THE FLORIDA BAR, Cоmplainant, vs. CHARLES JAY KANE, Respondent. THE FLORIDA BAR, Complainant, vs. HARLEY NATHAN KANE, Respondent. THE FLORIDA BAR, Complainant, vs. DARIN JAMES LENTNER, Respondent.
No. SC13-388
No. SC13-389
No. SC13-390
Supreme Court of Florida
[October 6, 2016]
We have for review three referee‘s reports recommending that respondents Charles Jay Kane, Harley Nathan Kane, and Darin James Lentner be found guilty of professional misconduct in violation of the Rules Regulating the Florida Bar (Bar Rules), and sanctioned as follows: in case SC13-388, the referee recommends that Charles Kane be suspended from the practice of law for three years; in case SC13-389, the referee recommends that Harley Kane be disbarred; and in case SC13-390, the referee recommends that Darin Lentner be suspended for two years.1 On June 14, 2016, we issued orders suspending each respondent until further order of the Court and consolidating the three cases. As discussed in this opinion, we now approve the referee‘s findings of fact and recommendations as to guilt in each case. We also approve the referee‘s recommendation that Harley Kane be disbarred. However, we disapprove the refеree‘s recommended sanctions for Charles Kane and Darin Lentner. Given their egregious misconduct, we conclude that all three respondents should be disbarred from the practice of law in Florida.
I. FACTS
The referee found that beginning in 2001, Charles Kane and Harley Kane, through their law firm Kane & Kane, Darin Lentner and Laura Watson of the firm Laura M. Watson, P.A., d/b/a Watson & Lentner (Watson & Lentner), and Gary Marks and Amir Fleischer of the firm Marks & Fleischer, P.A. (collectively, the PIP lawyers or PIP law firms), engaged in a joint effort to solicit healthcare provider clients with personal injury protection (PIP) claims against Progressive Insurance Company, among other insurance companies. The firms jointly held seminars and prepared marketing brochures and materials to disseminate to potential clients. While one of the PIP law firms was assigned the primary role in representing each of these healthcare provider clients, the “Special Co-Counsel Contingency Contract” provided that all three firms assumed joint legal responsibility for the clients.
The bad faith attorneys filed a lawsuit against Progressive for bad faith, known as “the Goldcoast case.” The case would include thirty-seven named plaintiffs. These thirty-seven plaintiffs were clients of the Watson & Lentner and Marks & Fleischer firms; none of Kane & Kane‘s clients were named plaintiffs. Still, each of the PIP law firms and each of the bad faith attorneys executed a contract agreeing to jointly represent all thirty-seven plaintiffs.
Over the next two years, the bad faith attorneys continued to prosecute the Goldcoast case. Progressive vigorously defended the suit and refusеd to produce
Progressive later indicated that it wanted to expand the settlement negotiations to include both the universe of bad faith claims and the clients’ PIP benefits claims. The PIP lawyers authorized the bad faith attorneys to negotiate both sets of claims, and the parties scheduled a mediation for April 19, 2004. In advance of the mediation, Larry Stewart spoke with the PIP lawyers to discuss the
The mediation was held on April 19, 2004, and was attended by Larry Stewart and William Hearon of the bad faith attorneys, and Darin Lentner of the PIP lawyers. During the discussions, the mediator suggested that Progressive had set aside $6 or $7 million to settle the bad faith claims; however, Progressive offered only $3.5 million. This offer was rejected.
