In re Hibner
73 A.D.3d 60, 897 N.Y.S.2d 489 (2010)
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Rule of Law:
An attorney commits professional misconduct by entering into a business transaction with a client that creates a conflict of interest, such as acquiring title to the client's home and then attempting to evict them, while concurrently representing the client in a separate legal matter. This conduct violates rules prohibiting attorneys from allowing their personal financial interests to affect their professional judgment and from entering into business transactions with clients without full disclosure and consent.
Facts:
- A married couple (the clients) were facing a foreclosure action on their home, which resulted in a judgment of foreclosure on March 6, 2002.
- On August 30, 2002, while the foreclosure was pending, Child Protective Services initiated a child neglect proceeding against the clients regarding their son.
- The clients retained attorney John R. Hibner to represent them in the child neglect proceeding.
- To prevent a foreclosure sale, on October 10, 2002, Hibner had the clients convey the deed to their home to him. The clients were not represented by independent counsel for this transaction.
- Hibner paid off the clients' mortgage of approximately $244,700, recorded the deed in his name, and became the clients' landlord.
- On January 17, 2003, while still representing the clients in the ongoing neglect proceeding, Hibner commenced a summary nonpayment proceeding to evict them for unpaid rent.
- Hibner obtained a warrant of eviction and scheduled the eviction with the Sheriff for April 3, 2003, the day after a final hearing in the clients' neglect case.
- The clients later sued Hibner to vacate the deed, and the matter was settled with Hibner reconveying the property to the clients after they paid him $350,000.
Procedural Posture:
- The Grievance Committee for the Tenth Judicial District served attorney John R. Hibner with a petition containing nine charges of professional misconduct.
- Following hearings, a Special Referee issued a report sustaining charges one through six but finding that charges seven through nine were not established.
- The Grievance Committee, as the petitioner, moved the Appellate Division court to confirm the Referee's findings on charges 1-6 and to disaffirm the findings on charges 7-9 (i.e., find Hibner guilty of all nine).
- The respondent, Hibner, filed a cross-motion asking the court to confirm the Referee's dismissal of charges 7-9 and to disaffirm the guilty findings on charges 2, 4, 5, and 6.
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Issue:
Does an attorney commit professional misconduct by acquiring title to a client's home to prevent foreclosure, thereby becoming their landlord, and then initiating eviction proceedings against them, all while continuing to represent the same clients in a pending child neglect case?
Opinions:
Majority - Per Curiam
Yes. An attorney commits professional misconduct under these circumstances. The court found that Hibner violated multiple rules of professional responsibility. First, he allowed his own financial and business interests as a landlord to affect his professional judgment on behalf of his clients, whose defense in a neglect proceeding depended on presenting a stable home environment (DR 5-101[a]). Second, he entered into a business transaction with clients who had differing interests without fully disclosing the terms in writing, advising them to seek independent counsel, or obtaining their written consent (DR 5-104[a]). Third, by seeking to evict them, he intentionally prejudiced his clients during the course of the professional relationship, undermining their defense in the neglect proceeding (DR 7-101[a][3]). Finally, the court found he engaged in dishonesty by filing a deed with a false notarization and later lying about it under oath to the Grievance Committee, which reflects adversely on his fitness as a lawyer (DR 1-102).
Analysis:
This case serves as a stark warning about the severe ethical dangers of an attorney entering into business transactions with a client. It reinforces the principle of undivided loyalty, demonstrating how an attorney's personal financial interests can create an irreconcilable conflict with their fiduciary duties. The court's decision to suspend the attorney for four years, despite his claim of altruistic motives, underscores the gravity of such conflicts, especially when they are compounded by acts of dishonesty. The ruling solidifies the precedent that an attorney's attempt to become a client's financial 'savior' cannot excuse subsequent actions where the attorney's self-interest prejudices the client's legal position.
