In re Singer ( ( 2014 )

IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 111,047
In the Matter of MARK R. SINGER,
Respondent.
ORIGINAL PROCEEDING IN DISCIPLINE
Original proceeding in discipline. Opinion filed October 10, 2014. Two-year suspension.
Kimberly L. Knoll, Deputy Disciplinary Administrator, argued the cause and was on the brief for the
petitioner.
Daniel F. Church, of Morrow Willnauer Klosterman Church, L.L.C., of Kansas City, Missouri,
argued the cause and was on the briefs for respondent; Mark R. Singer, respondent, argued the cause pro
se and was on the briefs.
Per Curiam: This is a contested original proceeding in discipline filed by the
office of the Disciplinary Administrator against the respondent, Mark R. Singer of
Overland Park, an attorney admitted to the practice of law in Kansas in 1975.
On August 16, 2013, the office of the Disciplinary Administrator filed a formal
complaint against the respondent alleging violations of the Kansas Rules of Professional
Conduct (KRPC). The respondent filed an answer on September 9, 2013. On November
20, 2013, the parties entered into a written joint stipulation of facts. A hearing was held
on the complaint before a panel of the Kansas Board for Discipline of Attorneys on
November 20, 2013, where the respondent was personally present. The hearing panel
determined that respondent violated KRPC 4.1(b) (2013 Kan. Ct. R. Annot. 617)
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(truthfulness in statements to others) and 8.4(c) (2013 Kan. Ct. R. Annot. 655) (engaging
in conduct involving misrepresentation).
Upon conclusion of the hearing, the panel arrived at the following findings of fact
and conclusions of law, together with its recommendation to this court:
"Findings of Fact
....
"5. The respondent represented BQI, LLC, the buyer in a real estate
transaction involving the Delaney House and Country Inn & Suites, Holyoke,
Massachusetts. Finance California, Inc. agreed to loan $3 million to BQI for the
purchase. Lorraine Halica with Lawyers Title Insurance Corporation served as the escrow
agent for the sale.
"6. On behalf of BQI, the respondent received loan transaction documents,
reflecting a $3 million transaction. The respondent prepared real estate transaction
documents to reflect a transaction price of $10.9 million, which included assumed debt
and balance of the purchase price. However, the actual price was $9 million.
"7. In a consulting agreement, BQI agreed to pay the seller $1.9 million for
services and that was included as part of the real estate transaction. However, the $1.9
million was not paid by BQI to the seller. The $1.9 million was a credit.
"8. During the preparation of the closing statement, the respondent directed
Ms. Halica to not disclose the consulting agreement on BQI's closing statement, pursuant
to BQI's instructions. Subsequently, during the disciplinary investigation, the respondent
stated:
'. . . Later, consistent with the agreement between Seller and Buyer, I
indicated to the escrow agent in anticipation of closing, the Seller's
counsel confirmed, that by virtue of the management
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agreement/consulting agreement, Seller would be deemed to have
received $1,900,000 of the purchase price through that agreement. At the
request of my client, I requested that the escrow agent not reflect on the
closing statement that $1,900,000 of the "amount due from Buyer" was
deemed paid by the management agreement/consulting agreement. I
advised my clients that they should not expect the escrow agent to agree
to that and that, notwithstanding the confidentiality direction, somehow
the lender would inevitably discover that Buyer had not delivered
$1,900,000 in cash to the closing, with resulting ramifications. I
indicated that, if asked, I would provide accurate copies of the
questionable documents to the requestor. Through the combination of
occurrences including the escrow agent's acquiescence to the request
about reflecting the credit on the closing statement and what may have
been the lack of diligence on the part of lender's counsel (there are
alternate explanations), the closing occurred as my clients wanted it to.'
Additionally, the respondent testified that he directed Ms. Halica to change the wording
of the closing statements from 'cash due' to 'amount due.'
"9. The respondent knew that Finance California required BQI to contribute
equity to the purchase. Regarding this issue, the United States District Court specifically
found:
'Both Ms. Halica's and Mr. Singer's testimony supported the conclusion
that Ms. Halica was the passive tortfeasor, and Mr. Singer the active one.
