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Ligon v. Bennett

Supreme Court of Arkansas

April 26, 2018



          Charlene A. Fleetwood, Arkansas Supreme Court Office of Professional Conduct, for petitioner.

          Bruce Jamison Bennett, pro se respondent.

          ROBIN F. WYNNE, Associate Justice

         This is an original action under the Arkansas Supreme Court Procedures Regulating Professional Conduct. Stark Ligon, as executive director of the Arkansas Supreme Court Committee on Professional Conduct (Committee), seeks the disbarment of Bruce Jamison Bennett, an attorney licensed to practice law in the State of Arkansas. This court's jurisdiction lies pursuant to Arkansas Supreme Court Procedures Regulating Professional Conduct section 13(A).

         In a ballot vote held on November 18, 2011, Panel A of the Committee unanimously found that Bennett had committed numerous violations of the rules governing the conduct of attorneys licensed to practice in Arkansas. The panel voted to initiate disbarment proceedings and to impose an interim suspension of Bennett's license to practice law. An order of interim suspension suspending Bennett's license during the pendency of the disbarment proceedings was entered on December 1, 2011. Ligon filed a complaint for disbarment on December 15, 2011. In a per curiam opinion issued on March 8, 2012, this court appointed the Honorable John Cole as special judge to preside over the disbarment proceedings. Ligon v. Bennett, 2012 Ark. 111.

         The complaint for disbarment and the testimony at the trial centered on Bennett's representation of Darrell Cavanagh. The pertinent facts can be summarized as follows. Bennett operated a law firm in Bentonville that handled primarily criminal and domestic-relations matters. Cavanagh inherited a sum of money from his grandparents who resided in California. Cavanagh, who testified at trial that he is dyslexic and has a history of drug use, approached Bennett for assistance with the inheritance. Cavanagh expressed to Bennett an interest in investing his share of the money from the estate so that he would not spend it quickly. On January 22, 2003, Bennett and Cavanagh entered into an agreement under which Bennett would assist Cavanagh in "the remaining distribution of the estate of Thomas Cavanagh and Marguerite Cavanagh." In return, Bennett was to receive ten percent of all distributions from the estate issued to Cavanagh from the date of the agreement. Bennett was also to receive a 10 percent fee on all sums made or earned by Cavanagh from the investment of distributions received by Cavanagh.

         In February 2003, Bennett drafted and Cavanagh signed an authorization permitting Wells Fargo, the bank holding the estate funds, to transfer Cavanagh's funds into Bennett's IOLTA trust account. The following distributions were placed into Bennett's IOLTA account: $809, 322.63 in April 2003; $100, 000 in September 2003; $1, 096.96 in October 2003; and $32, 500 in November 2003. Bennett admitted that, throughout this period, he commingled client funds and other funds in his IOLTA account and wrote checks for personal and firm expenses out of the IOLTA account.

         After Cavanagh expressed an interest in investing his money, Bennett introduced him to Ricky Hancock. Hancock and Bennett had played in a band together, and Bennett had represented Hancock in various legal matters. In April 2003, a corporation known as Hancock Holding Company, LLC, was formed. Ricky Hancock had a 60 percent ownership stake in Hancock Holding, with Cavanagh owning the remaining 40 percent. On April 11, 2003, Bennett prepared forms to create the Darrell Cavanagh Trust. Bennett utilized blank forms provided by Brad Lushbaugh, who represented Hancock in the loan negotiations. Bennett also drafted forms that granted him a springing durable power of attorney for financial purposes only, which were executed by Cavanagh on April 11, 2003.

         On April 12, 2003, Hancock Holdings borrowed $745, 000 from the Darrell Cavanagh Trust. Under the terms of the promissory note executed by Cavanagh and Ricky Hancock, the money was loaned at an interest rate of 2 percent per annum, with Hancock Holdings agreeing to pay the entire unpaid balance plus accrued and unpaid interest on or before May 1, 2013. Prior to that date, Hancock Holdings was required to pay accrued interest on a monthly basis. No monthly principal payment amount was listed. The loan was unsecured. A subsequent promissory note, executed on April 15, 2003, granted Hancock Holdings the unilateral right to extend the loan balance repayment date to April 15, 2023, with Hancock Holdings being responsible for interest-only payments prior to that date. The other material provisions of the original note remained unchanged.

         Cavanagh testified at trial that he did not authorize any additional loans to Hancock Holdings. On February 25, 2005, Ricky Hancock executed a promissory note in which he agreed to pay Cavanagh $225, 000 in exchange for Cavanagh's interest in Hancock Holdings. Cavanagh testified that he was not told that the payment was for the sale of his interest in the company. On May 2, 2005, Bennett wrote a $100, 000 check out of his IOLTA account to Hancock Holdings. Bennett does not dispute that the funds were derived from Cavanagh's inheritance. According to Hancock's testimony, he obtained the additional funds by calling Bennett and telling Bennett that he needed money. Hancock Holdings subsequently dissolved, and Ricky Hancock declared bankruptcy. It is unclear how much of the loans were repaid, but the testimony makes it clear that a substantial portion of the loaned sums were not repaid. Cavanagh filed suit against Bennett, Hancock, and Hancock Holdings over the loans and failed venture. Cavanagh settled with Bennett for $17, 000, which Cavanagh testified he received. Cavanagh obtained a $211, 296.42 judgment against Hancock regarding the February 25, 2005 promissory note. Cavanagh's separate settlement with Hancock and Hancock Holdings required Hancock to make the mortgage payments on a home in Rogers. According to Hancock's testimony, that obligation was discharged in his subsequent bankruptcy. Hancock failed to make the payments, and Cavanagh lost the home in foreclosure.

