Rebecca Louise Alcon

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 09-41608 TK
Chapter 7
REBECCA LOUISE ALCON,
Debtor.
_______________________________/
MEMORANDUM OF DECISION RE REQUEST FOR DISGORGEMENT
The 	above-captioned 	debtor 	(the 	“Debtor”) 	filed 	a 	voluntary
petition 	seeking 	relief 	under 	chapter 	7 	of 	the 	Bankruptcy 	Code 	on
March 2, 2009. 	David C. Winton (“Winton”) signed the petition as her
bankruptcy 	counsel 	and 	assisted 	her 	in 	connection 	with 	the 	case.
Schedules 	of 	Assets 	and 	Liabilities 	and 	a 	Statement 	of 	Financial
Affairs (the “SOFA”) were filed with the petition. 	Schedule I stated
that the Debtor was self-employed by an entity entitled Sky Scenes,
Inc. 	Schedule 	B 	did 	not 	disclose 	any 	interest 	in 	a 	corporation 	or
other business association. 	The question with regard to payments to
an 	attorney 	for 	counseling 	in 	connection 	with 	a 	bankruptcy 	was 	not
filled in, and no fee disclosure statement was filed by Winton. 	No
transfers 	outside 	the 	ordinary 	course 	of 	business 	within 	one 	year
were disclosed in the SOFA.
Signed: January 08, 2010
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
January 08, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-41608 Doc# 29 Filed: 01/08/10 Entered: 01/08/10 18:56:33 Page 1 of 6

