Reprimand For “Sloppy And Careless” Bankruptcy Representation
The Massachusetts Board of Bar Overseers publicly reprimanded an attorney for incompetent handling of a bankruptcy matter that involved property jointly owned by divorced spouses.
The summary from the Board’s web page
On November 26, 2012, the respondent, on behalf of a debtor, filed a voluntary petition for relief under Chapter 13 of the bankruptcy code, together with schedules and a disclosure of attorney compensation. At the time he filed the petition, the respondent had experience representing debtors in simple bankruptcy matters but he had never previously filed a case where the debtor co-owned real property with a former spouse and he had never previously filed a motion to approve the sale of real estate. The respondent did not seek assistance from more experienced counsel.
Schedule A of the petition reflected that the debtor owned real estate subject to two mortgages. The debtor’s ex-wife also had an ownership interest in the property. Under the terms of a divorce agreement, the ex-wife was both a co-owner of the property and a creditor of the debtor. The respondent failed to identify the ex-wife as co-owner in Schedule H or list the ex-wife as a creditor in Schedules D, E or F, as required in the circumstances.
On May 14, 2015, the respondent filed a motion with the bankruptcy court to approve the sale of the property. The property was listed with a real estate brokerage firm that, at the time, employed the ex-wife as a salesperson in one of its offices. The firm waived any interest in any commission that would otherwise be due as a result of a sale. The motion did not comply with local procedural rules, as it failed to include an affidavit of “disinterestedness.” As a result, the motion was denied without prejudice.
The respondent refiled the motion on May 27, 2015, with an affidavit. The motion again failed to comply with local rules because the affidavit did not include certain required form language and did not attest that the signatory was a duly authorized agent of the firm. As a result, the motion was again denied without prejudice.
On June 29, 2015, the respondent filed an emergency motion to approve the sale of the property with a supporting affidavit, this time purporting to be signed under the pains and penalties of perjury by the owner of the firm. Before filing the June 29, 2015 motion and affidavit, the respondent had prepared the affidavit and provided it to his client to obtain the signature of the affiant. Later, the signed affidavit was delivered to the respondent’s office and slipped under his door. The respondent did not inquire of his client whether he had left the document under his door and did not confirm with the affiant that he had in fact signed the document. It is unknown who delivered or signed the affidavit, but the alleged affiant did not.
On May 7, 2015, after the bankruptcy petition had been filed, the debtor, with the assistance of the respondent, entered into a post-divorce “Agreement for Judgment” with his ex-wife in connection with an alleged child support arrearage. The respondent did not seek approval of the bankruptcy court before advising his client to enter into the agreement for judgment and did not otherwise contemporaneously disclose the agreement to the bankruptcy court, as required by 11 U.S.C., § 329(a).
As a result of the respondent’s lack of diligence, additional hearings were required, including a hearing as to the forged signature and proceedings for relief in connection with the probate court judgment dated May 7, 2015, at a cost to the estate. The respondent filed a motion to withdraw his appearance as counsel for the debtor on July 7, 2015, which was allowed on or about August 11, 2015. The debtor retained successor counsel.
On August 21, 2015, the court found that the errors by the respondent constituted legal work that was “sloppy and careless.” The respondent was ordered to, and did, disgorge the legal fees that were paid to him in the bankruptcy case. The respondent also disclosed all material information to the trustee and agreed to make the estate whole for any additional costs caused by the respondent.
(Mike Frisch)