While we begin to digest all of the new opinions on the complicated and sometimes ambiguous provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), it may also be a good time to recall one of the more mundane and by now familiar practices in bankruptcy: case management and electronic case files or CM/ECF. At this point, the vast majority of bankruptcy courts in the country have converted to CM/ECF. Almost every court that is CM/ECF operational also accepts electronic filings.¹

With the rollout of any new program, as BAPCPA presently reminds us, there is a learning curve. Clerks have many anecdotal stories, such as receiving a filing that consisted of the Adobe Acrobat user manual—used for creating the pdf document of the filing—in place of the actual filing. Practitioners report having their user information misidentified and, as a result, becoming the unfortunate recipient of hundreds of e-mails for which they have little or no use. These and other inconveniences must be viewed as tolerable and go with the territory when implementing a new process. Further, the integration of a new process is a good time to revisit old protocols. Practitioners who blindly rely on technology or otherwise approach ECF cavalierly or with a lack of diligence will be met with little sympathy. This article will review some of the opinions where ECF has been part of the controversy and that highlight how, while ECF has made the practice of law more efficient, it has not allowed for any deviation from established practice standards.

Tough Transition

Even though most of the courts in the country have completely transitioned to CM/ECF, there are still lingering issues. In Askew v. Patel,² the court’s administrative procedures required all documents to be scanned and electronically transmitted to the bankruptcy court. The court would take no action to docket the filing, however, until a paper “hard” copy and a receipt confirming that it had been electronically scanned were delivered to the court. The court would then upload and docket the filing. Accordingly, in this jurisdiction, a document was not considered “filed” until such time as the hard copy was delivered to the court.

The plaintiff in this case uploaded the adversary complaint to the court on the date of the filing deadline, but did not file the paper copy until two days later. The court dismissed the complaint, assuming there had been “excusable neglect” but also finding that it was insufficient to extend the deadline for the complaint under Bankruptcy Rule 4007.³ While the focus of the opinion was on the ability of the court to extend a deadline to file a §523 complaint, the court gave little consideration to the timely electronic filing.

Reliance on Use of ECF Information

The landmark Comm. Bank v. Perkins,⁴ one of the earliest cases involving ECF, focused on a party’s right to rely on information contained in the electronic file. In this case, after the bankruptcy court entered an order deferring the debtor’s discharge, the clerk mistakenly established and published on its Web site a second (later) bar date for filing §523 and §727 complaints. A creditor, aware of the original deadline but nevertheless relying on the new, incorrect bar date and conversations with the trustee and bankruptcy clerk, filed its complaint by the later deadline. The bankruptcy court dismissed the complaint on the ground that it was late, ruling that there was no equitable reason for an extension. The Bankruptcy Appellate Panel (BAP), in reversing the bankruptcy court, stated: “Influencing our decision is the fact that the federal court system is rapidly converting to electronic case filing...and that parties need to be able to rely on information contained in a bankruptcy court’s electronic case file, including bar dates published by a bankruptcy court clerk.”⁵

The dissent, however, criticized the creditor’s reliance on both the clerk’s electronic entry of the deadline and the advice of the trustee, who also mistakenly advised the creditor that the deadline had been extended. The dissent found that the creditor’s reliance on these sources in the face of the established rules for extending a complaint deadline was not reasonable. The dissent suggested that the efficiency of ECF is to allow practitioners to review documents easily, obviating the need for reliance upon conversations with and opinions of court personnel or other officials.

The Old Standards Still Apply

In the Catch-22 category, the debtor’s attorney in In re Wenk⁶ was faced with the dilemma of filing a petition at a client’s request without the client’s signature in order to stop a foreclosure.⁷ In an attempt to comply with his client’s wishes, and fearing a malpractice suit, the attorney electronically filed the petition without first obtaining the debtor’s signature on the original. The attorney argued that the only purpose of the debtor’s signature is to affirm the accuracy of the information in the petition. Because the information was correct, he argued that he did nothing wrong. Alternatively, the attorney argued that it was not his intention to purport to have a signed petition, but rather to file a deficient petition and correct it later by an amendment.⁸

The court was wholeheartedly unsympathetic to the attorney’s predicament. The “/s/” on the electronic version of the petition represented that the debtor had signed the original when she had not. This, according to the court, amounted to fraud, the same as if the debtor’s signature had been forged. In addition, contrary to the attorney’s position, the court noted that the debtor’s signature on the petition is essential, representing the debtor’s oath that the information in the petition is accurate. The fact that it may be accurate despite the missing debtor signature was of no consequence.

