Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-4_09-ap-04584/USCOURTS-canb-4_09-ap-04584-0/pdf.json

Parties Involved:
Brian M. Carter
Plaintiff
Kermit Douglas Brooms
Defendant

Document Text:

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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Decision

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re No. 09-49461 EDJ

 Adv. No. 09-4584 AJ

KERMIT DOUGLAS BROOMS,

 Debtor. /

BRIAN M. CARTER,

 Plaintiff,

vs.

KERMIT DOUGLAS BROOMS,

 Defendant. /

DECISION

This court is faced with a situation where Brian M. Carter

(“Carter”), the above plaintiff, may or may not be the real party in

interest, and may or may not be engaged in the illegal practice of

law. The uncertainty arises because Carter refuses to comply with

an order of this court designed to determine the answers. The court

will provide Carter with a final opportunity to comply. Absent

compliance, the court will either dismiss this adversary proceeding

or enter judgment on the merits against Carter.

Signed: March 04, 2010

________________________________________

EDWARD D. JELLEN

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

March 05, 2010

GLORIA L. FRANKLIN, CLERK 

U.S BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 1 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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1Bankruptcy Code § 523(a)(19) provides, in relevant part:

(a) A discharge under section 727 . . . of this title does not

discharge an individual debtor from any debt— 

(19) that— 

(A) is for— 

(i) the violation of any of the Federal securities laws (as that

term is defined in section 3(a)(47) of the Securities Exchange

Act of 1934), any of the State securities laws, or any regulation

or order issued under such Federal or State securities laws; or 

(ii) common law fraud, deceit, or manipulation in connection with

the purchase or sale of any security; and 

(B) results, before, on, or after the date on which the petition

was filed, from— 

(i) any judgment, order, consent order, or decree entered in any

(continued...)

Decision 2

Carter does business under the name of “Discovery Judgment

Center.” Carter is not an attorney. But Carter is the purported

assignee of a prebankruptcy judgment in the sum of $525,000 plus

interest and fees. The judgment was entered by the California

Superior Court (as a sister state judgment from the State of Nevada)

in favor of an individual named Erika Jorgenson against Kermit

Douglas Brooms, the above debtor (“Brooms”), and others.

On October 7, 2009, Brooms filed a voluntary petition herein

under chapter 7 of the Bankruptcy Code. On December 18, 2009,

Carter, representing himself, filed a complaint commencing an

adversary proceeding against Brooms alleging that Carter is the

holder of the above-referenced judgment and that Brooms’s debt to

him is nondischargeable herein pursuant to Bankruptcy Code 

§ 523(a)(19) (violation of state or federal securities laws, or

fraud in connection with the purchase or sale of a security).1

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 2 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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1(...continued)

Federal or State judicial or administrative proceeding; 

(ii) any settlement agreement entered into by the debtor; or 

(iii) any court or administrative order for any damages, fine,

penalty, citation, restitutionary payment, disgorgement payment,

attorney fee, cost, or other payment owed by the debtor. 

2

28 U.S.C. § 1654 provides: “In all courts of the United

States the parties may plead and conduct their own cases

personally or by counsel as, by the rules of such courts,

respectively, are permitted to manage and conduct causes

therein.”

Decision 3

On February 8, 2010, a status conference was held in the

adversary proceeding. At the status conference, the court raised

the issues of whether Carter was the real party in interest, and

whether the original judgment creditor retained any interest in the

assigned judgment such as to preclude Carter from representing her. 

The court raised these issues because of well established rules

designed to protect the public and facilitate the smooth flow of

business in the federal courts, and because lay litigants lack many

of the ethical responsibilities of an attorney. See Jones v.

Niagara Frontier Trans. Auth., 722 F.2d 20, 22 (2d Cir. 1983). 

Under these rules, in federal courts an individual who is not

an attorney may appear in propria persona in his or her own behalf. 

28 U.S.C. § 1654.2 But an individual who is not an attorney may not

appear to represent others. 28 U.S.C. § 1654; C.E. Pope Equity

Trust v. United States, 818 F.2d 696 (9th Cir. 1987). 

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 3 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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Decision 4

And significantly for present purposes, litigants may not

circumvent the foregoing rules through a purported assignment of

claims. See, e.g., Palazzo v. Gulf Oil Corp., 764 F.2d 1381 (11th

Cir. 1985); Jones v. Niagara Frontier Trans. Auth., 722 F.2d 20, 22

(2d Cir. 1983); Bischoff v. Waldorf, 660 F.Supp.2d 815, and cases

collected therein at 820-821 (E.D. Mich. 2009); In re Heal, 2009 WL

4510128 (Bankr. N.D.Cal. 2009). 