When the mediation was unsuccessful, the bad faith attorneys continued their efforts to compel production in the Goldcoast case. The referee found that Progressive lost a “last ditch effort” to prevent production of its internal records, and the company was facing sanctions. One week before it was scheduled to comply with a production order, Progressive initiated settlement negotiations with the PIP lawyers. The bad faith attorneys were excluded from these negotiations. Progressive offered an undifferentiated lump sum to each of the three PIP law firms, together totaling $14.5 million, as settlement of all their clients’ claims, both PIP and bad faith, as well as attorney fees. On Sunday, May 16, 2004, all six of the PIP lawyers, including Charles Kane, Harley Kane, and Darin Lentner, met with lawyers from Progressive to put the agreement in writing. Again, the bad faith attorneys were not told of Progressive‘s offers, and they were not asked to
Several days later, the PIP lawyers, including Charles Kane, Harley Kane, and Darin Lentner, met with Larry Stewart and offered him $300,000 to compensate all three bad faith attorneys for their work on the bad faith case. The PIP lawyers refused to disclose the terms of the settlement with Progressive, saying only that the cases and claims had been settled. Stewart rejected the offer and told the PIP lawyers that he believed the settlement was improper because it did not allocate any funds to the bad faith clаims. The bad faith attorneys then wrote a letter, sent to each of the named plaintiffs in the Goldcoast case, explaining their efforts to compel production of Progressive‘s internal documents and the April
After the meeting with Larry Stewart, Charles Kanе became concerned that the undifferentiated settlement in the MOU did not allocate any money to the Goldcoast case, and he suggested further negotiations with Progressive. As a result, in June 2004, the PIP lawyers and Progressive entered an “Amendment to Memorandum of Understanding” (AMOU), allocating $1.75 million to settle the bad faith claims of the plaintiffs in the Goldcoast case. Still, no money was allocated for the potential bad faith claims for the remaining PIP clients (those not named as plaintiffs in the Goldcoast case). As in the original MOU, it was left to the PIP lawyers to determine how the remaining settlement funds would be
Each of the PIP law firms was responsible for notifying its clients of the settlement and obtaining the releases necessary to trigger payment under the MOU and AMOU. At Kane & Kane, both Charles Kane and Harley Kane directed lawyers in the firm in their communications with clients; Harley Kane, in particular, reviewed and approved letters sent to the firm‘s clients. At Watson & Lentner, Lentner was responsible for communicating with clients regarding the settlement, and he testified that he personally called each client. Clients of both firms were not told of the conflicts of interest created in the MOU and AMOU, the total amount of the settlement, the amount that Kane & Kane or Watson & Lentner intended to take as attorney fees, or that some clients received money for their bad faith claims while others did not. The clients of both firms were also not provided closing statements.
Shortly after they were discharged, the bad faith attorneys sued the PIP lawyers and law firms, including Harley Kane, Charles Kane, and Kane & Kane, and Darin Lentner and Watson & Lentner, for quantum meruit and/or unjust enrichment, among other claims (the unjust enrichment case). In April 2008, after years of litigation, Judge David F. Crow entered a final judgment in favor of the bad faith attorneys on their quantum meruit and/or unjust enrichment claims. Stewart Tilghman Fox & Bianchi, P.A. v. Kane & Kane, No. 502004CA006138XXXXMBAO, 2008 WL 8833300 (Fla. 15th Cir. Ct. Apr. 24, 2008). The final judgment included extensive findings as to the PIP lawyers’ actions, noting that the matter “could be a case study for a course on professional conduct involving multi-party joint representation agreements and the ethical pitfalls surrounding such agreements.” Id. at *2. Specifically, the court found that
The bad faith claims were an important pressure point on Progressive, they represented the biggest damage threat, they were a driving force behind the settlement, and their release was one of the principal considerations for the settlement. . . .
. . . .
. . . . The [bad faith attorneys‘] work resulted in favorable rulings which opened the door to settlement when [the PIP lawyers] had been unable to make any progress in that regard on their own. In addition, the evidence establishes that [the PIP] law firms unfairly deprived [the bad faith attorneys] of a fee by ignoring multiple conflicts of interest, misrepresenting the terms of the settlement to the [bad faith attorneys], misrepresenting the terms of the settlement to the clients to obtain the releases to trigger payment, manipulating the allocation of the settlement to obtain most of it as attorneys’ fees, and by discharging the [bad faith attorneys] for no reason.
