Inquiry Comm'n v. Kenniston

Citation: 552 S.W.3d 73Docket: 2018-SC-000230-KB

Court: Missouri Court of Appeals; August 16, 2018; Missouri; State Appellate Court

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The Inquiry Commission petitions for the temporary suspension of Richard Graham Kenniston from practicing law based on violations of professional conduct. Kenniston, a Kentucky attorney with KBA number 90572, filed a Chapter 13 Bankruptcy Petition for Shannon Denney (now Griffin) on September 30, 2015. After her debtor's plan was confirmed on January 6, 2016, Griffin issued a check for $3,425.52 for her bankruptcy payoff fee, which Kenniston deposited into his bank account on October 31, 2017. He also deposited a $250.00 check from Griffin’s husband at that time. Subsequently, Kenniston withdrew $3,000.00 from his account and transferred $2,700.00 in cash to his personal savings account, leaving insufficient funds to cover Griffin's payoff check.

Kenniston failed to remit the funds to the bankruptcy trustee, leading to a Motion for Sanctions filed by Chapter 13 Standing Trustee Beverly Burden on January 11, 2018. He did not respond or appear at the hearing, resulting in a court order requiring him to turn over the funds and provide an accounting. Although he filed an affidavit claiming to have sent the funds on February 2, 2018, he failed to provide necessary records. His late response to the motion and failure to file for a continuance in a timely manner further compounded his noncompliance. At the February 22, 2018, hearing, Kenniston admitted to misappropriating the funds for personal use and cited embarrassment and overextension as reasons for his inaction.

Kenniston was granted a continuance to obtain legal counsel but failed to appear on the rescheduled date of April 10, 2018. Subsequently, the Bankruptcy Court suspended him from practice and held him in contempt for intentionally misappropriating client funds. The court noted his history of procedural deficiencies in other cases, including a previous order placing him on probation and requiring him to refund legal fees, which he disregarded by filing a new bankruptcy case for another client despite prior deficiencies.

Kenniston was ordered to demonstrate why additional sanctions were necessary and to confirm he had informed Ball of his obligations under an August 2017 order and sought replacement counsel. Failing to comply, Kenniston later acknowledged his improper actions and agreed that sanctions were warranted. He was ordered to find replacement counsel for all bankruptcy clients and received a six-month suspension from practicing in the Bankruptcy Court. Despite being on probation, he accepted money from Ball to file a second bankruptcy case, further violating the order.

The Inquiry Commission found probable cause suggesting Kenniston misappropriated client funds, posing a substantial threat to clients and the public. Consequently, the Court ordered the temporary suspension of Kenniston's legal practice in Kentucky, effective immediately, and imposed restrictions on his handling of client funds. Specifically, the order prevents any bank from processing withdrawals from Kenniston's accounts except under court-approved conditions. The Inquiry Commission is also authorized to seek the appointment of a trustee to manage Kenniston's accounts and to impose further restrictions.

Previously, Kenniston had been indefinitely suspended from practicing law due to failure to respond to charges from the Kentucky Bar Association (KBA). The applicable regulations allow temporary suspension if probable cause exists regarding misappropriation of client funds. Kenniston's bankruptcy history includes a dismissed Chapter 13 case in September 2017 due to non-payment and a second Chapter 13 case converted to Chapter 7, which was also dismissed in February 2018 for failure to pay filing fees.

Kenniston maintains both a business account and a personal savings account at Park Community Credit Union. During a Bankruptcy Court hearing on February 22, 2018, he confirmed these accounts serve distinct purposes. He acknowledged the absence of an escrow account, which is a requirement under the Kentucky Rules of Professional Conduct. The bankruptcy trustee, Griffin, noted that Kenniston traveled abroad shortly after engaging with the Payoff Funds; however, Kenniston contested the claim that these funds financed his trip, asserting that his mother covered the expenses. The Bankruptcy Court identified several procedural issues in the case, including improper service, inadequate notice to involved parties, and Kenniston's failure to appear for his motion to continue the hearing. Additionally, the April 2012 contempt order related to Griffin highlighted multiple motions for sanctions filed by the United States Trustee against Kenniston across ten other cases, along with an eleventh client complaint regarding unfulfilled bankruptcy filing promises. Kenniston has not yet had a chance to respond to these new allegations, which were excluded from the contempt findings and sanctions in Griffin's case.