In Thomas v. Thomas, 387 B.R. 808, 815-16 (D. Colorado 2008),

for example, the court affirmed the bankruptcy court’s dismissal of

a nondischargeability action brought by an assignee under

circumstances where the assignment appeared absolute on its face,

but where the assignee agreed to share a portion of the proceeds of

recovery with the assignors. The court concluded that under

applicable state law, the claims at issue were not assignable for

collection purposes on a contingency fee basis. However, as an

alternate holding, the court stated:

Further, Assignee's actions may also be considered to be

the unlawful practice of law. Under the terms of the

assignments, Assignee promises to share the proceeds of

his recovery with the assigning subcontractors. 

Accordingly, he is still acting in a representative

capacity to some extent and not exclusively on his own

behalf. It is well established that although a natural

person may represent himself or herself in court, a

business entity must be represented by counsel. There is

significant authority from other jurisdictions

demonstrating that courts will look past the legal title

to determine whether a pro se purported assignee is

circumventing rules and statutes requiring that

corporations be represented by counsel in legal

proceedings. 

Thomas, 387 B.R. at 815-16. (Internal citations omitted.) See also

Fed. R. Civ. P. 17(a), applicable herein via Fed. R. Bankr. P. 7017,

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 4 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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Decision 5

providing that every action “must be prosecuted in the name of the

real party in interest.” 

With the foregoing principles in mind, on February 10, 2010,

this court issued a Status Conference Order (hereafter, the “Status

Conference Order”) which provided, in relevant part:

1. Plaintiff shall, within ten days from entry of

this order, file evidence of assignment to him of the

obligation owned by Kermit Brooms, the above named debtor;

plaintiff shall also file evidence of the consideration

for such assignment and the terms of such assignment.

2. Failure of plaintiff to comply with the

requirements of paragraph 1 of this order shall result in

dismissal of this proceeding, with prejudice.

3. Upon review of the documents mentioned in

paragraph 1, above, the court will determine whether and

how this adversary proceeding is to proceed. 

In response to the Status Conference Order, Carter filed a

Supplemental Brief and Declaration setting forth what Carter

considers to be legal authorities for the proposition that he need

not comply with the Status Conference Order. Carter provided the

court with a copy of the original judgment creditor’s Acknowledgment

of Assignment of Judgment, executed pursuant to Cal. Civ. Proc. Code

§ 673, but refused to provide the court with a copy of the Agreement

of Assignment of which the Acknowledgment is a part (see the

Acknowledgment, paragraph 9). 

Carter also refused to disclose the consideration he paid, if

any, for the assignment, and whether the original judgment creditor,

his assignor, retains any financial interest in the judgment or in

the outcome of the adversary proceeding.

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 5 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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Decision 6

It is true that assignees of claims generally have standing in

bankruptcy cases, including standing to prosecute objections to the

dischargeability of a particular debt, In re Boyajian, 564 F.3d 1088

(9th Cir. 2009), or to a debtor’s general discharge, In re Ota, 192

B.R. 545 (9th Cir. BAP 1996). However, this does not mean that

individuals may, through the device of an assignment, avoid

compliance with the court’s rules regarding legal representation or

ignore with impunity court orders designed to enforce those rules or

to determine whether they are being violated. 

As a consequence of Carter’s refusal to comply with the Status

Conference Order, this court cannot ascertain whether Carter is the

real party in interest, Fed. R. Bank. P. 7017, whether he is

engaging in the illegal practice of law by providing legal

representation to another person, or whether the assignment is

nothing other than a device to thwart 28 U.S.C. § 1654 and the rules

of this court.

Federal Rule 16(f)(1)(C), applicable herein via Fed. R. Bankr.

P. 7016 provides, in relevant part: “On motion or on its own, the

court may issue any just orders, including those authorized by Rule

37(b)(2)(A)(ii) - (vii), . . . if a party or its attorney: . . . 

(C) fails to obey a scheduling or other pretrial order.” 

Among the remedies authorized are dismissal or entry of a default

judgment against the disobedient party. Fed. R. Civ. P. 

37(b)(2)(A)(v)-(vi), applicable via Fed. R. Civ. P. 16(f)(1)(C). 

See also C.E. Pope Equity Trust v. United States, 818 F.2d 696, 697

(9th Cir. 1987).

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 6 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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Decision 7

Thus, dismissal of this adversary proceeding or entry of

judgment against Carter is an available remedy herein based on his

noncompliance with the Status Conference Order. Even so, the court

will issue its order providing Carter with one last opportunity to

avoid such action. But absent Carter’s full, timely, and good faith

compliance with the order filed herewith, this court will dismiss

this adversary proceeding or enter judgment against Carter on the

merits.

**END OF ORDER**

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 7 of 8 
UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

1300 Clay Street (2d fl.) 

 Oakland, CA. 94612

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Decision 8

COURT SERVICE LIST

Brian M. Carter

249 W. Jackson Street #475

Hayward, CA 94544

Kermit Douglas Brooms

P.O. Box 99024

Emeryville, CA 94662

Office of the U.S. Trustee

1301 Clay Street, Suite 690-N

Oakland, CA 94612

Case: 09-04584 Doc# 15 Filed: 03/04/10 Entered: 03/05/10 12:09:23 Page 8 of 8