UST v Upright Law, In re: Bishop, an index of the blog posts on the case

I have prepared a long series of blogs reprinting and reviewing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester). In the case the US Trustee through the Department of Justice is moving to bar the Chicago firm from practicing bankruptcy in its district, which includes the city of Buffalo.

Note that if the hyperlink does not work, that means the blog has not been published yet!

Click Here to Read Part 1.

This includes the Header of the Case and the UST’s introductory statements.

Click Here to Read Part 2.

This includes statements/introductions to the parties involved.

Click Here to Read Part 3.

Where the UST describes Upright Law and how their law practice structure.

Click Here to Read Part 4.

 

Click Here to Read Part 5.

 

Click Here to Read Part 6.

 

Click Here to Read Part 7.

 

Click Here to Read Part 8.

 

Click Here to Read Part 9.

 

Click Here to Read Part 10.

 

Click Here to Read Part 11.

 

I am intrigues by this case, being affiliated with Upright. Obviously I want to keep up-to-date on what happens next!

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

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In Re: Bishop – how does Upright Law practice law (per the US Trustee)?

Continuing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester).

 

You can read all of the parts (and by the time we are done there will be many) at this hub.

 

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois

***

In this part of the Complaint the US Trustee describes what Upright Law is and how they practice. Remember this is a complaint against them trying to bar them from practice in the Western District of New York; they are not about to shower it with praise…

Note Paragraph 25 & 26: in the Southern District of Illinois the matter is different – the local attorney contacts the client right away – within a day or two – to introduce himself or herself, review the client’s situation, discuss the documents needed, the credit counselling classes required and their costs and answers questions. I encourage Upright clients to call me at any time during the process and even take creditor inquiries.

***

(the filed Complaint continues…)

 

  1. Upright’s Business Model

 

21) Upright solicits both prospective debtor clients and local attorney “partners” over the Internet, using the website “www.uprightlaw.com.” On its current website, it purports to have “Local Attorneys Nationwide” and provides that “all legal services are provided by affiliated and related entities.” The website goes on to provide: “By an Act of Congress and the President of the United States, UL/ACL is a federally designated Debt Relief Agency. Attorneys and/or law firms promoted through this website are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code.” It also contains a link to “Disclosures required under the U.S. Bankruptcy Code.” Finally, the website states that Edmund Scanlan is the “CEO” or “Administrator” of every entity allegedly providing the legal services to prospective debtors. On information and belief, Mr. Scanlan is not a licensed attorney.

 

  1. Solicitation of Debtor Clients

 

22) Upon information and belief, when a prospective debtor reviews the Upright Law website, he or she is asked to provide his or her contact information to learn if they qualify for bankruptcy relief. Thereafter, Upright agents — located in Chicago – call the prospective debtor. These agents, known as “inside sales representatives,” “closers,” “first responders,” or, at other times, “senior class consultants,” are not attorneys. These non-lawyer agents conduct the initial interview, ask the prospective debtor questions about his or her financial situation, and determine if there is an apparent ability to pay for legal services and a desire to “make a life-changing decision” regarding his or her financial circumstances. If the answer is yes, these non-lawyers give the prospective debtor legal advice, including, but not limited to describing the differences between a chapter 7 and chapter 13 proceeding. After advising the prospective debtor of the available options, the “closer” will ask the potential client to “self-select” what chapter is the best fit.

23) Following this “self-selection,” the “closer” will gather basic intake information such as income, sources of income, household members, expenses and assets and enter this data into Upright’s software. Based on this information, the non-lawyer consultant will advise the client whether or not to file bankruptcy and under which chapter, quote a fee to the prospective debtor client, and ask them if they wish to hire the firm.

24) Upon information and belief, if the prospective debtor agrees to hire Upright, the “closer” asks the prospective debtor to provide bank account information, which Upright can use to withdraw bankruptcy-related fees and costs. Generally, if the prospective debtor cannot pay the fee immediately, automatic withdrawals are set up to debit the prospective debtor’s account over time.

25) Upon information and belief, after an opportunity for discovery, the evidence is expected to show that in 2015, Upright did not refer prospective debtors to a local “limited partner” licensed to practice law in the relevant local jurisdiction, such as New York, until the prospective debtors had paid Upright in full. During this process, the prospective debtor is told to contact Upright in Chicago for questions or concerns. Only after the fees are paid in full, which can take several months, depending on the installment plan, and the client’s particular financial situation, is the client “handed off” to the local partner attorney to start collecting documents and preparing the actual petition and completing their due diligence.

26) Representatives from Upright have recently testified before other courts that Upright no longer waits for the client to pay the entire fee, and now cases can be referred to a local partner as early as the day the client first makes a payment to Upright or shortly thereafter so that the partner attorney can set up a “compliance call” with the client. On information and belief, the compliance call averages 15 minutes. During that call or afterwards, the local partner attorney has the discretion to reject the client unilaterally, despite the prospective client not being given any reason to believe they are not represented.

 

  1. Engagement Letters

 

27) Upon information and belief, during this process, Upright electronically provides an engagement agreement to the client to sign via electronic signature. Upon information and belief, Upright does not obtain wet signatures.

28) Pursuant to a partnership agreement with their various local “partners,” the local partner’s signature is affixed to the retainer agreement as well as other documents without the local partner necessarily reviewing the document with the prospective client.

 

 

(end of section reprinting the Complaint)

***

Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

***

Check my blog’s search engine for more on this Complaint and Upright’s response. Just type “Upright Law” in my search engine for the Upright case law.

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

New York’s suit again Upright Law (part 2: the parties involved)

Continuing the Complaint against Upright Law in the case of In Re: Joyce Ellen Bishop, Case Number 16-20593 by the US Trustee in the US Bankruptcy Court for the Western District of New York (in Rochester).

You can read Part 1 here.

Or use this Index Hub. 

In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois

***

This part of the Complaint tells us what the US Trustee alleges that Upright did that led to this Complaint. Keep in mind the US Trustee is trying to bar Upright Law from practicing in the district, so they will not exactly be showering them with praise.

“I come to bury Caesar, not to praise him.” Shakespeare, Julius Caesar, Act 3, Scene 2

***

(the filed Complaint continues…)

 

III. BACKGROUND

  1. The Parties

 Mr. Racki

7) Defendant Jason Racki is the debtor’s counsel of record. He represented on the petition that his firm name in this case is Allen Chern, operating out of 140A Metro Park, Rochester, New York. His ECF participant registration form and the docket in this case disclose his firm name as the Law Office of Jason Racki, 10314 Spook Woods Rd, Port Byron, New York.