The court was likewise unimpressed with the attorney’s alternate explanation that he intended to file a “deficient” petition. First, a debtor’s signature is required, even on a skeletal petition. More importantly, however, the court found the practice of intentionally filing an unsigned petition to obtain the benefit of the automatic stay during the cure period to be a fraud on the court—a “ flagrant abuse of the bankruptcy process.”⁹

The court was aware of the difficult situation in which the attorney found himself. However, it did not hold this to be cause enough to ignore his duty to the court as an attorney. Finding the attorney’s actions improper under Rule 9011, the court imposed sanctions. In a similar case,¹⁰ after her first petition was dismissed, a debtor told her attorney’s receptionist that she was concerned about a possible foreclosure on her home. Another attorney at the same firm was given the debtor’s file and decided, without speaking to the debtor but believing it necessary, to file a new petition for the debtor. The debtor did not sign the petition nor authorize the attorney to file the petition. During the time that the second case was pending, the debtor hired a new attorney, who filed a third chapter 13 petition for the debtor. The chapter 13 trustee filed a Rule 9011 motion against the attorney who filed the second case without the debtor’s authorization.

The court began by noting that, “an attorney’s electronic filing of a petition represents that the debtor signed the petition.”¹¹ The debtor’s signature, according to the court, is not an authorization to file the petition, but rather a verification under penalty of perjury that the information in the petition is correct. Since the debtor did not sign the petition, the attorney’s filing is unverified and violates Rule 9011(b)(3).

In a slightly different twist, in In re Terry Brown,¹² the debtor’s attorney filed an amendment to a chapter 13 plan by typing “revised” on the previous plan and making the changes requested by the trustee. The attorney’s assistant opened the computer version of the plan, made the same changes and filed it electronically. The electronic plan impliedly contained the debtor’s signature; however, the debtor never signed the hard copy of the revised plan maintained by the attorney.

The CM/ECF rules in the debtor’s jurisdiction required ECF filers to retain documents bearing original signatures for five years after a case is closed. The court noted several problems faced by the attorney. First, the attorney altered the “hard copy” of the original plan, and thus would be unable to produce an accurate original. Second, because the attorney merely altered a previous plan, the debtor’s signature on the attorney’s hard copy pre-dated the new version. Third, because the “signature date” on the electronically filed document was the filing date, the revised plan filed with the court was not the same as the attorney’s hard copy. The court stated:

Here, by electronically filing a document, the debtor’s attorney certified that she had the document in question, bearing the debtor’s original signature in her physical possession as required by the court’s Interim Operating Order. Such is not the case for both the fourth amended chapter 13 plan and the revised fourth amended chapter 13 plan... The chapter 13 trustee is correct that the integrity of the electronic filing system is at risk if attorneys are careless in their handling of originals. In addition, attorneys must treat the filing of electronic documents no differently than the court’s prior system. At all times and for all documents filed with the court, an original signature is required. The same public policy that prevented an attorney from filing a document on a client’s behalf without an original signature still exists in the era of electronic filing.”¹³

The debtor’s counsel was sanctioned by the court.

Filing by Midnight - A Procrastinator’s Best Friend?

One of the benefits of electronic filing for the deadline-challenged is the ability to file a document up until midnight on the day it is due. Waiting until the last minute, however, is not always failsafe. In Mittman v. Casey,¹⁴ the issue was whether a complaint, which the plaintiff attempted to file electronically before midnight but which was not entered onto the docket until after midnight, was timely filed. In ruling that it was not, the court noted that its ECF rules required filings to be completed before midnight, local time, on the day that they are due. Although the attorney began the filing process by sending the cover sheet prior to midnight, the court’s rules were clear: “[W]hen a document has been filed through ECF, the official record is the electronic recording of the document as stored by the court, and the filing party is bound by the document as filed. Except in the case of documents first filed conventionally, a document filed through ECF is deemed filed at the date and time stated on the notice of electronic filing from the court.”¹⁵ In this case, neither the cover sheet nor the complaint were docketed until after midnight.

The court’s ECF rule corresponded to the conventional rule for filing. The court pointed out that had a cover sheet been presented at the clerk’s counter before midnight, with the adversary proceeding following after midnight, the filing likewise would not have been considered timely, specifically noting that cover sheets are not a part of, nor a substitute for, adversary filings.