         Cavanagh had a child-support obligation that preexisted his dealings with Bennett and continued throughout Bennett's representation of him. Cavanagh testified that he instructed Bennett to pay an existing arrearage and his ongoing obligation. Bennett countered that he was not aware of the obligation for some time and that Cavanagh did not instruct him to make child-support payments. The record contains child-support payment notices from Idaho and Arkansas that were addressed to Cavanagh and sent to Bennett's firm. Cavanagh testified that when he went to Idaho in early 2006 to visit his two children by a previous marriage, their mother informed him that she had not received support payments for some time. The failure to make payments resulted in a contempt sanction and body attachment that were resolved without assistance from Bennett. According to Mindy Cavanagh, Darrell Cavanagh's former spouse, the arrearage also negatively affected Darrell's credit. On April 13, 2006, Cavanagh wrote Bennett a letter in which he instructed Cavanagh to pay the child-support arrearage. In the letter, Cavanagh states that he had instructed Bennett on "numerous occasions" to pay his child support.

         On May 16, 2006, Cavanagh terminated Bennett's representation via letter. In the letter, Cavanagh requested an accounting, a return of his money, and his files. According to Cavanagh, Bennett never returned any money and failed to return all of Cavanagh's files.

         On March 16, 2016, the special judge issued findings of fact and conclusions of law in which he found that Bennett had committed violations of Rules 1.1, 1.2(a), 1.4(a)(1), 1.4(a)(3), 1.4(b), 1.5(a), 1.7(b), 1.15, 1.15(a)(1), 1.15(b)(1), 1.15(b)(3), 1.16(d), 3.3(a)(1), 3.3(a)(3), 8.4(b), and 8.4(c) of the Model/Arkansas Rules of Professional Conduct.[1]Following a separate hearing on the issue of the sanction to be imposed, the special judge determined that the appropriate sanction to be imposed is disbarment. Bennett has filed a brief with this court in which he contends that the special judge erred in finding that he had committed violations of the Model/Arkansas Rules of Professional Conduct.

         In attorney-discipline proceedings, this court accepts the special judge's findings of fact unless they are clearly erroneous. Ligon v. Price, 360 Ark. 98, 200 S.W.3d 417 (2004). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Ligon v. Newman, 365 Ark. 510, 516, 231 S.W.3d 662, 667 (2006). The court must view the evidence in a light most favorable to the decision of the special judge, resolving all inferences in favor of his or her findings of fact. Id. Disputed facts and determinations of the credibility of witnesses are within the province of the fact-finder. Id. The purpose of disciplinary actions is to protect the public and the administration of justice from lawyers who have not discharged their professional duties to clients, the public, the legal system, and the legal profession. Id.

         Model Rule of Professional Conduct 1.1 required Bennett to provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation. The special judge found that Bennett's conduct violated Rule 1.1, but he did not specify which conduct he believed violated the rule. Bennett's conduct in advising his client to enter into an unsecured loan at 2 percent interest with no monthly principal payments required and a possible twenty-year repayment date violates Rule 1.1. The same is true for Bennett's failure to pay Cavanagh's child-support obligation. We accept the special judge's finding that Bennett violated Rule 1.1.

         Model Rule 1.2(a) required Bennett to abide by Cavanagh's decisions regarding the objectives of representation and consult with Cavanagh as to the means by which they were to be pursued. Cavanagh testified that he never authorized any loan to Hancock Holdings beyond the initial $745, 000 sum. He also testified that he instructed Bennett to pay his child-support arrearage and ongoing obligation, which Bennett failed to do, even though the payment coupons were being sent to Bennett's firm. Bennett contended at trial that he gave the additional money to Hancock to hold for Cavanagh because he no longer felt comfortable having it in his IOLTA account. Hancock's testimony does not support that contention. Bennett also contended that he was never instructed to pay Bennett's child- support obligations and proffered evidence that, he argued, demonstrated that Cavanagh was unconcerned with the obligation. The special judge found that Bennett's conduct in investing additional funds after Cavanagh expressly told him not to do so and Bennett's failure to pay the child support arrearage and obligation violated Rule 1.2(a). Given the conflicting testimony, this issue comes down to credibility, and the special judge, who was present during the testimony, credited the testimony of Cavanagh and Hancock over Bennett. We accept this finding.

         Arkansas Rule of Professional Conduct 1.4(a)(1) required Bennett to promptly inform Cavanagh of any decision or circumstance with respect to which Cavanagh's informed consent was required. The special judge found that Bennett had failed to get his client's consent before making additional loans. Bennett disputes the contention that unauthorized loans were made, but this is also a credibility issue that was resolved against Bennett by the special judge. We accept this finding.

         Model Rule 1.4(a)(3) and Arkansas Rule 1.4(a)(3) both required Bennett to keep Cavanagh reasonably informed about the status of the matter. The special judge found that Bennett had violated these rules by failing to pay Cavanagh's child-support obligation, which resulted in either the issuance or near-issuance of a body attachment that had to be resolved with assistance from another attorney. Bennett was clearly aware of the child-support obligation, by virtue of the payment coupons being ...

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