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FILED

AUG 25 2014

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

ORDERED PUBLISHED

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NV-13-1196-KiTaJu

)

WAYNE A. SEARE and MARINETTE ) Bk. No. 2:12-bk-12173-MKN

TEDOCO, )

) Adv. No. 2:12-ap-01108-MKN

Debtors. )

 )

)

ANTHONY J. DeLUCA, )

)

Appellant, )

)

v. ) O P I N I O N

)

WAYNE A. SEARE, )

)

Appellee. )

______________________________)

Argued and Submitted on January 24, 2014, 

at Las Vegas, Nevada

Filed - August 25, 2014

Appeal from the United States Bankruptcy Court

for the District of Nevada

Honorable Bruce A. Markell, Bankruptcy Judge, Presiding

 

Appearances: Christopher Burke, Esq. argued for appellant, 

 Anthony J. DeLuca; Appellee Wayne A. Seare argued 

 pro se.

 

Before: KIRSCHER, TAYLOR and JURY, Bankruptcy Judges.

Opinion by Judge Kirscher

Concurrence by Judge Jury
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KIRSCHER, Bankruptcy Judge:

Appellant Anthony J. DeLuca (“DeLuca”) was the bankruptcy

attorney for chapter 71 debtors Wayne A. Seare (“Seare”) and his

wife Marinette Tedoco (“Tedoco”) (collectively, “Debtors”). 

DeLuca appeals an order from the bankruptcy court sanctioning him

for conduct related to his handling of Debtors’ case. We AFFIRM.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Prepetition events

1. The district court lawsuit and judgment against Seare

In December 2010, Seare sued his former employer St. Rose

Dominican Health Foundation (“St. Rose”) for employment

discrimination, alleging that he had been the victim of sexual

harassment by a female co-worker and that he was wrongfully

terminated in retaliation for his reporting the harassment. The

co-worker’s harassment of Seare allegedly included sending him

sexually explicit emails. After an investigation of the matter by

St. Rose, Seare was terminated.

While the lawsuit was pending in the United States District

Court for the District of Nevada (“district court”), Seare

admitted to his attorney that he had “embellished” the explicit

emails to bolster his harassment claims. Seare’s attorney

disclosed the misconduct to the district court in a motion to

withdraw. Ultimately, on October 24, 2011, the district court

ordered sanctions against Seare, dismissed his lawsuit against

1 Unless specified otherwise, all chapter, code and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

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St. Rose with prejudice, and ordered him to pay St. Rose’s

attorney’s fees (“Sanctions Order”). The district court found

that Seare had committed “fraud upon the court” by knowingly

providing false information, allowing his attorney to file an

amended complaint based upon that false information and

instituting and conducting litigation in bad faith.

A judgment was entered on October 25, 2011, in favor of

St. Rose for its attorney’s fees of $67,430.58 (“Judgment”). The

one-page Judgment did not mention “fraud” or provide any factual

or legal bases for supporting the Judgment. Thereafter, St. Rose

obtained a Writ of Garnishment and served it on Seare’s current

employer. The garnishment of Seare’s wages prompted Debtors to

seek counsel about whether to file bankruptcy.

2. Debtors retain bankruptcy attorney DeLuca

Some of the facts surrounding Debtors’ meeting with DeLuca

are disputed, but other facts are not. DeLuca contends that

certain facts asserted by Tedoco and relied upon by the bankruptcy

court were not admissible, which we address below.

Debtors consulted with DeLuca, a bankruptcy attorney of

eleven years, at his office on February 13, 2012, at around 5:00

p.m. This meeting was Debtors’ only in-person contact with

DeLuca, but DeLuca testified that he spoke with them at least once

by phone thereafter.

During an evidentiary hearing, Seare testified that Debtors

gave DeLuca a copy of the “order” and the Writ of Garnishment and

that DeLuca “thumbed through them.” Seare had also asserted in a

pre-hearing brief that Debtors gave DeLuca two documents at their

initial consultation — a copy of the Order for Wage Garnishment

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and the Sanctions Order. Tedoco also asserted that Debtors gave

DeLuca copies of the Order for Wage Garnishment and the “Wage

Sanctions.” DeLuca had no independent recollection of meeting

Debtors or of reviewing the Sanctions Order or Judgment. He did,

however, concede that his firm knew about the Judgment and Order

for Wage Garnishment at the time the bankruptcy petition was

filed.

