In re Rice

521 B.R. 405, 2014 WL 5801535
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedOctober 30, 2014
DocketNo. 14-58002-MHM
StatusPublished

This text of 521 B.R. 405 (In re Rice) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Rice, 521 B.R. 405, 2014 WL 5801535 (Ga. 2014).

Opinion

ORDER ON MOTION TO DISMISS

MARGARET H. MURPHY, Bankruptcy Judge.

This case is before the court on an Objection to Confirmation and Motion to Dismiss filed by the Chapter 13 Trustee (“Trustee”) June 10, 2014 (Doc. No. 36, supplemented by Docs. No. 38, 49, and 51) (as supplemented, the “Motion to Dismiss”) and Debtors’ Motion to Ratify Signature filed July 23, 2014 (Doc. No. 48) (the “Motion to Ratify”). This case was initiated when Debtors’ counsel, Stanley Kakol of C. Golden & Associates, LLC (“Kakol”), electronically uploaded a joint petition for relief under Chapter 13 of the Bankruptcy Code April 23, 2014. Kakol filed May 16, 2014, a Financial Power of Attorney, executed by Debtor John Thomas Rice (“Mr. Rice”) January 2, 2014, purporting to grant Debtor Sheila Avery Rice (“Mrs. Rice”) general authority to serve as agent for Mr. Rice with regard to financial transactions (Doc. No. 19) (the “First POA”). Concurrently, Kakol filed an Amended Financial Power of Attorney, executed by Mr. Rice May 5, 2014, purporting to grant Mrs. Rice authority to retain attorneys, file a bankruptcy case, and “sign whatever bankruptcy petition, form, schedule, or other paperwork necessary to effect such bankruptcy filing” (the “Amended POA”). The Amended POA further states, “it has always been my understanding that [the] January 2, 2012 Financial Power of Attorney gave my agent the power to file a bankruptcy on my behalf.” However, as the Trustee notes in the Motion to Dismiss, the petition initiating this case, as well as the Application to Pay Filing Fee in Installments filed with the petition, appear to be [407]*407signed by each Debtor in their individual capacities.1 Moreover, Trustee asserts that Mr. Rice and Mrs. Rice appeared at the § 341 meeting of creditors and testified to having signed the petition individually. In the Motion to Ratify, Debtors implicitly2 acknowledge that Mr. Rice did not sign the petition and seek to ratify the signature of Mr. Rice on the petition. Shortly after Debtors filed the Motion to Ratify, Trustee supplemented the Motion to Dismiss, seeking an order dismissing the case as void with respect to Mr. Rice. The Motion to.Dismiss also seeks a reduction in Kakol’s fees.

Hearing on Trustee’s Motion to Dismiss was held August 21, 2014. At the hearing, Kakol was directed to file an affidavit explaining how Debtors’ petition was signed and filed, and to file a brief showing cause why this case should not be dismissed. Trustee was allowed an opportunity to respond to Debtors’ brief.

Kakol filed an affidavit August 28, 2014, averring that Kakol advised Mrs. Rice April 18, 2014 that the First POA was flawed because it did not specifically allow her the power to file a bankruptcy case on her husband’s behalf; nevertheless, in the face of imminent repossession of Debtors’ vehicle, Kakol assisted Mrs. Rice in filing the joint petition April 23, 2014. In the affidavit, Kakol states that, prior to filing the petition, he had an “extended discussion” with Mr. Rice via telephone, discussing Mr. Rice’s financial affairs, confirming that Mr. Rice believed the First POA conveyed to Mrs. Rice the power to file bankruptcy on his behalf, and advising Mr. Rice that Kakol “would need to prepare an amendment to his [First POA] to specifically provide [Mrs. Rice] the power to file a bankruptcy case on his behalf.” Kakol further states, “I wanted to stop the threat of repossession, but I also knew that I wanted John Rice himself to sign the remaining schedules and the statements.” Kakol avers that he “mistakenly failed to notice that [Mrs. Rice] signed her husband’s name to the Petition,” apparently believing Mrs. Rice would have signed her own name for Mr. Rice, as agent for Mr. Rice. The petition, as filed, bears Debtors’ electronic signatures — 7s/”—but Kakol presumably holds a copy of the petition with wet-ink signatures. See BLR 5005-7(b)(3).

