In the Matter of Kueker (Review Dept. 1991) 1 Cal. State Bar Ct. Rptr. 583
Expanded Facts
European American Bank mistakenly overpaid debtor Frank James Lucas by approximately $78,144.98. The Bank’s New York collection agent, Harold Adler, Inc., retained attorney Howard Kueker in California to recover the overpayment. On September 23, 1980, Lucas paid Kueker the full amount; that same day Kueker executed a release. Although Kueker had discussed litigation, the complaint was not actually filed until September 25, 1980, after the funds were already received.
Because suit was filed after recovery, the Review Department found Kueker was entitled only to a 15% pre-litigation fee, leaving the client’s share at $66,423.23. Rather than placing those funds in a client trust account and notifying the client, Kueker deposited the money to his general account, used substantial portions for office/personal expenses, and did not promptly deliver the client’s funds.
Over the next 18 months (Sept. 1980–Mar. 1982), Kueker sent Adler 11 letters falsely stating that Lucas was making sporadic “good-faith” payments or was late, thereby concealing that the entire sum had already been paid and misappropriated. Partial repayments totaling roughly $35,688.58 were later made through cash and offsets from other collection commissions, but a principal balance of about $30,764.65 remained. In 1984, a promissory note was signed; after the State Bar complaint, the Bank declined further payments. During a lengthy investigation, Kueker was not fully candid or cooperative, admitting the misconduct for the first time at the hearing years later.
Charges / Violations
- Misappropriation & deceit — Bus. & Prof. Code § 6106 (moral turpitude).
- Trust-account violations — former Rules 8-101(A) (no trust deposit), 8-101(B)(1) (no prompt notice), 8-101(B)(4) (no prompt delivery).
- Not sustained: §§ 6068(a), 6103.
Defenses / Arguments
Kueker challenged factual findings (including timing of suit) and urged lesser discipline, pointing to financial strain, family stress, and psychological factors. He also claimed bias below and argued restitution efforts/commissions should mitigate.
Mitigation
- No prior discipline over ~14 years of practice before the misconduct.
- Personal/psychological stress (marital difficulties; therapy with a marriage and family therapist) and expressed remorse.
The court found this mitigation insufficient: expert opined further treatment was needed; candor and cooperation were lacking; restitution was incomplete and largely tied to the concealment narrative.
Aggravation
- Large sum misappropriated: ~$66k (client share).
- Multiple acts over time: 11 deceitful communications across 18 months.
- Harm to client: prolonged deprivation of funds owed from an overpayment mistake.
- Lack of candor/cooperation during investigation; delayed admission.
Outcome
Applying Supreme Court precedent and the Standards (e.g., misappropriation ordinarily warrants disbarment absent the most compelling mitigation or an insignificant amount), the Review Department rejected the hearing referee’s recommended suspension and instead recommended disbarment. The opinion emphasized the gravity of the misappropriation, the extended deceit, incomplete restitution, and lack of extraordinary mitigation or completed rehabilitation. Compliance with then-Rule 955 (now Rule 9.20) was ordered upon effective date of the Supreme Court’s decision.
Sanctions Table
| Issue | Details |
|---|---|
| Rules/Statutes Violated | § 6106; former Rules 8-101(A), 8-101(B)(1), 8-101(B)(4) |
| Key Conduct | Misappropriation of ~$66,423; 11 deceitful letters; failure to notify/deliver; commingling |
| Aggravation | Multiple acts; large amount; harm to client; lack of candor |
| Mitigation | No prior discipline; personal stress; therapy — but insufficient and incomplete rehabilitation |
| Restitution | ~$35,688.58 paid (cash/offsets); ~\$30,764.65 principal outstanding |
| Sanction | Disbarment recommended; Rule 955/9.20 compliance |
| Tribunal | State Bar Court, Review Department (Stovitz, J.; Norian, J., conc.; Pearlman, P.J., diss.) |
Tags
Citation: In the Matter of Kueker (Review Dept. 1991) 1 Cal. State Bar Ct. Rptr. 583.