Debtors claimed DeLuca reviewed the district court papers and

told them that the debt referred to in the Order for Wage

Garnishment and Judgment was dischargeable. Seare claimed in a

pre-hearing brief that during the consultation, Tedoco told DeLuca

that the St. Rose debt and Order for Wage Garnishment were not

from medical expenses. Rather, the debt was based on the

Sanctions Order for attorney’s fees, which was imposed because

Seare submitted embellished emails to the district court in his

lawsuit against St. Rose. Seare also testified that he told

DeLuca about his embellished emails. According to Seare, DeLuca

affirmatively told Debtors that the St. Rose debt referenced in

the Order for Wage Garnishment was dischargeable, even though it

was incurred through fraud. However, Seare contradicted himself

when he testified that “fraud” was never discussed during the

consultation. Seare testified that DeLuca did not discuss with

Debtors about what sort of debts might not be dischargeable or

that an adversary proceeding might be filed against him.

After the brief consultation with DeLuca, Debtors were placed

in a room to read, initial and sign the 19-page retainer agreement

(“Retainer Agreement”) under which they hired DeLuca. Tedoco

claimed that DeLuca’s staff periodically checked to see if they

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had completed the documents, but that no one sat with them to

explain any part of the Retainer Agreement. DeLuca testified that

standard protocol in his office required a paralegal to sit with a

client and explain every paragraph of the retainer agreement to

make sure the client understood it. However, he did not know and

had no record of which paralegal met with Debtors because he did

not keep such records.

Debtors executed the Retainer Agreement, initialing every

paragraph and signing every page, and paid DeLuca a $200 down

payment.2 At the bottom of each page (right above Debtors’

signatures) is the statement: “I have read, understand, and agree

to this page and its contents.” On the last page (right above

Debtors’ signatures) is the statement: “I have read and received

the foregoing NINETEEN (19) pages and I understand and agree to

its terms and conditions.” In addition, DeLuca provided Debtors

with a 19-page document entitled “Frequently Asked Questions”

(“FAQ”). DeLuca did not sign the Retainer Agreement, which is

evidently the same agreement signed by all clients, with only a

few differences in fees depending on whether the case is filed

under chapter 7 or 13. His stamped signature is, however, on the

first page of the Retainer Agreement, which is a form letter

thanking clients for their business. This letter also states that

while “some advisories (in the retainer agreement) may not appear

to apply to you at this time, we do need you to sign that you

understand or that you agree that you have been advised on each

2 DeLuca’s flat fee to file a chapter 7 case was $1,999,

which included the $306 filing fee and the credit report fee of

$35.

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topic.”

The Retainer Agreement separates basic services from those

services requiring additional fees. For matters beyond the “basic

services,” DeLuca’s billing rate was $495.00 per hour (or perhaps

$395.00, as the relevant paragraph refers to both figures).

The Retainer Agreement provides:

BASIC SERVICES: Services to be performed by DeLuca &

Associates include:

a. Analysis of debtor’s financial situation and

assistance in determining whether to file a petition

under . . . Chapter 7 or chapter 13. . . .

b. Review, preparation and filing of the petition,

schedules, statement of affairs, and other documents

required by the bankruptcy court;

c. Representation at the meeting of creditors.

d. Reasonable in person and telephonic consultation with

the client . . . .

ADDITIONAL FEES: There are circumstances which may

require additional fees.

Additional attorney fees will be charged for additional

services including but not limited to: [1] Addressing

allegations of fraud or non-dischargeability; . . .

[13] . . . Adversary Proceedings . . . .

For the additional fees, the Retainer Agreement does not explain

the relationship between items [1] and [13].

The Retainer Agreement also includes a “fraud” disclaimer:

“DEBTS THAT DO NOT GO AWAY: Non-dischargeable debts (debts that

you must re-pay), or debts not affected by client’s bankruptcy,

include but are not limited to the following: debts incurred

through fraud . . . .” Seare testified that he signed the

Retainer Agreement despite reviewing and understanding the fraud

disclaimer because DeLuca had told him that the St. Rose debt was

dischargeable. The FAQ also explains that debts incurred through

fraud are nondischargeable. Seare said that he did not read the

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FAQ because Debtors had already asked DeLuca questions during the

consultation. Seare testified that based on the Retainer

Agreement, he understood that DeLuca would not be representing him

against allegations of fraud. Seare also testified that adversary

proceedings were not discussed at the consultation and at that

time he did not know what an adversary proceeding was.