8) Mr. Racki practices before this Court as a sole practitioner and also purports to be a partner in Upright Law LCC by virtue of a limited partnership agreement.

9) During the relevant period of time for this case, Racki also purported to be a partner of Voight Law or VL.

10) Mr. Racki is a “debt relief agency” as defined by 11 U.S.C. § 101(12A) and he provided bankruptcy assistance to Ms. Bishop.

Upright Law, Law Solutions, Allen Chern and affiliates

11) Defendant Law Solutions Chicago LLC is an Illinois limited liability company that does business as Upright Law LLC (“Upright Law” or “Upright”). It filed articles of organization with the Illinois Secretary of State on October 10, 2008. It is authorized to transact business in Illinois under the following assumed names: Jason Allen Law, LLC; Upright Law, LLC; and Allen & Associates, LLC. On its website, Upright Law lists its headquarters at 79 West Monroe, 5th Floor, Chicago, IL 60603 and, at the time Ms. Bishop contacted it, it purported to have “Local Offices Nationwide.” Upon information and belief, Upright Law has an office in Chicago and no local offices nationwide. It has an intake/call center at its Chicago office.

12) Upright’s connection to New York appears to be through services offered by “Allen Chern Law.” Upright incorporated in the State of New York on January 16, 2014 and does business in the State of New York as “Allen Chern Law” but under the umbrella of the national name “Upright Law” and/or “Upright.”

13) Kevin Chern, an owner and manager of Upright, is an attorney licensed by the State of Illinois to practice law. Chern is not licensed to practice law in New York. 14) Jason Royce Allen, an owner and manager of Upright, is an attorney licensed by the State of Illinois to practice law. Allen is not licensed to practice law in New York.

15) According to Upright’s website, Edmund Scanlan is the chief executive officer of “Upright Law,” and a manager of an entity named Upright Litigation, LLC. According to Upright’s website, “all legal services are provided by affiliated and related entities.” The website states that Scanlan is the “CEO” or “Administrator” of every entity allegedly providing the legal services to prospective debtors.

16) On information and belief, when Ms. Bishop contacted Upright, it employed no lawyers licensed in the State of New York at its Chicago call center.

17) Moreover, Allen Chern Law does not have a have a “brick and mortar” location as required in New York.

18) Upright Law is a “debt relief agency” as defined by 11 U.S.C. § 101(12A) and it provided bankruptcy assistance to the debtor, Ms. Bishop.

Ms. Bishop

19) Ms. Bishop is the debtor in this case and is an “assisted person” as defined by 11 U.S.C. § 101(3) because she has primarily consumer debts and the value of her non-exempt property is less than $186,825. Moreover, Upright’s website acknowledges its federal designation as a Debt Relief Agency.[1]

United States Trustee

20) Plaintiff United States Trustee is a Department of Justice official with standing to file this complaint under 11 U.S.C. § 307.

 

(end of section reprinting the Complaint)

***

Filed by Kathleen Dunivin Schmit of the US Trustee’s office (WILLIAM K. HARRINGTON )

United States Trustee for Region Two) on April 28, 2017.

***

In this section we meet the parties involved:

James Racki is the partner or affiliate attorney with Upright, as am I and many attorneys across the country.

Upright Law and Allen Chern are a Chicago-based law firm who practice throughout the country.

Joyce Ellen Bishop is the debtor who hired Upright Law initially, then met with James Racki for local representation.

***

Check my blog’s search engine for more on this Complaint and Upright’s response. Just type “Upright Law” in my search engine for the Upright case law.

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

[1] On its website, Upright holds itself out as a “debt relief agency helping people file for bankruptcy under the bankruptcy code.” See https://www.uprightlaw.com/terms-conditions

 

Upright Law fees excessive in ND Ohio? (full opinion)

Read commentary of this opinion here.

UNITED STATES BANKRUPTCY COURT, NORTHERN DISTRICT OF OHIO, WESTERN DIVISION

In Re: Adam Vandesande, Debtor. Case No. 16-33708; Chapter 7

JUDGE MARY ANN WHIPPLE

After reviewing the Disclosure of Compensation Statement of Attorney for Debtor (“Fee Disclosure’) filed by Troy Hawkins, Counsel for Debtor, the court set a hearing on the reasonableness of attorney compensation given the exclusions set forth in the Fee Disclosure, as well as the cost of addressing excluded matters and the proposed hourly rate for doing so.  A response to the court’s hearing order was filed by the United States Trustee (“UST”).  Debtor and Attorney Hawkins appeared at the hearing in person and an Attorney for the UST appeared by telephone.

Counsel’s Fee Disclosure, under Rule 2016(b) of the Federal Rules of Bankruptcy Procedure, states that Troy Hawkins, Allen Chern Law LLC, received $1,250.00 for legal services on behalf of Debtor in connection with this Chapter 7 bankruptcy case.  It states that the services to be rendered include all legal services “to reasonably achieve the debtor’s objectives” unless specifically excluded in paragraph seven of the document. Paragraph seven then lists fifteen matters that are excluded, including matters that are basic Chapter 7 bankruptcy services often essential to achieving the goal of a fresh start, such as lien avoidance motions, motions for relief from stay, reaffirmation agreements, motions to redeem personal property, and amending schedules or other documents required to be filed with the petition. The Fee Disclosure further states that, with certain exceptions subject to a contingency fee, attorney fees for performing excluded services will be billed at the rate of $395 per hour.

Allen Chern Law, LLC, is specified as an affiliate of Upright Law, a law firm based in Chicago, Illinois. At the hearing, Attorney Hawkins explained that the fee agreement signed by Debtor was prepared by the Chicago firm for national use and sets forth the excluded services that he lists in his Fee Disclosure.

Attorney Hawkins represented to the court that he included them in the Fee Disclosure in order to be consistent with the signed fee agreement, but that, in practice, he does not and will not exclude basic bankruptcy services in Chapter 7 debtor representations, including in Debtor’s ongoing case. He also agrees that $395.00 per hour for the excluded services is unreasonable in a consumer Chapter 7 bankruptcy case in this jurisdiction.

Attorney Hawkins represented to the court that the firm will use a new fee agreement that provides that “[s]ervices include all representation to complete Client’s legal matter, except Agreement does not include representation in any objection to discharge, adversary proceeding or any heavily contested matter or Services that could not have been contemplated after reasonable diligence by Firm when this Agreement was signed (“Additional Services”).” He further represented that no more than $250.00 per hour would be charged for any Additional Services.

