Nelson Rivers v. Larry Galloway

Case Type:
Case Status:
Affirmed in part and Reversed in part
19-30910 (5th Circuit, May 08,2020) Published
A statement made by an attorney in court is not sufficient for the court to impose sanctions for attorney misconduct unless the court finds, by clear and convincing evidence, that the statement was made in bad faith. Courts cannot impose sanctions for attorney misconduct under their inherent authority unless the court finds clear and convincing evidence that the attorney acted in bad faith. In addition, the disgorgement of fees relating to section 341 meetings was "unnecessarily" ex post facto and thus reversed.
Procedural context:
A retired consumer bankruptcy attorney appealed a bankruptcy court's order that found him guilty of violating provisions of the Louisiana Code of Professional Conduct in connection with his sudden retirement from his practice. The bankruptcy court also found that the attorney violated local rules and procedures. In light of those findings, the bankruptcy court assessed a $3,500 sanction against the attorney and required the attorney to disgorge unearned and no-look fees. The attorney appealed to the district court, which affirmed the sanction award but reversed on the ethical lapses. The attorney appealed to the Fifth Circuit.
Nelson Rivers retired from his practice as a consumer bankruptcy attorney. Following local practice, he handed off his active chapter 13 cases to other attorneys. A chapter 13 trustee moved to dismiss one case that Rivers had filed when the debtors failed to make plan payments while in the hospital. The debtors cured the arrearages before the hearing. Rivers failed to appear at the hearing, and the court issued a show-cause order. The court later entered an opinion finding Rivers guilty of violating numerous provisions of the Louisiana Rules of Professional Conduct and local rules and procedures. The judge assessed a $3,500 against Rivers, and awarded the sanction to the attorney who had taken over much of Rivers' practice. The court ruled that Rivers knowingly made a false statement about the nature of the agreement between Rivers and the other attorney, which unnecessarily forced the other attorney to appear in court. The bankruptcy court also required Rivers to disgorge unearned and "no-look" fees usually authorized in that court. After appealing to the Fifth Circuit, Rivers self-reported himself to the Louisiana Office of Disciplinary Counsel, which cleared him of any ethical wrongdoing.

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