs. Lonergan that there was nothing wrong with
attempting to operate under the new entity, although it might not be successful. Mr. Kane
advised that the only potential risk was that the credit card processing company might
discover a connection between MBS and the newly formed company, which could lead to
the loss of the filing fees paid to create the new entity.
Based upon Mr. Kane’s advice, the Lonergans agreed that Mr. Lonergan would form
a new company. The day before the PNC trial, Mr. Kane filed articles of organization with
the Maryland State Department of Assessment and Taxation (“SDAT”) establishing Matrix
Printing, LLC (“Matrix”). Matrix was registered to the same address as MBS and was
intended to control and continue MBS’s printing and shipping franchise.
The following day, Mr. Kane appeared in the circuit court on behalf of MBS. Mr.
Kane advised PNC and the court that MBS would not contest the matter. The circuit court
entered judgment in favor of PNC against MBS in the amount of $50,719.25. Mr. Kane
6
Mr. Kane excepted to this finding and contends that the hearing judge should have
found that he discussed the Lonergan litigation strategies with two experienced lawyers.
We overrule this exception. The hearing judge specifically found that Mr. Kane discussed
this matter with an experienced bankruptcy attorney. The hearing judge is entitled to
significant deference in assessing the credibility of witnesses and picking and choosing
from the evidence presented and the inferences to be drawn from that evidence. See
Attorney Grievance Comm’n v. Page, 430 Md. 602, 627 (2013). Moreover, as discussed
infra, the hearing judge did not find that Mr. Kane violated any Rule in connection with
his recommendations and advice on the formation of the new entity.
6
did not inform PNC or the circuit court of the formation of Matrix prior to the entry of the
judgment; however, there was no duty to disclose such information.
PNC commenced efforts to collect on the judgment and garnished MBS’s bank
accounts. Mr. Kane advised Mr. Lonergan that MBS should explore filing bankruptcy
because PNC was unrelenting. Mrs. Lonergan requested a telephone call with Mr. Kane
regarding the potential bankruptcy filing. She again asked if there was risk or anything
illegal about the creation of Matrix. Mr. Kane was adamant that there was no risk. Mr.
Kane spoke with MBS’s accountant, Mr. Burstein, as well as a bankruptcy attorney, and
they both agreed with his recommendation.
2. MBS Chapter 7 Bankruptcy
Mr. Kane filed a Chapter 7 Bankruptcy petition on behalf of MBS in the United
States Bankruptcy Court for the District of Maryland (“Bankruptcy Court”) in March of
2013. The filing contained numerous deficiencies, including the failure to file many
schedules. On April 2, 2013, the Bankruptcy Court dismissed the petition because the
deficiencies had not been cured.
The following day, Mr. Kane filed an appearance of counsel and an affidavit for
explanation of non-compliance and disclosure, wherein Mr. Kane advised that he did not
have an account to electronically file MBS’s pleadings. Mr. Kane also filed a motion to
reinstate Chapter 7, associated schedules, and a statement of financial affairs. Mr. Kane’s
filings once again contained deficiencies. He failed to include the required declaration
from the debtor or to file a certificate of service as required by the bankruptcy rules.
7
The Bankruptcy Trustee (“Trustee”) retained counsel, Jeffrey M. Orenstein, to
investigate MBS and Matrix. The bankruptcy judge granted the Trustee’s motion to vacate
the dismissal of the bankruptcy, which allowed the Trustee to continue his investigation.
In the course of his investigation, Mr. Orenstein reviewed the bankruptcy petition prepared
by Mr. Kane on behalf of MBS. Mr. Orenstein noted that the petition stated that MBS had
no assets; however, there was no disclosure of any transfers by MBS or any closed bank
accounts. Mr. Orenstein investigated the PNC litigation and concluded that there were
potential claims that could be pursued on behalf of the bankruptcy estate.7
On February 2, 2014, Mr. Kane emailed Mr. Lonergan and advised that there were
no updates in the Chapter 7 bankruptcy case. In this email, Mr. Kane inquired about how he
was going to be compensated. At no time between November 2010 and February 2014 did
Mr. Kane provide an invoice or billing statement in connection with his representation of
MBS. Mr. Kane stated that “if [I] did an itemized bill based on time it would be excessive.
Thoughts on alternatives to hourly arrangement?” Mr. Kane and Mr. Lonergan agreed on a
total fee of $12,000 with $5,000 to be paid immediately and the remainder in monthly
installments of $1,000. Mr. Lonergan’s father sent two checks totaling $5,000 on behalf of
Mr. Lonergan in February of 2014. One check in the amount of $2,000 referenced
7
Mr. Kane excepts to the hearing judge’s findings concerning MBS’s bankruptcy
and contends that the hearing judge “should have found that the [R]espondent advised Mr.
Lonergan and the [Bankruptcy] Trustee that the [R]espondent was not an experienced
bankruptcy petitioner.” We overrule this exception. Even assuming that Mr. Kane advised
the Lonergans and the Bankruptcy Court of his lack of experience, Mr. Kane is required to
possess basic minimum standards of competence required by Rule 1.1 when representing
his clients, which includes ensuring that schedules comply with the minimal bankruptcy
requirements and that they are accurate.
8
“Services/PostNet.” The other check in the amount of $3,000 referenced “PostNet Legal
Services.”
On April 15, 2014, Mr. Lonergan requested a statement representing the agreed-
upon amount owed. Mr. Kane provided Mr. Lonergan an invoice that day, which included
time spent on the matter through March 9, 2011, as well as a “general entry” in the amount
of $4,776.68 on April 15, 2014, which brought the total invoice amount of $11,999. The
invoice did not account for the February 2014 payments. Mr. Lonergan testified that his
understanding was that the $12,000 would cover the case to its conclusion. Mr. Kane
testified that he had a clear understanding that he would handle the bankruptcy matter
without charge.
3. Adversary Proceeding Against MBS, Mr. Lonergan, Mrs. Lonergan, and
Mr. Kane
The Trustee’s investigation led to the filing of a Complaint to Avoid Transfers, for
Declaratory Judgment, and to Recover Monetary Damages against Matrix, Mr. Lonergan,
Mrs. Lonergan, and Mr. Kane. The Complaint, which was filed in June of 2014 in the
Bankruptcy Court, consisted of ten counts, including civil conspiracy and a fraudulent
conveyance based on the transfers allegedly made by the Lonergans and Mr. Kane between
MBS and Matrix on the eve of trial in the PNC case (the “Adversary Proceeding”).
Mr. Kane discussed the Adversary Proceeding with Mr. Lonergan and advised him
that he believed that the case was defensible because Mr. Kane had spoken to a bankruptcy
attorney and to MBS’s accountant prior to creating Matrix and filing MBS’s bankruptcy. In
August of 2014, Mr. Kane filed a Motion to Dismiss Complaint, or Alternatively, a Motion
9
for More Definite Statement of Same on behalf of Matrix, the Lonergans, and himself.
Mr. Kane had not discussed the complaint or his motion with Mrs. Lonergan, nor did he have
her authorization to take any action on her behalf.
From the outset of the Adversary Proceeding, counsel for the Trustee, Mr. Orenstein,
had several discussions with Mr. Kane wherein he expressed concern regarding Mr. Kane’s
ongoing representation of the Lonergans and Matrix. Specifically, Mr. Orenstein expressed
concern about the fact that Mr. Kane was a named defendant against whom the Trustee was
seeking damages, and that he would be a primary witness in the case. Mr. Orenstein told
Mr. Kane several times that he did not believe that Mr. Kane could represent the Lonergans
or Matrix in the Adversary Proceeding because Mr. Kane was also a defendant.
In August of 2014, the Bankruptcy Court held a pretrial hearing. Mr. Kane appeared
on behalf of the defendants. As before, Mr. Kane had not discussed the complaint or the
hearing with Mrs. Lonergan, nor was he authorized to appear on her behalf. 8 The Lonergans
were not present. At the hearing, the Trustee advised the Bankruptcy Court that Mr. Kane
would be a witness and therefore, could not serve as counsel for the Lonergans or Matrix.
After the hearing, Mr. Kane emailed Mr. Lonergan and informed him that the Trustee
intended to file a motion to disqualify him as counsel in the case because a lawyer cannot be
8
Mr. Kane excepts to the hearing judge’s finding. He contends that the hearing
judge should have found that Mr. Kane believed that Mr. Lonergan was advising Mrs.
Lonergan on the status of the Adversary Proceeding and that Mr. Kane was not
communicating with Mrs. Lonergan at Mr. Lonergan’s request because of serious marital
issues. We overrule this exception. Mr. Kane had a duty to discuss the Adversary
Proceeding with Mrs. Lonergan, and the fact that Mr. Kane believed that the Adversary
Proceeding was creating marital discord between his two clients only heightened this duty.
10
a witness and act as counsel at trial. Mr. Kane stated that: “[w]e will wait to see what the
Trustee files.” Mr. Kane did not withdraw as counsel for the Lonergans and Matrix in the
Adversary Proceeding at that time, nor did he discuss his conflict of interest with
the Lonergans.
In September of 2014, the Trustee served interrogatories and requests for production
of documents on each of the Lonergans. In November of 2014, the Trustee filed an
amended complaint, wherein he added claims against the Lonergans and Mr. Kane related
to the alleged fraudulent conveyance. Mr. Kane failed to communicate in any manner with
Mrs. Lonergan about the amended complaint.
On December 12, 2014—more than two months after the discovery had been
propounded—Mr. Kane emailed Mr. Lonergan and asked how he was doing on the
“discovery preparation.” On December 16, Mr. Orenstein wrote to Mr. Kane concerning
the overdue discovery responses and stated that if responses were not received on or before
December 20, the Trustee would seek sanctions against the Lonergans. That same day,
Mr. Kane emailed Mr. Orenstein and stated: “Client has been working on the responses.
This is a very busy time of the year for the company. Anticipate responses shortly.” At
that time, Mr. Kane still had not had any communications with Mrs. Lonergan about the
lawsuit that had been filed in which she was a named defendant, the outstanding discovery
requests, or the response deadline.
On January 4, 2015, Mr. Kane emailed Mr. Lonergan about the discovery responses.
Mr. Kane indicated that he was “very certain” that Mr. Orenstein was “going to insist [they]
11
file the discovery responses this week.” Mr. Kane did not advise Mr. Lonergan that the
responses were overdue or of the content of Mr. Orenstein’s December 16 letter.
In January of 2015, Mr. Kane filed an Answer to the Amended Complaint on behalf
of all the defendants, including himself. Again, Mr. Kane was not authorized by Mrs.
Lonergan to take any action on her behalf.
On February 3, 2015, Mr. Orenstein once again wrote to Mr. Kane regarding the
overdue discovery responses. Mr. Orenstein advised that if discovery responses were not
received by February 10, he would file a motion for sanctions. On February 4, Mr. Kane
emailed Mr. Lonergan and indicated that they needed to “resume” their efforts on the
discovery responses. Mr. Kane stated that he had a new deadline of February 10 to submit
discovery responses. Mr. Kane did not advise Mr. Lonergan that the Trustee intended to file
a motion for sanctions if responses were not received by February 10. The deadline passed
without any further communication between Mr. Kane and Mr. Orenstein.
Having received no response from Mr. Kane to his February 4 email, Mr. Orenstein
filed a motion for sanctions and motion to compel discovery against the Lonergans on
February 16. On February 17, Mr. Kane, for the first time, emailed draft responses to Mr.
Lonergan and requested that Mr. and Mrs. Lonergan review and sign the responses.
Mr. Kane did not advise the Lonergans of the pending motion for sanctions that had been
filed against them. On March 4, Mr. Kane emailed Mr. Lonergan and inquired about the
status of the responses. Again, Mr. Kane failed to advise Mr. Lonergan of the pending
motion for sanctions. On March 7, Mr. Kane emailed Mr. Lonergan about the discovery
12
responses and advised that a “motion to compel” had been filed. Mr. Kane stated that he
wanted to get the discovery filed to “keep from sanctions for non-filing.”
As of March 7, Mr. Kane had failed to have any direct communications with Mrs.
Lonergan about the discovery and failed to advise either of the Lonergans that a pending
motion for sanctions had been filed against them three weeks earlier.
The Bankruptcy Court scheduled a hearing for March 23, 2015. On March 19,
Mr. Kane finally provided complete discovery responses to Mr. Orenstein. Mr. Kane filed
a response to the motion for sanctions on the day before the hearing.
On March 23, the Bankruptcy Court heard the Trustee’s motion for sanctions.
Mr. Kane appeared on behalf of the Lonergans, who were not present. At the conclusion
of the hearing, the Bankruptcy Court granted the Trustee’s motion. After the hearing,
Mr. Kane failed to advise the Lonergans that sanctions had been entered against them.
Instead, Mr. Kane sent Mr. Lonergan an email advising him that the Bankruptcy Court had
granted the motion to compel and requested “the Trustee provide an estimate of the costs
of preparing the motion and will [sic] us to negotiate, if possible, a reasonable
reimbursement for the cost of the motion.” On April 17, 2015, the Bankruptcy Court
entered an Order of Sanctions against the Lonergans in the amount of $3,197.25. Once
again, Mr. Kane failed to advise Mrs. Lonergan about either the Court’s grant of the motion
to compel or the sanctions order.
In the fall of 2015—over a year after the initial case was filed—Mr. Kane advised
Mr. Lonergan that the Lonergans needed to retain new counsel because the Trustee intended
to call Mr. Kane as a witness at trial. The Lonergans retained Michael P. Coyle as successor
13
counsel. When the Lonergans consulted with Mr. Coyle, Mrs. Lonergan learned, for the first
time, that she was a named defendant in the Adversary Proceeding and that sanctions had
been entered against her.