Under 11 U.S.C. § 329(b), if the compensation of debtor’s attorney “exceeds the reasonable value of any such services, the court may cancel any such agreement . . . to the extent excessive. . . .” The court finds that the fee agreement signed by Debtor provides for compensation that exceeds the reasonable value of services set forth therein because of the exclusions for basic bankruptcy services.  [1]

Footnote [1]:  After the hearing, the court had the opportunity to review the entire fee agreement signed by Debtor that was offered as Exhibit A at the hearing. In addition to the long list of excluded services and the excessive hourly rate to be charged for excluded services set forth in that agreement, the court has additional concerns regarding its terms, including an additional $100.00 fee for each “in office visit” with counsel. The court is at this time addressing only the issues raised in its hearing order, with no other particular issues with the Fee Agreement having been raised at the hearing. The $100 additional fee for an office visit is, however, one that the court construes as within the cancellation of terms set forth in this order.

Nevertheless, based on Attorney Hawkins’ representations to the court and Debtor’s testimony at the hearing, it finds that the $1,250.00 paid to him by Debtor is not excessive and is a reasonable fee in this case, provided that no additional hourly rate is charged for basic services needed to adequately represent him in this Chapter 7 case. The fee agreement signed by Debtor is cancelled to the extent that it does not require counsel to include within the $1,250 attorney fee paid by Debtor the following services: all representation to complete Debtor’s Chapter 7 case, except representation in any objection to discharge, adversary proceeding or any heavily contested matter, or other services that could not have been contemplated after reasonable diligence by Counsel when the Fee Agreement was signed, and with the hourly rate for excluded services not to exceed $250 per hour.

IT IS SO ORDERED

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

Upright Law fees excessive in ND Ohio? (summary)

Upright Law fees

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country. Fees are tricky things, and you have to be careful not to charge too much in your district!

Upright Law is a law firm based in Chicago that helps people around the country find relief under the bankruptcy code. In the interest of full disclosure, I am an affiliate with Upright Law – I co-represent their (our) clients in the northern counties of the Eastern Division of the Southern District of Illinois. Our attorney fee statement comports with the requirements of the district – some things do require an extra fee (adversary actions challenging your discharge in bankruptcy, for example). That is made clear from the beginning and the court has had no issues with it.

Bank ND Ohio: Decision on Attorneys’ Fees of Upright Law in Ohio

Allen Chern Law, LLC, is specified as an affiliate of Upright Law, a law firm based in Chicago, Illinois. At the hearing, Attorney Hawkins explained that the fee agreement signed by Debtor was prepared by the Chicago firm for national use and sets forth the excluded services that he lists in his Fee Disclosure.

Attorney Hawkins represented to the court that he included them in the Fee Disclosure in order to be consistent with the signed fee agreement, but that, in practice, he does not and will not exclude basic bankruptcy services in Chapter 7 debtor representations, including in Debtor’s ongoing case. He also agrees that $395.00 per hour for the excluded services is unreasonable in a consumer Chapter 7 bankruptcy case in this jurisdiction.

Under 11 U.S.C. § 329(b), if the compensation of debtor’s attorney “exceeds the reasonable value of any such services, the court may cancel any such agreement . . . to the extent excessive. . . .” The court finds that the fee agreement signed by Debtor provides for compensation that exceeds the reasonable value of services set forth therein because of the exclusions for basic bankruptcy services.

Nevertheless, based on Attorney Hawkins’ representations to the court and Debtor’s testimony at the hearing, it finds that the$1,250.00 paid to him by Debtor is not excessive and is a reasonable fee in this case, provided that no additional hourly rate is charged for basic services needed to adequately represent him in this Chapter 7 case. The fee agreement signed by Debtor is cancelled to the extent that it does not require counsel to include within the $1,250 attorney fee paid by Debtor the following services: all representation to complete Debtor’s Chapter 7 case, except representation in any objection to discharge, adversary proceeding or any heavily contested matter, or other services that could not have been contemplated after reasonable diligence by Counsel when the Fee Agreement was signed, and with the hourly rate for excluded services not to exceed $250 per hour.

 

You can read the entire decision here.

***

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

The Jason Stockley verdict, explained; St. Louis Magazine, by Jeanette Cooperman

Jeanette Cooperman has been a good friend for almost 25 years. She is the author of A Circumstance of Blood and writes for various St. Louis, Missouri publications.

Here is an article she wrote on September 18, 2017 on the Jason Stockley verdict.

I hope you enjoy it.

Thanks to Jeanette and St. Louis Magazine for allowing me to reprint the article:

***

The Jason Stockley verdict, explained

Saint Louis University law professor Chad Flanders provides an in-depth analysis of Judge Tim Wilson’s verdict and findings.

 

BY JEANNETTE COOPERMAN; SEPTEMBER 18, 2017

After St. Louis Circuit Judge Timothy Wilson issued his decision on the case of former police officer Jason Stockley, Saint Louis University School of Law professor Chad Flanders—who teaches and writes in the areas of criminal law, constitutional law, and the philosophy of law—took an in-depth look at Wilson’s 30-page verdict and findings. We asked him to walk us through his legal analysis.

 

Why wasn’t Stockley convicted of a lesser charge? He could have been. Yes, prosecutors went for first-degree murder, but the state also asked the judge to consider lesser degrees of homicide if he did not feel he could convict on first-degree homicide. The possibilities were:

 

First-degree murder, in which a person must have knowingly, after deliberation, caused the death of another person. “Deliberation” is defined as cool reflection for any length of time, no matter how brief.

Second-degree murder, which in Missouri is knowingly causing the death of another, or intending to cause serious physical injury but winding up causing the person’s death.

Voluntary manslaughter, also known as “heat of passion” murder. That’s when you are provoked into killing someone and kill that person in a sudden passion. The provocation must be something that would provoke a person of an “ordinary temperament.”

Involuntary manslaughter. Wilson himself wrote: “The Missouri Supreme Court holds that self-defense in a homicide does not foreclose a conviction for involuntary manslaughter if the defendant was entitled to use force while acting in self-defense, but exceeded the scope of the self-defense privilege by using an unreasonable amount of force.” Involuntary manslaughter (first degree) is “recklessly” killing someone.

So why couldn’t the judge have found this to be a case of excessive force? Excessive force as such isn’t really a crime in Missouri. You can murder someone, or assault them—these are obvious uses of too much (unjustified) force. But excessive force is usually used in cases where people are suing the police in suits alleging that the police have violated their constitutional rights—that they used too much force in arresting someone, which violated that person’s right to be free from unreasonable seizures, or right not to be deprived of life or liberty without due process.

