GENON G. HENSLEY V. KENTUCKY BAR ASSOCIATION
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TO BE PUBLISHED
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2007-SC-000149-KB
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MOVANT
GENON G . HENSLEY
V.
IN SUPREME COURT
KENTUCKY BAR ASSOCIATION
RESPONDENT
OPINION AND ORDER
Genon G . Hensley, whose Bar Roster Address is 11921 Berry Hill
Road ; Louisville, Kentucky 40243, and whose Kentucky Bar Association (KBA)
Member Number is 31273, filed a motion for consensual discipline in this Court,
under SCR 3.480 (2), asking that the Court suspend her from the practice of law
for sixty-one days, probated for two years, conditioned on no additional
disciplinary charges arising against her and her completion of ten hours of
remedial ethics education . The KBA filed its response to the motion, stating that
it had no objection to the motion and agreeing with the proposed discipline.
Hensley admits that she is guilty of violating the Rules of
Professional Conduct as set out in all three counts of the Charge in KBA File
No. 5938 and in the complaint in KBA File No. 12623. She acknowledges she
has agreed to the imposition of discipline and requests the Court to impose the
discipline as set forth in the preceding paragraph . In light of the serious nature of
the admitted misconduct, this Court rejected the parties' negotiated sanction and
remanded for further disciplinary proceedings by order, dated March 22, 2007.
Hensley has moved for reconsideration of our order .
We GRANT Hensley's motion to reconsider due to the unlikelihood
of a full and fair evidentiary hearing for Hensley as a result of the KBA's admitted
prolonged delay in prosecution, which has only now come to our attention by way
of the KBA's response to the motion for reconsideration . We also take note of
mitigating factors highlighted by the KBA: lack of other disciplinary history,
restoration of funds at issue to clients, full cooperation with the disciplinary
process, and understanding of the seriousness of the admitted misconduct .
We glean the underlying facts from the Motion for Suspension with
Conditions:
I. KBA FILE NO. 5938.
A. Background .
On November 13, 1995, Oranell Seward filed a complaint with the
KBA to which Hensley timely responded . On November 14, 1997, January 22,
1998, and May 6, 1998, counsel for the KBA requested that Hensley supply the
KBA with additional information bearing on the complaint. Hensley timely
responded to each of these requests and supplied all information sought by the
KBA . Hensley has fully cooperated with the KBA in this investigation .
On October 3, 1993, Seward's husband died. Hensley had been a
friend and colleague of Seward's husband, and Seward requested Hensley's
assistance in settling the estate . Later, Seward asked Hensley to draft a will, a
living will, a power of attorney, and to prepare her 1995 income tax returns .
These specific services are not the subject of any complaint . An attorney-client
relationship thus existed between Hensley and Seward from approximately 1993
through early 1995.
B. The TMG Investment Partnership.
During the time that an attorney-client relationship existed, Seward
sought Hensley's advice concerning investing a portion of the proceeds left to her
by her late husband. Hensley referred Seward to Susie Schaff of Cotton & Allen,
CPA, concerning mutual funds that would be appropriate for Seward, and
attended a meeting at Seward's request with Duane Regan, a financial advisor,
to review Seward's overall financial plan.
In December 1993, Hensley advised Seward of the potential for
investing in a real estate development known as "Pleasant Hill Properties, L.P.,"
in San Francisco, California . Hensley and Seward later formed an investment
partnership called TMG Investments . Relying on Hensley's assurance that the
real estate investment was appropriate for investing some of the monies Seward
had received from her late husband, Seward contributed $7,000.00 to the
partnership, which was paid by personal check to Hensley. Hensley did not
invest the entire $7,000.00 in the California venture . Instead, she invested
$5,000 .00 and placed the investment in her own name. The remaining
$2,000 .00 was not invested in the California real estate development project but
was invested in another stock portfolio . Hensley has supplied the KBA with
documentation concerning the existence and validity of the Pleasant Hill
Properties, L.P ., real estate development project .
C. Ms. Seward's Purchase of a Residence in Trimble County.
In 1993, Irene Long, an attorney and personal friend of Hensley,
died. Hensley was requested to handle the probate of Ms. Long's will, and, while
attorney of record for the Long estate, purchased, with the heir's approval, a
small office in Trimble County. Next door to the office was a residence also
owned by the Irene Long estate, which had been rented for $200.00 per month.
In December 1994, while Hensley was still counsel of record for
Long's estate, Hensley asked Seward if she would be interested in buying the
residence as investment property . Hensley failed to tell Seward that she was
representing the Long estate . Hensley stated that if Seward purchased the
property, that Hensley would lease the residence from Seward for $400.00 per
month . Hensley further advised Seward that the residence could be purchased
for $50,000.00.
Hensley failed to tell Seward that James F. Long, administrator of
the Long Estate, had estimated the property's value at $45,300.00 four months
earlier . And Seward _authorized Hensley to offer the Irene Long estate
$50,000.00 for the residence, and that offer was accepted. The property was
appraised eleven months later at $54,000.00.
Seward directed Hensley to obtain financing for the purchase of the
property. Instead, Hensley contacted Fidelity Investments, and without
disclosing that Hensley- held a power of attorney for Seward, directed Fidelity to
liquidate $50,000 .00 in mutual funds owned by Seward to raise funds for
purchasing the house. Hensley directed the Fidelity representative with whom
she spoke to send the proceeds directly to Seward at Seward's home address .
