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Matter of Kernan

Decided: March 30, 1990.

IN THE MATTER OF STEPHEN P. KERNAN, AN ATTORNEY AT LAW


On an order to show cause why respondent should not be disbarred or otherwise disciplined.

For suspension -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None.

Per Curiam

[118 NJ Page 361] In this attorney-disciplinary case, respondent, Stephen P. Kernan, was charged with violations of the Rules of Professional Conduct (RPC) arising out of two matters, one involving his

own matrimonial action, the other relating to the disbursement of escrow funds. Following a determination by the District Ethics Committee (DEC), the Disciplinary Review Board (DRB) found that respondent had engaged in unethical conduct. In the matrimonial matter, this entailed respondent's failure to inform the court of the fact that he had transferred property that he had previously certified to the court as an asset. In the other matter, the ethics violation related to respondent's failure to pay the medical bill of a doctor from an escrow account established in connection with the settlement of a personal injury case on behalf of a client. By a five-two vote, the DRB recommended the suspension of respondent for three months; the dissenters would have given respondent a public reprimand.

I.

The facts comprising the charged conduct are relatively uncomplicated. Both incidents occurred in the Spring of 1987, although they appear to be otherwise unrelated.

A.

On April 10, 1987, respondent appeared pro se in court at a divorce settlement hearing in conjunction with a post-judgment application by respondent's ex-wife for support arrearages, distribution of property, and counsel fees. Four days before the hearing, on April 6th, respondent submitted to the court a case information sheet, which contained a list of his assets. Those assets included a computer, an automobile that was financed, and an 11.5 acre unimproved lot. However, one day before the hearing, respondent transferred to his mother, by quitclaim deed and for no consideration, the unimproved lot. According to his own testimony, he wanted to exclude this asset from the marital property that would otherwise be subject to a judgment for distribution in favor of his wife. At the time of the transfer, however, respondent informed neither the court, opposing counsel, nor his ex-wife. At the settlement conference

held immediately prior to the hearing itself, on April 10th, respondent failed to disclose the conveyance. Respondent also failed to amend the certification of assets that he had previously submitted to the court as part of the case information statement. Not until directly questioned by the court at the hearing did respondent reveal the fact that he had conveyed the property.

The DEC found that respondent had violated RPC 8.4(c) by conduct involving dishonesty, fraud, deceit, or misrepresentation, and RPC 8.4(d), by conduct prejudicial to the administration of justice. The DRB agreed that respondent's actions violated RPC 8.4(c) and (d). The DRB also found that respondent had ignored his duty of candor toward the court in violation of RPC 3.3(a)(1) and (5).

Respondent's conduct in this matter involved deceit and misrepresentation. However, it goes well beyond mere non-disclosure. The conveyance itself was purported fraud, a seemingly dishonest act and plainly destructive of the sound and proper administration of justice. In assessing this conduct, the DRB found that "[r]espondent blatantly attempted to defraud both the court and his wife. This serious misconduct directly undermined the administration of justice." Though respondent was acting pro se at the time, he was still a member of the bar and an officer of the court. "'The court has the right to rely upon the integrity of its officers. . . .'" In re Wolk, 82 N.J. 326, 330, 413 A.2d 317 (1980) (quoting In re Cahill, 66 N.J.L. 527, 530, 50 A. 119 (E. & A.1901)). Respondent explained his actions by claiming that he wanted to avoid a judgment against the property only in order to subdivide the property, enhance its value, and sell it at a greater profit, but that he did not want ultimately to cheat his ex-wife. This private motive, however, even if accepted, does not excuse conduct that was otherwise dishonest and deceitful. We agree with the DRB's conclusion that respondent's actions violated the prohibitions of RPC 8.4 against conduct that is dishonest, fraudulent or deceitful, or that is prejudicial to the administration of justice.

Additionally, respondent knowingly made a false certification. In re Kushner, 101 N.J. 397, 403, 502 A.2d 32 (1986). When respondent failed to amend the certification of his assets to disclose the transfer of the ownership of the 11.5 acre lot, he imperiled the ability of the court to determine the truth of the matter and reach a just result. If his actions were not calculated to cheat his ex-wife or, indeed, to commit a fraud on the court itself, there can be no legitimate reason for his failure to inform the court of his unilateral transfer of the property and his purpose to sell the property. The failure to disclose "material facts to the court," that can mislead the court was clearly in derogation of respondent's "obvious duty to be ...


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