399 S.W.3d 750
Ky.2013Background
- Ronald E. Hines, admitted 1987, faced consolidated disciplinary proceedings in four KBA files (8969, 12704, 15869, 17216) alleging 22 violations of the Rules of Professional Conduct; Board recommended guilt on selected counts and sanctions (120-day suspension and public reprimand).
- Files 8969 and 12704 arise from Hines’s representation of Cody Properties, Inc.: he had a contingency/fee arrangement to market timber/mineral rights, factional disputes among heirs led to his partial/complete termination, and he continued to act for a dissident faction, filed suit in the corporation’s name without board authorization, and transferred corporate files to successor counsel for the dissenting shareholders.
- Trial commissioner found Hines guilty of failures to communicate with corporate representatives, improper alignment with dissident shareholders (Rule 1.13(a) and related duties), and mishandling client files/confidential information (Rules 1.16(d), 1.6(a)); recommended 120-day suspension.
- File 15869 involved representation of a minor in a dog-bite case: Hines sought default judgment despite receiving a letter from a defendant (not filed with court), mis-certified under CR 55.01, and briefly withheld a client file pending payment; commissioner found violations of ex parte disclosure and CR 55.01 and recommended a public reprimand.
- File 17216 concerned a Rule 11 sanction in federal/Jefferson Circuit litigation; the commissioner and Board found no professional misconduct despite the Rule 11 order; this Court adopted those not-guilty findings and declined Bar Counsel’s request for broader review of counts the Board had rejected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hines violated Rule 1.4 (communication) by not answering board/officer requests | Bar Counsel: Hines ignored reasonable information requests from corporate agents (Spencer, O’Brien) | Hines: acted in corporation’s best interests; failures excused by corporate turmoil | Held: Guilty — lawyer must respond to duly authorized corporate constituents under Rule 1.4 |
| Whether Hines breached duties to the corporation (Rule 1.13 / loyalty) by siding with dissident shareholders and suing in the corporation’s name | Bar Counsel: Hines abdicated duty to corporation, improperly represented faction and filed suit without board authorization | Hines: contested board legitimacy; believed action protected shareholders and corporation | Held: Guilty as to acting contrary to the board’s authority and representing dissidents rather than the corporation; but court rejected one Rule 1.13(d) finding (no independent showing he misidentified client to constituents) |
| Whether Hines violated confidentiality/return-of-files rules (Rules 1.6, 1.16(d)) by turning files over to successor representing dissenting shareholders and withholding files | Bar Counsel: improper disclosure and failure to surrender files to corporation on termination | Hines: believed board was not legitimate and successor represented proper interests | Held: Guilty — Hines must surrender client files to the client-organization or its authorized representatives; turning files to counsel for dissenting shareholders violated duties |
| Whether Hines committed ethical violations in the dog-bite case by certifying and seeking default (CR 55.01) without disclosing defendant letter and by conditioning file return on payment | Bar Counsel: motion was ex parte and mis-certified under CR 55.01; failure to disclose was material | Hines: misunderstood CR 55.01; did not intend fraud | Held: Guilty of failing to disclose material fact in an ex parte default motion and of knowingly disobeying CR 55.01; public reprimand recommended but subsumed by suspension |
Key Cases Cited
- Allied Ready Mix Co., Inc. ex rel. Mattingly v. Allen, 994 S.W.2d 4 (Ky. Ct. App. 1998) (board of directors controls corporate litigation decisions)
- Louisville Bridge Co. v. Dodd, 85 S.W. 683 (Ky. 1905) (agent cannot serve two masters; conflicting interests require single loyalty)
- Kentucky Bar Ass’n v. Berry, 626 S.W.2d 632 (Ky. 1981) (Court’s plenary review power in disciplinary matters)
- Kentucky Bar Ass’n v. Leadingham, 269 S.W.3d 419 (Ky. 2008) (procedural note on review scope when Board and Bar Counsel seek review)
- Kentucky Bar Ass’n v. Kessen, 311 S.W.3d 249 (Ky. 2010) (Court may independently review disciplinary findings)