Instead of using the power of attorney that Hensley held for Steward, Hensley
represented herself to the Fidelity representative with whom she spoke as
Oranell Steward . Fidelity mailed the proceeds of the sale to Seward and they
were received by Seward .
Hensley handled all aspects of the real estate closing, including
preparation of the deed, which was dated December 30, 2004, even though
funds were not exchanged until after that date . Hensley was not paid by either
Seward or the Irene Long Estate for preparing the closing documents. Seward
had not seen the inside of the property at the time of the closing but visited
several weeks later with her new husband. Seward was shocked by its
condition . Seward later had the lot surveyed and found that Hensley's law office
encroached approximately two feet over the property line between the parcels .
This caused great concern for Seward, who later retained counsel
to pursue her concerns. Ultimately, Hensley settled with Seward for a total of
$86,000.00. Under the settlement agreement, Seward was reimbursed all
money she invested in the investment partnership ; all money she invested in the
house in Trimble County; interest on these investments ; her attorney's fees ; and
an additional $5,000 .00. The settlement was funded primarily by Hensley and
not her liability carrier .
Hensley admits she violated SCR 3.130-1 .8(a) in that she
suggested Seward purchase the real property in Trimble County, Kentucky, on
terms which appeared to benefit Hensley, while she was representing the Irene
Long Estate in the sale; and by entering into the "investment partnership" with
Seward, and failing to invest a portion of her client's money as directed by the
client .
Hensley acknowledges that she violated SCR 3.130-1 .7(a) and (b),
by representing both Seward and the Irene Long Estate in the sale and purchase
of the Trimble County real estate . The representation of both clients was directly
adverse, and Hensley did not inform Seward that she represented the Irene Long
Estate, nor did she obtain Seward's consent to represent the Irene Long Estate .
Furthermore, Hensley's representation of Seward in purchasing the real estate
was adverse to Hensley's interest in renting the property.
Hensley admits that she violated SCR 3.130-8 .3(c) by
misrepresenting and/or omitting relevant information to Seward in connection
with both transactions. She also admits violating this rule by failing to disclose
that her small office building extended onto the property that she suggested
Seward purchase, even though Hensley had not previously had a survey made
and was unaware that her office encroached on Seward's property ; securing
funds from Seward for an investment partnership to purchase stock in a real
estate development but only investing a portion of the funds thereof and in her
own name ; and representing herself as Seward in the sale of stock held
by Seward .
II. KBA FILE NO. 12623.
In KBA file 12623, the complainant hired Hensley to represent him
in a civil matter before the Henry Circuit Court . The complainant was a
defendant in the case. Essentially, the case was a property dispute between two
adjoining landowners brought to enforce deed restrictions that would not allow
the complainant to continue` his cattle business on his property or use a waterline
easement that crossed the adjoining property . Hensley began representing the
complainant in 1999 and continued representing him until March of 2004.
Hensley sold the building in which her practice was located and
moved from Bedford to LaGrange in April 2003. Hensley failed to take adequate
steps to notify complainant of her address change . She also failed to notify him
adequately of hearing dates, and she did not notify him of the entry of a summary
judgment until twenty days after entry. A charge has been authorized in this
matter.
Hensley admits violating SCR 3.130-1 .3, inasmuch as she did not
act with reasonable diligence and promptness in representing the client . She
also acknowledges a violation of SCR 3.130-1 .4(a) and (b) because she failed to
advise her client directly of the office location change, which severely reduced
communication with him.
Since we now accept the sanctions negotiated by the parties due to
the evidentiary problems posed by the KBA's delay in prosecution, Hensley's
motion for consensual discipline is GRANTED .
ACCORDINGLY, IT IS HEREBY ORDERED :
1)
Genon G . Hensley, KBA Member No. 31273, is hereby
suspended from the practice of law in the Commonwealth of Kentucky for a
period of sixty-one (61) days, with such suspension to be probated for a period of
two (2) years, conditioned on her not receiving any more disciplinary charges and
on her completion of ten (10) hours of remedial ethics education at her own
expense during the two year period following the date of this order;
2)
Hensley's completion of ten (10) hours of remedial ethics
education shall be separate and apart from her fulfillment of any other continuing
education requirement during the two (2) year period after the entry of the Court
order approving this consensual discipline. She will not apply for Continuing
Legal Education (CLE) credit for any of these remedial hours, even if the course
attended is approved for CLE in Kentucky. She must furnish a release and
waiver to the Office of Bar Counsel (OBC) to review her records in the CLE
Department that might otherwise be confidential, with such release to continue in
effect until one year after she completes her remedial education, in order to allow
the OBC to verify she has not reported any hours to the CLE Commission that
are being taken as remedial education ;
3)
The remedial ethics education must be satisfied by
Hensley's personal attendance at live continuing education or other education
programs approved or required by the OBC in advance and must be appropriate
for her remedial education regarding her ethical obligations to clients, third
parties, and the public;
4)
Hensley is not required to report this probated suspension to
her clients unless and until the Court imposes suspension for the period of sixtyone (61) days following her failure to comply with the above conditions;
5)
If Hensley fails to comply with any of these conditions, the
KBA may move the Court to impose sanctions for the period of sixty-one (61)
days. Should the Court impose the sixty-one (61) day suspension, Hensley
would then be required to report her suspension to her clients ; and
6)
In accordance with SCR 3.450, Hensley is directed to pay all
costs associated with these disciplinary proceedings in the amount of $48 .01 for
which execution may issue from this Court upon finality of this order.
All sitting . All concur.
ENTERED : May 24, 2007 .
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