 

Law enforcement officers are justified in using force in arresting people who are trying to escape. This is under a Missouri statute about “law enforcement officer’s use of force.” There are limits on how much force they can use in doing that (which is also spelled out in the statute), but I don’t see this case that way. At the point where Stockley shoots Smith, there’s no danger of Smith getting away. This is a “did he act in self-defense?” case.

 

And because the judge thought it possible that Stockley did act in self-defense—more precisely, that it had not been proven beyond a reasonable doubt that he didn’t act in self-defense—any lesser charge was ruled out? Mostly. Wilson wrote, “Given that the State here has failed to prove beyond a reasonable doubt that defendant’s use of deadly force was not justified in self-defense, the Court need not address lesser degrees of homicide including involuntary manslaughter.” There are some cases in Missouri that allow the possibility of using self-defense against murder, but still being convicted of manslaughter—but that’s rare. The judge thought the self-defense case was there, and that prevented a conviction on any lesser homicide charge.

 

Is self-defense tough to prove? There has to be some evidence of self-defense presented in court, but the defense doesn’t have the burden to prove it beyond a reasonable doubt. The state has the burden to prove that Stockley did not act in self-defense. This is a point of law that was very helpful to Stockley.

 

Could it have been argued that there wasn’t enough evidence to show that the officer acted in self-defense? Well, this is sort of what the state did argue, and lost. They wanted to say that Stockley deliberated and killed the person when there wasn’t really a threat sufficient to justify the use of deadly force in self-defense. But the judge went with the defense on this point.

 

What’s the standard for self-defense in Missouri law? The core has remained the same over the years, and the basics are this: if you fear imminent use of deadly force against you, and reasonably believe that only deadly force is sufficient to remove the threat, you are justified in using deadly force. The elements are, roughly, 1) the defendant didn’t start it, 2) there was a real necessity to use deadly force to avoid the danger to your life and or physical safety, 3) the belief in this necessity was reasonable, and 4) the defendant did everything possible to avoid the danger and the need to take a life. The last part of this gets qualified a bit when it comes to law enforcement officers, because they don’t have the duty to retreat when they’re threatened.

 

What would be the logical charge in a case in which a perpetrator was possibly in danger but overreacted? Either voluntary manslaughter [explained above] or involuntary manslaughter. Involuntary manslaughter is when you “recklessly” cause the death of another (as in: there was a real risk that you would cause this harm, but you disregarded the risk and did the thing anyway). In his opinion, Judge Wilson briefly considered whether involuntary manslaughter would be the proper charge but decided against it.

 

What, in this case, could have shown deliberation? Multiple gunshots, shots at close range, a “kill shot,” or words said in advance of the crime could all be used to show deliberation.

 

Stockley’s announcement while in pursuit that he was “going to kill this motherf‑‑‑er, don’t you know it” didn’t hold any weight for this judge, because the words were uttered in the heat of the moment and it was hard to tell the context. Do you know of any cases in which judges have attached weight to such comments? Cases involving statements like this are rather common; so much so that Missouri puts them in a category of evidence called “planning evidence”: If you do or say things that show your intent to kill, that can go toward showing deliberation. Statements like, “I’m going to kill him” certainly fit into that category. Of course, as the judge pointed out, you have to put the phrase in context.

 

Do situations of perceived danger automatically remove “cool deliberation”? No, there have been other cases in which similar dangerous, stressful and frenetic circumstances have not barred a finding of deliberation—especially given that deliberation can arise in a matter of seconds, as Missouri courts have repeatedly held. In one case, a jury found “deliberation” during a struggle for a purse in a robbery.

 

What was the most significant evidence in question? Judge Wilson, I think, saw the key factual question as whether Smith had a gun, or at least whether Stockley reasonably believed he had a gun. If Stockley wins on this factual point, he’s going to be strong on self-defense. Saying someone pointed a gun at you and you responded to that are pretty common in self-defense cases, and you can win on self-defense even if it turns out there wasn’t a gun (so long as you reasonably believed that there was a gun).

 

Is Wilson’s assumption of an “urban heroin dealer” being armed problematic judicially, or just common sense? It seemed to me a little gratuitous in the context of the opinion. It is clear by that point the judge believed Stockley about what he (and his partner) say they saw and about whether or not the gun was planted. And then you have this short paragraph with this generalization. I don’t think it needed to be there, and I was surprised it was. But even if this was found to be an example of bias and not common sense, it’s not a basis to challenge the verdict, because this is an acquittal, not a conviction. It’s only in rare cases that the state can get another try at convicting someone—that’s the way our system works.

 

The judge also attached significance to the fact that Smith and Stockley did not know each other, had no “prior history.” This goes to whether there was “bad blood” between them, which courts have seen as one basis for inferring deliberation, because now you have a motive. But it seems possible that a basis for “bad blood” could be found in A) Smith ramming the police vehicle and B) leading the officers on a chase. That might have given the officer a motive to do what he did.

 

To a trained legal mind, is this a pretty obvious and easy-to-understand decision, or is it gray and nuanced enough that other judges and legal scholars could have analyzed the case differently? I think this could have gone either way. At the end of the day, the decision Judge Wilson made was based on his call on various disputed facts. The law was not, for the most part, at issue. A lot of this goes to the credibility of the witnesses and drawing a bunch of inferences one way rather than another. It’s just that in this case, the judge saw most, or nearly all, of them breaking in Stockley’s favor.

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, McLeansboro, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also find his website at http://www.mtvernonbankruptcylawyer.com.

 

 

 

 

Conflicts of Interest between clients: the Renewable Energy case (part 3)

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country.

This is a very involved case that I love sifting through. But it basically boils down to attorneys representing more than one client in a matter and creating a “conflict of interest” – he cannot do one thing for one client that may affect or hurt another.

After an argument based on Constitutional grounds, the court continues with its well-done and quite readable decision.

Here is the first and second part of the Renewable Energy case.

And now the conclusion!

 

Mr. Hofmann brushes aside these authorities and asks us to find inspiration instead in Albert v. Site Mgmt., Inc., 506 B.R. 453 (D. Md. 2014), and In re Refco Inc., 461 B.R. 181 (Bankr. S.D.N.Y. 2011). But neither of these cases acknowledges Stern’s direction that a case meeting both of the conditions we’ve discussed is entitled to an Article III forum. Neither of these cases appears reconcilable with the most thoughtful circuit learning on the subject we’ve just outlined. Refco even admits that its result is in tension with Stern, going so far as to acknowledge that the Supreme Court would likely reject its result. Refco, 461 B.R. at 191; see also In re Lyondell Chem. Co., 467 B.R. 712, 721 (S.D.N.Y. 2012) (agreeing with Refco’s self-assessment). And it can come as no surprise that a court’s well-reasoned confession its ruling runs afoul of Supreme Court precedent is enough to send us packing in the other direction.

