In re Stomberg
487 B.R. 775
Bankr. S.D. Tex.2013Background
- Braun, Orlando, and the Firm represented the Debtor in a Chapter 11 case and filed the Debtor’s Schedules and SOFA without the Debtor’s signature or verification, including a forged electronic signature.
- Braun had prior disciplinary history and conduct issues; the Court had already sanctioned him for other misrepresentations and conflicts of interest.
- Braun filed the Petition, Schedules, and SOFA on January 7, 2011 with the Debtor allegedly reviewing only briefly and without a face-to-face meeting.
- The Debtor’s current counsel later identified that the original documents lacked the Debtor’s wet signatures and were not properly verified.
- The Court issued multiple show-cause orders; Braun’s conduct prompted a formal sanctions proceeding under Rule 9011, Rule 5005, and local rules, culminating in a Second Show Cause Order and a lengthy evidentiary hearing.
- The Court ultimately found Braun’s conduct to be in bad faith, imposed monetary sanctions, and ordered restitution to affected parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Braun violated Rule 9011(b) | Braun filed unsigned documents and forged signatures. | Braun argues changes were de minimis and signatures were not required. | Yes, Rule 9011(b) violated. |
| Whether sanctions are warranted under Rule 9011(c) and the inherent powers | Sanctions are necessary to deter future misconduct. | Sanctions are excessive given context. | Sanctions warranted under 9011(c) and inherent powers. |
| Whether Braun violated electronic filing rules (5005 and Local Rules) | Documents filed electronically violated procedural/retention requirements. | Procedures were substantially complied. | Violation established; sanctions appropriate. |
| Whether Braun personally failed to meet the Debtor before filing the Schedules and SOFA | Attorney-Client meeting was required to verify accuracy. | Phone review sufficed. | Failure to meet in person proven; sanctionable conduct. |
Key Cases Cited
- In re Wenk, 296 B.R. 719 (Bankr.E.D.Va. 2002) (forgery/9011 violations in electronic filings cited in sanctions rulings)
- In re Phillips, 317 B.R. 518 (8th Cir. BAP 2004) (signature verification and 9011 compliance critical to filings)
- In re Yorkshire, LLC, 540 F.3d 328 (5th Cir. 2008) (sanctions and 105(a) powers; bad faith and duty to the court)