Mr. Coyle recommended that the Lonergans attempt to negotiate a settlement with
the Trustee. Prior to Mr. Coyle’s involvement in the case there had not been any legitimate
settlement discussions between Mr. Orenstein and Mr. Kane.9 Mr. Coyle entered his
appearance and negotiated a settlement with the Trustee prior to trial. The terms of the
settlement required that the Lonergans and Matrix pay approximately $16,500 and that the
Lonergans pay an additional $3,197.25 as sanctions associated with the parties’ discovery
violations. Mr. Kane never reimbursed the Lonergans for the amounts paid toward the
sanctions.
Trial proceeded on January 12, 2016, with Mr. Kane as the only defendant. The
Trustee and Mr. Kane each made opening statements and conducted direct and cross-
examination of Mr. Lonergan. During the lunch break, Mr. Kane, for the first time, advised
Mr. Orenstein that he had filed a personal Chapter 13 bankruptcy petition in September of
2015. Mr. Orenstein immediately advised the bankruptcy judge of Mr. Kane’s Chapter 13
filing, which required that the proceedings against him be stayed immediately. The
following exchange occurred with the bankruptcy judge:
MR. ORENSTEIN: Your Honor, I have to apologize to you and
everybody else in this courtroom for wasting your time because Mr. Kane
9
Mr. Kane excepts to the hearing judge’s finding that he failed to engage in
legitimate settlement discussions, and contends that he did in fact, have discussions, but to
no avail. Based upon our independent review of the record, Mr. Kane’s exception to this
finding is overruled. The hearing judge’s finding is not clearly erroneous.
14
just informed me that in September[,] he filed a Chapter 13 bankruptcy
petition.
THE COURT: Oh, no.
MR. ORENSTEIN: And this case, as a result, is stayed as to him,
although the trustee was not listed as a creditor and we knew nothing
about that until just this moment. And you know how much time and
effort and money we have spent on this because Mr. Kane has, once
again, thrown us into the deep end. But we cannot, as a matter of law, go
forward with this trial at this point.
MR. KANE: Let me respond to that. I have been trying to - - first of all,
for personal privacy reasons, I have been trying to keep that out of any
and all professional matters. That’s number one for my rationale.
Number two, once I became the sole defendant, and I asked counsel at
the break, because we haven’t had any discussions since they left me as
the sole defendant, monetarily, what are they seeking from me. Okay? I
was given a number, okay, and I said that’s not even workable for me.
The difficulty for me is that I’m trying to, as you can see, from September
- - I’ll give you the case number if you need it, Your Honor.
THE COURT: Sure.
MR. KANE: It’s 15-22874. It’s a mortgage issue. I’m trying to work
out a mortgage issue with the mortgage company, and I’m trying to
resolve that issue on modification with Wells Fargo. And that’s what
I’ve been dealing. So[,] on a personal note, I believed, and still do believe
that the only financial exposure, if there is any in this case, is it relates to
my former clients, not for me. I’ve always provided professional advice.
THE COURT: It doesn’t matter. You’ve been sued[,] and you should
have advised the Court that you’re a Chapter 13. People who are - - it
stays the matter. And he could have made some other decisions, either
about how he was going to settle it because you’re in Chapter 13, or chose
not to pursue it, or whatever, or you could have agreed on a claim in the
Chapter 13 case.
But to have gone forward when there is an automatic stay that goes into
effect, and to have cause these people and the Court all of this time is - -
MR. KANE: But the Court was also clear, on several days, that you
wanted this case tried today.
THE COURT: But is wasn’t going to be - -
MR. KANE: And I wasn’t going to let that interfere.
THE COURT: It can’t be - -
MR. KANE: I didn’t want my personal life to interfere.
THE COURT: It can’t be tried if there’s an automatic stay. Even if I’m
the judge, and I don’t know that I am in the 13, there is an automatic stay
that goes into effect, and it can’t be pursued unless they file a motion for
relief from automatic stay. They can’t do it, ethically.
15
All right. Well, we’re done for today; that’s for sure. Let’s just wrap this
up.
* * *
THE COURT: Okay. Are they listed as a creditor? They didn’t get
notice.
MR. KANE: No.
THE COURT: Oh.
MR. KANE: I list two creditors, Your Honor, the first and second
mortgage; that’s the only people - -
THE COURT: They’re a - -
MR. KANE: I’m going to have to amend at this point. I understand I’m
going to have to do all of that now that they’re made me a direct point of
contact in this case. I thought it was peripheral; that’s my perception of
it. But apparently the trustee doesn’t think so.
THE COURT: Well, it’s not a matter of “apparently the trustee”; it’s the
law. Read Section 362 of the Bankruptcy Code.
MR. KANE: But I - - you know, honestly, Your Honor, I get where - -
you know, if I get somebody that sues me for a court reporter bill for
$300, I don’t list them on any financial reportings, and I do with any
venue. Those are just minor things. I saw my role, personally, as far as
personal exposure, as minor.
THE COURT: It doesn’t matter; it’s still a claim. It needed to have been
listed.
MR. KANE: All right.
At the attorney grievance hearing, Mr. Kane advanced various reasons for his failure
to disclose the Adversary Proceeding and list the Trustee as an unsecured creditor in his
bankruptcy petition. The hearing judge found that Mr. Kane’s reasons for purposely
omitting the listing of the Adversary Proceeding were not permissible. The hearing judge
determined that Mr. Kane knowingly and intentionally withheld material information from
the Bankruptcy Court by failing to identify the Adversary Proceeding. The hearing judge
found that Mr. Kane was aware that he needed to list the claim. Mr. Kane acknowledged
the willful nature of his omission to list the Adversary Proceeding in his personal
16
bankruptcy filing when he advised the Bankruptcy Court that he failed to disclose the claim
because “I have been trying to keep that out of any and all professional matters. . . .”
Subsequently, the automatic stay was lifted, and the Adversary Proceeding against
Mr. Kane went forward. The Bankruptcy Court found for Mr. Kane and entered a judgment
in his favor.
Mr. Kane excepts to the factual finding that he “knowingly and intentionally filed a
false bankruptcy petition,” claiming that he firmly believed that he did not have to list the
Adversary Proceeding because it was an “inchoate claim.” Although this may have been
Mr. Kane’s belief, it was nonetheless incorrect. And the record described above shows
that Mr. Kane’s omission was intentional. Based upon the facts outlined above, the hearing
judge’s finding is not clearly erroneous. We overrule Mr. Kane’s exception.
4. Bar Counsel Investigation into Lonergan Complaint
Mrs. Lonergan filed a complaint with the Attorney Grievance Commission in June
of 2016. Bar Counsel forwarded the complaint to Mr. Kane on September 6 and requested
that Kane provide a written response within fifteen days. When Mr. Kane did not respond
to Bar Counsel’s request, Counsel sent a follow-up request asking Mr. Kane to respond
within ten days. On October 19, 2016, Mr. Kane represented to Bar Counsel that his
representation of MBS was on a pro bono basis.10
10
As will be discussed infra, in the Conclusions of Law relating to Rules 3.3 and
8.1, the hearing judge found that Mr. Kane “believed he was proceeding on a pro bono
basis given his thought process.” Because the court was not persuaded that there was clear
and convincing evidence that Mr. Kane knowingly made a false statement, the hearing
judge found that Mr. Kane did not violate Rule 8.1(a) based upon his testimony regarding
work done on a pro bono basis.
17
Bar Counsel requested that within ten days, Mr. Kane provide “additional
information and documentation” including “copies of all records created and maintained
for the receipt, maintenance and disbursement of funds from the Lonergans, MBS and
Matrix,” as well as “copies of cancelled checks and a full accounting of any payments”
received. Mr. Kane neglected to timely respond to this request.
Mrs. Lonergan provided supplemental information to Bar Counsel at the end of
October 2016. On November 16, Bar Counsel requested that Mr. Kane respond in writing,
within seven days, to the new information provided by Mrs. Lonergan. Three weeks later,
Mr. Kane provided a compact disc containing electronic files related to his representation
of the Lonergans, MBS, and Matrix. However, the information provided by Mr. Kane did
not include “records associated with the receipt, maintenance and disbursement of client
funds” that had been requested by Bar Counsel. Mr. Kane ultimately provided Bar Counsel
with a photograph of the front of two checks but failed to produce a copy of another check
in the amount of $1,000 that he received from Matrix.
Mr. Kane excepts to the hearing judge’s findings in connection with Bar Counsel’s
investigation into Mrs. Lonergan’s complaint, arguing that “[t]he Court should have found
that the record supports a finding that the [R]espondent’s family issues (serious illness of
his in-laws) delayed his response to Bar Counsel’s inquiries and that the [R]espondent
ultimately appropriately engaged with Bar Counsel.” Mr. Kane’s exception is overruled.
The hearing judge’s failure to make a specific finding that Mr. Kane’s delayed response
was caused by his in-laws’ failing health is not clearly erroneous. See Attorney Grievance
Comm’n v. Vanderlinde, 364 Md. 376, 385 (2001) (“Exceptions to the findings of our
18
hearing judges in attorney discipline matters should be directed to facts that he [or she]
finds, or facts that he [or she] expressly rejects or expressly refuses to consider.”). As
discussed infra, as a mitigating factor in Mr. Kane’s favor, the hearing judge found that
Mr. Kane’s in-laws’ failing health affected Mr. Kane emotionally and required significant
time and energy for their care.
Mr. Kane’s Personal Bankruptcy Filings and Tax Returns
1. Serial Bankruptcy Filings
Mr. Kane filed five individual voluntary bankruptcy petitions under Chapters 7 and
13 between February 26, 2014, and April 4, 2017. Each of the bankruptcy petitions were
filed “on the eve of a foreclosure on his home” and were signed under the penalty of
perjury. The hearing judge found that Mr. Kane’s “frequent and unsuccessful filings
constituted an abuse of the bankruptcy process.”
Mr. Kane filed his first Chapter 13 bankruptcy petition in February of 2014. The
petition, schedules, and income statement were all deficient and contained incorrect or
misleading information. Specifically, Mr. Kane reported significantly less money in his
checking account than his bank records demonstrated. Other items disclosed included
monthly expenses, household furnishings, wearing apparel, and a vehicle, all of which were
inconsistently reported on later bankruptcy filings. The Bankruptcy Court denied
Mr. Kane’s Chapter 13 plan with leave to amend; however, Mr. Kane neglected to file an
amended plan. In July of 2014, the Bankruptcy Court dismissed this bankruptcy petition.
When Mr. Kane initiated his second Chapter 13 filing in September of 2015, the
Adversary Proceeding to which he was a party with the Lonergans and Matrix was pending
19
in Bankruptcy Court. As noted supra, Mr. Kane failed to disclose the Adversary
Proceeding or list the Trustee as an unsecured creditor. In addition to these omissions,
Mr. Kane’s petition, schedules, and income statement again were incomplete and contained
false or misleading information. At the attorney grievance hearing, Mr. Orenstein testified
that the information that Mr. Kane failed to provide on his schedules included, but was not
limited to, information relating to his bank account, ownership interest in his law practice,
and office lease. The Bankruptcy Court dismissed this Chapter 13 petition in April of 2016,
determining that Mr. Kane had “‘not properly prosecuted [the] action’ either by electing to
convert it from a Chapter 13 case to another chapter or dismissing the action.”
Approximately seven weeks later, in June of 2016, Mr. Kane filed a third Chapter
13 petition. Less than a month later, Mr. Kane filed amended schedules on which he listed
claims for household goods and furnishings, electronics, and clothes. On Schedule E/F, he
also listed unsecured creditors whom he had not previously disclosed on his 2014 or 2015
bankruptcy filings. Additionally, on Schedule J, Mr. Kane listed expenses for “telephone,
cell phone, internet, satellite and cable; food and housekeeping; clothing and laundry
and dry cleaning; personal care products and services; medical and dental expenses;
travel expenses; entertainment; charitable contributions and religious donations; and
insurance[,]” none of which he had listed on his two earlier bankruptcy petitions. This
petition was dismissed in December of 2016.
Less than two months later, Mr. Kane filed a fourth bankruptcy petition for Chapter
7 bankruptcy. However, the same day, Mr. Kane filed a motion requesting that the case be
converted to a Chapter 13 bankruptcy. This motion was granted. Nonetheless, the petition
20
was dismissed in February of 2017 due to Mr. Kane’s failure to complete filings required
by the Bankruptcy Court.
Once again, less than two months after his last petition was dismissed, Mr. Kane
filed a fifth Chapter 13 petition in April of 2017. The Chapter 13 Trustee filed a Motion
to Dismiss with Prejudice for Bad Faith. In Mr. Kane’s response to this motion, he
admitted that his serial bankruptcy filings were commenced in an effort to obtain a loan
modification. The Trustee’s motion was granted; however, the order was later vacated
after Mr. Kane established that he was current on his plan payments. Ultimately, the
Chapter 13 Plan was denied, and in February of 2018, the Chapter 13 petition was
dismissed for failure to properly prosecute the action.11
The hearing judge found that Mr. Kane’s frequent and unsuccessful filings
constituted an abuse of the bankruptcy process. The hearing judge found that Mr. Kane’s
explanation at trial that “skeleton filings” are permitted in Bankruptcy Court and that he
filed the petitions “late at night when he was exhausted” does not absolve him from his
repeated “omissions and inaccuracies in his filings” because they are evidence of “a
knowing disregard for the accuracy of the multiple petitions filed . . . under oath.”
