In re Ruiz

515 B.R. 362, 25 Fla. L. Weekly Fed. B 60, 2014 Bankr. LEXIS 3777, 2014 WL 4401581
CourtUnited States Bankruptcy Court, M.D. Florida
DecidedSeptember 5, 2014
DocketCase No. 6:13-bk-13023-KSJ
StatusPublished
Cited by1 cases

This text of 515 B.R. 362 (In re Ruiz) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Ruiz, 515 B.R. 362, 25 Fla. L. Weekly Fed. B 60, 2014 Bankr. LEXIS 3777, 2014 WL 4401581 (Fla. 2014).

Opinion

Chapter 7

MEMORANDUM OPINION GRANTING TRUSTEE’S MOTION FOR TURNOVER OF LEGAL FEES

KAREN S. JENNEMANN, Chief United States Bankruptcy Judge

The issue is whether a lawyer can provide a debtor with very limited representation for a reduced fee and without complying the Court’s rules. Here, the Passalacqua Law Firm (the “Law Firm”) was paid $775 to represent the Debtor, Diego Marino Ruiz, both before and after this Chapter 7 bankruptcy case was filed but did not sign the petition, attend the meeting of creditors with the Debtor, or perform the other minimal duties required of attorneys representing debtors. The Chapter 7 Trustee, Leigh Meininger, objects to this practice and requests an order requiring the Law Firm to disgorge the $775 fee they received.1 The Law Firm opposes the Trustee’s Motion for Turnover arguing that the Debtor [364]*364agreed to their limited representation.2 The Court agrees that the Law Firm cannot pick and choose which services they provide to debtors and will grant the Trustee’s motion.

Mr. Ruiz signed a voluntary Chapter 7 bankruptcy petition3 under penalty of perjury indicating he had no lawyer and then filed it with the Court on October 22, 2013. On the Debtor’s Statement of Financial Affairs, the Debtor listed a payment of $775 to the Law Firm for limited representation and document preparation.4 The Debtor also filed a Disclosure of Compensation of Attorney.5 This Disclosure reflected a payment made by the Debtor for $775 for legal services that, the Court notes, included representation at the meeting of creditors.

The Limited Representation Agreement between the Debtor and the Law Firm required the attorneys to provide services to the Debtor both before and after the bankruptcy case was filed.6 The Law Firm specifically agreed to prepare all papers required to start a Chapter 7 case, including all schedules and statements, and then to deliver them to the Debtor for filing. They also agreed, after the case was filed, to help the Debtor gather documents, such as bank statements, the Trustee may request and “to continue to guide and assist the client with any question or situation that would arise until the discharge was received.”7 The Law Firm inconsistently agreed, on one hand, to provide full representation to the Debtor, but, on the other hand, refused to formally appear in the case, sign the petition, attend the meeting of creditors with the Debtor, or provide the normal legal services required of attorneys representing debtors in Chapter 7 bankruptcy cases.

The Trustee in his Motion for Turnover8 argues that an attorney cannot provide this limited representation to a Chapter 7 debtor and that, in this case, the proper remedy is for the Law Firm to disgorge their $775 fee to pay the Debtor’s filing fee ($335)9 and to return the balance ($440) to the Debtor. The Law Firm, in response, argues that, although they provide fewer services, they cost less and give poorer debtors the ability to get valuable, albeit limited, legal advice.

The question before the Court is whether an attorney can provide services for consultation and preparation of the bankruptcy petition and related papers but then cause the debtor to file pro se without making an appearance or representing the debtor at the meeting of creditors. Instead of traditional representation, where a lawyer handles a case from start to finish, limited scope representation, also known as “unbundling” or “discrete task [365]*365representation,” involves representation in which a lawyer performs some, but not all, of the work.

Attorneys practicing before this Court are governed by the Florida Rules of Professional Conduct.10 Florida Rule 4-I.2(c) permits the unbundling of legal services in some circumstances:

If not prohibited by law or rule, a lawyer and client may agree to limit the objectives or scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent in writing. If the attorney and client agree to limit the scope of the representation, the lawyer shall advise the client regarding applicability of the rule prohibiting communication with a represented person.11

Local Rule 9011-1,12 in turn, governs the duties of attorneys who file a petition on a debtor’s behalf and provides that “[ujnless allowed to withdraw from a case ... by order of the Court ... counsel filing a petition on behalf of a debtor shall attend all hearings scheduled in the case or proceeding at which the debtor is required to attend....”13 Local Rule 2091-1 further provides that an attorney who files a petition for a debtor cannot later withdraw from the case except by order of the court, “after fourteen days’ notice served on the client and parties in interest affected thereby, and to opposing counsel.”14 Because Florida Rule 4-1.2(c) acknowledges that Courts can limit an attorney’s ability to “unbundle” or limit services by law or local rule, the issue is whether the Law Firm’s limited representation violated Local Rule 9011-1. If it did, Florida Rule 4-1.2(c) also prohibits the arrangement.

The language found in Local Rule 9011-1 specifically refers to “counsel filing a petition on behalf of a debtor.”15 Although no attorney signed the petition, the Law Firm admittedly represented the Debtor, prepared all the papers submitted by Mr. Ruiz, and continued to advise the Debtor after the filing. Their own Disclosure of Compensation moreover noted that their $775 fee was in exchange for legal services including, but not limited to, the “preparation and filing of any petition.”16 The Law Firm cannot evade their responsibilities under Local Rule 9011-1 by doing all the work and then giving the Debtor the papers to file falsely pretending he is acting pro se.

The Law Firm was obligated to sign and is deemed to have filed the Debtor’s petition. As such, their attempt to limit their services is prohibited by Local Rule 9011-1 and violates Florida Rule 4-1.2(c).

In a case factually similar to this one, In re Merriam,17 the United States Trus[366]*366tee sought disgorgement of legal fees paid to the debtor’s attorney arguing the fees were unreasonable because the attorney did not sign the debtor’s petition. In ruling that the attorney had to sign the petition under Bankruptcy Rule 9011,18 the bankruptcy court stated, “When an attorney has the client sign a pleading that the attorney prepared, the attorney creates the impression that the client drafted the pleading. This violates both Rule 11 and the duty of honesty and candor to the court.”19 An attorney’s involvement and signature on a petition confirms the accuracy and legal sufficiency of the statements made.20 Conversely, courts routinely interpret the pleadings of pro se

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In re Dugan
549 B.R. 790 (D. Kansas, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
515 B.R. 362, 25 Fla. L. Weekly Fed. B 60, 2014 Bankr. LEXIS 3777, 2014 WL 4401581, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-ruiz-flmb-2014.