Opinion
Case Nos. 05-96287, 05-96742.
March 22, 2006
ORDER FOR ATTORNEY CHARLES WAGNER TO APPEAR AND SHOW CAUSE
The Court's review of cases filed by attorney Charles Wagner and assigned to the undersigned judge reveals deficiencies in two cases that may warrant the imposition of sanctions on counsel. These deficiencies include the failure to file schedules timely and the failure to file Declarations re: Electronic Filing within the time frame required by General Order 02-2. Accordingly, for the reasons that follow, attorney Charles Wagner is ordered to appear at an evidentiary hearing at 2:30 p.m. on April 18, 2006, in Courtroom 1A of the Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, Ohio, and show cause why he should not be sanctioned for the filing deficiencies in the above-captioned cases.
DISCUSSION
This Court has inherent authority to impose sanctions on offending parties and counsel. See, e.g., Mapother Mapother, PSC v. Cooper (In re Downs), 103 F.3d 472, 477 (6th Cir. 1996) ("Bankruptcy courts, like Article III courts, enjoy inherent power to sanction parties for improper conduct."); In re French Bourekas, Inc., 175 B.R. 517, 525 (Bankr. S.D.N.Y. 1994) (noting that bankruptcy court possesses power to impose sanctions as inherent authority and by virtue of 11 U.S.C. § 105(a)). A court must be careful when considering whether to impose sanctions. "When a court metes out a sanction, it must exercise such power with restraint and discretion. Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991). The sanction levied must thus be commensurate with the egregiousness of the conduct." In re Downs, 103 F.3d at 478.
11 U.S.C. § 329Section 329(a) of the Bankruptcy Code requires that "[a]ny attorney representing a debtor" to disclose any fee arrangements. In re Koliba, No. 05-74612, ___ B.R. ___, 2005 WL 3729398, at *1 (Bankr. N.D. Ohio Jan. 20, 2006) (quoting In re Big Rivers Electric Corp., 355 F.3d 415, 428 (6th Cir. 2004)); see also FED. R. BANK. P. 2016. This section vests upon the bankruptcy courts the authority to review all professional fees paid to the debtor's attorney. See In re Koliba, 2005 WL 3729398, at *1. Inherent in this authority is the power of a bankruptcy court to issue sanctions, including the disgorgement of fees, both in full and in part, when an attorney fails to satisfy the requirements of the Bankruptcy Code. Id. (citing In re Kisseberth, 273 F.3d 714, 721 (6th Cir. 2001) and In re Downs, 103 F.3d 472, 478 (6th Cir. 1996)).
Bankruptcy Rule 2017
If review of a case shows that the attorney fee arrangement is not reasonable, "the court may cancel the agreement or order a refund of payments made. 11 U.S.C. § 329. Bankruptcy Rule 2017 implements this provision." In re Campbell, 259 B.R. 615, 625 (Bankr. N.D. Ohio 2001). Read together, section 329 and Rule 2017 "furnish the court with express power to review payments to attorneys for excessiveness and restore the status quo when assets have improvidently been bartered for legal services." Id. at 626.
11 U.S.C. § 105Section 105 of the Bankruptcy Code provides in pertinent part:
Power of Court
(a) The Court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.
Specific Conduct That Appears to Merit Sanctions
The specific conduct that appears to merit sanctions includes the following:Case Name Case Number Deficiencies
Wayne Menefee 05-96287 failure to file declaration re: electronic filing within required time frame Noelle Hodge 05-96742 failure to file schedules timely, failure to file declaration re: electronic filing within required time frame Pursuant to General Order 02-2, the Court has issued an Electronic Case Filing (ECF) Administrative Procedures Manual. Under Section II. B. 2 of the Administrative Procedures Manual, a signature declaration form ("Declaration re: Electronic Filing of Documents and Statement of Social Security Number") is to be filed with the clerk's office within five working days of the electronic filing of the petition. The purpose of the filing of the signature declaration form is to assure that the debtor's handwritten signature and Social Security number are on file with the Court. The Declaration re: Electronic Filing is essentially an obligation of the debtor's counsel as opposed to that of the debtor. The declaration authorizes the attorney to file a petition and other documents electronically on the debtor's behalf. Counsel's failure to file the signature declaration form resulted in dismissal of the debtors' cases with no apparent benefit to the debtors.Potential Sanction
The potential sanction that the Court is considering is the disgorgement of fees previously paid to the debtors' attorney in each of the above-captioned cases. In case number 05-96287 the amount received by the attorney was $600. In case number 05-96742 the amount received was $400.
CONCLUSION
For the foregoing reasons, attorney Charles Wagner is ordered to appear at an evidentiary hearing at 2:30 p.m. on April 18, 2006, in Courtroom 1A of the Howard M. Metzenbaum U.S. Courthouse, 201 Superior Avenue, Cleveland, Ohio, and show cause why he should not be sanctioned for the filing deficiencies in the above-captioned cases.
IT IS SO ORDERED.