Ms. Halica testified that she did not know and had no reason to know
that showing a cash contribution rather than a credit on the Buyer's
closing statement was a material alteration; and that she "had no
knowledge that there was anything being hidden" from Finance
California. Ms. Halica also testified that if she had even an inkling that
the Consulting Agreement was illusory, or that she was being asked to
facilitate a fraud, she would have contacted her superiors and not gone
forward with the closing. Moreover, Mr. Singer testified that he was
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aware of Finance California's requirement that the Buyer contribute
equity to the purchase, and that his instructions to Ms. Halica were
motivated in part by a concern that Finance California would find out
about the Consulting Agreement. Mr. Singer admitted that he sent an
email to Ms. Halica that stated affirmatively that the information which
he had asked her to keep confidential "shouldn't matter" to the lender—
and would only matter to a lender that was "a vulture." It was
uncontroverted that Mr. Singer himself—who knew about Finance
California's equity requirement—communicated the misleading closing
statement to Finance California's representatives without telling Finance
California or its attorney about the credit. Mr. Singer's testimony clearly
demonstrated that he, rather than Ms. Halica, was in total control of the
situation, that he manipulated the situation for his client's benefit, and
that he purposely kept Ms. Halica in the dark. When Third-Party
Plaintiffs' counsel suggested that Mr. Singer "just kept leading [Ms.
Halica] on" and that Ms. Halica was "just marching along with [his]
instructions about how to show [the credit]," Mr. Singer admitted, "Well,
I guess that's true."'
Lawyers Title Ins. Corp. v. Singer, 792 F. Supp. 2d 306, 311-12 (2011) (citations to
record omitted).
"10. In the agreement, BQI had an option to terminate the consulting
agreement within the first 6 months for a termination fee of $95,000. BQI and the seller
agreed to that term.
"11. On August 9, 2002, the transaction closed. That same day, BQI
terminated the consulting agreement. After the consulting agreement was terminated, the
only equity that BQI contributed was a $50,000 initial deposit.
"12. Approximately 1 month after closing, Finance California, assigned the
mortgage to a third-party. Shortly thereafter, BQI defaulted on the loan and the senior
lienholders foreclosed on the mortgage.
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"13. BQI did not have sufficient equity to satisfy Finance California's
subordinate mortgage.
"14. Lawyers Title Insurance Corporation sued Finance California.
Additionally, Lawyers Title Insurance Corporation filed a third-party claim against the
respondent on a claim for indemnification. In the third-party claim, Lawyers Title
Insurance Corporation alleged fraud, breach of fiduciary duty, breach of the covenant of
good faith and fair dealing, breach of contract, and intentional breach of contract.
"15. Prior to trial, the court ordered all parties to attend mediation. The
respondent did not appear in person, but rather allowed his attorney to appear on his
behalf. All parties reached a settlement except for the respondent. The case against the
respondent proceeded to jury trial.
"16. On February 10, 2011, the jury returned its verdict. In returning its
verdict, the jury made a number of findings, detailed in its verdict form.
"17. Specifically, the jury found clear and convincing evidence that the
respondent made a false statement to Ms. Halica about an existing fact, or omitted to state
a material fact, while Ms. Halica was acting as escrow agent. The jury found clear and
convincing evidence that the respondent knowingly made the false statement or material
omission; or that the respondent made the statement or omission with reckless disregard
for the truth of the matter. The jury also found clear and convincing evidence that the
respondent made the statement or omission in order to induce Ms. Halica to act in
reliance on it. Additionally, the jury found clear and convincing evidence that Ms. Halica
did rely on the respondent's false statement or omission in the course of her duties as
escrow agent, and that this reliance was justified. The jury found a preponderance of
evidence that Finance California was injured by its reliance on the respondent's false
statement or omission. The jury further found, by a preponderance of evidence, that the
respondent's fraud—whether by false statement or omission—was the direct and
immediate cause of Finance California's injury. Also, the jury found by a preponderance
of evidence that the respondent was in control of the events that led to Finance
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California's injury. The jury found that by a preponderance of evidence that Finance
California did not know of the respondent's wrongful conduct, that it had no reason to
anticipate his wrongful conduct, and that it was reasonable for it to rely on the respondent
not to engage in the wrongful conduct. The jury also found by a preponderance of the
evidence that Lawyers Title Insurance Corporation and Ms. Halica were potentially liable
to Finance California for the claim of breach of fiduciary duty. The jury found by a
preponderance of the evidence that the settlement amount paid by Lawyers Title
Insurance Corporation and Ms. Halica ($1.7 million) was reasonable under the
circumstances. Finally, the jury found $1.7 million in damages.
"18. As a result of the jury's verdict, on February 11, 2011, the United States
District Court for the District of Connecticut entered a judgment against the respondent in
the amount of $1.7 million.