The Retainer Agreement also includes a request for copies of

“ALL LAWSUITS you have been involved in within the last two (2)

years . . . .” DeLuca claimed Debtors never provided sufficient

documentation relating to the district court lawsuit as required.

Finally, the Retainer Agreement explains the length of

DeLuca’s representation of a client: “I understand that following

the discharge of my bankruptcy DeLuca & Associates’ representation

is concluded by operation of law. I understand that DeLuca &

Associates is no longer obligated to represent me in any capacity

with regard to my bankruptcy filing after the discharge order is

entered. I understand that any work requested following discharge

of the bankruptcy will be an additional fee.”

B. Postpetition events

1. The bankruptcy case is filed.

DeLuca filed Debtors’ chapter 7 bankruptcy petition on

February 29, 2012. The St. Rose debt was listed as a

“garnishment” on Schedule F in the amount of $67,431.00. The

Judgment underlying the St. Rose debt was listed in Debtors’

Statement of Financial Affairs and indicated that the nature of

the proceeding was a “collection.” The Disclosure of Compensation

of Attorney for Debtors stated that Debtors agreed to exclude

“representation . . . in any dischargeability actions” or “any

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other adversary proceedings” from the flat fee.

At the § 341(a) meeting of creditors on March 30, 2012,

St. Rose informed Debtors and counsel that it intended to enforce

its rights under the Judgment through a nondischargeability

action.

2. The adversary proceeding is filed.

St. Rose filed an adversary complaint against Seare, seeking

to except its debt from discharge under § 523(a)(4) and (a)(6). 

The summons and complaint were served on Seare on or about June 5,

2012. DeLuca apparently received electronic notice of the

complaint the day it was filed.

Debtors received a discharge on May 30, 2012. Approximately

$137,430 in unsecured debt was discharged, or 62% of Debtors’

unsecured, nonpriority claims.

On June 4, 2012, DeLuca sent Debtors an email informing them

of their discharge and that, as of the discharge date, their case

was completed. The email is a “form” message and did not mention

any particulars of Debtors’ case or the recently-filed adversary

proceeding by St. Rose. It stated, “[W]e are very happy to inform

you that you can now move forward with a fresh start on life, free

from the stress of excessive debt. Now you can place your

financial situation back on the right track.”

Debtors replied to the June 4 email later that day, thanking

DeLuca for his help with their bankruptcy and inquiring whether

the St. Rose “Judgement [sic] Order” had been discharged, since

St. Rose had indicated at the § 341(a) meeting that it was

pursuing the adversary proceeding against them. They closed the

email by asking DeLuca to “[p]lease let us know what we need to

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do.”

DeLuca’s office responded to Debtors’ email on June 5, 2012. 

The response reminded Debtors of St. Rose’s expressed intent at

the § 341(a) meeting to pursue legal action for the Judgment. The

response also stated that on April 16, 2012, about six weeks prior

to the filing of the adversary complaint, DeLuca received from

counsel for St. Rose a “fax cover letter . . . with an attached

Stipulation and Order regarding the discharge-ability [sic] of

subject debt in question as to Mr. Sear [sic] only,” and that his

office had promptly responded to the letter advising counsel that

DeLuca “would not sign off on any Stipulation regarding the

discharge-ability [sic] of any debt listed in the schedules.” 

DeLuca never consulted with Seare before rejecting the proposed

stipulation and order. It is unknown whether DeLuca informed

St. Rose that he was not representing Seare in the adversary

proceeding. The response went on to explain that DeLuca had

performed all of the duties for which he was contracted, and that

he would not be representing Seare in the St. Rose adversary

proceeding. DeLuca’s office referred Seare to another attorney.