The hearing judge found that Mr. Kane disclosed to the bankruptcy judge that he
intentionally does not include what he considers to be minor items when Mr. Kane stated
11
After Bar Counsel filed the Petition for Disciplinary Action, Mr. Kane filed a
sixth bankruptcy petition in November of 2018. Again, this Chapter 13 petition was
deficient. The hearing judge took judicial notice of the Bankruptcy Court’s January 10,
2019, order denying confirmation of the Respondent’s Chapter 13 plan, with leave to
amend.
21
that, “If I get somebody that sues me for a court reporter bill for $300 I don’t list them on
any financial reportings, and I do [sic] with any venue. They are just minor things.”
Mr. Kane excepts to the hearing judge’s finding that his frequent and unsuccessful
filings were an abuse of the bankruptcy process. He claims that the filings are an attempt
“to force a recalcitrant creditor to the negotiating table,” which is a “common practice” and
the different amounts in various schedules in the bankruptcy filings are explained by the
fluid nature of a person’s financial situation. We overrule this exception. Based upon our
review of the record, the hearing judge’s finding is not clearly erroneous. As set forth
above, Mr. Kane filed multiple bankruptcy filings replete with incomplete and inconsistent
information, and in each instance, the petition was dismissed. The hearing judge did not
clearly err in finding that these multiple, serial incomplete filings constituted an abuse of
the bankruptcy process.
2. Tax Returns
During the attorney grievance hearing, Mr. Kane testified that he deducted 100% of
his communication expenses for his sole proprietorship on his 2014 and 2015 Individual
Tax Returns, even though his wife and three children, who are not employees, also use
these services. He also confirmed that he deducted amounts not related to the operation of
his law practice, including the cost of his FIOS television. In his Findings, the hearing
judge stated that, “[W]hile the Court acknowledges that the amount involved here is not
great, that fact is not relevant to this Court’s findings regarding the false statement.”
Mr. Kane excepts to the hearing judge’s findings of fact that information on his tax
returns is false. Mr. Kane’s exception to the hearing judge’s finding of fact is overruled.
22
The hearing judge’s finding is not clearly erroneous. Mr. Kane admitted that he deducts
the full amount of the family cell phone expenses. Whether these deductions rise to the
level a violation of Rule 8.4(b) or (c) is discussed infra when we address the hearing judge’s
conclusions of law.
Attorney Trust Account Overdraft
In its Petition, Bar Counsel alleged a violation of Rule 8.1(b) regarding Mr. Kane’s
response to its investigation into a trust account overdraft matter after Bar Counsel received
notice from Bank of America that Mr. Kane’s trust account had been overdrawn by $4.42.
While Mr. Kane did not respond to Bar Counsel’s initial request, he eventually answered
and indicated that the error was due to his having inaccurately recorded the amount of some
checks on separate occasions. Mr. Kane further explained that he wrote a check to a client
that was “an overpayment to the client of under $5.00. No other client funds in the
account.”
After Bar Counsel requested additional information because Mr. Kane had “only
identified the name, date, amount, status, and ‘value work done’ for each of the identified
transactions,” Mr. Kane responded that he had “provided this information which is
sufficient given the nature of these matters. You will need to outline why I need to provide
anything further beyond this information[.] I do NOT have the time available to retrieve
information on closed matters for a fishing expedition.”
The hearing judge found that Bar Counsel did not set forth any proposed conclusions
of law or articulate how Mr. Kane violated Rule 8.1(b) in his response to Bar Counsel.
Consequently, the hearing judge treated that claim as abandoned by Bar Counsel. No
23
exceptions were filed by Bar Counsel to the hearing judge’s findings or conclusion on this
charge. Although Mr. Kane filed an exception, the hearing judge did not find a violation.
Accordingly, we will not address it further.
Representation of Charles Arvin
Charles Arvin worked for Lockheed Martin (“Lockheed”) for 34 years. In the
spring of 2012, Lockheed notified employees it was shutting down its battery laboratory in
Clarksburg, Maryland. Among those workers affected were Charles Arvin and Sharon
Sanbower. Ms. Sanbower was a part-time chemical engineer who worked for Lockheed
for 38 years. Mr. Arvin, a software engineer, earned an annual salary of approximately
$87,000. Lockheed offered Mr. Arvin a severance package of approximately $50,000. The
severance package included “several provisions regarding the release of all claims against
Lockheed with the exception of ‘any claims under applicable workers’ compensation
statutes.’” Mr. Arvin had to either reject or accept the severance offer within 45 days.
Mr. Arvin’s last day of employment was June 27, 2012. During Mr. Arvin’s last
days of employment, he inhaled a harmful electrolyte solution while opening a battery cell.
Mr. Arvin asserted that this exposure led to a persistent cough, permanent lung damage,
and the worsening of a preexisting anxiety disorder.
At the urging of Mr. Arvin’s co-worker, Sharon Sanbower12 Mr. Arvin met with
Mr. Kane at a Starbucks in July of 2012 to discuss whether he should accept the severance
12
Mr. Arvin had known Ms. Sanbower for nearly 25 years and worked with her in
the battery laboratory for approximately ten years. Ms. Sanbower was among the workers
affected by the closing of the battery laboratory. Ms. Sanbower had retained Mr. Kane to
represent her in a claim related to chemical exposure. Mr. Kane’s representation of Ms.
24
package offered by Lockheed and the possibility of pursuing a toxic tort claim. Ms.
Sanbower attended the meeting with Mr. Arvin.
Mr. Kane told Mr. Arvin that in order to pursue a toxic tort lawsuit against
Lockheed, he would have to waive any severance offer. Mr. Kane advised Mr. Arvin that
his recovery in a toxic tort lawsuit would exceed the amount of the severance offer made
by Lockheed. Mr. Kane also told Mr. Arvin that “I hate to see you take that settlement
package for the little bit of money you’re going to receive.” He further advised Mr. Arvin
that “you have a better chance of making more money in this lawsuit than would making
[sic] in your severance.”
Mr. Kane had no legal or factual basis to support this advice. He had not conducted
any legal research, nor had he reviewed any of Mr. Arvin’s medical records, and he had
not consulted with any experts concerning the potential toxic tort claim. Mr. Kane did not
advise Mr. Arvin of the risks associated with pursuing a toxic tort claim, including the costs
of litigation. Mr. Kane failed to advise Mr. Arvin that he could accept the severance offer
and still pursue a worker’s compensation claim. Mr. Kane confirmed no fewer than six
times at this initial meeting that Mr. Arvin should waive the severance offer. The hearing
judge found that in reliance on Mr. Kane’s “uninformed advice,” Mr. Arvin waived the
severance offer and retained Mr. Kane to represent him in pursuing his claim against
Lockheed.
Sanbower is not a part of the charges that the Attorney Grievance Commission brought
against Mr. Kane.
25
Mr. Kane excepts to the hearing judge’s finding that he gave Mr. Arvin “uninformed
advice” and contends that he “gave him the best advice that he could—based upon what he
knew at the time—that a toxic tort claim would be worth more than the severance package.”
Mr. Kane further notes that Ms. Sanbower had already come to that conclusion independent
of his advice. Mr. Kane’s exception is overruled. There is clear and convincing evidence
in the record that Mr. Kane had no basis in law or in fact for the “advice” that he gave
Mr. Arvin at that time, nor was it reasonable or appropriate for Mr. Kane to put any weight
in research undertaken by Ms. Sanbower, a layperson, as it related to her separate matter,
when advising Mr. Arvin.
1. Worker’s Compensation Claim
a. Occupational Disease
In July of 2012, Mr. Kane filed the first workers’ compensation claim on behalf of
Mr. Arvin, arguing that Mr. Arvin’s electrolyte exposure resulted in an occupational
disease. The claim described the accident as follows: “during closing the battery lab I was
exposed to toxic chemicals. Causing anxiety and emotional distress with other problems.”
At a hearing before the Maryland Workers’ Compensation Commission (“WCC”),
Mr. Kane argued a “‘hybrid theory’ of liability.” Mr. Kane acknowledged that Mr. Arvin’s
claim “did not meet the exact criteria of an occupational disease and did not meet the exact
criteria of an accidental injury,” in part, because Mr. Arvin did not miss a single day of
work. Mr. Arvin’s claim was denied by the WCC in May of 2013. Mr. Kane filed a request
for a rehearing, which was denied.
26
At the attorney grievance hearing, Mr. Kane and Mr. Arvin gave conflicting
testimony regarding whether Mr. Kane had ever advised Mr. Arvin of his intent to present
a “novel legal theory in an attempt to advance the law” or that there were any complications
with his workers’ compensation claim. The hearing judge stated that he was unable to
determine by “clear and convincing evidence that Kane failed to advise Mr. Arvin of the
novel hybrid theory.” Bar Counsel did not file any exceptions to this finding. Accordingly,
we shall not consider it further.
b. First Judicial Review Case
Mr. Kane filed a petition for judicial review of the WCC’s decision in the Circuit
Court for Frederick County in July of 2013.
Counsel for Lockheed Martin, Michael Daney, sent discovery requests to Mr. Kane
in August of 2013. Mr. Kane emailed them to Mr. Arvin, advising him that the responses
to the discovery requests were due within 30 days. Mr. Arvin replied to Mr. Kane’s email
advising him that he had “no clue what is a discovery request”. Mr. Kane never responded
to Mr. Arvin’s email, and failed to take any action to complete the discovery responses for
more than four months.
In September of 2013, the court entered a scheduling order. In January of 2014, Mr.
Kane forwarded to Mr. Arvin his proposed responses to Lockheed’s discovery request and
asked him to review them as Mr. Kane wanted to file them “asap.” Mr. Arvin responded
by email and provided feedback on January 26, 2014. On January 28, Mr. Kane sent Mr.
Arvin a final draft of the responses and also emailed Mr. Daney indicating he would have
discovery responses “before the end of the day.” However, Mr. Kane never followed
27
through on sending the final responses to Mr. Daney, which led to Lockheed filing a
Motion for Sanctions, or in the Alternative, to Compel Discovery Responses. Mr. Kane
failed to advise Mr. Arvin of the motion for sanctions. Mr. Kane finally provided signed
discovery responses to Mr. Daney on February 10, 2014.
When Mr. Kane responded to the motion for sanctions, he blamed his delayed
responses on Mr. Arvin’s “economic and medical constraints” indicating that they were
impediments to his ability to obtain discovery responses. Mr. Kane also stated that he was
a sole-practitioner and had no staff, that his caseload had doubled, and that the complexity
of Mr. Arvin’s case had created additional challenges. The circuit court ultimately found
the motion for sanctions to be moot.
Mr. Kane waited until five days before the discovery deadline to serve Lockheed with
interrogatories. In response to Mr. Kane’s untimely filing of discovery, Lockheed filed a
Motion for Protective Order. The circuit court granted Lockheed’s motion and ordered “that
the discovery sought by the Claimant shall not be had.” Mr. Kane failed to advise his client
that he propounded late discovery or that the court had granted a protective order.
Mr. Kane failed to identify experts in accordance with the court’s scheduling order.
Instead, Mr. Kane attempted to identify three experts in his pretrial statement, which was
filed six days late. Lockheed filed a series of motions to preclude the testimony of two
witnesses and to preclude evidence related to an accidental injury. Mr. Kane failed to
respond to any of the motions, which were later granted by the court. Mr. Kane failed to
advise Mr. Arvin of the motions or the court’s rulings. Mr. Kane voluntarily dismissed the
case in June of 2014, claiming that the petition was “premature.”
28
At the attorney grievance hearing, Mr. Kane argued that because Mr. Daney was
aware of the experts from the WCC case, he was not bound to designate his experts in
accordance with the scheduling order in the circuit court case. The hearing judge found
“no merit” in Mr. Kane’s argument.
c. Accidental Injury Claim
Mr. Kane filed a second workers’ compensation claim on behalf of Mr. Arvin in
April of 2014 in which he alleged an accidental injury. A hearing was held before the
WCC, and in June of 2014, the claim was denied.
d. Second Judicial Review Case
Mr. Kane filed a petition for judicial review in the Circuit Court for Frederick
County in September of 2014. In October, Lockheed, through Mr. Daney, served
interrogatories and a request for production of documents on Mr. Kane. In early February
2015, a scheduling order was entered, which among other things, established a discovery
deadline and a deadline for disclosing experts. In April of 2015—six months after
discovery was propounded—Mr. Kane sent Mr. Arvin draft responses for his review. The
hearing judge did not find any evidence that Mr. Kane ever provided Mr. Arvin’s discovery
responses to Lockheed.
Lockheed and Mr. Arvin participated in a mediation in June of 2015 in which
Lockheed offered Mr. Arvin $10,000 to settle all of his claims. Mr. Kane advised
Mr. Arvin to reject the settlement offer because the amount was less than Lockheed’s
original severance offer of $52,000. Notably, at the attorney grievance hearing, Mr. Arvin
testified that during this mediation, he learned for the first time, and from the mediator, that
29
he had not been required to waive the initial severance offer in order to pursue a workers’
compensation claim.
One day prior to the discovery deadline, Mr. Kane propounded discovery upon
Lockheed. Soon thereafter, Lockheed’s counsel filed a motion for a protective order.
Mr. Kane filed an untimely opposition to the motion and also filed a motion to modify the
scheduling order. The circuit court granted Lockheed’s motion, and ordered “that the
discovery sought by the Claimant shall not be had . . . .” The court denied Mr. Kane’s
motion to amend the scheduling order.
