Bankruptcy

Recent Opinions From The Middle District Of Georgia

By Scott Riddle

 In re Baugh, Ch. 7 Case No. 07-30838 (Bankr. M.D. Ga. September 17, 2009)(J. Walker). A petition preparer was sanction pursuant to section 110 of the Code.  The Court found that the preparer violated the Code by failing to provide her address, her partial social security number, and by providing legal advice to the debtor concerning reaffirmation agreements.  The preparer was ordered to disgorge her fees of $500, pay a $700 fine, and cease preparing any petitions in the District until further order of the Court.

In re Tarpley, Ch. 13 Case No. 08-50669; Adv. No. 08-5081 (Bankr. M.D. Ga. June 23, 2009)(J. Walker).  The facts are summarized by the Court:

Defendant Cambridge Credit Counseling Corporation Click for Enhanced Coverage Linking Searchesoffers credit counseling and educational assistance on financial matters to consumers throughout the United States. In 2000, Debtor-Plaintiff Betty Tarpley engaged Defendant in response to its advertising. For approximately eight years, Debtor remitted monthly payments to Defendant, totaling more than $ 30,000. The payments were disbursed by Defendant to various creditors of Debtor after deduction of an administrative fee.

On November 25, 2003, customers of Defendant filed a class action lawsuit in the Eastern District of New York on behalf of all customers of Defendant who received [*2] debt management services from Defendant's date of incorporation in 1996 onward. The class action plaintiffs sought damages for alleged violations of the Fair Debt Collection Practices Act, the Credit Repair Organizations Act, the Racketeer Influenced and Corrupt Organizations Act, the Telemarketing and Consumer Fraud and Abuse Protection Act, and various similar state statutes, as well as claims of false advertising, breach of fiduciary duties, and unjust enrichment.

The parties to the class action entered into a settlement agreement. On December 18, 2006, the district court entered an order approving the compromise and setting forth various terms and conditions, including waiver and release of claims held by the class action plaintiffs...Debtor filed a Chapter 13 petition on March 15, 2008. On September 25, 2008, she initiated an adversary proceeding against Defendant. The complaint alleged violations of consumer protection statutes, breach of contract, and fraud. Defendant filed a motion for summary judgment contending that Debtor's suit is barred under the theory of res judicata by virtue of the class action settlement...Debtor was a party to a class action against Defendant that alleged various violations of consumer protection, tort, and contract laws. Debtor continued her contractual relationship with Defendant during the civil suit and after the settlement.

The Court held that as the debtor's complained alleged post-settlement misconduct on the part of the company, and no facts were provided to show that the company was entitled to judgment for those claims, their summary judgment motion was denied for those claims.  However, res judicata did apply to the debtor's allegations of pre-settlement misconduct, and thus the company was entitled to judgment for those claims.

 In re Hall, Ch. 7 Case No. 03-54624-RFH  (Bankr. M.D. Ga. September 24, 2009) (J. Hershner).   Prior to filing a Chapter 7, debtor retained an Alabama lawyer to handle his personal injury claim for 45% of the recovery, plus expenses.  The Alabama lawyer then agreed with a Georgia lawyer to be co-counsel in the personal injury case, and Debtor sighed a second retainer agreement with the Georgia lawyer, also with a fee of 45% and expenses.  Debtor understood that the combined fee for both lawyers would be 45% plus expenses.  Debtor subsequently filed a Chapter 7 petition and scheduled the personal injury claim as an asset, but apparently did not tel either personal injury lawyer about the case for several months.  The Georgia lawyer subsequently pursued the action on behalf of the Trustee.  

The facts are somewhat convoluted and are not repeated here, but after a fee dispute arose, the Court held that the Alabama lawyer did not provide sufficient evidence of a quantum meruit claim, as he provided no time records or means for the Court to determine the reasonable value of his services.  The lawyers was not entitled to a post-petition administrative claim as he was not approved as counsel for the Trustee, and provided no evidence that he provided value to the estate.  Finally, and dispute between the two personal injury lawyers over splitting the fee did not impact the estate.

Full post as published by Georgia Bankruptcy Blog on October 09, 2009 (boomark / email).