Computer Use Required

Now that computers, and fluency with the Internet, should be an ordinary part of every attorney’s office protocol, courts are expecting attorneys’ practices to evolve with the technology. In a pair of similar cases, courts have sanctioned attorneys for failing to investigate debtors’ previous filings by taking advantage of the availability of PACER. In the first, during their initial meeting, the attorney questioned the debtor about previous filings. The debtor disclosed only one of eight previous filings, and the attorney listed only that one in the petition. The attorney used PACER to search the docket of that previous case, learning that an order in that case barring refiling had expired. He made no further inquiry into PACER records before filing the petition. However, because there was an intervening Bar order in a different previous filing for the same debtor, the new case was immediately dismissed. The attorney then filed a new case on behalf of the debtor’s husband. These cases operated to continually frustrate a creditor’s attempts to foreclose on the debtors’ real property.

The attorney insisted that he had fulfilled his responsibility by questioning the debtor about previous filings and was justified in relying on her representations. The court was not unsympathetic to the plight of an attorney when a client arrives facing immediate foreclosure. However, “as a result of the advent of electronic documents, a few clicks of the mouse enable an attorney to discover that client’s bankruptcy history...I believe a PACER search should be done by every lawyer prior to filing a petition with this court.”¹⁶ The court went on to note that a Bar order is usually entered only when there are more than two previous filings, and the attorney’s failure to further investigate the debtor’s bankruptcy history with knowledge of at least one previous Bar order was inexcusable.

In In re Oliver,¹⁷ the debtor’s seventh case was filed in violation of an order in a previous case barring refiling for a period of 180 days. Again, the court refused to accept the attorney’s contention that he was entitled to rely upon the debtor’s representation regarding previous filings, stating: “Given the ease with which a lawyer can search the court’s records and the ‘epidemic’ of repeat bankruptcy filings, the failure to conduct a PACER search may subject a lawyer to sanctions.”¹⁸ The court seemed particularly concerned with attorneys who would rather take a fee than engage in any investigation that might result in turning away a potential client.

Lawyers should not be permitted to gain a competitive advantage in the marketplace by lowering their ethical standards. This court has observed time and again this process of lawyer-shopping coupled with serial filing. The lawyer should be something more than a mere scrivener for her client. A lawyer may not take his client’s word concerning previous bankruptcy filings when it is so easy to check the court’s records...the failure to conduct such a search is not reasonable under almost any circumstances.¹⁹

ECF is without question a valuable and time-saving tool for attorneys. Instant access to dockets and documents translates into better service to clients. As these cases demonstrate, however, when used as a substitute for reasonable and ethical conduct, courts have not hesitated to sanction the offender.

 

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Footnotes

1 For information on the courts currently using CM/ECF and accepting electronic filings, see www.uscourts.gov/cmecf/cmecf_about.html.
2 In re Patel, 331 B.R. 497 (Bankr. M.D. Ga. 2005).
3 This case is currently being appealed on the issue whether a deadline for filing complaints under 11 U.S.C. 523 can be extended for excusable neglect.
4 In re Perkins, 271 B.R. 607 (8th Cir. BAP 2002).
5 Id. at 614.
6 296 B.R. 719 (Bankr. E.D. Va. 2002).
7 The debtor called the attorney requesting a petition be filed, but could not get to the attorney’s office because of the weather. The debtor, worrying that the petition might not be filed, obtained the services of another attorney to file the petition, resulting in duplicate filings for the same debtor.
8 The attorney testified that it was his practice to file petitions without signatures so that the debtor could receive the benefit of the automatic stay immediately, knowing that the court would issue a deficiency notice and provide a 10-day cure period.
9 269 B.R. at 726.
10 Briggs v. LaBarge (In re Phillips), 317 B.R. 518 (8th Cir. BAP 2004).
11 Id. at 523.
12 328 B.R. 556 (Bankr. N.D. Cal. 2005).
13 Id. at 559.
14 In re Michael A. Casey, 329 B.R. 43 (Bankr. S.D. Ohio 2005).
15 Id. at 45 (emphasis in original).
16 Id. at 179.
17 323 B.R. 769 (Bankr. M.D. Ala. 2005).
18 Id. at 773.
19 Id. at 774-775. Under BAPCPA, the automatic stay is limited or does not go into effect for certain repeat filings. See 11 U.S.C. 362(c)(3) and (4). Affirmative action by the debtor will be necessary to obtain the benefit of the stay, thus knowledge of the debtor’s previous bankruptcy history becomes imperative.