Perhaps what Mr. Hofmann, the district court, and these authorities are aiming at is something different and a good deal more plausible than an extension of public rights doctrine to cases “factually intertwined” with bankruptcy. In places, you could read them all as suggesting less that cases like ours qualify as bona fide public rights disputes and more that we should consider recognizing a fourth qualification to Article III, one particular to bankruptcy, to cover them.

And somewhere in here there may be a good argument premised on historical understanding. At the time of the founding, English bankruptcy commissioners could “summarily” decide matters related to the disposition of property in the bankruptcy estate — a sort of equitable in rem authority to administer and dispose of the bankrupt’s assets for the benefit of his creditors. But bankruptcy commissioners could not resolve “plenary” suits involving outside parties or questions about what property belonged in or out of the bankruptcy estate. Such matters had to be resolved before a judge. Congress’s early attempts to implement a nationwide bankruptcy system reflected this same jurisdictional divide. See Brubaker, supra, at 123-30; Arkison, 134 S. Ct. at 2170. And there’s a colorable argument that Article III should be read in light of this historical practice. You might even rationalize Stern and other existing cases along these lines. After all, Stern’s second condition, focusing on the amenability of a claim to resolution in the bankruptcy claims process, could be read as suggesting that the constitutional line falls along something like the old summary-plenary divide.

So might Stern’s suggestion that fraudulent conveyance claims belong in an Article III court despite the fact they sometimes nominally arise from federal statute. And so might the logic behind the Ninth Circuit’s decision in Bellingham and similar circuit decisions elsewhere.

Recognizing the summary-plenary line as the operative constitutional boundary in bankruptcy may have the virtue of consistency with historical practice and afford lower courts (some of) the guidance they’ve long wanted. See Brubaker, supra, at 123-30. It might also have the virtue of avoiding further entanglements with public rights doctrine in this area — a doctrine that’s not only pretty hard to get your hands around, but one that on even a good day may be poorly suited to the task of allocating decisonmaking authority in bankruptcy given (after all) that bankruptcy involves the disposition of private assets between private parties. It’s perhaps telling in this regard that, despite suggesting some aspects of bankruptcy implicate only public rights, precisely none of the Court’s Article III bankruptcy cases has yet upheld a bankruptcy court’s decision on this basis. And perhaps telling, too, that several Justices have expressed openness to exploring the use of historical practice as a basis for the constitutional boundary between Article I and Article III in the bankruptcy context. See Wellness Int’l Network, 135 S. Ct. at 1951 (Roberts, C.J., dissenting); id. at 1967-68 (Thomas, J., dissenting); Stern, 131 S. Ct. at 2621 (Scalia, J., concurring); see also Brubaker, supra, at 164-67; Gibson, supra, at 170.

Still, it’s hardly clear that pursuing this idea further would help Mr. Hofmann. For this case doesn’t involve the administration or distribution of estate assets and it would seem to fit pretty neatly on the plenary side of the line.

Even more problematically still, while the district court discusses a possible argument in this direction, Mr. Hofmann’s brief does no more than allude to it.

And because entertaining an argument for drawing a new doctrinal boundary between Article I and Article III in the bankruptcy context would require us to confront highly “difficult constitutional question[s]” that are “not adequately . . . briefed,” we are naturally reluctant to venture farther into this dark wood without more help from counsel. Wellness Int’l Network, 135 S. Ct. at 1970 (Thomas, J., dissenting). After all, what looks a promising possibility from afar often reveals scraggly particulars on closer encounter. So in the end we think the prudent course is to leave Mr. Hofmann’s allusion where we find it and defer its resolution for another case where it may be more fully explored by the parties.

Still, that’s not the end of our encounter with this appeal. It isn’t because saying (as we do) that a bankruptcy court may not decide this case without the parties’ consent under Stern doesn’t necessarily mean it cannot hear the case and offer a report and recommendation about its disposition to a district court.

Indeed, as the Supreme Court has recently explained, where (as here) we are faced with a “Stern claim”— a claim the bankruptcy court is statutorily but not constitutionally authorized to decide and for which it has not received the parties’ consent to proceed — it’s still possible under 28 U.S.C. § 157(c)(1) and consistent with Article III for a bankruptcy court to “hear the proceeding and submit proposed findings of fact and conclusions of law to the district court for de novo review and entry of judgment.” Arkison, 134 S. Ct. at 2173. In cases like this, the bankruptcy court may act as a sort of magistrate or special master, an adjunct to the decisionmaker, not the decisionmaker itself — and in this way honor both statutory and constitutional commands. Id. So while Summit is right and the district court erred in sending Mr. Hofmann’s case to bankruptcy court for final decision, the district court remains free on remand to refer the case to a bankruptcy court for a report and recommendation.

Summit resists this result, fighting even a temporary trip to bankruptcy court for a report and recommendation. For a bankruptcy court to hear a claim as a matter of statutory law, Summit notes, 28 U.S.C. § 157(a) instructs that the claim must “aris[e] under title 11 or aris[e] in or relate[] to a case under title 11,” the federal bankruptcy code. And Summit says this requirement isn’t met in this case because the parties’ fight is so far removed from bankruptcy that it can’t be said to “aris[e] under title 11 or aris[e] in or relate[] to a case under title 11.” But whatever other problems might attend this line of argument one is by now familiar: it wasn’t made before the district court and is therefore another one we may and do decline to resolve in this appeal. See Waldman, 698 F.3d at 917.

Not ready to give up quite so easily on its effort to avoid even a short detour from district court, Summit suggests we cannot ignore and must resolve its argument because it implicates the subject matter jurisdiction of the federal courts. But that much it does not — quite — do. The statute Summit invokes, 28 U.S.C. § 157, involves only the allocation of responsibility between the bankruptcy and district court; it does not “implicate questions of subject matter jurisdiction.” Stern, 131 S. Ct. at 2607. We acknowledge that § 157(a) shares similar language with 28 U.S.C. § 1334(b) — and we readily accept that statute is jurisdictional: quite expressly it provides district courts with “jurisdiction” over “all civil proceedings arising under title 11, or arising in or related to cases under title 11.” So maybe Summit’s § 157(a) argument could be transferred to § 1334(b), and maybe the argument could present a successful jurisdictional challenge there. But if it did, it wouldn’t be just the bankruptcy court that would lack jurisdiction to hear and report on this case. The district court itself would have no authority to hear the case either for § 1334(b) expressly governs its jurisdiction too.

