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In re Breckenridge

Supreme Court of South Carolina

April 20, 2016

In the Matter of Robert Ryan Breckenridge, Respondent. Appellate Case No. 2015-000181

Heard June 2, 2015.

Lesley M. Coggiola, Disciplinary Counsel, and Barbara M. Seymour, Deputy Disciplinary Counsel, both of Columbia, for Office of Disciplinary Counsel.

Robert Ryan Breckenridge, of Greenville, pro se.


In this attorney disciplinary matter, the Office of Disciplinary Counsel (ODC) filed formal charges against Respondent, alleging that in a residential real estate transaction, Respondent failed to: properly supervise the disbursement of funds; maintain proper records; disclose to his clients the actual disbursement of their loan proceeds, including his sharing of legal fees with non-lawyer third parties; and ensure that the representations in the HUD-1 settlement statement (HUD-1 statement) matched the actual disbursements of loan proceeds. Following a hearing, the Hearing Panel of the Commission on Lawyer Conduct (the Panel) found that Respondent committed misconduct by violating Rules 1.5(b), 5.3, and 5.4 of the Rules of Professional Conduct (RPC), Rule 407, SCACR, and Rule 417, SCACR. The Panel recommended the following sanctions: public reprimand; assessment of the costs of the proceedings; and completion of the Legal Ethics and Practice Programs (LEAPP) Ethics School and Trust Account School. We agree with the Panel's recommendation, and impose the recommended sanctions. Additionally, for the benefit of the Bar, we take this opportunity to address an attorney's duty in supervising disbursements of loan proceeds in residential real estate transactions.

Facts/Procedural Background


At the time of the hearing before the Panel, Respondent's practice consisted of conducting residential real estate closings. According to Respondent, he worked as an independent contractor for Carolina Attorney Network, a management service located in Lexington and owned by a non-lawyer. Carolina Attorney Network provides its services to title companies, and coordinates the residential real estate closing process by contracting with attorneys who act as closing agents. Respondent testified that over 99.9% of his business comes from Carolina Attorney Network.

Vantage Point Title, Inc. is a non-lawyer-owned title company doing business out of Florida. According to Respondent, Vantage Point Title produces title insurance policies, disburses funds, and prepares the title commitments for closings. While the lender prepares loan documents, Vantage Point Title prepares the HUD-1 statement.

Vantage Point Title refers closings and sends closing packages to Carolina Attorney Network, which in turn, assigns closings to its contract attorneys, including Respondent.[1] Carolina Attorney Network then sends the assigned attorney the documents via e-mail prior to the closing. When Respondent is assigned a closing, he testified that he reviews the title opinion, the closing instructions, and the HUD-1 statement. Respondent does not, however, review the title commitment or verify the loan payoff amount. After Respondent conducts the closing, he returns the closing package containing the executed loan documents to Vantage Point Title, along with an authorization to disburse the funds.

Upon receipt of the executed loan documents, Vantage Point Title disburses the funds, files the satisfaction of the executed mortgage, files the new mortgage, and issues the title policy. Vantage Point Title then sends Respondent a disbursement log showing how the closing funds were disbursed.

Respondent testified that he reviewed disbursement logs to ensure that they were "zeroed out"-or in other words, that there was no balance or no negative number after the transaction is complete. According to Respondent, as long as he saw a "zero balance, " he "assumed" that everything had "been done correctly." He stated that even without verification that a deposit was made, or that checks actually cleared, he considered the disbursement log a "verification that [Vantage Point Title did] everything [it is] supposed to do . . . ."

Furthermore, Respondent testified that he had no first-hand knowledge of Vantage Point Title's disbursement process except for what was reflected on the disbursement logs he received, and that he had no signatory authority on any of the lender or Vantage Point Title's accounts. Vantage Point Title deposits closing funds into an account at Wells Fargo Bank, which includes closing funds for borrowers in all states. Therefore, Vantage Point Title does not place closing funds in an attorney trust account.

Finally, Respondent or an employee of Carolina Attorney Network verifies that the new mortgage has been recorded. Vantage Point Title pays Carolina Attorney Network $250 for the closing. Carolina Attorney Network then pays Respondent $150.

The Francis Closing

In June 2012, Respondent conducted a residential real estate closing for John and Dorothea Francis, who were refinancing their home mortgage. The Francises' lender contracted with Vantage Point Title, who referred their closing to Carolina Attorney Network. Carolina Attorney Network assigned the closing to Respondent.

When asked whether he had any recollection of the Francis closing, Respondent testified that he did not because he had conducted at least 5, 000 transactions in the past five years. He explained further that while he could not remember the specifics of the Francis closing, he could "tell you how pretty much every single one of my transactions occurs" because it is "a pretty repetitive process." Respondent then explained the closing process as follows.

Prior to the closing, Respondent received the title search results for the Francises' closing and verified that a South Carolina attorney completed the title opinion. Respondent also acknowledged that the HUD-1 statement "looked like it should have looked." Further, Respondent testified that he would have obtained the Francises' signatures on a dual representation disclosure form. However, Respondent neither disclosed to the Francises that he was splitting the attorney's fee with Carolina Attorney Network, nor did he disclose to them the details of the disbursement.

After Respondent returned the closing documents for the Francis closing to Vantage Point Title, he received and reviewed the disbursement log. Specifically, Respondent reviewed the disbursement log to ensure it showed a zero balance. However, despite the fact that the disbursement log showed a zero balance, the receipts and disbursements did not actually "zero out." The disbursement log showed a credit of $104, 907 and total debits of only $801.30, leaving what should have been calculated as a balance of $104, 105.30. As it turns out, the loan had been "net funded, "[2] and the lender did not disburse $104, 907 to Vantage Point Title to pay off the original mortgage. Therefore, in the Francis closing, the disbursement log was not accurate.

At the time of the closing, however, Respondent did not know the loan had been net funded. In fact, Respondent admitted that at the time of the closing, he did not know exactly how much money was going to be disbursed or to whom, because he was unaware that the lender was net funding the transaction.

Therefore, the lender paid Vantage Point Title $801.30[3] to fund the closing, $250 of which was attorney's fees paid to Carolina Attorney Network (who then paid Respondent $150).[4] In other words, the $801.30 amount is considered the "wire-in" money, because it was the only amount that the lender actually paid to Vantage Point Title in this case.

Respondent acknowledged that he did not verify that any checks involved in this closing cleared the bank. Indeed, two checks which caused insufficient funds in Vantage Point Title's trust account[5] involved with the Francis closing spurred the ODC ...

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