Oscar L. Jackson

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
OSCAR L. JACKSON,
Debtor.
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Case No. 08-00755
(Chapter 13)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION RE TRUSTEE’S
MOTION SEEKING DISGORGEMENT OF FEES
The trustee’s unopposed motion seeking to require the
debtor’s attorney to disgorge fees for filing a petition when the
debtor had not obtained prepetition credit counseling as
generally required by 11 U.S.C. § 109(h) will be granted.
Exhibit D to the debtor’s petition invoked the temporary waiver
provision of § 109(h)(3)(A) to the prepetition credit counseling
requirement, but there is no evidence establishing that filing
Exhibit D was conduct that complied with the requirements of F.R.
Bankr. P. 9011. 	The trustee alleges that in filing the petition
and its Exhibit D, the attorney did not act on the basis of
“knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances” as required by Rule 9011(b)
with respect to either the law or the facts relating to whether
The decision below is signed as a decision of
the court.
Signed: January 20, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	I need not decide who has the ultimate burden of
persuasion once an attorney does come forward with evidence that
standing alone would satisfy his burden of going forward with the
production of evidence, but the opposing party then presents
evidence to the contrary.
2
those filings were proper.
I
The debtor’s attorney bears the burden of going forward with
evidence to establish that he complied with Rule 9011, but he has
remained silent. 1 	As to Rule 9011(b)((3), the prong of Rule
9011(b) dealing with factual representations, the debtor’s
attorney has not set forth any evidence that supports the factual
representations of Exhibit D. 	I can only infer that the factual
contentions of Exhibit D “have no evidentiary support” within the
meaning of Rule 9011(b)(3). 	Nor has the attorney set forth
evidence demonstrating that, nevertheless, his belief that the
factual contentions did have evidentiary support was formed after
an inquiry reasonable under the circumstances.
Illustratively, consider the factual contention in Exhibit D
that the debtor had sought credit counseling but the agency was
unable to provide it within five days of the making of the
request. 	In failing to respond to the trustee’s motion, the
debtor’s attorney has deprived this court of any information
regarding what the debtor did with respect to attempting to
obtain credit counseling, and what inquiry the debtor’s attorney
made, before filing Exhibit D, in that regard. 	My understanding
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2 	If an attorney has his client contact a credit counseling
agency that is unable to provide credit counseling promptly, the
attorney would be well advised to have his client attempt to turn
to one that can. 	Unless reasonable efforts at such an attempt
are made, a court might not find a § 109(h)(3) certification
“satisfactory” as required by § 109(h)(3)(A)(iii).
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is that credit counseling is readily available in this district
within five days from most approved credit counseling agencies,
yet the debtor’s attorney has failed to file an opposition
identifying the agency that was unable to provide credit
counseling within five days. 2
II
With respect to Rule 9011(b)(2), the prong of Rule 9011 that
addresses legal contentions, no reasonable inquiry could have led
the attorney to conclude that if the factual representations in
Exhibit D were untrue, the filing was “warranted by existing law
or by a nonfrivolous argument for the extension, modification, or
reversal of existing law” within the meaning of Rule 9011(b)(2).
The attorney would not be able to defeat the trustee’s motion by
contending that it does not matter whether the factual
representations in Exhibit D were inaccurate. 	If an attorney
knows (or should know under the standards of Rule 9011(b)) that
facts do not exist that support an exception to the requirement
of prepetition credit counseling, an attorney has no business
filing a petition on the debtor’s behalf. 	Besides, an attorney
has an obligation to comply with Rule 9011 with respect to
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factual contentions even if he has a reasonable belief that those
factual contentions are unnecessary, as a matter of law, to
justify his legal contentions.
Moreover, Exhibit D failed to supply certain required
factual detail, and Exhibit D must be viewed as making a legal
contention (that a waiver is justified) despite failure to supply
such factual detail either in Exhibit D or in response to the
trustee’s motion. 	The debtor’s Exhibit D failed as required by
the Official Form to summarize the exigent circumstances that
supported invoking the temporary waiver provision. 	Without the
attorney’s having filed an opposition to the trustee’s motion,
the record contains no allegation of facts establishing any
exigent circumstances that the court could find to be
satisfactory to justify a waiver. 	As a matter of law, filing a
petition when no facts exist to demonstrate exigent circumstances
cannot be viewed as complying with the attorney’s obligations
with respect to the legal contention in Exhibit D. 	No attorney
could reasonably believe that a waiver could be obtained if he
could not set forth any facts to support the assertion in Exhibit
D that exigent circumstances existed.
III
Sanctions are thus appropriate. 	Rule 9011(c) requires that
the sanctions “be limited to what is sufficient to deter
repetition of such conduct or comparable conduct by others
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similarly situated.” 	If counsel were to retain any compensation
for having filed the petition and related papers, that would
provide an incentive for other attorneys to engage in the same or
comparable conduct. 	Accordingly, I will require that the
attorney not retain any of the fees received.
The trustee seeks either to have fees disgorged to the clerk
of the court or disgorged to the debtor. 	I conclude that payment
to the clerk is the appropriate sanction. 	Under Rule 9011(c),
the court can enter “an order to pay a penalty into court.” 	The
court can also order a disgorgement to the debtor on the basis
that the services were theoretically of no value to the debtor
because the petition was dismissed, 11 U.S.C. § 329(b), and
because Rule 9011(c) would permit that as a sanction to deter
repetition of the conduct in which the debtor’s counsel engaged.
But often the debtor does benefit from the filing of an invalid
petition as it gains the debtor the benefit of the automatic stay
of 11 U.S.C. § 362(a), and can stave off an impending foreclosure
sale or other effort to collect a debt, and the debtor has not
attempted to urge that he did not benefit from the filing of the
petition (such that disgorgement to him is the preferred
sanction). 	Moreover, unless there were some benefit to the
debtor’s filing before he had credit counseling in hand, there
was no apparent reason for his counsel to file the petition
without waiting until credit counseling was in hand. 	It would
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6	O:\TEEL\Judge Temp Docs\Jackson (Oscar) Mem Decsn re Mtn to Disgorge Fees.wpd
not be appropriate to adopt as a Rule 9011(c) sanction
disgorgement of fees to a party who benefitted from the improper
filing. 	Accordingly, I will direct the debtor’s counsel to pay
to the clerk of the court an amount equal to the attorney’s fees
that he received in this case.
An order follows.
[Signed and dated above.]
Copies to: Debtor; Debtor’s attorney; Chapter 13 Trustee.
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