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On March 24, 2009, the chapter 7 trustee (the “Trustee”) filed
an 	application 	to 	employ 	Stromsheim 	& 	Associates 	(“Stromsheim”) 	as
counsel for the Trustee to investigate and recover, if appropriate,
undisclosed 	property 	of 	the 	estate. 	An 	order 	granting 	the
application was filed on March 31, 2009. 	In the meantime, on March
26, 	2009, 	the 	Debtor 	filed 	a 	motion 	to 	shorten 	time 	on 	a 	motion 	to
dismiss 	the 	chapter 	7 	case. 	The 	motion 	to 	dismiss 	was 	not 	filed
until March 30, 2009.
The 	motion 	to 	shorten 	time 	stated 	that 	the 	Trustee 	had 	frozen
the assets of the corporation owned by the Debtor and her nondebtor
spouse, causing the corporation to bounce checks. 	Since the Debtor
and her family depended on the revenues of the corporation for their
livelihood, the Trustee’s action was making it impossible for them to
meet their current obligations to creditors.
The Trustee filed an opposition to the motion to shorten time.
In 	the 	opposition, 	the 	Trustee 	noted 	that, 	among 	other 	things, 	the
Debtor 	had 	failed 	to 	list 	any 	interest 	in 	the 	corporation 	by 	which
she 	was 	self-employed. 	As 	a 	result, 	a 	request 	for 	production 	of
documents 	was 	sent 	to 	Winton, 	including 	a 	request 	for 	documents
relating 	to 	any 	bank 	accounts 	on 	which 	the 	Debtor 	had 	signature
authority. 	The 	documents 	revealed 	a 	bank 	account 	for 	an 	entity
entitled 	Sky 	Scenes, 	LLC 	containing 	$32,570.40. 	The 	Trustee
contacted the bank and froze the account to prevent the dissipation
of the funds.
Under 	the 	circumstances, 	the 	Trustee 	asserted 	that 	shortened
time on the motion to dismiss was inappropriate. 	Notwithstanding the
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opposition, the Court shortenened time somewhat and set the hearing
for April 9, 2009.
In the motion to dismiss, the Debtor corrected the statement,
made in the motion to shorten time, that the Trustee had frozen the
bank account of a corporation owned by the Debtor and her nondebtor
spouse. 	She 	explained 	that 	the 	entity 	whose 	bank 	account 	was
frozen–-the LLC–-was a different entity from the corporation and had
been established by her nondebtor spouse just prior to marriage with
his separate property. 	She had no interest in that entity and thus
the 	estate 	had 	no 	interest 	in 	it. 	Evidence 	of 	these 	facts 	was
provided to the Trustee on March 31, 2009, and the Trustee released
the hold on the account the same day.
On April 4, 2009, the Debtor filed an amended SOFA, disclosing,
among other things, that she had paid Winton $2,300 for his services
and that, within one year of the filing, she had used approximately
$38,000 	from 	her 	401(k) 	retirement 	account 	to 	purchase 	an 	airplane
for 	her 	husband. 	On 	April 	7, 	2009, 	the 	Trustee 	filed 	a 	limited
opposition to the motion to dismiss. 	In the opposition, the Trustee
stated that he would not oppose dismissal, since there were currently
no unsecured creditors, as long as the administrative costs were paid
by the Debtor. 	The Trustee requested $1,050 for himself and $2,000
for his counsel.
A 	hearing 	on 	the 	motion 	to 	dismiss 	was 	conducted 	on 	April 	9,
2009. 	At the conclusion of the hearing, the Court granted the motion
to 	dismiss, 	retaining 	jurisdiction 	to 	determine 	the 	request 	for
payment 	of 	the 	administrative 	costs. 	A 	post-hearing 	briefing
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schedule 	was 	established. 	Both 	parties 	filed 	post-hearing 	briefs.
In 	the 	Trustee’s 	post-hearing 	brief, 	the 	Trustee 	sought 	payment 	of
the 	administrative 	costs 	from 	Winton, 	not 	from 	the 	Debtor. 	The
Trustee contended that the filing of the case--at the very least, the
timing of the filing--was ill advised. 	The Trustee also contended it
was 	the 	various 	omissions, 	ambiguities, 	and 	misstatements 	in 	the
documents prepared by Winton that led to the Trustee’s having frozen
a bank account for an entity not owned by the Debtor.
To the contrary, Winton asserted that the problems were caused
by 	the 	Trustee 	not 	having 	done 	his 	job 	properly: 	i.e., 	not 	having
asked 	the 	right 	questions 	to 	ferret 	out 	the 	correct 	information.
With 	respect 	to 	his 	failure 	to 	list 	the 	Debtor’s 	purchase 	of 	the
airplane for her spouse, Winton explained that he had concluded that,
because the purchase price came from exempt funds, the transfer could
not be relevant to the bankruptcy filing. 	Winton admitted not being
a 	bankruptcy 	specialist 	and 	indicated 	his 	intention 	to 	cease 	doing
any bankruptcy work in the future.
The Court concludes that Winton was principally responsible for
the events described above and that he should be required to disgorge
his fees to pay the administrative costs. 	The Court does not believe
that there is any legal basis for the payment of fees to the Trustee.
Thus, the disgorgement order will be limited to $2,000, to be paid to
Stromsheim. 	The 	Court 	finds 	this 	sum 	reasonable 	given 	the 	work
described.
As a nonbankruptcy specialist, Winton is apparently unaware of
one 	of 	the 	fundamental 	principles 	in 	representing 	debtors 	in
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bankruptcy cases: i.e., disclosure, disclosure, disclosure. 	It was
Winton’s job, not the Trustee’s, to make it clear that there were two
entities, one in which the Debtor owned an interest and one in which
the 	Debtor 	did 	not. 	It 	appears 	that 	Winton 	himself 	did 	not
understand 	that 	there 	were 	two 	entities 	with 	similar 	names. 	As
stated 	above, 	in 	the 	motion 	to 	shorten 	time, 	he 	asserted 	that 	the
Trustee had frozen the account of a corporation owned by the Debtor
and her nondebtor spouse. 	Yet he had ready access to the Debtor who
could have clarified this ambiguity. 	The Trustee did not.
Winton’s rationale for not listing the purchase of the airplane
reflects 	a 	similar 	misunderstanding 	of 	the 	duty 	of 	a 	debtor’s
counsel. 	The 	law 	is 	clear 	that 	even 	the 	pre-petition 	transfer 	of
exempt property may qualify as a fraudulent transfer. 	Moreover, when
the literal words of the question call for certain information, it is
inappropriate for a debtor’s attorney to decide that the information
need 	not 	be 	disclosed. 	The 	information 	must 	be 	provided 	with
whatever qualifying statement may be desired.
The Trustee’s request for disgorgement is granted to the extent
of $2,000. 	Counsel for the Trustee is directed to submit a proposed
form of order in accordance with the Court’s decision.
END OF DOCUMENT
Case: 09-41608 Doc# 29 Filed: 01/08/10 Entered: 01/08/10 18:56:33 Page 5 of 6

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COURT SERVICE LIST
David C. Winton
Law Offices of David C. Winton
936-B 7th St. #345
Novato, CA 94547
Trustee
John Kendall
2601 Blanding Ave.
Bldg #C Suite 110
Alameda, CA 94501
Reidun Stromsheim
Law Offices of Stromsheim and Assoc.
201 California St. #350
San Francisco, CA 94111
Case: 09-41608 Doc# 29 Filed: 01/08/10 Entered: 01/08/10 18:56:33 Page 6 of 6