Debtors replied to the June 5 email on June 6, 2012. They

admitted that DeLuca was hired only to “do our bankruptcy,” but

were very upset and frustrated that the proposed stipulation and

order were never sent to them or that DeLuca’s office, “at the

very least,” had not made them aware it. Debtors requested copies

of the referenced documents between St. Rose and DeLuca’s office. 

In closing, Debtors stated: “Not informing your clients of very

important documents and failing to return phone calls are

unacceptable and unprofessional customer service.”

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On June 6, 2012, DeLuca personally sent a letter to Debtors

informing them that he would not be representing them in the

adversary proceeding and referring them to another attorney. 

Seare later claimed that he and Tedoco found it disturbing that

DeLuca advertises a “full service” bankruptcy firm, yet he was

requesting that Debtors hire another attorney. Seare testified

that he tried to retain other law firms to represent him; one

declined, one said they did not handle such matters and another

said it would be very expensive.

In his pro se answer to the St. Rose complaint, Seare argued

that the debt was dischargeable “due to hardship on the dependents

of debtor.” Seare admitted to having embellished the emails in

the district court case, but stated that other evidence existed to

support his position. Seare alternatively requested that the debt

be “modified” to a feasible payment plan. Notably, Seare

complained that his district court attorney had “thrown [him]

under the bus” when he informed the court of Seare’s manufacturing

of the emails and that this same attorney had also “failed to

forward settlement information” regarding St. Rose.

On August 2, 2012, the bankruptcy court held a scheduling

conference. DeLuca did not appear for Seare. Seare told the

court that DeLuca had told Debtors that he did not represent

clients in adversary proceedings. Counsel for St. Rose stated

that he had informed DeLuca shortly after Debtors filed their

petition of his client’s intent to file a nondischargeability

action.

3. The court issues the order to show cause.

On August 3, 2012, the bankruptcy court issued its “Order to

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Show Cause Why This Court Should Not Sanction Anthony J. DeLuca

for Failing to Represent Debtor in the . . . Adversary Proceeding”

(“OSC”). The court was concerned that DeLuca had violated certain

provisions of the Nevada Rules of Professional Conduct (“NRPC”),

specifically, NRPC 1.2(c), NRPC 1.1 and NRPC 1.5.

DeLuca was ordered to show his compliance with NRPC 1.2(c),

particularly, whether not representing Seare in the adversary

proceeding was reasonable and whether he had obtained Debtors’

informed consent for such limitation. DeLuca also had to produce

a copy of his June 6 letter to Debtors. The OSC provided that if

the court found DeLuca had violated any of these rules, it could: 

(1) impose monetary sanctions, including requiring DeLuca to pay

for Debtors’ representation in the adversary proceeding;

(2) impose nonmonetary sanctions, such as requiring DeLuca to

represent Debtors; (3) order disgorgement of his fees; or

(4) refer the matter to the Nevada State Bar.

In response to the OSC, DeLuca explained that Debtors had

mentioned a judgment from “medical debts” during the consultation,

but they failed to mention the significant detail that the debt

was ordered by the district court as a result of Seare’s

manufacturing of evidence, lying to his attorney and then allowing

his attorney to submit an amended complaint containing false

information to the court. Had these details about the fraudulent

nature of the debt, of which Debtors were well aware at the time

of the consultation, been brought to DeLuca’s attention, DeLuca

claimed he would have declined to represent them, citing to his

“Tell the Truth” section of his retainer agreements. In short,

DeLuca contended that he undertook the representation of Debtors

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based on incomplete, inaccurate or intentionally omitted

information regarding the fraudulent nature of a significant

portion of their debts. DeLuca argued that he was entitled to

accept representation of debtors based on full disclosure,

particularly when it related to substantive issues such as a large

debt incurred as a result of manufacturing evidence and committing

fraud upon the court.