Anxious to remain in federal court — just not ever visit bankruptcy court — Summit shirks from acknowledging this, the full consequences of its argument, and nowhere mentions § 1334(b) in its opening brief or how its argument might apply to that statute. And, happily for everyone, we don’t have to address the question on our own motion either, even though it does implicate subject matter jurisdiction. We don’t because, whether or not the district court has jurisdiction to decide this case under § 1334(b), everyone acknowledges it clearly has jurisdiction to do just that under § 1332(a) given that the complaint alleges complete diversity of citizenship and a sufficient amount in controversy. See, e.g., Penteco Corp. Ltd. P’ship–1985A v. Union Gas Sys., Inc., 929 F.2d 1519, 1521 (10th Cir. 1991).

At the end of the day, then, we are confident that the district court possesses subject matter jurisdiction to hear this case at least under the diversity statute, that Summit is entitled under Stern to have an Article III district court resolve its claims, and that the district court may refer the case to an Article I bankruptcy court for a report and recommendation. Many other questions remain for tomorrow. But resolving this much is enough work for today. The case is remanded to the district court for further proceedings consistent with this opinion.

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, McLeansboro, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also find his website at http://www.mtvernonbankruptcylawyer.com.

 

 

 

The Renewable Energy Case: Article One Judges and Article Three Judges

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country.

This is a very involved case that I love sifting through. But it basically boils down to an attorney representing more than one client in a matter and creating a “conflict of interest” – he cannot do one thing for one client that may affect or hurt another.

He also created a constitutional issue in doing so! Who should hear the case? A judge created by Article I of the Constitution or a judge created by Article III of the Constitution?

Read the first part of the Renewable Energy case here. Seriously, you’ll be lost if you do not!

 

How do these unfortunate but hardly uncommon (and still unproven and only alleged) facts yield a dispute of constitutional magnitude? Summit filed suit in federal court against Mr. Hofmann alleging diversity jurisdiction and the right to have the case resolved in an Article III court. Mr. Hofmann replied that the case belonged in and should be resolved by an Article I bankruptcy court. Ultimately, the district court sided with Mr. Hofmann even as it acknowledged some uncertainty about this much and certified its decision for an immediate appeal.

The Constitution assigns “[t]he judicial Power” to decide cases and controversies to an independent branch of government populated by judges who serve without fixed terms and whose salaries may not be diminished. U.S. Const. art. III, § 1. This constitutional design is all about ensuring “clear heads . . . and honest hearts,” the essential ingredients of “good judges.” 1 Works of James Wilson 363 (J. Andrews ed., 1896) (alteration omitted), quoted in Stern v. Marshall, 131 S. Ct. 2594, 2609 (2011). After all, the framers lived in an age when judges had to curry favor with the crown in order to secure their tenure and salary and their decisions not infrequently followed their interests. Indeed, the framers cited this problem as among the leading reasons for their declaration of independence. The Declaration of Independence ¶ 11; Stern, 131 S. Ct. at 2609.

And later they crafted Article III as the cure for their complaint, promising there that the federal government will never be allowed to take the people’s lives, liberties, or property without a decisionmaker insulated from the pressures other branches may try to bring to bear. Stern, 131 S. Ct. at 2609. To this day, one of the surest proofs any nation enjoys an independent judiciary must be that the government can and does lose in litigation before its “own” courts like anyone else.

Despite the Constitution’s general rule, over time the Supreme Court has recognized three “narrow” situations in which persons otherwise entitled to a federal forum may wind up having their dispute resolved by someone other than an Article III judge. Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 64 (1982) (plurality opinion). Cases arising in the territories or the armed forces or those involving “public rights” may be sent to Article I tribunals of Congress’s creation even if decisionmakers there do not enjoy the same insulation and independence as Article III judges. Id. at 63-72. Bankruptcy courts are, of course, legislative creations of just this sort. And because they don’t have a thing to do with the territories or armed forces, the Supreme Court has suggested that their lawful charter depends on and is limited by public rights doctrine.

As developed to date, public rights doctrine has something of “a potluck quality” to it. Waldman v. Stone, 698 F.3d 910, 918 (6th Cir. 2012) (Kethledge, J.). The original idea appears to have been that certain rights belong to individuals inalienably — things like the rights to life, liberty, and property — and they may not be deprived except by an Article III judge. Meanwhile, additional legal interests may be generated by positive law and belong to the people as a civic community and disputes about their scope and application may be resolved through other means, including legislation or executive decision. See Stern, 131 S. Ct. at 2612; Caleb Nelson, Adjudication in the Political Branches, 107 Colum. L. Rev. 559, 566-72 (2007). But the boundary between private and public rights has proven anything but easy to draw and some say it’s become only more misshapen in recent years thanks to seesawing battles between competing structuralist and functionalist schools of thought. Compare, e.g., Northern Pipeline, 458 U.S. 50, and Stern, 131 S. Ct. 2594, with Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833 (1986), and Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015). Indeed, the Court itself has acknwledged, its treatment of the doctrine “has not been entirely consistent.” Stern, 131 S. Ct. at 2611; see also S. Elizabeth Gibson, Jury Trials and Core Proceedings: The Bankruptcy Judge’s Uncertain Authority, 65 Am. Bankr. L.J. 143, 168-175 (1991) (“How a majority of the Court could have embraced these opposing views of article III within the span of less than a decade is difficult to understand,” id. at 174).

Bankruptcy courts bear the misfortune of possessing ideal terrain for testing the limits of public rights doctrine and they have provided the site for many such battles. See Northern Pipeline, 458 U.S. 50; Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989); Stern, 131 S. Ct. 2594. Even today, it’s pretty hard to say what the upshot is. Through it all, the Supreme Court has suggested that certain aspects of the bankruptcy process may implicate public rights and thus lawfully find resolution in Article I courts. See, e.g., Northern Pipeline, 458 U.S. at 71 (plurality opinion); Granfinanciera, 492 U.S. at 56 n.11; Stern, 131 S. Ct. at 2614 n.7. But the Court has also emphasized time and again that not every “proceeding [that] may have some bearing on a bankruptcy case” implicates a public right amenable to resolution in an Article I tribunal. Stern, 131 S. Ct. at 2618.

That much, of course, hardly decides cases. What most everyone wants to know is which aspects of typical bankruptcy proceedings do and don’t implicate public rights. Yet even Stern, perhaps the Court’s most comprehensive tangle with the question, offered no comprehensive rule for application across all cases.

