In re Bradley
495 B.R. 747
Bankr. S.D. Tex.2013Background
- Debtors Shontel and Sarika Bradley retained the Firm to handle their Chapter 13 case beginning in 2009, with multiple substitutions of counsel and changes in attorney‑in‑charge over the years.
- Attorney Nosa Aduwa, then managing Houston office, filed Schedules and SOFA without the Debtors' signatures or authorization, and used Gutierrez to forge signatures electronically on several documents.
- Aduwa substituted an appearance attorney (Carter) for a creditors’ meeting, failed to adequately prepare Carter, and did not notify the Debtors of the substitution.
- In December 2012 and January 2013, the Firm filed the Notice of Conversion and Initial/Amended Conversion Schedules/SOFA, containing inaccuracies and relying on unsigned or unverified information.
- The Debtors later testified at the January 8 and January 22, 2013 meetings that they had not reviewed or signed the contested schedules and that the documents contained errors; the Trustee identified misconduct prompting a show cause.
- The Court held a show cause hearing, found extensive violations of the Bankruptcy Code, Rules, and Local Rules, and imposed sanctions against Aduwa, Gutierrez, the Firm, and the Firm's principals Macey and Aleman, including a prohibition on appearance attorneys in cases before the undersigned judge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aduwa violated Rule 9011(b) and related rules | Bradley asserts deliberate misfilings and forged signatures by Aduwa. | Aduwa claims backlog and procedures misapplied; seeks leniency. | Yes; sanctions warranted for 9011(b) violations. |
| Whether forged signatures on the Defective Pleadings violated 9011 | Bradley contends Gutierrez forged signatures under Aduwa's direction. | Firm argues inadvertent errors and internal mismanagement. | Yes; forgery and unauthorized practice of law established; sanctions imposed. |
| Whether use of an appearance attorney violated local rules and statutes | Bradley demonstrates lack of notice and unprepared appearance by Carter. | Firm asserts appearance attorneys are common and permissible with disclosure. | Prohibited for cases before the undersigned; sanctions imposed and future prohibition ordered. |
| Whether Rule 2016 disclosures and § 329 disclosures were false or incomplete | Disclosures understated fees and failed to list Carter’s involvement. | Firm claims goodwill and remediation; errors not intentional. | Disclosures false/incomplete; sanctions imposed and fees disgorgement discussed. |
| Whether the Firm and its principals may be sanctioned under § 105 and Rule 9011(c) for bad faith conduct | Bad faith, systemic misconduct; pattern of non‑compliance. | Post hoc remedial steps indicate improvement; seeks limited sanctions. | Sanctions imposed; continued monitoring and structural reforms ordered; appearance attorneys barred in cases before the judge. |
Key Cases Cited
- In re Stomberg, 487 B.R. 775 (Bankr.S.D.Tex. 2013) (establishes that forging electronic signatures violates 9011(b))
- In re Phillips, 317 B.R. 523 (Bankr.E.D. Mo. 2004) (necessity of debtor signatures to verify accuracy)
- In re Wenk, 296 B.R. 719 (Bankr.E.D.Va. 2002) (forged signatures on documents violates 9011)
- In re Yorkshire, LLC, 540 F.3d 328 (5th Cir. 2008) (constitutional authority and sanctions framework for 9011 and related sanctions)
- In re Harwell, 439 B.R. 455 (Bankr.W.D. Mich. 2010) (sanctions for use of appearance attorneys and disclosure failures)
- In re Love, 461 B.R. 29 (Bankr.N.D. Ill. 2011) (disgorgement and sanctioning of a mill firm for bad representation)