"19. The respondent filed a motion to set aside verdict and a corrected motion
to set aside verdict. On May 16, 2011, the United States District Court for the District of
Connecticut considered and denied the respondent's motion. In its opinion, the court
stated:
'The jury heard Mr. Singer testify that on three separate occasions, he
instructed or reminded Ms. Halica to take actions that served to conceal
the fact of the credit from Finance California. Mr. Singer admitted that as
an escrow agent, Ms. Halica had obligations to all the parties to the Loan
Transaction—including Mr. Singer's clients—and that it was part of her
duties to take instructions from Mr. Singer.'
Lawyers Title Ins. Corp. v. Singer, 792 F. Supp. 2d 306, 311 (2011) (citations to record
omitted).
"20. The respondent appealed from the judgment to the United States Court of
Appeals for the Second Circuit. On February 4, 2013, the Second Circuit Court of
Appeals affirmed the judgment, finding:
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'UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.
'Third-Party-Defendant-Appellant Mark Singer ("Singer")
appeals from the jury verdict, rendered February 10, 2011, finding in
favor of Third-Party-Plaintiffs-Appellees, Lorraine Halica ("Halica") and
Lawyers Title Insurance Co., and the district court's May 16, 2011, ruling
and order denying his Rule 50(b) and Rule 59 motions. We assume the
parties' familiarity with the underlying facts, the procedural history, and
the issues presented for review.
....
'The district court properly determined that Singer failed to
satisfy the high standards required to overturn a jury verdict. Quite
simply, the record contains ample evidence in support of Halica's
position advanced at trial that she was a passive tortfeasor deserving of
common law indemnification from the active tortfeasor, Singer, who
committed fraud. Halica testified that she had no knowledge that the
consulting agreement was illusory, and that she "had no knowledge that
there was anything being hidden" from Finance California ("Finance
California"). Singer, on the other hand, testified that he was aware of
Finance California's requirement that the buyer contribute cash at
closing, and that he nonetheless instructed Halica to keep confidential the
undisclosed "credit" provided by the buyer from the valueless consulting
agreement between the buyer and the seller. This direct testimony
permits a reasonable jury to conclude, based on the evidence of Singer's
fraud and manipulation of Halica and the charge given to the jury, that
Singer had the requisite control of the transaction sufficient to support
the jury's award of indemnification under Connecticut law.
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'We have considered all of Singer's other arguments and found
each of them to be without merit. Accordingly, the judgment of the
district court is hereby AFFIRMED.'
"Conclusions of Law
"21. Based upon the findings of fact, the hearing panel concludes as a matter
of law that the respondent violated KRPC 4.1(b) and KRPC 8.4(c), as detailed below.
"KRPC 4.1(b)
"22. Lawyers are required to be truthful in their statements to others.
'In the course of representing a client a lawyer shall not knowingly:
....
(b) fail to disclose a material fact to a third person
when disclosure is necessary to avoid assisting a
criminal or fraudulent act by a client, unless disclosure is
prohibited by or made discretionary under Rule 1.6.'
KRPC 4.1(b). In this case, the respondent failed to disclose a material fact to Ms. Halica
and the disclosure was necessary to avoid assisting his client, BQI, in a fraudulent act.
Thus, the hearing panel concludes that the respondent violated KRPC 4.1(b).
"KRPC 8.4(c)
"23. 'It is professional misconduct for a lawyer to . . . engage in conduct
involving dishonesty, fraud, deceit or misrepresentation.' KRPC 8.4(c). The respondent's
conduct in this case was dishonest, fraudulent, and deceitful. In order to avoid detection,
the respondent directed Ms. Halica [to] refrain from putting certain information in the
closing statement. Further, the respondent changed the language of 'cash' due to 'amount'
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due in the closing documents. The respondent's word-smithing is further evidence of his
fraudulent conduct. As such, the hearing panel concludes that the respondent violated
KRPC 8.4(c).
"American Bar Association
Standards for Imposing Lawyer Sanctions
"24. In making this recommendation for discipline, the hearing panel
considered the factors outlined by the American Bar Association in its Standards for
Imposing Lawyer Sanctions (hereinafter 'Standards'). Pursuant to Standard 3, the factors
to be considered are the duty violated, the lawyer's mental state, the potential or actual
injury caused by the lawyer's misconduct, and the existence of aggravating or mitigating
factors.
"25. Duty Violated. The respondent violated his duty to the public to
maintain his personal integrity.
"26. Mental State. The respondent intentionally violated his duty.
"27. Injury. As a result of the respondent's misconduct, the respondent caused
actual injury to the lender and to the title company.
"Aggravating and Mitigating Factors
"28. Aggravating circumstances are any considerations or factors that may
justify an increase in the degree of discipline to be imposed. In reaching its
recommendation for discipline, the hearing panel, in this case, found the following
aggravating factors present:
"29. Dishonest or Selfish Motive. The respondent's conduct was motivated by
dishonesty.