Id. at *18-19. The trial court entered judgment against Kane & Kane, Harley Kane, and Charles Kane, jointly and severally, in the amount of $2 million. It also entered judgment against “Laura M. Watson, P.A., d/b/a Watson & Lentner” in the amount of $981,792. The court did not enter judgment against Laura Watson or Darin Lentner individually, finding there to be no evidence that either was a party to any agreement with the bad faith attorneys and that there was no evidence
Based on these facts, the referee recommended that Charles Kane, Harley Kane, and Darin Lentner each be found guilty of violating the following 2004 Bar Rules:
In determining the appropriate discipline, the referee found seven aggravating factors applicable in each case: (1) respondents acted with a dishonest or selfish motive; (2) they engaged in a pattern of misconduct; (3) they committed multiple offenses; (4) they made false statements during the disciplinary proceedings; (5) they have refused to acknowledge the wrongful nature of their misconduct; (6) they have substantial experience in the practice of law; and (7) they have shown an indifference to making restitution. The referee also found two mitigating factors: respondents had no prior disciplinary record, and there was evidence of their good character and reputation.
As noted, the referee recommends that Charles Kane be suspended for three years, that Harley Kane be disbarred, and that Darin Lentner be suspended for two years. The referee also recommends the following payments as conditions of seeking reinstatement: Charles Kane and Harley Kane be ordered to satisfy the judgment entered against them in the unjust enrichment case and each pay $11,831.65 in costs to the Bar; Lentner be ordered to pay $856,789 to the Clients’ Security Fund, as well as the Bar‘s costs, totaling $13,737.48. Charles Kane, Harley Kane, and Darin Lentner have each filed petitions for review.
II. ANALYSIS
In the proceedings before the referee, Charles Kane and Harley Kane filed a motion to dismiss, which alleged that the Bar and Larry Stewart engaged in misconduct in prosecuting the disciplinary cases against them. The referee denied the motion. The standard of review for a referee‘s ruling on a motion to dismiss is whether the referee abused his or her discretion. See Fla. Bar v. Head, 27 So. 3d 1, 6 (Fla. 2010). To the extent that the motion raises a question of law, the referee‘s decision is subject to de novo review. See Fla. Bar. v. D‘Ambrosio, 25 So. 3d 1209, 1214 (Fla. 2009); Fla. Bar v. Greene, 926 So. 2d 1195, 1199 (Fla. 2006).
The Kanes’ motion alleged three general instances of misconduct. First, their primary argument is thаt Stewart and the Bar were complicit in drafting a false affidavit for the Bar‘s expert witness, which the Bar submitted to the referee in response to the Kanes’ motion for summary judgment. The Kanes contend the affidavit is false because it was actually prepared by Stewart and represented his opinions, not those of the expert witness, and because the expert witness did not have sufficient time to review all of the materials that he claimed to have reviewed in drafting the affidavit. They also alleged that Stewart attempted to conceal his involvement through a series of e-mails. Second, the motion to dismiss alleged that Stewart and the Bar‘s expert witness gave false testimony in depositions regarding how the expert witness‘s affidavit was prepared, and that the Bar did not
The referee heard testimony on the motion to dismiss contemporaneously to the final hearing. At the conclusion of this hearing, the referee orally denied the motion, finding that while there was misconduct, it was not serious enough to warrant dismissing the Bar‘s case. We agree.
The Court has made clear that the Bar has an obligation to process disciplinary cases in a fair and just manner. See Fla. Bar v. Rubin, 362 So. 2d 12, 16 (Fla. 1978) (“The Bar has consistently demanded that attorneys turn ‘square corners’ in the conduct of their affairs. An accused attorney has a right to demand no less of the Bar when it musters its resources to prosecute for attorney misconduct.“). It is also clear that “the purpose of an attorney disciplinary proceeding is the protection of the public, not the vindication of private rights.” Tyson v. Fla. Bar, 826 So. 2d 265, 268 (Fla. 2002) (“Disciplinary proceedings against attorneys are instituted in the public interest and to preserve the purity of the courts. No private rights except those of the accused attorney are involved.“) (citing Application of Harper, 84 So. 2d 700, 702 (Fla. 1956)). Here, the referee did find that there was some evidence of misconduct: it is apparent that Stewart played a role in drafting thе expert witness‘s affidavit, and he regularly
Nonetheless, we conclude that the referee did not abuse his discretion in denying the Kanes’ motion. There is ample evidence to support the referee‘s recommendations that Charles Kane and Harley Kane engaged in serious misconduct. Stewart‘s actions and those of Bar counsel do not diminish such evidence. Moreover, the Bar, in response to the motion, voluntarily excluded both Stewart and its expert witness from any further participation in the case. As a result, Stewart played no role in the referee‘s ultimate recommendations as to guilt and sanction.