As before, Mr. Kane failed to file expert designations by the deadline established in
the scheduling order. Once again, Mr. Kane attempted to identify four expert witnesses in
an untimely pretrial statement.
Given Mr. Kane’s failure to conduct discovery or identify experts in accordance
with the court’s scheduling order, Lockheed filed a series of motions to preclude Mr. Arvin
from presenting witnesses or evidence at trial. Once again, Mr. Kane failed to respond to
Lockheed’s motions. The circuit court granted Lockheed’s motions.
Lockheed filed a motion for summary judgment, based in part on Mr. Arvin’s failure
to identify an expert to “present a complicated medical question of causation.” Mr. Kane
filed an untimely response the day before the hearing on the motion. The circuit court
granted Lockheed’s motion for summary judgment.
Mr. Kane failed to inform Mr. Arvin of the existence of the motions or the fact that
the court granted the motion for summary judgment. Mr. Kane filed a motion for
reconsideration, which was denied.
30
Mr. Kane filed a Notice of Appeal to the Court of Special Appeals in November of
2015. The Court of Special Appeals affirmed the circuit court’s decision in an unreported
opinion, Arvin v. Lockheed Martin Corp., No. 2170, 2017 WL 1034002 (Md. Ct. Spec.
App. March 17, 2017).
e. Novelty of Workers’ Compensation Claim
The hearing judge found that because Mr. Arvin’s workers’ compensation claim had
unusual facts that did not conform neatly under either a claim for occupational disease or
a claim for an accidental injury, Mr. Kane’s attempt to extend or modify the existing law
with his hybrid theory was made in good faith. He further concluded that even though Mr.
Kane’s arguments failed, they were not unethical. No exceptions were filed with regard to
this finding and we shall not consider it further.
2. Toxic Tort Claim
As noted supra, at the conclusion of their initial meeting in July of 2012, Mr. Arvin
retained Mr. Kane to pursue a toxic tort claim against Lockheed. The hearing judge
determined that the statute of limitations relating to this potential claim ran on or before
July 2015.
The hearing judge found that Mr. Kane “failed to take any meaningful steps to
advance Mr. Arvin’s interests related to a toxic tort claim against Lockheed.” Mr. Kane
excepts to the hearing judge’s factual finding that he “did not do any work on the toxic tort
complaint.” We overrule Mr. Kane’s exception. Based upon the facts described above,
the hearing judge’s finding is supported by clear and convincing evidence.
31
The record reveals that Mr. Kane first communicated with Mr. Arvin about the toxic
tort claim in an email sent on September 9, 2013—over a year after their initial meeting.
In the email, Mr. Kane stated, “Nothing new and not [sic] trial date set. Working on the
toxic tort complaint which is separate from the workers comp case.” The hearing judge
found that “[t]here is no credible evidence that [Mr. Kane] [] did any work on the ‘toxic
tort complaint’ related to Mr. Arvin’s claim as opposed to Ms. Sanbower’s claim.” It is
undisputed that a complaint was never filed.
The second and only other communication in the record from Mr. Kane relating to
Mr. Arvin’s toxic tort claim was an email from Mr. Kane to Mr. Arvin dated April 25,
2014, in which Mr. Kane stated:
Exchanged several emails to with Daney (counsel for LMC). They are eager
to receive our settlement demand. Would like to get this to Daney by the
weekend (before Monday). Will prepare a recommended settlement demand
for your review sometime before Sunday hopefully. They want resolution of
both workers compensation claims and any other possible claims (toxic tort
exposure).
There is no evidence that Mr. Kane ever communicated with Lockheed regarding
Mr. Arvin’s potential toxic tort claim.
At the attorney grievance hearing, Mr. Kane testified that he determined in April of
2015 that he could not pursue a toxic tort claim on Mr. Arvin’s behalf. Notwithstanding
his position, Mr. Kane failed to advise Mr. Arvin that he had determined the toxic tort claim
could not be pursued, nor did he provide Mr. Arvin with any explanation about his
reasoning. Mr. Kane failed to present any credible evidence that he undertook any research
or expended any time evaluating Mr. Arvin’s potential toxic tort claim. Notably, Mr. Kane
32
failed to advise Mr. Arvin of the relevant statute of limitations for his tort claim in advance
of the expiration of the deadline and that he would not be filing a complaint.
3. Bar Counsel’s Investigation into Arvin Complaint
Mr. Arvin filed a complaint with the Attorney Grievance Commission against Mr.
Kane in May of 2017. Mr. Kane failed to respond to Bar Counsel’s first correspondence
in which they sent him a copy of the complaint and requested that Mr. Kane respond within
fifteen days. After Bar Counsel sent another letter on July 25 by regular mail and email,
Mr. Kane responded and indicated he had been “out of the country” and “out of town . . .
at a workers’ compensation conference. I am digging out obviously.” While Mr. Kane did
not specifically ask for an extension of time to respond, the hearing judge determined that
such a request was implied from his email. Mr. Kane again corresponded with Bar Counsel
on August 7, indicating he was close to completing his responses relating to both the
Lonergan and Arvin matters, but he had been traveling and was at that time out of town
visiting elderly in-laws.
Having received no substantive response, on August 8, Bar Counsel requested that
Mr. Kane provide written responses within ten days. Mr. Kane responded to Bar Counsel’s
request by stating that the investigation was “a ridiculous joke of a process.” Eight days
later, he provided Bar Counsel with a partial substantive response. Approximately a month
later when Bar Counsel asked Mr. Kane to provide “a copy of the complete client file,
including but not limited to your retainer agreements, all correspondence, billing invoices
and timekeeping records” as well as “all financial records relevant to Mr. Arvin maintained
pursuant to Maryland Rule 19-407(d)[,]” Mr. Kane did not respond.
33
Mr. Kane excepts to the hearing judge’s findings in connection Bar Counsel’s
investigation into Mr. Arvin’s complaint, arguing that “the record supports a finding that
the [R]espondent’s family issues (serious illness of his in-laws) delayed his response to Bar
Counsel’s inquiries and that the [R]espondent ultimately appropriately engaged with Bar
Counsel.” We overrule Mr. Kane’s exception. The hearing judge’s findings with respect
to Bar Counsel’s investigation are not clearly erroneous.
II. Standard of Review
As noted above, in an attorney discipline matter, this Court reviews for clear error a
hearing judge’s findings of fact, giving due regard to the hearing judge’s opportunity to assess
the credibility of the witnesses. Md. Rule 19-741(b)(2)(B). See also Attorney Grievance
Comm’n v. Dyer, 453 Md. 585, 643, cert. denied, 138 S. Ct. 508 (2017). We review a hearing
judge’s conclusions of law de novo without deference. Md. Rule 19-741(b)(1). This Court
determines whether clear and convincing evidence establishes that a lawyer violated the
MLRPC. See Attorney Grievance Comm’n v. Ucheomumu, 462 Md. 280, 299 (2018); see also
Md. Rule 19-727(c) (“Bar Counsel has the burden of proving averments of the petition [for
disciplinary or remedial action] by clear and convincing evidence.”).
III. Hearing Judge’s Conclusions of Law
From the findings of fact presented above, the hearing judge found by clear and
convincing evidence that Mr. Kane violated MLRPC 1.1, 1.2, 1.3, 1.4, 1.7, 1.16, 3.1, 3.3,
3.4, 8.1, and 8.4.13
13
Following trial, Bar Counsel withdrew the allegation that Mr. Kane violated Rule
1.15(e).
34
Rules 1.1 (Competence) and 1.3 (Diligence)
Rule 1.1 requires that an attorney “provide competent representation to a client.
Competent representation requires the legal knowledge, skill, thoroughness and
preparation reasonably necessary for the representation.” Rule 1.3 requires that a lawyer
must also “act with reasonable diligence and promptness in representing a client.” Conduct
which violates Rule 1.1 will also often violate Rule 1.3. See Attorney Grievance Comm’n
v. McCulloch, 404 Md. 388, 398 (2008) (finding violations of Rules 1.1 and 1.3 where
counsel “took a fee and then abandoned the litigation”). The hearing judge found that Mr.
Kane violated Rules 1.1 and 1.3 in his representation of Mr. Arvin and the Lonergans. We
uphold these conclusions.
Arvin Representation
With respect to Mr. Arvin, the hearing judge determined that Mr. Kane’s advice to
Mr. Arvin regarding his severance agreement violated Rule 1.1 because he lacked the
requisite knowledge, thoroughness, and preparedness to advise Mr. Arvin with respect to
his severance and a potential toxic tort claim against Lockheed. Specifically, the hearing
judge found that at the time that Mr. Kane advised Mr. Arvin to reject the settlement offer,
he had not reviewed Mr. Arvin’s medical records, nor had he conducted any research
regarding the viability of Mr. Arvin’s claim or its potential value. Mr. Kane had not
consulted with any experts or considered the time and expense of tort litigation. At trial,
Mr. Kane admitted that he relied, at least in part, on Ms. Sanbower, a lay person, in
determining whether she and Mr. Arvin had a strong claim. The hearing judge found that
Mr. Kane had no reasonable basis to advise Mr. Arvin that he would recover significantly
35
more money if he pursued a toxic tort lawsuit than if he accepted Lockheed’s severance
package. Mr. Kane later abandoned the toxic tort claim because he could not establish the
basis for the cause of action.
“Evidence of a failure to apply the requisite thoroughness and/or preparation in
representing a client is sufficient alone to support a violation of Rule 1.1.” Attorney
Grievance Comm’n v. Garrett, 427 Md. 209, 222 (2012) (quoting Attorney Grievance
Comm’n v. Guida, 391 Md. 33, 54 (2006)). “An attorney may violate [Rule] 1.1, although
he or she has the adequate knowledge or skill to represent a client, if the attorney fails to
apply the thoroughness and/or preparation necessary for proper representation.” Attorney
Grievance Comm’n v. Hamilton, 444 Md. 163, 179 (2015) (citing Attorney Grievance
Comm’n v. De La Paz, 418 Md. 534, 553 (2011) (citations omitted)).
The hearing judge also found that Mr. Kane violated Rule 1.1 and 1.3 by failing to
undertake any meaningful investigation into Mr. Arvin’s toxic tort claim, and by failing to
advise Mr. Arvin that he would not be filing a complaint on his behalf prior to the expiration
of the statute of limitations. The hearing judge found that Mr. Kane violated Rules 1.1 and
1.3 in connection with the petitions for judicial review of the decisions of the WCC, by
repeatedly failing to respond to discovery, and by failing to designate experts in a timely
fashion, which resulted in the exclusion of witnesses at trial and the entry of summary
judgment against his client.
Mr. Kane excepts to the hearing judge’s findings that he violated Rule 1.1 and 1.3
in connection with his representation of Mr. Arvin on the toxic tort claim. Specifically, he
contends that at his initial meeting with Mr. Arvin and Ms. Sanbower, he made it clear that
36
Mr. Arvin had a choice—to accept the severance package and waive the claim for a toxic
tort or to reject the severance (as Ms. Sanbower had done based upon her own independent
research) and pursue the toxic tort. Mr. Kane asserts that he made it clear that the decision
was Mr. Arvin’s choice, and that Mr. Kane made no guarantees of success.
We overrule Mr. Kane’s exception. Mr. Kane’s exception is contradicted by his
own testimony. At trial, Mr. Kane admitted that when he told Mr. Arvin that his toxic tort
claim was worth more than his severance package, he had not conducted any research, had
not reviewed Mr. Arvin’s medical records, and had not spoken with any experts regarding
Mr. Arvin’s potential claim. As such, the hearing judge correctly found that Mr. Kane’s
advice was “uninformed” and “had no legal or factual basis.” Clear and convincing
evidence supports the hearing judge’s conclusion that Mr. Kane violated Rule 1.1. See
Attorney Grievance Comm’n v. Zhang, 440 Md. 128, 158 (2014) (attorney violated
MLRPC 1.1 when she failed to conduct any legal research or to speak with her client before
suggesting grounds for annulment).
Mr. Kane excepts to the hearing judge’s conclusion that he violated Rule 1.3
because he contends that “there is no evidence that the delays in discovery in the circuit
court caused the failure of the workers’ compensation claim. Those claims failed on their
merits—not because of discovery issues.” We overrule Mr. Kane’s exception. First,
whether Mr. Kane’s misconduct caused the failures in Mr. Arvin’s case is not dispositive
when determining whether an attorney has violated the rules of professional conduct. See
Attorney Grievance Comm’n v. Singh, ____ Md. _____, Misc. Docket AG No. 6, Sept.
Term, 2018, 2019 WL 3210320, *9 (Md. July 17, 2019) (noting that the phrase “no harm,
37
no foul” notion of harmless error in the sports context does not apply to the rules of
professional conduct governing attorneys). Second, even if the “no harm, no foul”
approach applied in this context, there is insufficient evidence in the record to support Mr.
Kane’s claim that Mr. Arvin’s case failed on its merits—summary judgment was granted
against Mr. Arvin because of Mr. Kane’s failure to respond to discovery and failure to
identify experts in accordance with the court’s scheduling order. There is no evidence in
the record upon which we could assess the strength of Mr. Arvin’s case.
Lonergan Representation
The hearing judge concluded that Mr. Kane violated Rule 1.1 and 1.3 when he failed
to act with diligence and promptness in his representation of the Lonergans. Mr. Kane
failed to act diligently when he failed to disclose any conflict of interest to the Lonergans
arising out of the fact that he was a named defendant and failed to communicate with Mrs.
Lonergan concerning the fact that she was a named defendant in the Adversary Proceeding.
