Torrens v. Hood

727 F.3d 1360, 2013 WL 4574249
CourtCourt of Appeals for the Eleventh Circuit
DecidedAugust 29, 2013
DocketNo. 12-15925
StatusPublished
Cited by25 cases

This text of 727 F.3d 1360 (Torrens v. Hood) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Torrens v. Hood, 727 F.3d 1360, 2013 WL 4574249 (11th Cir. 2013).

Opinion

WILSON, Circuit Judge:

Luis A. Torrens, Adrian Reyes and the Torrens Law Firm, LLC (the firm) (collectively “Appellants”), appeal the United States District Court for the Southern District of Florida’s affirmance of the United States Bankruptcy Court for the Southern District of Florida’s order in favor of John Hood, Jr. The bankruptcy court held that Appellants violated 11 U.S.C. §§ 527 and 528(a)(1), Florida Rules of Professional Conduct 4-3.3(a)(l) and 4-8.4(c), and possibly 18 U.S.C. § 157(3) by helping Hood file an “ostensibly pro se [Voluntary Chapter 13] bankruptcy petition in bad faith to stall a foreclosure sale.”1 After an evidentiary hearing, the bankruptcy court held that Appellants prepared the Chapter 13 petition as ghostwriters and consequently made false or fraudulent representations to the court.

Appellants now contend that they did not perpetrate fraud on the court by as[1362]*1362sisting Hood in the preparation of his pro se Chapter 13 petition, and that the assistance Appellants provided cannot be classified as ghostwriting. After review of the briefs and the record, and with the benefit of oral argument, we reverse and remand.

I.

On January 24, 2012, Hood met with Adrian Reyes, a member of the Torrens Law Firm, to discuss foreclosure defense services provided by the firm. At this time, Hood allegedly considered hiring the firm to attempt to extend the February 22, 2012 sale date for the state-court foreclosure proceedings concerning his Hollywood, Florida business. Reyes also discussed bankruptcy with Hood, the impact it would have on the foreclosure process, and the firm’s fees for both foreclosure defense work and bankruptcy representation. On February 21, 2012, Hood, apparently unable to afford representation for both his bankruptcy and foreclosure needs, paid a $1,000 retainer to the firm to provide foreclosure defense work. On that same date, a courier filed a pro se Chapter 13 petition via a power of attorney on Hood’s behalf in the bankruptcy court for the Southern District of Florida. The circumstances behind the petition’s preparation and filing are highly disputed.

Before the bankruptcy court, Hood contended that he had no knowledge that he had filed for bankruptcy. The bankruptcy court found Hood’s contention to be untruthful, yet still held that Appellants fraudulently prepared and filed a pro se petition on behalf of Hood. Appellants maintain that the firm’s secretary acted as a scrivener when she prepared the petition at Hood’s request. Appellants also argue that, at Hood’s request, the secretary wrote his oral responses into the corresponding blanks on the petition. A courier then filed the petition on behalf of Hood via a power of attorney notarized by Luis Torrens, a partner at the firm.

On February 28, 2012, one of Hood’s largest business clients contacted him regarding his involvement in the bankruptcy proceeding and expressed concern over Hood’s continued ability to perform work for them. Hood, seemingly leery of losing business, informed the client that he had no knowledge of the bankruptcy proceeding. On April 3, 2012, with what the bankruptcy court characterized as “buyer’s remorse,” Hood, represented by counsel, filed a motion for order to show cause against Appellants.

The bankruptcy court granted Hood’s motion and held an evidentiary hearing on April 16, 2012. The court noted that despite Hood’s remorse, he “signed several documents containing the word bankruptcy in multiple places.” Regardless, on June 7, 2012, the bankruptcy court held that Appellants violated 11 U.S.C. §§ 527 and 528(a)(1), Florida Rules of Professional Conduct 4-3.3(a)(l)2 and 4-8.4(c),3 and “appear[ed] to have violated 18 U.S.C. § 157(3).”4 The bankruptcy court found [1363]*1363that Appellants acted as ghostwriters by failing to sign the Chapter 13 petition, and thus perpetrated fraud on the court.

The bankruptcy court suspended Torrens from practice before • the United States Bankruptcy Court for the Southern District of Florida for six months, barred Reyes from applying for admission to practice before the United States Bankruptcy Court for the Southern District of Florida before December 31, 2012, prohibited both Torrens and Reyes from filing any papers in bankruptcy court during their period of suspension, and held that all employees, associates and business affiliates of the firm were enjoined from acting as bankruptcy petition preparers under 11 U.S.C. § 110 or as a “debt relief agency” as defined by 11 U.S.C. § 101(12A). The court also referred the matter to the office of the United States Attorney for possible criminal prosecution and to the Florida Bar for further disciplinary proceedings. The district court affirmed the bankruptcy court’s decision, concluding that the surrounding circumstances revealed at the evidentiary hearing supported the bankruptcy court’s findings. Appellants only appeal the holding that they perpetrated fraud on the court by ghostwriting Hood’s Chapter 13 petition in violation of Florida Rules of Professional Conduct 4 — 3.3(a)(1) and 4 — 8.4(c), and 18 U.S.C. § 157(3).

II.

“In the bankruptcy context, this court sits as a second court of review and thus examines independently the factual and legal determinations of the bankruptcy court and employs the same standards of review as the district court.” In re Optical Techs., Inc., 425 F.3d 1294, 1299-1300 (11th Cir.2005) (internal quotation marks omitted). We review the bankruptcy court’s findings of fact for clear error and its conclusions of law de novo. In re Englander, 95 F.3d 1028, 1030 (11th Cir.1996) (per curiam). “Neither the district court nor this court may make independent factual findings.” Id. A bankruptcy court’s imposition of sanctions is reviewed for an abuse of discretion. In re Mroz, 65 F.3d 1567, 1571 (11th Cir.1996). ;

Bankruptcy fraud is a criminal matter in which federal district courts have original jurisdiction. 18 U.S.C. § -3231; see In re Hipp, 895 F.2d 1503, 1518 (5th Cir.1990). In the event that a bankruptcy judge has “reasonable grounds” for believing that a party committed bankruptcy fraud in violation of 18 U.S.C. § 157(3), the judge “shall report [the case] to the appropriate United States attorney.” 18 U.S.C.

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Bluebook (online)
727 F.3d 1360, 2013 WL 4574249, Counsel Stack Legal Research, https://law.counselstack.com/opinion/torrens-v-hood-ca11-2013.