B. Referee‘s Findings of Fact and Recommendations as to Guilt
We next address the referee‘s findings of fact and recommendations as to guilt. We conclude that the referee‘s factual findings are fully supported by competent, substantial evidence in the record. See Fla. Bar v. Frederick, 756 So. 2d 79, 86 (Fla. 2000) (holding that the referee‘s findings were supported by
1. Rules 4-1.7(b), 4-1.7(c), and 4-1.8(g)
The referee found, and we agree, that the PIP lawyers’ secret settlement with Progressive, memorialized in the MOU and the AMOU, was a conflict of interest and an improper aggregate settlement, in violation of Bar Rules
i. Charles Kane
Charles Kane urges the Court to disapprove the referee‘s recommendations of guilt because he argues that he was only minimally involved in the bad faith
The evidence demonstrates that Charles Kane and Harley Kane worked closely with the other PIP lawyers in the representation of their clients against Progressive. The PIP lawyers collectively decided to pursue bad faith claims against Progressive, and they each took steps to assist in that litigation. Although the Kanes maintain that they were not authorized to pursue bad faith claims on behalf of their clients, their conduct indicates otherwise. Kane & Kane, like the other PIP law firms, filed bad faith civil remedy notices with the Florida Department of Insurance on behalf of some clients, a necessary first step in filing bad faith claims. Although only thirty-seven plaintiffs were named in the Goldcoast case, it is clear that the PIP lawyers, including Charles Kane and Harley Kane, understood that more clients would be added to the suit when their bad faith
We do recognize that Charles Kane was the least involved in the bad faith litigation among the PIP lawyers. He did not attend most of the meetings between the PIP lawyers and bad faith attorneys, and he was not copied on any of the e-mails discussing strategy in the bad faith litigation. Nonetheless, Harley Kane testified that he did share some of these e-mails with Charles Kane, and Charles Kane was aware of the progress in the bad faith litigation to some extent. Charles Kane met with Larry Stewart in preparation for the April 2004 mediation with
Kane points to other evidence in the record that he contends does not support the referee’s findings. However, the referee had the opportunity to consider and evaluate this evidence. In making his findings and recommendations, the referee weighed Kane’s version of events against other evidence in the record. We have long held that “[t]o succeed in challenging a referee’s findings of fact, the challenging party must establish there is a lack of evidence in the record to support such findings or that the record clearly contradicts the referee’s conclusions.” Fla. Bar v. Glueck, 985 So. 2d 1052, 1056 (Fla. 2008). “An attorney cannot meet his burden by simply pointing to contradictory evidence when there is also competent, substantial evidence in the record to support the referee’s findings.” Id.
ii. Harley Kane
Harley Kane, like his father, Charles Kane, argues that Kane & Kane was only minimally involved in the bad faith litigation, that the firm’s clients did not retain Kane & Kane to pursue bad faith claims, and that the clients did not have viable, perfected bad faith claims for which they were entitled to compensation.
iii. Darin Lentner
The referee next found that respondents, in communicating the proposed settlement with Progressive to their clients, did not adequately explain the settlement so that their clients could make informed decisions and, in some instances, misled clients in violation оf Bar Rules 4-1.4(b) and 4-8.4(c). We agree with the referee that Charles Kane, Harley Kane, and Darin Lentner withheld from clients nearly all material information about the settlement, entirely to further their own interests. The clients were not told: the total amount of the settlement; the fact that some clients (those named in the Goldcoast case) would receive money for their bad faith claims while other clients did not; the value of the bad faith claims, which some clients were required to waive without compensation; and the amount each respective firm intended to take as attorney fees. The referee found that by failing to disclose these important facts, the respondents effectively misled their clients so that the clients would sign off on the settlement and Progressive would release the settlement funds. The clients were never given the opportunity to make informed decisions about their cases.