Specifically, the hearing judge concluded that Mr. Kane violated Rule 1.1 when he delayed
in preparing discovery responses, which ultimately resulted in sanctions being entered
against the Lonergans. Clear and convincing evidence supports this conclusion, as it is
undisputed that the Bankruptcy Court entered a monetary order of sanctions against the
Lonergans, which they paid, arising from Mr. Kane’s failure to timely respond to
discovery.14
14
Although Mr. Kane filed an exception to the hearing judge’s conclusions of law
that he violated Rule 1.1 (Competence), 1.2 (Scope of Representation), and 1.3 (Diligence)
in connection with his representation of the Lonergans, he admits that his conduct violated
the Rules, stating that in the case of monetary sanctions, he “accepts responsibility and
38
The hearing judge also concluded that Mr. Kane violated Rule 1.1 when he failed
to identify the conflict of interest between himself, Mr. Lonergan, Mrs. Lonergan, and
Matrix in the Adversary Proceeding. Clear and convincing evidence supports this
conclusion. See Attorney Grievance Comm’n v. Framm, 449 Md. 620, 646 (2016)
(concluding the attorney violated Rule 1.1 where she failed to recognize a conflict of
interest).
Rule 1.2 (Scope of Representation and Allocation of
Authority Between Client and Attorney)
Rule 1.2 provides in pertinent part that:
. . . an attorney shall abide by a client’s decisions concerning the objectives
of the representation and, when appropriate, shall consult with the client as
to the means by which they are to be pursued. An attorney may take such
action on behalf of the client as is impliedly authorized to carry out the
representation . . . .
We have held repeatedly that “[w]hen a lawyer fails to take any steps towards the
client’s objective, the lawyer necessarily fails to abide by the client’s decision concerning
that objective.” Attorney Grievance Comm’n v. Gage-Cohen, 440 Md. 191, 198 (2014)
(internal quotations omitted) (quoting Attorney Grievance Comm’n v. Garrett, 427 Md.
209, 223 (2012)). Additionally, an attorney violates Rule 1.2 when “he or she fails to
inform a client of the status of his or her case, thereby denying the client the ability to make
informed decisions.” Hamilton, 444 Md. at 182.
agrees that his failure to provide prompt discovery supports a violation of [these Rules] [].”
Mr. Kane also admits that he should have recognized the potential conflict of interest
arising from his dual role as attorney and a named defendant in an Adversary Proceeding
with his clients. Because Mr. Kane admits that his conduct in connection with his
representation of the Lonergans violated these Rules, we overrule his exceptions.
39
Arvin Representation
With respect to Mr. Arvin, the hearing judge found that Mr. Kane violated Rule 1.2
in his representation by failing to take any meaningful steps toward investigating or
pursuing a toxic tort claim on Mr. Arvin’s behalf or advising Mr. Arvin regarding the toxic
tort claim.15 The hearing judge also determined that Mr. Kane failed to communicate his
conclusion not to pursue the toxic tort claim or advise Mr. Arvin when the statute of
limitations would run. As such, the hearing judge determined that Mr. Arvin was denied
the ability to make informed decisions regarding the representation. Clear and convincing
evidence supports the hearing judge’s conclusions.
Lonergan Representation
In finding a violation of Rule 1.2, the hearing judge determined that the Lonergans
were denied the ability to make informed decisions regarding Mr. Kane’s representation
because Mr. Kane failed to identify the conflict of interest and withdraw as counsel in the
Adversary Proceeding. The hearing judge concluded that Mr. Kane violated Rule 1.2 when
he represented Mrs. Lonergan in the Adversary Proceeding without ever communicating
with her about that matter.16 Mr. Kane could not possibly know Mrs. Lonergan’s objectives
15
Mr. Kane excepts to the hearing judge’s conclusion of law that he violated Rule
1.2, arguing that he put “both Mr. Arvin and Ms. Sanbower in touch with potential experts.”
The hearing judge found that “there is no credible evidence that [Mr. Kane] [] did any work
on the ‘toxic tort complaint’ related to Mr. Arvin’s claim as opposed to Ms. Sanbower’s
claim.” The hearing judge’s conclusion that Mr. Kane failed to take meaningful steps
toward investigating and pursuing Mr. Arvin’s toxic tort claim is supported by clear and
convincing evidence, and we overrule Mr. Kane’s exception.
16
Again, while Mr. Kane notes an “exception” to the judge’s conclusion of law, he
“candidly admits that he could have handled the Lonergan representation in a better fashion”
40
because she was unaware that she was a named party in the Adversary Proceeding, and
Mr. Kane never discussed the Adversary Proceeding (including without limitation the entry
of a sanctions order) with her. See Attorney Grievance Comm’n v. Smith, 457 Md. 159,
215 (2018) (“In order for a lawyer to abide by a client’s decisions concerning the objectives
of the representation, the client must be able to make informed decisions as to the objectives
of the representation.” (quoting Attorney Grievance Comm’n v. Shapiro, 441 Md. 367, 380
(2015))). Clear and convincing evidence supports the conclusion that Mr. Kane violated
Rule 1.2 in his representation of the Lonergans.
Rule 1.4 (Communication)
Rule 1.4 (Communication) provides, in pertinent in part:
(a) A lawyer shall:
(1) promptly inform the client of any decision or circumstance with
respect to which the client’s informed consent . . . is required by these
Rules;
(2) keep the client reasonably informed about the status of the matter;
(3) promptly comply with reasonable requests for information; and
(4) consult with the client about any relevant limitation on the attorney’s
conduct when the attorney knows that the client expects assistance not
permitted by the Maryland Lawyers’ Rules of Professional Conduct
or other law.
(b) A lawyer shall explain a matter to the extent reasonably necessary to
permit the client to make informed decisions regarding the representation.
and that “he should have communicated directly with Mrs. Lonergan and not have relied
solely on Mr. Lonergan to inform his wife of the status of the case.” Given Mr. Kane’s
admissions and based upon our review of the record, Mr. Kane’s exception is overruled.
41
We have held that an attorney violates Rule 1.4 “when the attorney fails to communicate
crucial information about the status of the case [to the client].” Hamilton, 444 Md. at 185
(citing De La Paz, 418 Md. at 554).
Arvin Representation
With respect to Mr. Arvin, the hearing judge concluded that Mr. Arvin was unaware
that he could have pursued the workers’ compensation claim while also taking advantage
of Lockheed’s severance offer. Mr. Arvin stated that he first learned of this fact at the
mediation of the workers’ compensation case, well after he rejected the severance.
Moreover, Mr. Kane failed to advise Mr. Arvin that he was not going to pursue the
toxic tort claim or when the statute of limitations would run on such a claim. Rather,
Mr. Kane simply abandoned the toxic tort claim without advising Mr. Arvin. The hearing
judge’s conclusion that Mr. Kane’s communication, or lack thereof, between himself and
Mr. Arvin demonstrates a violation of Rule 1.4(a) and (b) is supported by clear and
convincing evidence.
Mr. Kane has filed an exception to the judge’s conclusion that Mr. Kane violated
Rule 1.4 in the course of his representation of Mr. Arvin. The basis for his exception is
that there “was no lack of communication with Mr. Arvin about the toxic tort litigation.”
Based upon our independent review of the record, we overrule this exception. There is
clear and convincing evidence in the record that Mr. Kane violated Rule 1.4(a) and (b) in
connection with his lack of communication with Mr. Arvin about the toxic tort matter.
42
Lonergan Representation17
With respect to Mr. Lonergan, the hearing judge found that Mr. Kane violated Rule
1.4(a)(2) and 1.4(b) when he failed to timely provide the client with information about the
fees and expenses that had allegedly been incurred during the first three years of the
litigation. The hearing judge also found that Mr. Kane failed to adequately communicate
with Mr. Lonergan regarding the issuance of sanctions against him and his wife. These
findings are supported by clear and convincing evidence.
As for Mrs. Lonergan, the hearing judge found that Mr. Kane violated Rule
1.4(a)(1)–(4) and 1.4(b) when he failed to communicate directly with Mrs. Lonergan after
the Adversary Proceeding was filed. We agree. At that point, both Lonergans were named
defendants in the action. Mr. Kane’s continued reliance upon Mr. Lonergan to
communicate with Mrs. Lonergan violated Rule 1.4. He filed pleadings and motions and
appeared in court on Mrs. Lonergan’s behalf without ever speaking with her about the
adversary complaint. Mr. Kane never confirmed that he was authorized to represent Mrs.
Lonergan and act on her behalf. Moreover, Mr. Kane’s awareness of the discord that this
litigation was causing between the Lonergans, only heightened the need to communicate
directly with both parties and confirm Mrs. Lonergan’s position.
17
Mr. Kane once again notes an exception to the hearing judge’s conclusion of law
that he violated Rule 1.4 in his representation of the Lonergans. While he styles his
pleading caption as an exception, no specific exception is pleaded. He admits that he could
have communicated better with the Lonergans and “accepts responsibility for this lapse in
representation.” To the extent that Mr. Kane’s pleading contains an exception to the legal
conclusion of a violation of Rule 1.4 in connection with the Lonergans, it is overruled.
43
Rule 1.7 (Conflict of Interest)
A conflict of interest generally disqualifies a lawyer from representing a particular
client.
Rule 1.7 specifically states that a conflict of interest exists if “there is a
significant risk that the representation of one or more clients will be
materially limited by the lawyer’s responsibilities to another client, a former
client or a third person or by a personal interest of the lawyer.”
Attorney Grievance Comm’n v. Powell, 461 Md. 189, 219 (2018) (emphasis original).
The hearing judge concluded that Mr. Kane violated MLRPC 1.7 in his
representation of the Lonergans. It is undisputed that Mr. Kane was a named defendant
along with Mr. Lonergan, Mrs. Lonergan, and Matrix in the Adversary Proceeding filed by
the Trustee. When Mr. Kane was joined as a defendant with the Lonergans, a conflict of
interest arose between Mr. Kane and his clients. The hearing judge found that Mr. Kane
would have the very real incentive to lessen his liability, which in turn could increase the
Lonergans’ obligation. Indeed, the very tension between Mr. Kane and his clients is
evident from his explanation to the Bankruptcy Court when he was trying to explain his
failure to list the Adversary Proceeding in his personal bankruptcy. Mr. Kane stated: “I
believed and still do believe that the only financial exposure, if there is any in this case, is
it relates to my former clients, not to me.” Mr. Kane simply ignored the significant risk
that his representation of the Lonergans would be materially limited by his personal interest
when he was named as a co-defendant with his clients in the Adversary Proceeding
involving conduct in which he was directly involved and that he had recommended.
44
The hearing judge also concluded that a potential conflict arose between Mr. and
Mrs. Lonergan in the Adversary Proceeding. The hearing judge found that Mrs. Lonergan
was a passive party to the transaction and could have cast blame and responsibility on Mr.
Lonergan (as well as Mr. Kane). Moreover, Mr. Kane was aware of the discord between
the Lonergans over the business. Instead of explaining the potential conflict, or even
advising Mrs. Lonergan that she had been sued, he continued to communicate solely with
Mr. Lonergan.
Lastly, there is no evidence in the record that the Lonergans gave their informed
consent to any of the conflicts of interest in writing or otherwise. See Powell, 461 Md. at
219.
The hearing judge’s conclusion that Mr. Kane violated Rule 1.7 in his representation
of the Lonergans is supported by clear and convincing evidence.18
Rule 1.16 (Declining or Terminating Representation)
Rule 1.16 provides in pertinent part, that:
(a) . . . a lawyer shall not represent a client or, where representation has
commenced, shall withdraw from the representation of a client if:[]
the representation will result in violation of the Maryland Lawyer’s
Rules of Professional Conduct or other law;
***
(d) Upon termination of representation, a lawyer shall take steps to the
extent reasonably practicable to protect a client’s interests, such as
18
Yet again, in Mr. Kane’s written exceptions, he notes an exception to the hearing
judge’s conclusion of law finding a violation of Rule 1.7 but states no basis for the
exception and “candidly admits that he made a mistake” and that “[h]e should have rectified
the problem earlier.” To the extent that Mr. Kane’s pleading contains an exception to the
finding of a Rule 1.7 violation, it is overruled.
45
giving reasonably notice to the client, allowing time for employment
of other counsel, surrendering papers and property to which the client
is entitled and refunding any advance payment of fee or expense that
has not been earned or incurred . . . .
Arvin Representation
The hearing judge’s conclusion that Mr. Kane violated Rule 1.16 in his
representation of Mr. Arvin is supported by clear and convincing evidence. As noted
supra, Mr. Kane failed to take any meaningful steps towards pursuing a toxic tort claim
against Lockheed on Mr. Arvin’s behalf and failed to advise him that no action would be
taken. We have held that an attorney violates Rule 1.16(d) “[w]here a lawyer abandons a
client without notice through the failure to take meaningful steps in pursuit of the client’s
interest . . . .” Attorney Grievance Comm’n v. Costanzo, 432 Md. 233, 255 (2013) (citing
Attorney Grievance Comm’n v. Garrett, 427 Md. 209, 225 (2012) (internal quotations
omitted)).
We agree with the hearing judge’s conclusion that Mr. Kane abandoned Mr. Arvin,
without notice, as it relates to the toxic tort claim.19 Once Mr. Kane determined that he
19
In Mr. Kane’s exception to the hearing judge’s conclusion that he violated Rule
1.16 in his representation of Mr. Arvin, Mr. Kane states that he “did not abandon Mr.
