529 B.R. 112
Bankr. E.D. Va.2015Background
- Petitioner filed a Chapter 13 petition on Aug 20, 2013 on T.H.’s behalf without T.H.’s wet signature or evidence of authorized authority.
- Neither Zooberg nor Boardman Firm retained the original signed Petition or a copy, triggering CM/ECF retention concerns and a presumption that the signature did not exist.
- U.S. Trustee moved to expunge the filing and to impose sanctions for unauthorized filing and misrepresentations in Exhibit D and the Petition.
- Hearing held and Petition to Expunge granted; Amended Motion to Impose Sanctions remained for adjudication; case subsequently expunged.
- Court found numerous misrepresentations (address, credit counseling, assets/liabilities, creditors, venue) and severe lack of due diligence; sanctioned Zooberg and the Boardman Firm with suspension and monetary disgorgement.
- Court preserved jurisdiction to sanction notwithstanding expungement, dismissal, or closing of the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the petition improperly filed without authorization? | Robbins contends Zooberg filed without T.H.’s authorization. | Zooberg contends authority or reasonable basis existed. | Yes; filing without proper authorization established misrepresentations and duty violations. |
| Did Zooberg’s representations on the Petition violate Rule 9011 and professional conduct rules? | Misrepresentations and lack of reasonable inquiry violated 9011 and ethics rules. | There was reliance on third-party representations under emergency circumstances. | Yes; multiple misrepresentations and lack of reasonable inquiry violated Rule 9011 and Virginia Rules. |
| Did Boardman Firm’s credit counseling practices contribute to misconduct? | Policy to file without certificate breached court rules. | Policy was amended; compliance improved. | Yes; problematic policy and retention practices warranted sanction. |
| Is the court’s sanction authority available after expungement and is the sanction appropriate? | Court has inherent authority to sanction for misconduct before it. | Expungement could negate consequences. | Yes; court retains authority and imposed 60-day suspension plus $1,000 disgorgement. |
| Should penalties deter future similar misconduct by the attorney and firm? | Sanctions should deter similar conduct by practitioners before the court. | Sanctions should be proportionate and corrective. | Yes; sanctions crafted as minimal necessary to deter repetition. |
Key Cases Cited
- In re Wenk, 296 B.R. 719 (Bankr.E.D.Va. 2002) (forging debtor signatures analogized to electronically filed signatures without authorization)
- In re Alvarado, 363 B.R. 484 (Bankr.E.D.Va. 2007) (due diligence and Rule 9011 obligations in bankruptcy filings)
- In re Storay, 364 B.R. 194 (Bankr.D.S.C. 2006) (expungement mechanics and attorney signatures as certifications)
- In re Joyce, 399 B.R. 382 (Bankr.D.Del. 2009) (expungement as remedial disclosure; not a substitution for sanctions)
- In re Phillips, 433 F.3d 1068 (8th Cir. 2006) (attorney must know filing basis; authorizations and consequences discussed)