False Statements in Massachusetts Bankruptcy Court
A simple Massachusetts Chapter 7 bankruptcy went amuck recently when an attorney failed to follow the proper procedures in electronic filing.
According to a decision handed down by Judge Hillman last month, In Re: Stallworth (Chapter 7 Case No. 04-017-12) and published recently, Attorney Curtis was a “registered user” of the federal comprehensive electronic case management system (CM/ECF). She was, unfortunately, not too familiar, as she had only filed three total cases, two for Stallworth, and one other
Apparently Attorney Curtis filed a bankruptcy petition on behalf of Stallworth in September. Often, attorneys file a petition without schedules and other documents: filing an incomplete petition is usually to stop a court action in another court, a foreclosure, for example. And the attorney follows up with the rest of the documents. In fact, in this case, the Court (automatically) responded requesting the missing documents, including the social security number page, the statistical matrix, and the Credit Counseling Certificate. The attorney did not comply and the bankruptcy was dismissed by the Court.
Unfortunately, the attorney then tried to file a motion to vacate the dismissal via email, rather than by filing on the CM/ECF system. Notwithstanding the fact that she was instructed to file via the CM/ECF system, she simply refilled the Chapter 7 Petition…but she misspelled the client’s name and filed it with woefully insufficient information; essentially she filed a blank petition.
Because of the inadequate and duplicative filings, the United States Trustee filed a motion to disgorge (return) attorney fees. That motion included a reference to another case in which Attorney Curtis had neglected to file properly with the Bankruptcy Court, under similar circumstances. Wherefore, the Court issued a Massachusetts Order to Show Cause why her electronic filing privileges should not be suspended. At the time of that hearing, Attorney Curtis made “three conflicting accounts” to the Court regarding the filing of the bankruptcy documents. After several hearings, and misrepresentations, the Court suspended the attorney’s CM/ECF provledges because she “repeated and/or egregiously failed to comply” with Court procedures. The Court also reported a memorandum regarding the matter to the United States District for disciplinary proceedings.
Further, the Court noted that the Massachusetts Rules of Professional Conduct, Rule 3.3 requires that a lawyer may not “make a false statement of material fact” to a Court. The Court here found that Attorney Curtis “repeatedly made false statements of material fact” with regard to the filing of the debtor’s Chapter 7 schedules. The Court also found that the misrepresentations regarding informing the client of the second bankruptcy filing were in violation of Massachusetts Rules of Professional Conduct, Rule 1.4(a) http://www.mass.gov/obcbbo/rpc1.htm in that she failed to keep her client “reasonably informed” of the status of the case. Is this a case of Massachusetts legal malpractice? Perhaps, but are there damages to the client? We cannot tell from the Court’s written decision.
The lesson to attorneys here may be foreshadowed in the Court’s description of the “background” of the case: “The following is a cautionary tale of what occurs when the uninitiated attempt to practice [law] before the bankruptcy court without a firm grasp” of the rules of court and Massachusetts bankruptcy law.
The lesson to Massachusetts bankruptcy clients is that hiring an experienced bankruptcy attorney is critical.