Arvin—he litigated the workers’ compensation claim twice in the Circuit Court and
appealed the matter to the Court of Special Appeals.” We overrule Mr. Kane’s exception.
Mr. Kane’s “representation” of Mr. Arvin in the circuit court consisted of Mr. Kane
voluntarily dismissing one matter, and in the other matter, having summary judgment
entered against his client because of Mr. Kane’s discovery violations and his failure to
designate experts. Putting aside Mr. Kane’s wholly inadequate representation of Mr. Arvin
in the workers’ compensation cases, the hearing judge based his legal conclusion of a Rule
1.16 violation on the fact that Mr. Kane did not take any meaningful steps to pursue the
toxic tort claim and failed to advise Mr. Arvin that he would not be filing such a claim in
advance of the expiration of the statute of limitations. Based upon our independent review
46
would not pursue a toxic tort claim on Mr. Arvin’s behalf, he was obligated to take steps
to the extent reasonably practicable to protect Mr. Arvin’s interests. Mr. Kane failed to
advise Mr. Arvin that he would not be filing a toxic tort claim on his behalf until after the
expiration of the applicable statute of limitations.
Lonergan Representation
The hearing judge’s conclusion that Mr. Kane violated Rule 1.16 when he
represented the Lonergans in the Adversary Proceeding in violation of Rule 1.7, as
described, supra, is also supported by clear and convincing evidence.
Rule 3.1 (Meritorious Claims and Contentions)
Rule 3.1 provides:
A lawyer shall not bring or defend a proceeding, or assert or controvert an
issue therein, unless there is a basis for doing so that is not frivolous, which
includes, for example, a good faith argument for an extension, modification
or reversal of existing law. A lawyer may nevertheless so defend the
proceeding as to require that every element of the moving party’s case can
be established.
The hearing judge found that Mr. Kane violated Rule 3.1 in connection with his
personal bankruptcy filings. Specifically, the hearing judge found that Mr. Kane’s serial
bankruptcy filings were designed to delay a foreclosure or frustrate the lender because Mr.
Kane could not obtain the loan modification that he desired. The hearing judge found that
each bankruptcy filing was dismissed for failure to prosecute, failure to confirm a plan or
failure to cure deficiencies in the documents submitted. The hearing judge noted that the
of the record, there is clear and convincing evidence to support the hearing judge’s finding
in that regard.
47
evidence submitted, and Mr. Kane’s own testimony demonstrated that his bankruptcy
filings were strategic and not intended to result in a successful Chapter 13 plan. Mr. Kane
testified that there was an intent to confirm a plan; however, something always came up.
The hearing judge found that Mr. Kane’s own filings contradicted his testimony. The
hearing judge concluded that the filings were not made in good faith as they were designed
to frustrate and delay the Respondent’s creditors, primarily his mortgagee.
Mr. Kane filed an exception to this conclusion and contends that there is no legal
basis for the conclusion that his repeated filings were an abuse of the bankruptcy process.
He contends that the filings “were a legitimate effort to force a recalcitrant creditor to the
negotiating table.”
The record clearly demonstrates that Mr. Kane has serially filed six bankruptcy
petitions on the eve of foreclosure, all of which were dismissed by the Bankruptcy Court
for failure to prosecute or failure to complete the required filings. The hearing judge, who
had the opportunity to assess the credibility of the witnesses, rejected Mr. Kane’s testimony
that he had a legitimate basis for filing each of his bankruptcy petitions. The hearing
judge’s conclusion that Mr. Kane’s serial bankruptcy filings violate Rule 3.1 is supported
by clear and convincing evidence, and we overrule Mr. Kane’s exception.
Rule 3.3 (Candor to the Tribunal)
In pertinent part, Rule 3.3(a) provides that: “[a] lawyer shall not knowingly: (1)
make a false statement of fact or law to a tribunal or fail to correct a false statement of
material fact or law previously made to the tribunal by the lawyer[.]”
48
Mr. Kane’s Personal Bankruptcy Petitions
The hearing judge concluded that Mr. Kane violated Rule 3.3(a)(1) as it relates to
his personal bankruptcy petitions. Specifically, the hearing judge found that Mr. Kane
made a false statement to the Bankruptcy Court when he failed to disclose the Adversary
Proceeding. The hearing judge noted that Mr. Kane acknowledged the intentional nature
of this omission when he advised the bankruptcy judge in the Adversary Proceeding that
he failed to list the Trustee’s claim in his personal bankruptcy petition for “privacy reasons”
because he was trying to keep “all professional matters” out of his personal bankruptcy.
Mr. Kane excepts to this conclusion claiming that he “believed—albeit
incorrectly—that the [Bankruptcy] [] Trustee was making an inchoate claim that did not
have to be disclosed.” Mr. Kane further contends that he “failed to disclose not for
nefarious financing reasons but rather not to interfere with his clients’ case.” Mr. Kane’s
exceptions are overruled. The hearing judge’s finding that Mr. Kane intentionally failed
to disclose the Adversary Proceeding in which he had been named as a defendant is
supported by clear and convincing evidence.20
20
As part of its Petition for Disciplinary or Remedial Action and at the attorney
grievance hearing, Bar Counsel also requested a finding that Mr. Kane violated Rule 3.3
regarding his statement to the Bankruptcy Court that he was representing the parties in the
Lonergan matter on a pro bono basis. In failing to make this requested finding, the hearing
judge described in detail the discussions between Mr. Lonergan and Mr. Kane concerning
the agreed upon flat fee arrangement for the legal services involved in the PNC/Matrix
litigation, as well as payments made by Mr. Lonergan and his father for the services
provided up until the bankruptcy. The hearing judge commented that in Mr. Kane’s mind,
the flat fee arrangement “would fail to fully compensate him for the MBS work performed
prior to the bankruptcy filing. Thus, he would not receive any compensation for the
bankruptcy representation. Consequently, the Court cannot find by clear and convincing
evidence that the statement, when made by Mr. Kane, was intentionally false.” Bar
49
Rule 3.4 (Fairness to Opposing Party and Counsel)
Rule 3.4 provides, in part:
A lawyer shall not:
(c) knowingly disobey an obligation under the rules of a tribunal except for
an open refusal based on an assertion that no valid obligation exists;
(d) in pretrial procedure, make a frivolous discovery request or fail to make
a reasonably diligent effort to comply with a legally proper discovery request
by an opposing party;
Arvin Representation
The hearing judge concluded that Mr. Kane violated Rule 3.4(c) and (d) in his
representation of Mr. Arvin. Specifically, the hearing judge found that Mr. Kane failed to
timely respond to Lockheed’s discovery requests in both circuit court proceedings in violation
of the Maryland Rules and the circuit court’s scheduling orders. The hearing judge determined
that Mr. Kane was aware of the deadlines imposed by the Rules and the scheduling order and
nevertheless disobeyed said deadlines without justification in violation of Rule 3.4(c). See
Attorney Grievance Comm’n v. Mixter, 441 Md. 416, 472 (2015) (overruling an exception to a
finding of knowing and intentional disobedience of court orders).
The hearing judge also found that that Mr. Kane violated Rule 3.4(d) when he
propounded untimely discovery requests on Lockheed (one day before the discovery
deadline) in the second circuit court matter. In his conclusion of law, the hearing judge
noted that Mr. Kane had testified that he “really didn’t need that discovery effectively
Counsel did not file an exception to the hearing judge’s finding. In accordance with Rule
19-741(b)(2), since no exceptions were filed, we will treat the hearing judge’s findings of
fact on this point as established.
50
because I knew what the case was all about.” Despite this contention, Mr. Kane opted to
propound discovery, one day before the discovery deadline in the second circuit court case,
notwithstanding the fact that the same circuit court in the first workers’ compensation appeal
had issued a protective order from Mr. Kane’s late filed discovery requests in that case. The
hearing judge held that the only conclusion he could draw from Mr. Kane’s identical
behavior in the second request was that the untimely discovery was intended to annoy and/or
burden the opposing party.
In his exceptions, Mr. Kane asks this Court to overturn the hearing judge’s
conclusion using the same excuse that he made during the attorney grievance hearing—that
he did not really need the discovery, that the discovery was not propounded to harass the
opposing side, and that it was propounded to “simply put the company on record in the
litigation.”21 We agree with the hearing judge’s conclusion that Mr. Kane violated Rule
3.4(d) with his untimely discovery requests and overrule Mr. Kane’s exceptions. Regardless
of Mr. Kane’s statement that he did not “intend to harass” opposing counsel, the act of
serving discovery one day prior to the discovery deadline on opposing counsel, not once,
but in two separate cases, has the effect of harassing the opposing party. Mr. Kane’s actions
necessitated Lockheed’s motion for a protective order—a filing that would have been
unnecessary had Mr. Kane complied with the court’s scheduling order.
Mr. Kane’s excuse that he served untimely discovery simply to put Lockheed “on
21
record” in the litigation is nonsensical. Mr. Kane had been litigating this matter with
Lockheed in not one, but two successive workers’ compensation cases. By the time Mr.
Kane propounded his second untimely discovery requests, Lockheed was most certainly
“on record” of the cases that Mr. Kane had filed on his client’s behalf.
51
Lonergan Representation
The hearing judge also found that Mr. Kane violated Rule 3.4(d) in connection with
his representation of the Lonergans. As discussed supra, Mr. Kane’s failure to provide
timely discovery responses to the Trustee resulted in a monetary sanctions award against
the Lonergans. The hearing judge commented that the record in this matter contains several
instances of Mr. Kane’s disregard for the Rules or the scheduling orders governing
discovery in civil matters. We agree with the hearing judge and find clear and convincing
evidence that Mr. Kane violated Rule 3.4(d).22
Rule 8.1 (Bar Admission and Disciplinary Matters)
In pertinent part, Rule 8.1(b) provides that a lawyer in connection with a disciplinary
matter shall not “knowingly fail to respond to a lawful demand for information from an
admissions or disciplinary authority[.]” The hearing judge concluded that Mr. Kane
violated Rule 8.1(b) as it related to Bar Counsel’s investigation into the both the Arvin
complaint and the Lonergan complaint.23 Mr. Kane excepts to this conclusion, contending
22
Once again, Mr. Kane notes an exception to the hearing judge’s conclusion that
he violated Rule 3.4 in connection with his representation of the Lonergans, but fails to
provide any support for the exceptions, and “agrees that he was not as prompt as he should
have been in responding to discovery in the Lonergan adversarial matter and that sanctions
were imposed as a result.” To the extent that Mr. Kane’s written pleading alleges an
exception to this particular conclusion of law, it is overruled.
23
In the Lonergan matter, Bar Counsel asserted that Mr. Kane violated Rule 8.1(a)
when he submitted his October 19, 2016, response to Bar Counsel, wherein he stated that
he was representing MBS on a pro bono basis. As discussed supra, the hearing judge did
not find that Mr. Kane’s representation was an intentionally and knowingly false statement,
and therefore did not find that such a representation to Bar Counsel violated Rule 8.1(a).
Bar Counsel did not file an exception to this finding.
52
that “[R]espondent’s family issues (serious illness of his in-laws) delayed his response to
Bar Counsel’s inquiries and the [R]espondent ultimately appropriately engaged with Bar
Counsel.” There is clear and convincing evidence in the record that Mr. Kane violated Rule
8.1(b) in connection with both investigations.24 We overrule Mr. Kane’s exception. There
is clear and convincing evidence in the record that Mr. Kane failed to timely and completely
respond to Bar Counsel’s requests for information in both investigations. As noted supra,
Mr. Kane had many excuses for failing to timely respond to Bar Counsel’s requests,
including that he had been traveling in Ireland and that he had a packed calendar.
Moreover, Mr. Kane told Bar Counsel that Counsel’s investigation was “a ridiculous joke
of a process”—which is hardly an appropriate response.
Rule 8.4 (Misconduct)
Rule 8.4(a) states that it is professional misconduct for an attorney to “violate . . .
the Maryland Lawyers’ Rules of Professional Conduct.” The hearing judge found that
because Mr. Kane has violated multiple Rules, there is clear and convincing evidence that
his conduct has violated Rule 8.4(a). Since we have concluded that Mr. Kane violated
multiple Rules, we agree that he has violated Rule 8.4(a).
24
Bar Counsel also requested that the hearing judge find that Mr. Kane did not
timely respond to its July 7, 2017, and July 25, 2017, correspondence in violation of 8.1(b).
The hearing judge did not find a violation of Rule 8.1(b) arising out of Mr. Kane’s failure
to respond to these communications, instead finding that Mr. Kane’s emails dated July 25,
2017, and August 7, 2017, in which he explains why he has not yet responded, could be
construed as a request for a reasonable extension of time. Bar Counsel did not file an
exception to this finding of fact, and we shall not consider it further.
53
Rule 8.4(b) states that it is professional misconduct for a lawyer to “commit a
criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a
lawyer in other respects[.]” The hearing judge made the following conclusion with respect
to Mr. Kane’s personal bankruptcy and tax filing:
The Respondent violated Rule 8.4(b) related to his personal bankruptcy and
tax filings. 18 U.S.C. § 1001 makes it a crime to falsify or conceal a material
fact, or to make a false statement or provide a false document to the
government or a government agent. Brogan v. United States, 522 U.S. 398
(1998). 18 U.S.C. § 1621 prohibits perjury. Bronston v. United States, 409
U.S. 352 (1973).
The Court concludes that the Respondent’s conduct violated these criminal
statutes when he knowingly and intentionally failed to disclose the adversary
proceeding and list the Trustee as an unsecured creditor in his 2015
bankruptcy filing and submitted multiple bankruptcy petitions, signed under
the penalties of perjury, that contained false information or intentionally
concealed material facts. Attorney Grievance Comm’n v. Fraidin, 438 Md.