Debtors oppose Trustee’s Motion to Dismiss, asserting that a bankruptcy petition may be signed on a debtor’s behalf by an agent under a power of attorney and that, even if the petition was initially defective, Mr. Rice’s subsequent ratification of Mrs. Rice signing on his behalf “cures all ills.” Trustee argues that the filing of a bankruptcy petition by proxy is inappropriate absent “extraordinary circumstances” not present in this case, that the First POA did not confer Mrs. Rice with the authority to file on Debtor’s behalf, and that Mrs. Rice’s “forgery” of Mr. Rice’s signature renders the petition a “legal nullity.” Moreover, Trustee argues that ratification is inappropriate in this case, because ratification is usually applied in cases to prevent a debtor from benefitting from bankruptcy while simultaneously avoiding the negative consequences of bankruptcy. [409]*409attorney. Mr. Kakol may very well encounter the circumstances of this case again. Moreover, Mr. Kakol is charged with a duty of candor to this court, both by professional standards and by the rules of this court.

[408]*408I.Mrs. Rice’s Forgery of Debtor’s Signature is Void

Courts disagree as to how and when a proxy may file a bankruptcy petition on a debtor’s behalf. See, e.g., In re Raymond, 12 B.R. 906 (Bankr.E.D.Va.1981) (bankruptcy petition may never be filed by proxy); In re Harrison, 158 B.R. 246 (Bankr.M.D.Fla.1993) (discussing cases which allow proxy to file bankruptcy for active-duty military debtor); In re Curtis, 262 B.R. 619 (Bankr.D.Vt.2001) (agent under power-of-attorney may file bankruptcy petition for a debtor only when filing for bankruptcy is specifically provided in the power of attorney); U.S. v. Spurlin, 664 F.3d 954 (5th Cir.2011) (general power of attorney is sufficient to convey power to file bankruptcy petition), cert. denied, Spurlin v. U.S., - U.S. -, 133 S.Ct. 104, 184 L.Ed.2d 48 (2012). However, cases which do concede an agent’s authority to sign a debtor’s petition under a power of attorney generally require that the agent indicate that s/he is signing in a representative capacity. In re O’Connor, 2009 WL 1616105 (Bankr.N.D.Ohio February 27, 2009); In re Washington, 297 B.R. 662 (Bankr.S.D.Fla.2003); In re Hurt, 234 B.R. 1 (Bankr.D.N.H.1999) (“When a case is commenced under a power of attorney, certain minimum requirements must be satisfied,” including that the signor’s representative capacity is indicated on the petition, that the power of attorney be filed with the petition, and that the attorney-in-fact appear at the § 341 meeting of creditors and certify why such representative execution was necessary); In re Brown, 163 B.R. 596, 597-98 (Bankr.N.D.Fla.1993) (petition signed by non-debtor under power of attorney, without indication that the petition was signed in a representative capacity, was a legal nullity).

This court agrees with those courts which require that an agent’s representative capacity be plainly indicated on the document signed. By signing her husband’s name and failing to indicate her representative capacity, Mrs. Rice’s execution of the petition initiating this case was nothing but a forgery.

II. Mr. Rice’s Ratification of the Bankruptcy Petition Warrants Denial of the Motion to Dismiss

Even courts which have disallowed execution of a debtor’s name under a power of attorney have acknowledged that a debtor might be able to ratify the petition. In re Brown, 163 B.R.

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Related

United States v. Spurlin
664 F.3d 954 (Fifth Circuit, 2011)
In Re Washington
297 B.R. 662 (S.D. Florida, 2003)
In Re Curtis
262 B.R. 619 (D. Vermont, 2001)
In Re Harrison
158 B.R. 246 (M.D. Florida, 1993)
In Re Raymond
12 B.R. 906 (E.D. Virginia, 1981)
In Re Hurt
1999 BNH 16 (D. New Hampshire, 1999)
In Re Brown
163 B.R. 596 (N.D. Florida, 1993)

Cite This Page — Counsel Stack

Bluebook (online)
521 B.R. 405, 2014 WL 5801535, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-rice-ganb-2014.