i. Charles Kane and Harley Kane
Charles Kane and Harley Kane directed associates in their firm in their communications with clients regarding the Progressive settlement. They are both equally responsible for the decision to withhold material information about the
ii. Darin Lentner
Lentner also directed communications between his firm and clients regarding the Progressive settlement. He signed letters sent to clients, and he testified that he spoke with every client himself. Lentner’s clients, like those of the Kane & Kane firm, were not told the total amount of Watson & Lentner’s settlement with Progressive, the amount the firm received in attorney fees, that there was pending litigation concerning bad faith claims against Progressive, and that Progressive had offered money to settle those claims. Lentner also signed the
Lentner maintains on review that the Bar Rules regarding confidentiality precluded him from revealing to the PIP clients the status of the Goldcoast case. This argument is without merit. As we have discussed, Lentner and the other PIP lawyers used thе threat of the collective bad faith claims for all of their clients as pressure on Progressive to settle, and they only abandoned those bad faith claims when allocating the settlement money. The rules requiring confidentiality do not protect Lentner in his failure to disclose important facts about the settlement offer.
3. Rule 4-1.5(f)
The referee found that all three respondents failed to provide their clients with closing statements, in violation of Bar Rule 4-1.5(f). Clients of both the Kane & Kane and Watson & Lentner firms signed contingent fee contracts. There is no dispute that the firms did not provide closing statements to their clients. Although there was testimony presented to the referee that a closing statement is not typically provided in a PIP case because the attorney fee is not taken as a portion of the client’s overall recovery, the referee found, and we agree, that there is no specific exception in the Bar Rules authorizing this practice.
4. Rules 4-8.4(c) and 3-4.3
In addition to their conduct during the Progressive settlement, Charles Kane and Harley Kane continued to engage in further dishonest acts. During the course of the unjust enrichment litigation, both Charles Kane and Harley Kane threatened to withhold compensation from their associates in order to force them to fabricate time records for use in the case. There is also evidence that Harley Kane later altered аnd inflated these time records. The inflated time sheets were provided to the bad faith attorneys and their counsel during discovery. Harley Kane admitted that the time records produced in discovery were “excessive.”
In November 2008, after the judgment was entered against them in the unjust enrichment case, Harley Kane and Charles Kane filed petitions for Chapter
Harley Kane and Charles Kane did file Chapter 7 bankruptcy petitions, seeking in part to discharge the judgment owed to the bad faith attorneys. The bad faith attorneys filed a “Complaint to Determine Dischargeability of Debts and Objection to Discharge.” On May 10, 2012, the bankruptcy court entered a memorandum opinion, finding in favor of the bad faith attorneys in part and against them in part. The bankruptcy court found that the Kanes’ debt to the bad faith attorneys was not subject to discharge because, in participating in the secret settlement with Progressive, they acted willfully and maliciously to injure the bad faith attorneys and reduce their legal fees. Although the Kanes’ bankruptcy filings are not inherently dishonest or deceitful, their conduct during the bankruptcy
C. The Referee’s Recommended Sanctions
Finally, we address the referee’s recommended sanctions: the rеferee recommends that Charles Kane be suspended from the practice of law for three years, that Harley Kane be disbarred, and that Darin Lentner be suspended for two years. In reviewing a referee’s recommended discipline, this Court’s scope of review is broader than that afforded to the referee’s findings of fact because, ultimately, it is the Court’s responsibility to order the appropriate sanction. See Fla. Bar v. Anderson, 538 So. 2d 852, 854 (Fla. 1989); see also
The referee in this case found that Charles Kane, Harley Kane, and Darin Lentner engaged in egregious misconduct: they secretly negotiated an aggregate settlement that created conflicts of interest between lawyers and clients, and left the bad faith attorneys with no compensation for their significant work in the Goldcoast case; in allocating the settlement funds, they abandoned their PIP clients’ bad faith claims in favor of a greater fee for themselves; and they withheld
Respondents urge the Court to consider St. Louis, and the related cases Florida Bar v. Rodriguez, 959 So. 2d 150 (Fla. 2007), Florida Bar v. Friedman, 940 So. 2d 428 (Fla. 2006) (table), and Florida Bar v. Ferraro, 839 So. 2d 700 (Fla. 2003) (table), involving law partners representing clients in civil suits against the DuPont Corporation. Respondents contend these cases indicate that each attorney’s actions should be considered separately and different sanctions imposed based on each attorney’s level of involvement. However, respondents’ argument
Respondents also argue that the referee’s recommended sanctions are unsupported because there is no evidence of client harm. They note that none of their former clients filed complaints with the Bar indicating they were unhappy with the terms of the settlement. However, the referee’s findings clearly indicate that respondents knowingly and intentionally agreed to a settlement that created conflicts of interest, and they failed to inform clients of those conflicts. The clients signed releases waiving their bad faith claims without receiving any compensation for those claims—all so that respondents could collect greater fees for themselves. We conclude that there is sufficient evidence of harm to clients and harm to our legal system, even if no client filed a complaint.