Instead, it invoked a number of different factors to support the result it reached in the particular and rather unusual case at hand. Id. at 2614 (justifying its decision because the case at hand didn’t “fall within any of the varied formulations of the public rights exception in this Court’s cases”); see also id. at 2621 (Scalia, J., concurring) (noting the “surfeit” of factors and formulations offered by the majority); Ralph Brubaker, A “Summary” Statutory and Constitutional Theory of Bankruptcy Judges’ Core Jurisdiction After Stern v. Marshall, 86 Am. Bankr. L.J. 121, 172 (2012).

But along the way Stern did clearly take at least one thing off the table. It held that when a “claim is a state law action . . . and not necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy,” it implicates private rights and thus is not amenable to final resolution in bankruptcy court. Stern, 131 S. Ct. at 2611. Indeed, the Court repeated this point — repeatedly. See id. at 2617, 2618, 2620. So whatever else you might say in the midst of this still-very- much-ongoing battle over bankruptcy and public rights doctrine, you can say this much: cases properly in federal court but arising under state law and not necessarily resolvable in the claims allowance process trigger Article III’s protections.

Happily, too, this is all the guidance we need to answer this appeal. While the parties before us agree on little else, they agree that Summit’s claims against Mr. Hofmann and his firm are properly heard in federal court under the federal diversity statute, that they arise under state law, and that none will necessarily be resolved in the process of allowing or disallowing claims against the estate.

Accordingly, we can be sure this is not the sort of case that may be forcibly shipped to an Article I bankruptcy court for final decision. The parties may waive their right to an Article III forum and choose to have their claims resolved in bankruptcy court. Wellness Int’l Network, 135 S. Ct. at 1939. But a district court may not — as the district court did here — send parties entitled to an Article III court to an Article I forum for final decision without their consent.

Mr. Hofmann resists this result by suggesting that Summit’s claims are factually “intertwined” with the bankruptcy proceedings and for this reason belong in bankruptcy court. After all, he says, any harm that happened here happened only because of a conflict of interest arising from his service as a bankruptcy trustee. This much may be true but it equally strikes us as irrelevant.

As we read Stern, it doesn’t leave room for the notion that a claim independently arising under state law and not necessarily resolvable in the claims allowance process — but “factually intertwined” with bankruptcy proceedings — may be sent to bankruptcy court for final resolution without consent. As we see it, the only “intertwining” Stern cares about concerns the law, not the facts. In the process of rejecting the idea that the claim before the Court implicated public rights doctrine, Stern observed (among other things) that the claim was not “intertwined with a federal regulatory program Congress has power to enact” but arose instead under state law. 131 S. Ct. at 2614 (quoting Granfinanciera, 492 U.S. at 54). The Court pointed out that prototypical public rights disputes arise from “federal statutory scheme[s]” while “quintessential[]” private rights disputes involve common law rights affecting personal life, liberty, or property. Id. at 2614, 2618. In this way, the Court did suggest the source of law generating a claim may inform its categorization as involving a public or private right. But the Court nowhere suggested that any claim “factually intertwined” with bankruptcy may be sent to bankruptcy court for final resolution without consent.

We confess we’re glad of this. Asking what source of law generated the claim at issue may well raise some questions around the edges — like what about claims pursuing fraudulent conveyances, which find a home in a federal statute but surely implicate longstanding common law rights? See Granfinanciera, 492 U.S. at 56. Still, questions like these aren’t a patch on what would be involved if in each case we had to ask whether the plaintiff’s claims are “factually intertwined” with a bankruptcy proceeding. If, as Mr. Hofmann submits, our case is “factually intertwined” enough with bankruptcy to warrant its resolution in bankruptcy court — just because a trustee in the bankruptcy happened to generate a conflict of interest with a client outside the bankruptcy — what wouldn’t be?

What if a trustee and creditor came to blows in the courthouse parking lot over the terms of a proposed reorganization plan? What if a trustee stole from a third person and gave the money to the bankruptcy estate? Couldn’t someone plausibly describe disputes like these as at least as “factually intertwined” with bankruptcy as our own?

The implausibility of Mr. Hofmann’s “factually intertwined” test as a viable interpretation of Stern and its inadvisability as a practical matter are further underscored by this. If we were to adopt his test, you could make a pretty good argument Stern itself would have had to come out the other way. In Stern the debtor brought a tort counterclaim against a creditor in hopes of enlarging the bankruptcy estate and the Supreme Court found the allegation sufficient to trigger the bankruptcy court’s “core” authorities. 131 S. Ct. at 2604. That sounds pretty “factually intertwined.” Yet the Court held the case triggered Article III’s protections. A similar sort of problem may recur with Granfinanciera too. There the debtor allegedly engaged in a fraudulent conveyance to hide assets from the bankruptcy estate. Though the Court decided the case on other grounds (the Seventh Amendment), Stern seemed to suggest that fraudulent conveyance cases involve private rights and thus are of the sort that (absent consent) must be decided in Article III courts. See id. at 2614 n.7 (describing Granfinanciera as teaching that “Congress could not constitutionally assign resolution of the fraudulent conveyance action to a non-Article III court”); see also In re Bellingham Ins. Agency, Inc., 702 F.3d 553, 563 (9th Cir. 2012) aff’d sub nom. Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014). Even though, surely, one could argue fraudulent conveyance claims are usually (always?) “factually intertwined” with the bankruptcy process because they challenge efforts to evade it. That Mr. Hofmann’s proposed test would place us at odds with what the Supreme Court has decided in Stern — and at least suggested about Granfinanciera — does much to make us skittish of following where he would have us go.

Notably, many circuits to come this way before us have read Stern much as we do. In fact, some have even read the decision as claiming a good deal more ground for Article III than we must to resolve this appeal. The Ninth Circuit, for one, has suggested that only the second portion of the Stern test we’ve discussed — whether the matter would necessarily be resolved in the claims allowance process — must be satisfied to trigger Article III’s protections. After all, the Ninth Circuit has noted, Granfinanciera involved a claim at least nominally arising from federal statute (not state law), yet it’s one Stern seemed to suggest belongs on the private side of the rights ledger. In re Bellingham, 702 F.3d at 564. Neither is the Ninth alone in this view. See, e.g., In re Fisher Island Invs., Inc., 778 F.3d 1172, 1192 (11th Cir. 2015) (holding that a bankruptcy court had authority to decide a state law dispute that was necessarily resolved in the claims allowance process); In re Frazin, 732 F.3d 313, 320-24 (5th Cir. 2013) (invoking the claims allowance process to explain why a bankruptcy court could decide certain state law claims but not others); Waldman, 698 F.3d at 921 (finding an Article III problem because “there was never any reason to think that” the debtor’s “disallowance claims would necessarily resolve his affirmative [state law] claims”). To decide the case before us, however, we do not have to travel so far for both of the factors Stern discussed are present here and surely all the circuits to have spoken on the subject would agree their combination is enough (maybe more than enough) to invite Article III’s application.