172 (2014) (attorney violated 8.4(b) when he aided his wife in preparing and
filing forms and schedules that contained misrepresentations in the United
States Bankruptcy Court).
The Court also concludes that the Respondent violated 26 U.S.C. § 7206
which prohibits the filing of false tax returns when he filed a return which he
knew contained deductions for expenses unrelated to his law practice. The
fact that the amount of underpayment of tax may be low is immaterial. “The
purpose of § 7206(1) is not simply to ensure that the taxpayer pay the proper
amount of taxes—though that is surely one of its goals. Rather, that section
is intended to ensure also that the taxpayer not make misstatements that could
hinder the Internal Revenue Service (“IRS”) in carrying out such functions
as the verification of the accuracy of that return or a related tax return.”
United States v. Greenberg, 735 F.2d 29, 31 (2d Cir. 1984) (Finding a
criminal violation were the underpayment of taxes amounted to $48.00). The
Court concludes, therefore, that the Respondent violated Rule 8.4(b).
(cleaned up). Typically, when this Court finds a violation of Rule 8.4(b), the respondent
has been charged or convicted of a crime in a separate proceeding. In this case, Mr. Kane
has not been charged or convicted of a crime. Rather, the hearing judge concluded that
54
Mr. Kane violated criminal statutes in connection with his personal bankruptcy filings
when he failed to disclose the Adversary Proceeding or identify the Trustee as an unsecured
creditor and when Mr. Kane submitted multiple bankruptcy petitions that contained false
and inconsistent information. The hearing judge further concluded that Mr. Kane violated
26 U.S.C. § 7206, which prohibits the filing of false tax returns, when he filed tax returns
which included deductions for cell phone and internet expenses, including family use, and
were unrelated to his law practice.
Mr. Kane has filed exceptions to the hearing judge’s conclusion of law that he
violated Rule 8.4(b). Mr. Kane notes that he has not been charged with or convicted of a
federal crime related to his tax returns or his personal bankruptcy filings. Mr. Kane asserts
that there is no evidence in the record upon which the hearing judge could conclude that
he committed a federal crime in connection with his bankruptcy filings and tax returns.
Mr. Kane notes that federal crimes require an element of scienter and it must be proven
that the defendant committed such crimes “knowingly and willfully.” “Knowingly” is
defined as “acting intentionally and voluntarily, and not because of ignorance, mistake,
accident, or carelessness.” Leonard B. Sand, et al., Modern Federal Jury Instructions,
Criminal, No. 3A-1, 3A-3 (2018). Similarly, “willfully” requires a person to “act with
knowledge that one’s conduct is unlawful and with the intent to do something the law
forbids . . . . [T]he conduct was not ‘willful’ if it was due to negligence, inadvertence, or
mistake.” Id. at 3A-20.
To support his conclusion that Mr. Kane’s conduct in his personal bankruptcy
constituted a criminal action in violation of Rule 8.4(b), the hearing judge cited to our
55
decision in Attorney Grievance Commission v. Fraidin, 438 Md. 172 (2014). In that case,
we upheld the hearing judge’s finding that respondent violated Rule 8.4(b) when he
assisted his wife with the preparation of bankruptcy documents which included false
statements under oath that she worked for the respondent’s law firm and received a monthly
income from his law office of $3,000.00 per month, when in fact she was never employed
by the law firm and never received any wages. Id. at 207. As evidence of her wages, Mrs.
Fraidin supplied fabricated “paychecks,” which were drawn from the respondent’s IOLTA
account. Id. at 180. In Fraidin, we upheld the hearing judge’s conclusion that respondent
utilized his trust account funds to commit bankruptcy fraud by knowingly and intentionally
fabricating paychecks for his wife drawn from his IOLTA account for the sole purpose of
misrepresenting to the bankruptcy court that his wife was gainfully employed so that his
wife would qualify for a Chapter 13 reorganization. Id. at 203–06.
In addition to Fraidin, Bar Counsel also urges us to rely upon Attorney Grievance
Commission v. Byrd, 408 Md. 449 (2009), where we upheld a finding that respondent
violated Rule 8.4(b) and 8.4(c) with respect to his misconduct in connection with his
bankruptcy matter. In Byrd, the respondent’s creditor had filed an involuntary bankruptcy
action against the respondent, seeking to liquidate assets to pay the creditor’s debt. Id. at
460. In that case, we found multiple instances of intentional, dishonest misconduct by
respondent, including willful and intentional failure to cooperate with the bankruptcy trustee,
and multiple contempt orders entered by the bankruptcy judge over a seven-year time span,
as well as several orders to compel certain action, which were disregarded by respondent,
56
and two underlying determinations by the bankruptcy court that the respondent’s misconduct
was “willful” and constituted “bad faith,” resulting in sanctions. Id. at 482.
The hearing judge in that case found that respondent’s reports to the bankruptcy
court were false, and that respondent knew they were false when he filed them. Id. at 464.
In reaching this conclusion, the hearing judge relied upon the record of the bankruptcy
proceedings, as well as the extensive testimony of the Trustee that as a Chapter 11 debtor,
and later as a Chapter 13 debtor, respondent failed and refused to file monthly operating
reports indicating the assets coming in and accounts receivable, and the cash flow and
expenses of the business, and that respondent’s monthly operating reports were “grossly
inaccurate, deceptive [] and misleading.” Id. at 481. Based upon the extensive testimony
of the Trustee, the hearing judge determined that respondent “violated 18 U.S.C. § 1001
(making it a crime to falsify or conceal a material fact, or to make a false statement or
provide a false document to the government or a government agency) and 18 U.S.C. § 1621
(prohibiting perjury).” Id. Based upon the evidence, we found clear and convincing
evidence to support the conclusion that the respondent violated Rule 8.4(b). Id. at 482.
We also found that, based upon the multiple contempt findings, respondent’s willful
misconduct in flagrantly disobeying court orders and the rules of the bankruptcy court
“manifestly involved dishonesty and was prejudicial to the administration of justice” in
violation of Rule 8.4(c) and (d). Id.
In this case, unlike Fraidin and Byrd, our independent review of the record leads us
to conclude that while Mr. Kane was incompetent, uninformed, and negligent, his actions
were not taken with an intent to defraud the Bankruptcy Court. Mr. Kane brought his
57
personal bankruptcy to the Trustee’s attention at the lunch break on the first day of the
Adversary Proceeding against him. The colloquy between Mr. Kane, the Trustee, and the
bankruptcy judge demonstrates that while Mr. Kane’s failure to disclose the matter in his
bankruptcy petition was uninformed and inconsistent with the requirements of the
Bankruptcy Code, it was not undertaken with an intent to defraud the Bankruptcy Trustee
or the Bankruptcy Court. Mr. Kane explained to the bankruptcy judge that he was trying
to keep his “professional matters” out of his bankruptcy for “personal privacy reasons.”
He also testified that he did not think he needed to identify the Adversary Proceeding
because he thought that only his clients had monetary risk and that the claims against him
were “inchoate claims.” Again, while Mr. Kane’s decision was without legal merit and
demonstrates his lack of competence on bankruptcy-related matters, we do not find, based
upon this record, that Mr. Kane had the requisite intent to commit a criminal act. Similarly,
while the record reflects that Mr. Kane filed serial bankruptcies with schedules containing
incorrect and incomplete information, his conduct lacks a knowing or willful intent to
engage in bankruptcy fraud.25
25
Our finding that Mr. Kane’s bankruptcy filings fall short of criminal misconduct
should not be construed as condoning this behavior. As noted supra, we have upheld the
hearing judge’s conclusion that Mr. Kane’s inaccurate, serial filings violated Rule 3.3
(Candor Toward the Tribunal). To be sure, Mr. Kane’s bankruptcy schedules are replete
with inaccurate information. For example, on Mr. Kane’s February 2014 bankruptcy
petition, on Schedule B, he stated that there was $100 in his Bank of America checking
account when his bank records reflected a balance of $1,239.37 in the account. Mr. Kane
testified that he was accounting for monies that he knew were already obligated elsewhere.
The hearing judge noted that notwithstanding Mr. Kane’s explanation, the account always
stayed above $100 for the relevant period. The hearing judge also correctly noted that Mr.
Kane’s personal property values and personal expenses changed with each filing, and there
are unexplained discrepancies in the schedules associated with his serial filings. For
58
Although we find that Mr. Kane should have disclosed the Adversary Proceeding
and identified the Trustee as an unsecured creditor and should have been more diligent and
accurate with his schedules, there is no evidence that his actions rise to the level of criminal
conduct involved in Fraidin and Byrd. Although Mr. Kane’s filings reflect incompetence
and negligence, we do not find by clear and convincing evidence that his conduct
constitutes a criminal act.
Similarly, based upon our independent review of the record, we do not find by clear
and convincing evidence that Mr. Kane’s act of deducting his internet and cell phone
expense as business expenses, which included family members’ coverage, constitutes a
criminal act. While the Internal Revenue Service may take a different approach or reach a
different conclusion, based upon the record before us, we sustain Mr. Kane’s exception
that his cell phone and internet deductions fall short of criminal activity.26
Rule 8.4(c) provides that it is professional misconduct for a lawyer to “engage in
conduct involving dishonestly, fraud, deceit or misrepresentation[.]” The hearing judge
example, the schedules on Mr. Kane’s June 2016 filing identified household goods and
furnishings valued at $1,500, electronics valued at $600, and clothes valued at $250, and
also identified office expenses and personal expenses, none of which had been identified
on his 2014 or 2015 bankruptcy petitions. In comparing Mr. Kane’s serial bankruptcy
filings, although Mr. Kane filed incomplete and inconsistent schedules, our review of the
record reveals that these filings, while incompetent and careless, do not evidence an intent
to defraud creditors or commit bankruptcy fraud.
26
At oral argument, Mr. Kane’s attorney argued that Mr. Kane uses Turbo Tax,
which shows that he lacked a criminal intent. He plugs in his expenses and the software
inserts the deduction. Obviously, Turbo Tax does not independently verify the expenses
and the individual using the software must accurately enter expenses incurred and properly
associated with a legitimate business deduction.
59
concluded that the conduct that he found violated Rule 8.4(b) also constitutes a violation
of Rule 8.4(c). Mr. Kane has excepted to this conclusion, asserting that the hearing judge’s
legal conclusion of this violation was based solely upon the conclusion that Mr. Kane
committed a federal criminal act.27 Mr. Kane argues that he lacked the requisite intent to
engage in fraudulent or dishonest conduct. We will sustain Mr. Kane’s objection on this
point.
As noted above, with respect to Mr. Kane’s bankruptcy filings, while the filings
were careless and reflect a lack of competence, we do not find by clear and convincing
evidence that Mr. Kane’s mistakes and inconsistencies were intentionally dishonest
conduct or were undertaken for the purpose of defrauding or deceiving the Bankruptcy
Court.
With respect to his tax deductions, Mr. Kane asserts that he is a sole practitioner
who operates from a virtual office. Mr. Kane took a deduction on his tax return for his cell
phone usage, which also included cell phone service of family members. At oral argument,
Mr. Kane’s counsel stated that there is nothing in the record upon which the hearing judge
could find that taking a cell phone business deduction for his family’s coverage constitutes
tax fraud, or that the IRS would consider the deduction unacceptable in an audit. Based
upon the record before us, we do not find clear and convincing evidence that Mr. Kane’s
27
In his conclusions of law, the hearing judge did not describe his basis for
concluding that Mr. Kane violated Rule 8.4(c) other than simply stating that “each of the
listed violations of Rule 8.4(b) also constitutes a violation of Rule 8.4(c).”
60
cell phone deduction on his tax returns constitutes intentionally dishonest or fraudulent
conduct in violation of Rule 8.4(c).
Rule 8.4(d) provides that it is professional misconduct for a lawyer to “engage in
conduct that is prejudicial to the administration of justice[.]” The hearing judge concluded
that Mr. Kane violated Rule 8.4(d) when he failed to disclose the Adversary Proceeding
and list the Trustee as an unsecured creditor in his 2015 bankruptcy filing because it wasted
judicial resources, and was therefore prejudicial to the administration of justice. The
hearing judge also concluded that Mr. Kane’s conduct resulted in the Bankruptcy Court
wasting a half day of its valuable trial time to conduct a trial in a stayed proceeding.
Moreover, Mr. Kane’s conduct unnecessarily caused a delay in the Adversary Proceeding,
which could have been avoided by listing the claim in his 2015 bankruptcy petition and
schedules as is required by the Bankruptcy Code. Mr. Kane filed an exception to this
conclusion but did not specify any basis for his exception. We overrule the exception.
Mr. Kane’s failure to identify the Adversary Proceeding on his personal bankruptcy
certainly caused a waste of judicial resources and delay, which could have been avoided.
The hearing judge further concluded that Mr. Kane’s overall conduct brings the
legal profession into disrepute in violation of Rule 8.4(d). We find that the conclusion is
supported by clear and convincing evidence and affirm the hearing judge’s conclusion.
Md. Rule 19-407 (Attorney Trust Account Record Keeping)
At the attorney grievance hearing, Bar Counsel contended that Mr. Kane violated
Md. Rule 19-407 as it relates to his representation of Mr. Arvin. Specifically, Bar Counsel
argued that Mr. Kane violated the Rule because he either failed to create the record as
61
required by the Rule or failed to maintain records for the requisite period of time. Although
the hearing judge concluded that Mr. Kane failed to produce the records at trial, the hearing
judge was not convinced by clear and convincing evidence that the reason for the failure
to produce the documents (its own separate violation of the Rules) was because Mr. Kane
has either failed to create or maintain the records, as opposed to his failure to retrieve them.
