Natalie C. Bolling

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
NATALIE C. BOLLING,
Debtor.
)
)
)
)
)
)
Case No. 08-00746
(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Not for Publication in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 recited that prepetition
credit counseling had been obtained, 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 those filings were proper.
The decision below is signed as a decision of
the court.
Signed: January 20, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
Case 08-00746 Doc 32 Filed 01/21/09 Entered 01/21/09 16:10:51 Desc Main
Document Page 1 of 4

2
I
The record contains no evidence that prepetition credit
counseling was obtained, and that suffices to place on the
debtor’s attorney the burden to produce evidence showing that he
complied with Rule 9011, but he has remained silent. 	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.
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
Case 08-00746 Doc 32 Filed 01/21/09 Entered 01/21/09 16:10:51 Desc Main
Document Page 2 of 4

3
knows (or should know under the standards of Rule 9011(b)) that
his client did not obtain credit counseling prepetition, an
attorney has no business filing a petition on the debtor’s behalf
(except in those rare circumstances, not invoked here, in which
the requirement is waived). 	Besides, an attorney has an
obligation to comply with Rule 9011 with respect to 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.
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
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
Case 08-00746 Doc 32 Filed 01/21/09 Entered 01/21/09 16:10:51 Desc Main
Document Page 3 of 4

4	O:\TEEL\Judge Temp Docs\Bolling (Natalie) Mem Decsn re Mtn to Disgorge Fees.wpd
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, and
presumably the debtor did benefit from the filing. 	It would 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; Office
of U.S. Trustee.
Case 08-00746 Doc 32 Filed 01/21/09 Entered 01/21/09 16:10:51 Desc Main
Document Page 4 of 4