In re Gayle Bagsby

Case Type:
Consumer
Case Status:
Affirmed
Citation:
2020 WL 2025906, Case No. 19-8017/8018/8019 (6th Cir. BAP 2020) (6th Circuit, Apr 27,2020) Published
Tag(s):
Ruling:
Court affirmed imposition of sanctions against Debtor's counsel for filing two different petition for relief for Decedent's estate. Counsel knew or should have known that Decedent's estate is not eligible for relief under chapter 13. Petitions violated Rule 9011 requirements.
Procedural context:
Counsel filed a Chapter 13 petition listing the Estate of a deceased individual as Debtor. The Bankruptcy Court dismissed the Petition as "Debtor" was not eligible for relief under Chapter 13. The Court then awarded sanctions including prohibition against Counsel filing any new cases, requiring Counsel to take CLE in ethics; and requiring Counsel to self-report to State Board of Professional Responsibility. On appeal, the Sixth Circuit BAP affirmed.
Facts:
The putative Debtor passed away in 200. In 2017 and again in 2018, as the request of Decedent's daughter, counsel filed Petitions for relief under Chapter 13. Both cases were dismissed. Following dismissal of the second case, the Court entered an Order to Show Cause why counsel should not be sanctioned. The Court held that the Bankruptcy Court has authority to Sua Sponte award of sanction warranted where Counsel does not make a reasonable pre-filing inquiry that filing is supported by evidence. Test is whether reasonable person would believe conduct was acceptable at time and requires consideration of all relevant facts and circumstances, but does not require bad faith, actual intent, or actual contempt.. Counsel violated Rule 9011 by filing two separate petitions for Decedent’s estate with no inquiries or research to determine whether Chapter 13 could be filed by Estate; there was no basis in law to support a reasonable possibility that a Chapter 13 case could be successful; and cases were filed for express purpose of delaying foreclosure. Counsel admitted he filed two different skeletal petitions on behalf of deceased person but did not file any remaining documents; Counsel did not contest purpose of filing was to delay foreclosure; Counsel acknowledged he did not engage in reasonable inquiry concerning Estate’s eligibility; and Counsel's assertion that he never filed for an Estate previously did not excuse his obligation to determine whether Petition was legally and factually supported. Sanctions included 90-day suspension from filing new cases; requiring Attorney to take 10 hours of CLE in ethics; and requiring Attorney to self-report to State Board of Professional Responsibility.
Judge(s):
Croom, Price-Smith & Wise

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