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Citing Extreme Misconduct, Mississippi Bankruptcy Court Permanently Disbars Attorney

By: Maurice W. Sayeh

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

            In In re Dobbs, a Mississippi bankruptcy court held that it had the authority, to sanction and to permanently disbar an attorney from practicing in its district.[1]  A debtor and his wife filed a joint chapter 13 bankruptcy petition in 2013 and hired an attorney (“First Attorney”) to represent them.[2]  Following dismissal of the original 2013 case, the First Attorney filed a subsequent 2015 bankruptcy petition on behalf of the debtor but not the debtor’s wife[3].  The 2015 bankruptcy petition was accompanied with a Certificate of Credit Counseling (“First Certificate”) falsely reflecting that the debtor had attended a credit-counseling course on March 26, 2015,[4] as required by Section 109 of the United States Bankruptcy (“the Code”).[5]  The 2015 bankruptcy petition listed the First Attorney as the debtor’s counsel and purportedly included the debtor’s electronic signature.[6] Following the court’s approval of the First Attorney’s request to withdraw as counsel, the debtor hired a new attorney (“Second Attorney”).[7]  The Second Attorney filed another Certificate of Credit Counseling (“Second Certificate”) on behalf of the debtor, which indicated the debtor actually completed credit counseling on April 8, 2015.[8]

            Because of the discrepancy between the two certificates, the court entered an Order to Show Cause and scheduled a hearing in the debtor’s case.[9]  At the Show Cause Hearing, the debtor testified that he did not know the First Certificate was filed nor did he authorize his First Attorney to file the bankruptcy petition.[10]  He further testified that he neither signed the petition nor completed pre-petition credit counseling for the 2015 case.[11]  The debtor claimed not to be even aware of the 2015 case until after it was commenced.[12]  The court then issued a Show Cause Order for the First Attorney because of the debtor’s troubling testimony.[13]  In response to the Show Cause Order, the First Attorney sent a letter to the court stating that he received a phone call from the debtor’s wife describing how the debtor wanted him to file a new case to prevent the debtor from losing property belonging to his mother.[14]  The First Attorney also stated that he knew that the debtor did not take class before he filed the certificate.[15]  The First Attorney explained that he believed his actions were necessary to stay a pending foreclosure on the mobile home in which the debtor lived.[16]  The court, however, found the First Attorney did not explain why the decision to file should appropriately be made by the debtor's estranged wife, instead of the debtor.[17]  Finding that the First Attorney had violated multiple statutes and rules and that this was also not his first deliberate act of misconduct, the court ruled it was necessary to permanently disbar the First Attorney from practicing in its district.[18]  By assessing professional standards and applying case law, the court concluded that it has discretion to “disbar an attorney only upon presentation of clear and convincing evidence sufficient to support the findings of one or more violations warranting this extreme sanction.”[19]  Finding sufficient evidence of ethical violation, the court sanctioned and permanently disbarred the First Attorney.[20]

            Multiple courts have held that “[t]he clear language of 11 U.S.C. § 105(a) grants . . .  [c]ourt[s] significant equitable powers as well as latitude in framing the relief necessary to carry out both the specific provisions of the statute as well as its philosophical underpinnings.”[21]  Further, Section 526(a)(5) of the Code provides that a bankruptcy court may ‘impose an appropriate civil penalty’ against an attorney who it finds intentionally violated § 526 (a)(2).”[22]  Indeed, according to the Supreme Court,“[c]ourts of justice are universally acknowledged to be vested, by their very creation, with power to impose silence, respect, and decorum, in their presence, and submission to their lawful mandates.”[23]  In sanctioning the First Attorney, the court considered the ABA “Standards for Imposing Lawyers Sanctions.”[24]  The In re Dobbs Court also considered Liebling v. The Mississippi Bar,[25] where the court set forth the following factors that a court should consider in imposing sanctions:[26]

(1) the nature of the [attorney]’s conduct, (2) the need to deter such conduct, (3) the preservation of dignity and reputation of the legal profession, (4) the need to protect the public, (5) sanctions imposed in similar cases, (6) the duty involved, (7) the lawyer's mental state, (8) actual and potential injury resulting from the misconduct, and (9) the existence of aggravating factors.[27]

            Local bar associations, not specific courts, typically handle attorney disbarment.[28] Yet, the In re Dobbs Court noted that attorneys are members of the court as well, and it is the court that grants attorneys admission to practice law.[29]  The court concluded that while disbarment of an attorney usually falls under “the province of a state bar association,”[30] a court may disbar an attorney as well since an attorney is a member of the court.[31]  In light of the court’s statements, a court would likely exercise this power in the more extreme instances and with cautious judicial discretion.[32]  The reason being is the In re Dobbs Court stated the court’s authority to disbar attorney should not be used as a punishment but instead to protect the public from the attorneys it finds not fit to practice law.[33]

 

 

 



[1] 535 B.R. 675, 690, 699 (Bankr. N.D. Miss. 2015).

[2] See id. at 680.

[3] See id.

[4] See id.

[5] See id.

[6] See id. at 680.

[7] See id.

[8] See id.

[9] See id. at 680–81.

[10] See id. at 681.

[11] See id.

[12] See id. (explaining debtor had not been in First Attorney’s office since December 2014 or January 2015).

[13] See id. at 682.

[14] See id.

[15] See id.

[16] See id. at 683.

[17] See id.

[18] See id. at 683, 695–98, 699.

[19] See In re Dobbs, 535 B.R. at 699 (quoting In re Medrano, 956 F.2d 101, 102 (5th Cir. 1992)(stating court could “disbar an attorney only upon presentation of clear and convincing evidence sufficient to support the findings of one or more violations warranting this extreme sanction”).

[20] See id. at 691.

[21] See In re Ludwick, 185 B.R. 238, 245 (Bankr. W.D. Mich. 1995)(explaining 11 U.S.C. § 105 states “[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”).

[22] See Parker v. Jacobs, 466 B.R. 542, 548-49 (M.D. Ala 2012) (stating attorneys who violate 11 U.S.C. § 526 a(2) can be sanctioned by bankruptcy courts, and sanctions can include civil penalties).

[23] See id. at 43.

[24] See In re Dobbs, 535 at 697.

[25] 929 So. 2d 911 (Miss. 2006) (holding court can consider certain discretionary factors when considering imposing public reprimands against attorneys).

[26] See In re Dobbs, 535 B.R. at 697 (observing ABA “Standards for Imposing Sanction” four criteria: “(1) whether the duty violated was to a client, the public, the legal system, or the profession, (2) whether the attorney acted intentionally, knowingly, or negligently, (3) the seriousness of the actual or potential injury caused by the attorney’s misconduct; and (4) the existence of aggravating and mitigating factors”).

[27] See id. at 696–97(assessing Liebling factors).

[28] See id.

[29] See id.

[30] See id.

[31] See In re Dobbs, 535 B.R. at 697.

[32] See id. at 698–99.

[33] See id. at  696–97.