The hearing judge noted that Mr. Kane testified to difficulty with his computers. Bar
Counsel did not file an exception to this conclusion. Although Mr. Kane filed an exception,
stating that, while he could have done a better job of managing his law office and personal
finances, there was no evidence to support a conclusion that he willfully mismanaged his
bookkeeping. However, since no such legal conclusion was reached by the hearing judge
and no violation was found, we overrule Mr. Kane’s exception.
Mitigating Factors
In Attorney Grievance Commission v. Hodes, we noted that the following may be
considered as mitigating factors:
Absence of a prior disciplinary record; absence of a dishonest or selfish
motive; personal or emotional problems; timely good faith efforts to make
restitution or to rectify consequences of misconduct; full and free disclosure
to disciplinary board or cooperative attitude toward proceedings;
inexperience in the practice of law; character or reputation; physical or
mental disability or impairment; delay in disciplinary proceedings; interim
rehabilitation; imposition of other penalties or sanctions; remorse; and
finally, remoteness of prior offenses.
441 Md. 136, 209 (2014) (citing Attorney Grievance Comm’n v. Coppola, 419 Md. 370,
407 (2011) (citations omitted)).
62
The hearing judge found that Mr. Kane proved one mitigating factor by a
preponderance of the evidence. Mr. Kane testified that during the time period of this case,
he has had personal problems with caring for his ailing in-laws with whom he was very
close. Their failing health and ultimate deaths greatly affected Mr. Kane emotionally and
required significant amounts of his time and energy for their care. The Court found Mr.
Kane credible on this point. No exceptions were filed by Bar Counsel to this finding.
Based upon our independent review of the record, we agree with the hearing judge’s
finding.
Aggravating Factors
The hearing judge found clear and convincing evidence that five aggravating factors
were present: (1) prior discipline; (2) a pattern of misconduct; (3) multiple offenses; (4)
refusal to acknowledge the wrongful nature of conduct; and (5) substantial experience in
the practice of law.28 We agree with the hearing judge’s conclusions, which are
summarized as follows.
28
We have recognized the following aggravating factors in considering sanctions in
attorney grievance proceedings:
(1) Prior disciplinary offenses;
(2) A dishonest or shellfish motive;
(3) A pattern of misconduct;
(4) Multiple offenses;
(5) Bad faith obstruction of the disciplinary proceeding by intentionally failing
to comply with rules or orders of the disciplinary agency;
(6) Submission of false evidence, false statements, or other deceptive practices
during the disciplinary process;
(7) Refusal to acknowledge the wrongful nature of conduct;
(8) Vulnerability of the victim;
(9) Substantial experience in the practice of law;
63
The hearing judge noted that Mr. Kane received a reprimand from the Attorney
Grievance Commission on January 18, 2017, for violating Rules 1.1 (Competence), 1.3
(Diligence), 1.4 (Communication), 1.16(d) (Terminating representation), and 3.4(d)
(Fairness to opposing counsel). The hearing judge noted that in that matter, Mr. Kane
failed to provide competent and diligent representation, and failed to adequately
communicate with his client. Specifically, Mr. Kane failed to adhere to discovery
guidelines, comply with opposing counsel’s discovery requests, and communicate with his
client regarding the scope and ramifications of his actions.
Bar Counsel also requested that the hearing judge consider a warning from the
Attorney Grievance Commission dated August 30, 2016, for alleged violations of Rules
1.3 (Diligence) and 1.4 (Communication). The hearing judge concluded that it would not
consider the warning as part of an aggravating factor because the warning explicitly
provided “[a] warning is not discipline under Maryland Rule 19-700[.]” Bar Counsel
excepted to the hearing judge’s failure to find Mr. Kane’s prior warning to be an
aggravating factor under the circumstances. We agree with Bar Counsel and sustain
Counsel’s exception. Although the warning is not discipline, as set forth below, it
evidences a pattern of misconduct.
(10) Whether he or she displayed indifference to making restitution; and
(11) [I]llegal conduct.
See Attorney Grievance Comm’n v. Sperling, 434 Md. 658, 676–77 (2013) (citing
Standard 9.22 of the American Bar Association Standards for Imposing Lawyer Sanctions).
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The warning that Bar Counsel issued on August 30, 2016, stated that although the
complaint made against Mr. Kane had been dismissed:
We did determine, however, that you violated Maryland Lawyers’ Rules of
Professional Conduct 1.3 and 1.4. You violated Rule 1.3 by failing to act
with reasonable diligence and promptness in pursuing the return of your
client’s $20,000 deposit made toward the purchase of a home. You violated
1.4 by failing to keep your client reasonably informed of the status of her
case and failing to explain the case to the extent reasonably necessary to
permit her to make informed decisions regarding your representation. We
are issuing a warning to you for those violations.
A warning is not discipline . . . but should guide you in the future to avoid a
complaint of a similar nature that might result in a disciplinary sanction.
This Court has recognized that a warning is “an admonition against repetition of conduct.”
Attorney Grievance Comm’n v. Stolarz, 379 Md. 387, 406 (2004). We agree with Bar
Counsel that the conduct described in the warning is similar to the conduct at issue in the
Lonergan and Arvin matters. While the warning was not a disciplinary action, it is
nonetheless evidence of a pattern of misconduct, which is an aggravating factor in
determining the appropriate sanction. See Attorney Grievance Comm’n v. Kirwan, 450
Md. 447, 463–64 (2016) (agreeing with hearing judge’s conclusion that the attorney’s prior
warning supported a finding that the attorney had engaged in a pattern of misconduct);
Attorney Grievance Comm’n v. Hill, 398 Md. 95, 104–05 (2007) (considering the
attorney’s two prior warnings as “prior grievance history” in determining the appropriate
sanction to impose); Attorney Grievance Comm’n v. Reinhardt, 391 Md. 209, 230 (2006)
(considering a warning to be “prior history” with the Commission). Accordingly, there is
clear and convincing evidence that the warning issued to Mr. Kane should be considered
by the Court as a pattern of misconduct.
65
In addition to the prior disciplinary action, the hearing judge concluded that Bar
Counsel had established, by clear and convincing evidence, a pattern of misconduct and
multiple offenses. The hearing judge noted the multiple rules violated in connection with
Mr. Kane’s representation of the Lonergans and Mr. Arvin, as well as the violations found
in connection with Mr. Kane’s personal bankruptcy and tax filings. The hearing judge
found that at the December 2018 hearing, Mr. Kane failed to acknowledge the wrongful
nature of his conduct, instead maintaining that there was no conflict of interest and that the
clients should have contacted him if they were uninformed about their cases. The hearing
judge further noted that Mr. Kane has substantial experience in the practice of law, having
been admitted in 1983.
IV. Sanction
The purpose of a sanction in an attorney discipline case is not so much to punish the
attorney as “to protect the public and the public’s confidence in the legal profession.”
Attorney Grievance Comm’n v. Greenleaf, 438 Md. 151, 163 (2014) (quoting Attorney
Grievance Comm’n v. Worthy, 436 Md. 633, 643 (2014)). The sanction imposed depends
on the facts and circumstances of each case, and in arriving at an appropriate sanction, we
“consider the nature of the ethical duties violated in light of any aggravating or mitigating
circumstances.” Attorney Grievance Comm’n v. Paul, 423 Md. 268, 284 (2011).
Accordingly, the sanction imposed should be “commensurate with the nature and gravity
of the violations and the intent with which they were committed.” Attorney Grievance
Comm’n v. Stein, 373 Md. 531, 537 (2003).
66
Bar Counsel has recommended that we disbar Mr. Kane from the practice of law.
In support of this recommendation, Bar Counsel notes that Mr. Kane violated numerous
Rules in his representation of the Lonergans and Mr. Arvin, as well as Bar Counsel’s
associated investigation into those complaints, to wit: Rules 1.1 (Competence), 1.2 (Scope
of Representation and Allocation of Authority Between Client and Lawyer), 1.3
(Diligence), 1.4 (Communication), 1.7 (Conflict of Interest; General Rule) (as to the
Lonergans), 1.16 (Declining or Terminating Representation), 3.4 (Fairness to Opposing
Party and Attorney), 8.1(b) (Bar Admission and Disciplinary Matters), and 8.4(a) and (d)
(Misconduct). Bar Counsel also notes Mr. Kane’s violation of Rule 3.3 (Candor Toward
the Tribunal) and 8.4(a) and (d) (Misconduct) in connection with his personal bankruptcy.
Bar Counsel contends that in addition to Mr. Kane’s misconduct, there are substantial
aggravating factors, including prior misconduct, Mr. Kane’s substantial experience in the
practice of law, and his refusal to acknowledge the wrongful nature of his conduct.
To support their recommended sanction of disbarment, Bar Counsel relies upon the
hearing judge’s findings that Mr. Kane violated Rule 8.4(b) and 8.4(c) in connection with
his bankruptcy filings and tax deduction for cell phone expenses. Bar Counsel relies upon
Fraidin, 438 Md. 171, and Byrd, 408 Md. 449. As noted supra, we sustained Mr. Kane’s
exception to the hearing judge’s conclusion that Mr. Kane’s conduct in his personal
bankruptcy and his tax filings violated Rule 8.4(b) and (c). At oral argument, in response
to the Court’s questions, Bar Counsel admitted that if the Court were only to consider the
misconduct in the Lonergan and Arvin cases, Bar Counsel would recommend an indefinite
suspension. Bar Counsel stated that the “recommendation for disbarment is based on the
67
conduct in the Lonergan and Arvin matters, compiled with the Respondent’s personal
bankruptcy filings and tax returns.”
Mr. Kane contends that the facts of this case do not support disbarment as Mr. Kane’s
conduct in his bankruptcy and tax filings were neither criminal, nor intentionally dishonest.
Mr. Kane notes that cases where we have determined that the respondents have tax problems,
but do not involve willful and intentional tax fraud, have not resulted in disbarment. Mr.
Kane relies upon Attorney Grievance Comm’n v. Gavin, 350 Md. 176 (1998), in which the
Court imposed a reprimand where the respondent failed to timely file his tax returns and
failed to rectify his tax delinquencies. Mr. Kane also directs us to Attorney Grievance
Comm’n v. Worthy, 436 Md. 633 (2014), where the Court imposed a six-month suspension
for two separate convictions of failure to file tax returns amounting to over $70,000 in unpaid
taxes. Mr. Kane asserts that he did not willfully evade paying taxes—rather, he took some
minor deductions that might arguably seem questionable. Mr. Kane asserts that this conduct
was not criminal and does not support disbarment. Mr. Kane further asserts that there is
insufficient evidence to conclude that he knowingly and willfully committed fraud when he
filled out his bankruptcy schedules and filed his income taxes. He states that there is no
violation of Rule 8.4(b) or (c), although he admits that the evidence supports a finding that
he acted out of ignorance, mistake, carelessness, or negligence.
With respect to the findings associated with his representation of the Lonergans and
Mr. Arvin, Mr. Kane argues that the case law supports either a reprimand or a “short
suspension.” Mr. Kane contends the facts of this case are more similar to Attorney
Grievance Commission v. Cohen, 361 Md. 161 (2000), where we imposed an indefinite
68
suspension after finding violations of Rules 1.1, 1.3, 1.4, 8.1(a), and 8.4(c) and (d) for
failing to keep clients informed regarding their cases, lack of competence, and making false
statements during a disciplinary investigation.
In light of our sustaining Mr. Kane’s exceptions to the Rule 8.4(b) and (c)
conclusions of law, we agree that the violations in this matter support the imposition of an
indefinite suspension. Our decisions in prior attorney discipline cases support suspending
Mr. Kane indefinitely, with the right to apply for reinstatement. In cases similar to Mr.
Kane’s where the attorney’s disciplinary actions do not involve dishonesty, the sanction
has often been indefinite suspension. See Attorney Grievance Comm’n v. Kirwan, 450 Md.
447, 466 (2016); see also Attorney Grievance Comm’n v. Green, 441 Md. 80, 101–102
(2014) (collecting cases). Indefinite suspension ensures that Mr. Kane is not permitted to
practice law until this Court is satisfied that he is able to do so consistent with the MLRPC.
We have reiterated that indefinite suspension is not permanent, so Mr. Kane may apply for
reinstatement under Maryland Rule 19-752. However, we decline to set a minimum length
for this suspension because there is nothing in the record that would allow this Court to
“divine an appropriate minimum ‘sit-out’ period.” Kirwan, 450 Md. at 467, quoting Green,
441 Md. at 102. We would also note that while we did not find a Rule 8.4(b) or (c) violation
with respect to Mr. Kane’s bankruptcy filings and tax filings, any future filings by
Mr. Kane would be considered by the Court as part of any consideration on reinstatement.
The suspension shall begin 30 days after the date on which this opinion is filed.
IT IS SO ORDERED; RESPONDENT
SHALL PAY ALL COSTS AS TAXED
BY THE CLERK OF THIS COURT,
69
INCLUDING COSTS OF ALL
TRANSCRIPTS, PURSUANT TO
MARYLAND RULE 19-709(d) FOR
WHICH SUM JUDGMENT IS
ENTERED IN FAVOR OF THE
ATTORNEY GRIEVANCE
COMMISSION AGAINST EUGENE
IGNATIUS KANE, JR.
70
Attorney Grievance v. Kane
Combined Opinion