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The Security National Bank of Sioux City, IA v. Vera T. Welte Testamentary Trust

Summarizing by Amir Shachmurove


Case Type:
Case Status:
SC-21-1173 (9th Circuit, Oct 18,2022) Not Published
The U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) affirmed the judgment of the U.S. Bankruptcy Court for the Southern District of California (BC) that imposed $2,990 in fines and damages under § 110 on Maurice Grayton (Grayton), the non-lawyer who had, at minimum, signed the SOFA and Form 106Dec "for Cesar Montiel Perez" (DR) and served the DR's motion to reopen his case and vacate its first dismissal who the U.S. Trustee (UST) argued and the BC found to be a "bankruptcy petition preparer" (BPP) as meant in § 110(a)(1), in response to the UST's motion for summary judgment (MSJ).
Procedural context:
In January 2020, the UST filed an adversary complaint against Grayton that contained the following causes of action: (1) violation of § 110(b)(1) (failure to sign and print name and address on documents); (2) violation of § 110(b)(2) (failure to provide Rule 9009 notice re official forms); (3) violation of § 110(c)(1) (failure to provide BPP’s social security number); (4) violation of § 110(e)(1) (execution of documents on behalf of debtor); (5) violation of § 110(e)(2)(B)(vii) (giving legal advice); (6) violation of § 110(g) (collecting filing fee from debtor); and (7) violation of § 110(h)(2) (failure to provide a declaration disclosing fee received from debtor). Grayton filed an answer, in which he alleged he acted under duress in following the DR's instructions to prepare and file the documents; refused to cooperate with discovery while propounding numerous requests for production and interrogatories; and failed to attend at the court-scheduled hearing on his subsequently filed motion for summary judgment and request for court-appointed counsel and for a jury trial; filed a subsequently denied motion in limine, which Grayton unsuccessfully--and tardily--appealed to the U.S. District Court for the Southern District of California (DC); orally demanded the BC's recusal to no avail; and tendered yet other motions and appeals to the DC. Eventually, the UST filed the MSJ, with most of the underlying facts deemed admissions based on Grayton's unanswered requests for admission. Grayton submitted no formal opposition, but he did appear at the hearing, during which he refused to answer of the BC's questions. Afterward, the BC granted the MSJ in part and approved the UST's subsequent motion to withdraw the remaining claims and for entry of a final judgment. Grayton timely appealed.
Perhaps the least relevant aspects of this case are the predicate facts. In December 2018, the DR filed a chapter 7 bankruptcy petition, with certain documents evidencing the involvement of Grayton (see above), The DR ,later failed to appear for his initial § 341(a) meeting of creditors, and after his case was dismissed. Motions to reopen and to vacate the dismissal were eventually filed, the notice of the former indicating service by Grayton; the BC granted both. In May 2019, the DR's case was again dismissed, this time when the BC granted the UST’s motion for denial of discharge under § 727(a)(8), as the DR had received a discharge in a case commenced within eight years before the filing of the instant petition.
William J. Lafferty III; Julia W. Brand; and Robert J. Faris

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