 

This opinion is to be continued!

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, McLeansboro, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also find his website at http://www.mtvernonbankruptcylawyer.com.

 

The Renewable Energy Case: representing more than one client …

As a bankruptcy attorney in Mount Vernon, IL for over 20 years, I read through and analyze court rulings throughout the country.

This is a very involved case that I love sifting through. But it basically boils down to an attorney representing more than one client in a matter and creating a “conflict of interest” – he cannot do one thing for one client that may affect or hurt another.

Here is the first part of the case. Honestly? You can see the conflict coming a mile away!

 

UNITED STATES COURT OF APPEALS, TENTH CIRCUIT, Case No. 14-4001

In re: RENEWABLE ENERGY DEVELOPMENT CORPORATION, Debtor.

ELIZABETH R. LOVERIDGE, Chapter 7 Trustee, Plaintiff, vs.

TONY HALL; ELLIS-HALL CONSULTANTS, LLC; SUMMIT WIND POWER, LLC; SSP, a trust, Scott Rasmussen-Trustee; CLAY R. CHRISTIANSEN; DIANE E. CHRISTIANSEN; RICHARD D. FRANCOM; STEPHEN K. MEYER; BONNIE G. MEYER; DOES I-X; Defendants, and SUMMIT WIND POWER, LLC; KIMBERLY CERUTI, an individual, as Third Party Plaintiffs – Appellants, vs.

PARSONS KINGHORN HARRIS, a professional corporation; GEORGE B. HOFMANN; MATTHEW M. BOLEY; KIMBERLEY L. HANSEN; VICTOR E. COPELAND; LISA R. PETERSON; MELYSSA DAVIDSON, individuals, as Third Party Defendants – Appellees.

Appeal from the United States District Court for the District of Utah

GORSUCH, Circuit Judge.

This case has but little to do with bankruptcy. Neither the debtor nor the creditors, not even the bankruptcy trustee, are parties to it. True, the plaintiffs claim they once enjoyed an attorney-client relationship with a former bankruptcy trustee. True, they now allege the former trustee breached professional duties due them because of conflicting obligations he owed the bankruptcy estate. But the plaintiffs seek recovery only under state law and none of their claims will be necessarily resolved in the bankruptcy claims allowance process. And to know that much is to know this case cannot be resolved in bankruptcy court. The bankruptcy court may offer a report and recommendation. It may even decide the dispute if the parties consent. But the parties are entitled by the Constitution to have an Article III judge make the final call. So the district court’s ruling otherwise — its decision to send the dispute to an Article I bankruptcy court for final resolution without their consent — violates the Constitution’s commands and must be corrected.

Conflicts of interest often spell trouble for lawyers. The rules are complex and missteps happen. And at least as the complaint in this case tells it, a misstep happened here. When Renewable Energy Development Corporation (REDCO) found itself facing Chapter 7 proceedings, the bankruptcy court appointed attorney George Hofmann to serve as trustee for the estate. REDCO was in the wind business and its assets included lease options with private property owners who agreed to allow wind farms on their lands. As trustee, Mr. Hofmann was eager to ascertain the value of REDCO’s leases so he consulted another client of his with expertise in the field — Kimberly Ceruti, the owner of Summit Wind Power, LLC. The pair eventually discovered that REDCO had failed to pay some property owners the consideration it owed them. As a result, Mr. Hofmann allegedly concluded that REDCO’s options were unenforceable and even encouraged Summit to pursue its own leases with the same individuals. Which it promptly did.

What started off sounding like a good idea and maybe even a win-win for REDCO and Summit soon yielded a rat’s nest of conflicts. On further study, Mr. Hofmann came to the view that the property owners couldn’t cancel their leases with REDCO in favor of Summit without first giving REDCO a chance to cure its nonpayment. And, in Mr. Hofmann’s estimation, the chance to cure was a valuable opportunity for REDCO and its creditors. So he asked Summit to forgo its new leases in favor of REDCO’s old ones. Summit refused. Things got so testy that Mr. Hofmann, yes, brought an adversarial proceeding in bankruptcy court against one client (Summit) on behalf of another (the REDCO estate).

Unsurprisingly, Summit responded with state law claims against Mr. Hofmann and his law firm, alleging legal malpractice, breaches of fiduciary duties, and a good many other things besides. Mr. Hofmann, by now irredeemably conflicted, was replaced as trustee.

 

This opinion is to be continued!

 

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, McLeansboro, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also find his website at http://www.mtvernonbankruptcylawyer.com.

 

The Judge is your Friend … and mine, too!

 When is a Facebook “Friend” Really A Friend (IRL)?

Thursday, August 24, 2017    Julie Tappendorf

Courtesy of Municipal Minute

When is a Facebook “friend” considered a friend IRL (in real life)?  Yesterday, a Florida appeals court ruled that the mere fact that a trial court judge was Facebook friends with an attorney did not disqualify the judge from hearing a case involving that attorney. Law Offices of Herssein and Herssein v. U.S. Automobile Association.

The underlying dispute in this case isn’t really important, at least not to this post. The issue before the appeals court was the plaintiff’s request that the trial court judge be disqualified because the judge was “friends” on Facebook with a lawyer representing a potential witness and party in the underlying dispute. The trial court had denied the request, and that decision was appealed to the appellate court.

The appellate court looked at the factors for determining whether a judge should be disqualified, including whether a reasonably prudent person would fear he could not get a “fair and impartial trial” before the judge. In this case, the appellate court determined that Facebook friendship between a judge and an attorney, on its own, was not enough to warrant disqualification of the judge, stating as follows:

A Facebook friendship does not necessarily signify the existence of a close relationship.

The appellate court acknowledged that people can have thousands of Facebook “friends,” that a person may not even remember who he or she had “friended” in the past, and that some “friendships” may be due more to Facebook’s  data-mining technology than personal interactions. In short, the court rejected any assumption that all Facebook “friends” should rise to the level of a close relationship that warrants disqualification. Based on the facts presented in this particular case, the court found no support for disqualification of the judge in the underlying dispute.

 

Post Authored by Julie Tappendorf

 

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Thanks so much to Julie Tappendorf and the Municipal Minute for allowing me to share their blog post.

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (probate, wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Salem, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.co