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"30. Substantial Experience in the Practice of Law. The Kansas Supreme
Court admitted the respondent to practice law in the State of Kansas in 1975. At the time
of the misconduct, the respondent had been practicing law for more than 25 years.
"31. Indifference to Making Restitution. To date, the respondent has not made
any payments toward restitution nor has he set aside any funds for the payment of
restitution.
"32. Mitigating circumstances are any considerations or factors that may
justify a reduction in the degree of discipline to be imposed. In reaching its
recommendation for discipline, the hearing panel, in this case, found the following
mitigating circumstances present:
"33. Absence of a Prior Disciplinary Record. The respondent has not
previously been disciplined.
"34. The Present and Past Attitude of the Attorney as Shown by the Attorney's
Cooperation During the Hearing and the Attorney's Full and Free Acknowledgment of
the Transgressions. The respondent entered into a written joint stipulation of facts.
"35. Previous Good Character and Reputation in the Community Including
Any Letters from Clients, Friends, and Lawyers in Support of the Character and General
Reputation of the Attorney. Ms. Kellee P. Dunn-Walters testified about the respondent's
good character and reputation.
"36. Imposition of Other Penalties or Sanctions. The court entered a
judgment against the respondent in the amount of $1.7 million.
"37. Remorse. At the hearing on the formal complaint, the respondent
appeared remorseful for having engaged in the misconduct.
"38. In addition to the above-cited factors, the hearing panel has thoroughly
examined and considered the following Standards:
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'5.11 Disbarment is generally appropriate when:
(a) a lawyer engages in serious criminal conduct a
necessary element of which includes
intentionally interference with the administration
of justice, false swearing, misrepresentation,
fraud, extortion, misappropriation, or theft; or
the sale, distribution or importation of controlled
substances; or the intentional killing of another;
or an attempt or conspiracy or solicitation of
another to commit any of these offenses;
(b) a lawyer engages in any other intentional
conduct involving dishonesty, fraud, deceit, or
misrepresentation that seriously adversely
reflects on the lawyer's fitness to practice.
'5.12 Suspension is generally appropriate when a lawyer knowingly
engages in criminal conduct which does not contain the elements
listed in Standard 5.11 and that seriously adversely reflects on
the lawyer's fitness to practice.
'5.13 Reprimand is generally appropriate when a lawyer knowingly
engages in any other conduct that involves dishonesty, fraud,
deceit, or misrepresentation and that adversely reflects on the
lawyer's fitness to practice law.
....
'7.2 Suspension is generally appropriate when a lawyer knowingly
engages in conduct that is a violation of a duty owed as a
professional and causes injury or potential injury to a client, the
public, or the legal system.'
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"Recommendation
"39. At the hearing on the formal complaint, the deputy disciplinary
administrator recommended that the respondent be suspended for a period of 1 year and
following the period of suspension, the deputy disciplinary administrator recommended
that the respondent's practice be supervised for a period of 2 years. The respondent
requested that he be granted probation and be subject to the terms and conditions of
probation set forth in his proposed probation and supervision plan.
"40. Kan. Sup. Ct. R. 211(g)(3) sets forth the requirements that must exist
before a hearing panel may recommend that a respondent be placed on probation:
'(3) The Hearing Panel shall not recommend that the Respondent be
placed on probation unless:
(i) the Respondent develops a workable, substantial, and
detailed plan of probation and provides a copy of the proposed
plan of probation to the Disciplinary Administrator and each
member of the Hearing Panel at least fourteen days prior to the
hearing on the Formal Complaint;
(ii) the Respondent puts the proposed plan of probation into
effect prior to the hearing on the Formal Complaint by
complying with each of the terms and conditions of the probation
plan;
(iii) the misconduct can be corrected by probation; and
(iv) placing the Respondent on probation is in the best
interests of the legal profession and the citizens of the State of
Kansas.'
Kan. Sup. Ct. R. 211(g).
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"41. While the respondent provided a substantial, detailed, and workable plan
of probation and the respondent implemented the plan of probation prior to the hearing on
the formal complaint, the misconduct in this case cannot be corrected by probation and it
is not in the best interests of the citizens of the State of Kansas to place the respondent on
probation in this case. Thus, the hearing panel concludes that probation is not appropriate
in this case.
"42. Engaging in conduct that involves dishonesty, fraud, and
misrepresentation is serious misconduct and calls for serious discipline. The hearing
panel studied the ABA Standards for Imposing Lawyer Sanctions and concluded that
Standard 5.11(b) appears to apply in this case. Standard 5.11(b) suggests that disbarment
is the appropriate discipline to impose. However, in this case, the respondent presented
compelling evidence of mitigating circumstances and based upon those mitigating
circumstances, the hearing panel concludes that a period of suspension is appropriate.
