In re Burke

281 B.R. 367, 2001 Bankr. LEXIS 2014, 2001 WL 1913127
CourtUnited States Bankruptcy Court, S.D. Alabama
DecidedAugust 8, 2001
DocketNo. 01-11253
StatusPublished
Cited by1 cases

This text of 281 B.R. 367 (In re Burke) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Burke, 281 B.R. 367, 2001 Bankr. LEXIS 2014, 2001 WL 1913127 (Ala. 2001).

Opinion

[369]*369ORDER DENYING MOTION FOR SANCTIONS AGAINST DEBTOR AND COUNSEL

MARGARET A. MAHONEY, Chief Judge.

This case is before the Court on the motion of Donald R. Seymore, a creditor, for sanctions against the debtor and his counsel. The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Order of Reference of the District Court. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2) and the Court has the authority to enter a final order.

FACTS

Julian Burke has been in three bankruptcy cases since May 23, 2000-a chapter 13, a chapter 11 and a chapter 7 case. The chapter 13 and 11 cases were filed and dismissed as follows:

Chapter 13 Case No. 00-12008-MAM-13

Filed May 23, 2000

Dismissed August 18, 2000

Chapter 11 Case No. 00-13373-WSS-ll

Filed August 25, 2000

Dismissed March 2, 2001

The chapter 7 case is still pending:

Chapter 7 Case No. 01-11253-MAM-7

Filed March 14, 2001

Pending

Mr. Burke retained Michael B. Smith as his counsel in the chapter 11 and 7 cases. At filing of his chapter 11 case, one form filed was the “Disclosure of Compensation of Attorney for Debtor” certified by Michael Smith on August 14, 2001.

It stated that Mr. Smith had received prior to the signing of the statement $1,200 from the debtor. The form stated that “[t]he source of the compensation paid to me was ... Debtor.” On October 30, 2000, Julian Burke amended his Statement of Affairs, at question 9, to show Michael Smith was paid $500 on August 1, 2000 and $750 on August 18, 2000 or a total of $1,250. The answer also disclosed that “$3,400.00 remains in Trust Account.”

At the first meeting of creditors on January 9, 2001, Mr. Seymore asked Mr. Smith about his fees.

MR. SEYMORE: Three months into our bankruptcy proceeding here—
MR. SMITH: Uh-huh.
MR. SEYMORE: — you listed your fees as $1,200 plus $800 for his filing and signed statements. So money received from Julian Burke.
MR. SMITH: Uh-huh.
MR. SEYMORE: Three months later you come up with thirty-four hundred dollars in the trust fund account. Where did that come from:
MR. SMITH: The amount listed was a total of $5,000. Out of that, we had to pay the court $830.00.
MR. SEYMORE: Uh-huh.
MR. SMITH: I had done about seven or eight hundred dollars worth of work before this was filed. So I paid myself that. The balance that’s listed on the schedules is what’s in the trust account.
MR. SEYMORE: Well, the original that I was looking at listed you showing as $800.00 filing fee.
MR. BEDSOLE: Oh, he had—
MR. SEYMORE: Twelve hundred and something retaining you. And three months later, here comes this thirty-four hundred dollars in a trust account that you missed on your amended schedule.
MR. SMITH: You’ll have to show me what you’re talking about so I can explain it to you.
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[370]*370MR. SMITH: At the very beginning of me representing Mr. Burke, he paid me $500 to get all his stuff together. Then we finally determined that he needed — that we got the injunction from the Chapter 13 listed and got the Court’s permission to actually file a Chapter 11. So we did the — we did the work, the groundwork for getting all the stuff together for the Chapter 11. So that would have been the $700. So those two totals would have been twelve — that would have been the twelve hundred dollars that I listed that he had previously paid me that we put on the original aspect of it. The remainder of the money that he— The remainder of the $5,000, the difference between the — if you subtract out the eight hundred dollar filing fee — Was it eight thirty?
MR. SEYMORE: I believe it is eight thirty.
MR. SMITH: Subtract out the eight thirty and the seven hundred or seven fifty that — from that, yields whatever I’ve got down—
MR. BEDSOLE: That’s the prepetition work was seven fifty?
MR. SMITH: Plus five.
MR. BEDSOLE: Five hundred?
MR. SMITH: He originally came to see me. He gave me — paid me five hundred dollars.
MR. BEDSOLE: Yep.
MR. SMITH: That was when the Chapter 13 had been^ — •
MR. BEDSOLE: I see the twelve hundred in here right at the beginning. Okay.
MR. SMITH: Then he paid me a total of $5,000, of which I paid myself $700.00 for doing all the work for the Chapter 11 before it was filed. And then out of that we took the $830.00 filing fee, and that leaves the balance of whatever it says on — it said on the petition, three thousand, thirty-two hundred.
MR. BEDSOLE: Has he paid you a total of $5,000?
MR. SMITH: $5,000 plus $500.
MR. BEDSOLE: Plus $500. Okay. So he’s paid you fifty-five hundred dollars?
MR. SMITH: I’ve only received twelve hundred.
MR. BEDSOLE: All right.
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MR. SEYMORE: Well, the only question I had is why it was three months after the original filing it appears.
MR. SMITH: Probably because I realized we hadn’t put it in there and it needed to be in there.

The chapter 11 case was dismissed on March 2, 2001. On March 5, 2001, Mr. Smith removed the $3,400 from the trust account and paid his outstanding postpetition bill and used the rest of it to pay Mr. Burke’s chapter 7 filing fee.

In the “Disclosure of Compensation of Attorney for Debtor” filed on March 14, 2001 in the Chapter 7 case, Mr. Smith disclosed that he had been paid no funds and had agreed to accept no fees for the case. Mr. Seymore has filed a motion for sanctions alleging that the first disclosure in the chapter 11 was wrong and Mr. Burke fraudulently and intentionally concealed assets, particularly because, as asserted by Mr. Seymore, Julian Burke shows only $100 in cash on his schedules and negative cash flow. He asserts that Michael Smith did not originally list a $3,400 trust account and at the first meeting of creditors indicated he had been paid only $1,200. Also Mr. Seymore alleges that the trust account was not disclosed in the chapter 7 case when filed and Mr. [371]*371Smith never filed any request for approval of fees from the Court.

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Cite This Page — Counsel Stack

Bluebook (online)
281 B.R. 367, 2001 Bankr. LEXIS 2014, 2001 WL 1913127, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-burke-alsb-2001.