The rules of procedure in Massachusetts bankruptcy court are clear; just as the rules of civil procedure are in state and federal courts: When you file a “complaint” to initiate a civil lawsuit in court, the rules require a “short and plain statement” regarding 1. Jurisdiction, 2. What is the “claim” and 3.What kind of relief is sought.
In our Massachusetts bankruptcy blog we have discussed bankruptcy sanctions. This article is about sanctions on an attorney.
In a proceeding in Bankruptcy Court, a Massachusetts bankruptcy attorney filed a complaint in a Boston Chapter 7 case called an adversary proceeding. That is, following a filing for bankruptcy protection to discharge the debts of his client, the attorney, on behalf of his client filed a lawsuit within, or on top of, the bankruptcy proceeding, for relief beyond and in addition to the discharge of consumer debts. In the case In Re: Koufos, Peter (USBC); (Chapter 7 Case No. 10-23579-JNF; Adv. P. No. 11-1185) (Oct. 21, 2011). The Complaint is an attempt to stop a foreclosure action by US Bank. However, instead of short and plain paragraphs which are clearly established by the rules, the attorney’s complaint resorted to “innuendo, invective, hearsay…with rhetorical questions [in a] hyperbolic attack” on the mortgage lending industry.
Unfortunately, in an attempt to point out the abuses of the mortgage lenders, the bankruptcy attorney got carried away with “ad hominem attacks and irrelevant and prejudicial” remarks in the complaint. Complaints should not be testimony and should never be replete with rhetorical questions such as: where did the debtor’s money go after the bank took the payments? In this case, the complaint has 161 paragraphs of information, which, I believe the Court found too much like a motion for summary judgment, in essence, arguing the case, and too little like the short and plain statement outlining the case.
Count one, which is a request for relief stating that the bank does not have standing to foreclose, has 40 more paragraphs of testimony like information along with argument. The second count is another “standing” type of count requesting declaratory judgment against the bank, and, while only 10 paragraphs, has opinions on what the law is and quotes from cases. Again, it seems like a summary judgment legal argument rather than a Complaint under the rules. Count three is a RICO count, which, again, quotes case law, incorporates federal statues and argues the case.
Count four is a Massachusetts 93A, however, fails to state that a 93A Demand letter was sent, which is a requirement by the law. It does argue why it was not necessary. Count five argues a civil conspiracy, citing federal and Massachusetts case law. Count six is a brief Unjust Enrichment count. Count seven is, or should be, paired with the 93A count, regarding violation of Massachusetts Chapter 140. Count seven seeks to rescind the mortgage. Count eight, ironically plead as one count but really is two counts, requesting intentional inflection of emotional distress and negligent infliction of emotional distress. As a Massachusetts personal injury lawyer, I would suggest pleading this as two counts because they require proving different elements.
In any event, the 310 paragraph, 45 page Complaint with exhibits totaling 673 pages, was too much for the Court to ignore. The defendant bank followed the rule by notifying the attorney ahead of time, giving him the opportunity to withdraw or amend the Complaint. The Massachusetts bankruptcy court and Judge Feeney perhaps went easy on the attorney, considering the possibilities. The Court cited Federal Rules of Bankruptcy Procedure 9011, essentially saying that the attorney failed to make an “adequate inquiry” on statements before filing the claim. The Complaint is “anything but ‘a short and plain statement of a claim showing that the pleader is entitled to relief.'” The Court ordered Rule 11 sanctions of $1,000.00 to be paid, not to the Court, but to a non-profit legal organization that benefits consumers. The Court didn’t give us a vote, but we would advocate that the sanction be paid to the National Lawyers Guild, where I am on the Board of the Lawyer Referral Service.