"43. The hearing panel turned to In re Rausch, 272 Kan. 308, 32 P.3d 1181(2001), for guidance. In that case, the respondent had been convicted of a misdemeanor
crime, deceptive business practices, and had a civil fraud judgment entered against him.
As a result of that misconduct, the Kansas Supreme Court entered an order suspending
Mr. Rausch for a period of 2 years.
"44. Based upon the similarities between the respondent's misconduct and Mr.
Rausch's misconduct, the hearing panel unanimously recommends that the respondent be
suspended from the practice of law for a period of 2 years.
"45. Further, because dishonest conduct cannot be corrected by probation, the
hearing panel concludes that a period of supervision following the period of suspension
would serve no purpose. Finally, the hearing panel recommends that, prior to applying for
reinstatement, the respondent make a good faith effort to obtain a satisfaction of
judgment.
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"46. Costs are assessed against the respondent in an amount to be certified by
the Office of the Disciplinary Administrator."
DISCUSSION
In a disciplinary proceeding, this court considers the evidence, the findings of the
disciplinary panel, and the arguments of the parties and determines whether violations of
KRPC exist and, if they do, the discipline that should be imposed. Attorney misconduct
must be established by clear and convincing evidence. In re Foster, 292 Kan. 940, 945,
258 P.3d 375 (2011); see Supreme Court Rule 211(f) (2013 Kan. Ct. R. Annot. 356).
Clear and convincing evidence is "'evidence that causes the factfinder to believe that "the
truth of the facts asserted is highly probable."'" In re Lober, 288 Kan. 498, 505, 204 P.3d
610 (2009) (quoting In re Dennis, 286 Kan. 708, 725, 188 P.3d 1 [2008]).
Respondent was given adequate notice of the formal complaint, to which he filed
an answer, and adequate notice of the hearing before the panel and the hearing before this
court.
The respondent filed exceptions and amended exceptions to the hearing panel's
final hearing report, but these did not challenge the basic factual findings or legal
conclusions of the panel. In addition, his brief to this court made no argument in support
of the exceptions to the findings of fact and conclusions of law. See In re Johanning, 292
Kan. 477, 486, 254 P.3d 545 (2011) (a respondent who does not advance arguments in a
brief to this court that support exceptions to the final hearing report is deemed to have
abandoned the exceptions). Its arguments and authorities were limited to the subject of
the discipline to be imposed.
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We adopt the findings of fact and conclusions of law of the hearing panel,
unamended by respondent's suggested additions in his exceptions and amended
exceptions. Clear and convincing evidence—among it, the parties' written joint
stipulation and the Connecticut jury verdict affirmed by the Second Circuit on appeal—
demonstrates that respondent violated KRPC 4.1(b) and 8.4(c).
Respondent sought a panel recommendation of supervised probation, and he
continues to seek that discipline before this court. The panel expressed an unwillingness
to recommend such a sanction because of the general rule that fraudulent behavior is not
amenable to correction by probation. We agree with this general rule, although there may
be particular situations in which it does not apply. This case does not present one of those
particular situations. Respondent's conduct here was deceitful; and we are not persuaded
by his counsel's or his own statements before this court that probation is an appropriate
response to that conduct. We agree with the panel's ultimate recommendation that a
period of suspension is necessary.
We therefore hold that respondent should be suspended from the practice of law in
Kansas for a period of 2 years from the filing of this opinion. He shall not be subject to a
reinstatement hearing under Supreme Court Rule 219 (2013 Kan. Ct. R. Annot. 407).
CONCLUSION AND DISCIPLINE
IT IS THEREFORE ORDERED that Mark R. Singer be suspended for 2 years from the
practice of law in the State of Kansas, effective on filing of this opinion, in accordance
with Supreme Court Rule 203(a)(2) (2013 Kan. Ct. R. Annot. 300).
IT IS FURTHER ORDERED that the respondent shall comply with Supreme Court
Rule 218 (2013 Kan. Ct. R. Annot. 406).
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IT IS FURTHER ORDERED that the costs of these proceedings be assessed to the
respondent and that this opinion be published in the official Kansas Reports.
MICHAEL J. MALONE, Senior Judge, assigned. 1
1
REPORTER'S NOTE: Senior Judge Malone was appointed to hear case No. 111,047
to fill the vacancy on the court created by the appointment of Justice Nancy Moritz to the
United States 10th Circuit Court of Appeals.
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