Finally, the referee recommended that respondents, as a condition of seeking readmission or reinstatement, make the following payments: Charles Kane and Harley Kane be required to satisfy the civil judgment against them in the unjust enrichment case, and Darin Lentner be required to pay $856,789 to the Clients’ Security Fund. We have previously required as a condition of reinstatement or readmission to practice that a lawyer satisfy an outstanding civil judgment. Seе, e.g., Fla. Bar v. Bloom, 632 So. 2d 1016, 1017 (Fla. 1994) (ordering that respondent Bloom “not be reinstated to the practice of law until he demonstrates his fitness to practice law which would include proof of satisfaction of the judgment entered against him in the underlying civil action on which this cause is predicated“). Accordingly, we approve the referee’s recommendation that the Kanes be ordered to satisfy the civil judgment in the unjust enrichment case.
We disapprove, however, the referee’s recommendation that Lentner pay $856,789 to the Clients’ Security Fund. The final judgment in the unjust enrichment case entered judgment against Kane & Kane, Charles Kane, and Harley Kane, jointly and severally, for $2 million. In contrast, Judge Crow entered a judgment against “Laura M. Watson, P.A., d/b/a Watson & Lentner,” in the amount of $981,792, but did not enter judgment against Laura Watson or Darin
III. CONCLUSION
Accordingly, respondents Charles Kane, Harley Kane, and Darin Lentner are hereby disbarred. Respondents were suspended by order dated June 14, 2016. Darin Lentner’s disbarment shall be effective nunc pro tunc June 22, 2016, the date his suspension became effective. Charles Kane’s and Harley Kane’s disbarments shall be effective nunc pro tunc July 14, 2016, the date their suspensions became effective. Respondents shall fully comply with Rule Regulating the Florida Bar 3-5.1(h).
Additionally, respondent Charles Kane and respondent Harley Kane are ordered, as a condition of readmission, to satisfy the civil judgment entered against them, as directed in the report of referee.
Judgment is entered for The Florida Bar, 651 East Jefferson Street, Tallahassee, Florida 32399-2300, for recovery of costs from Charles Jay Kane in the amount of $11,831.65, for which sum let execution issue.
Judgment is entered for Thе Florida Bar, 651 East Jefferson Street, Tallahassee, Florida 32399-2300, for recovery of costs from Harley Nathan Kane in the amount of $11,831.65, for which sum let execution issue.
It is so ordered.
LABARGA, C.J., and PARIENTE, QUINCE, POLSTON, and PERRY, JJ., concur.
LEWIS and CANADY, JJ., concur in result.
THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER THE EFFECTIVE DATE OF THIS DISBARMENT.
Original Proceeding – The Florida Bar
John F. Harkness, Jr., Executive Director, The Florida Bar, Tallahassee, Florida; Adria E. Quintela, Staff Counsel, Alan Anthony Pascal, Chief Branch Discipline Counsel, and Ghenete Elaine Wright Muir, Bar Counsel, The Florida Bar, Sunrise, Florida; and David Bill Rothman and Jeanne T. Melendez of Rothman & Associates, P.A., Miami, Florida,
for Complainant
Scott Kevork Tozian and Gwendolyn H. Daniel of Smith, Tozian, Daniel & Davis, P.A., Tampa, Florida,
for Respondents Charles Jay Kane and Harley Nathan Kane
John Preston Seiler of the Law Offices of Seiler, Sautter, Zaden, Rimes & Wahlbrink, Fort Lauderdale, Florida,
for Respondent Darin James Lentner