DeLuca also noted that his retainer agreements specifically

exclude adversary proceedings as part of the services he provides

for the basic fee. Further, his office had immediately advised

Debtors via the June 5 email and his June 6 letter that he would

not be representing Seare in the adversary proceeding and that

they should seek alternative counsel. Attached to DeLuca’s

response were portions of an unsigned retainer agreement, copies

of the emails between his office and Debtors and a copy of his

June 6 letter.

a. The initial OSC hearing

The bankruptcy court held an initial hearing on the OSC on

September 13, 2012. DeLuca, Seare and Tedoco appeared. The court

noted that DeLuca’s brief did not substantively address the

specific provisions of the NRPC raised in the OSC, namely, whether

DeLuca obtained informed consent from Debtors to limit his

representation and whether limiting his representation was

reasonable under these circumstances. In response, DeLuca said

that the Retainer Agreement excluded adversary proceedings and

that it was reasonable to not represent debtors because they were

not forthcoming about the fraudulent nature of the St. Rose debt,

saying only that it was a debt to a hospital. DeLuca further

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argued that it was reasonable for any competent attorney to assume

that a debt to a hospital was for medical services, which are

dischargeable, and not a debt relating to fraud for manufacturing

evidence and that it would be reasonable for a client to tell the

attorney about it. DeLuca conceded that he knew the Judgment

existed, but contended that it would be incumbent upon the client

to inform the attorney about the details of it. DeLuca also

conceded that had he reviewed the Sanctions Order and Judgment, it

would have been obvious the St. Rose debt was based on fraud.

Based on DeLuca’s responses, the bankruptcy court expressed

concern that he may have also violated two sections of the Code: 

§§ 707(b)(4) and 526(a). For that reason, the court ordered

additional briefing and set an evidentiary hearing, during which

either party could call witnesses. DeLuca offered to return

Debtors’ fee, but the court found this offer potentially

insufficient as Debtors were now embroiled in a

nondischargeability action and the court questioned the benefit of

their discharge.

On September 20, 2012, the bankruptcy court entered an order

setting the evidentiary hearing and confirming its instructions

that DeLuca be prepared to address his compliance with the

aforementioned provisions of the NRPC, as well as his compliance

with §§ 707(b)(4)(C) and 526(a)(1)-(3).

b. The OSC evidentiary hearing

In response to the bankruptcy court’s concern about his

compliance with NRPC 1.2(c) and NRPC 1.5, DeLuca contended in his

supplemental brief that Debtors had consented to the limited scope

of representation and that limiting his representation was

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reasonable under the circumstances. To show Debtors’ consent,

DeLuca argued that Debtors had signed the pages of the Retainer

Agreement where it explained the scope of services covered under

“Basic Services” and “Additional Fees.” Debtors had also signed

the last page, which stated they had read the Retainer Agreement

and agreed to its terms and conditions. DeLuca contended that

Debtors were clearly advised of what services would be covered

under the $1,999 flat fee and what services would require

additional fees because it was his office’s protocol for a

paralegal to review a retainer agreement line by line with each

client. Debtors had also initialed the paragraph and signed the

corresponding page setting forth the Length of Representation,

which stated that DeLuca was no longer obligated to represent them

after entry of the discharge order.

As for reasonability, DeLuca made several arguments. First,

Debtors had indicated they could not afford to pay DeLuca the

additional fees for litigation services. Therefore, argued

DeLuca, he was not required to work without compensation, citing

the Thirteenth Amendment. DeLuca next argued that it was

reasonable and within his discretion to not represent Seare

because Seare had a history of lying to his own attorneys and

manipulating them into pursuing judicial claims. DeLuca asserted

that once he learned of the full breadth of Seare’s unscrupulous

conduct, he determined that representing Seare was a liability to

him and his firm, so he did not wish to represent him.

Next, DeLuca argued that the adversary proceeding was legally

indefensible because Seare had committed fraud, so representing

him in litigation would have been futile. However, DeLuca claimed

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that after the initial OSC hearing, he did try to procure a

settlement with St. Rose on Seare’s behalf. According to DeLuca,

St. Rose was receptive and willing to reduce its claim to $23,000,

with a nominal down payment and monthly payments of $300.00.3

DeLuca advised Debtors of the offer, but they wished to pursue

their own settlement directly with St. Rose. Lastly, DeLuca

argued that Seare was not prejudiced by the nonrepresentation

because DeLuca had advised him immediately after the adversary

complaint had been filed that he was unable to represent him. 

Thus, Seare had months to find substitute counsel, yet he chose to

represent himself.

As for his compliance with § 707(b)(4)(C), DeLuca argued that

he performed due diligence in light of the limited information

Debtors provided and their urgency to file bankruptcy to stop the

garnishment. Despite the Retainer Agreement’s request for all

documentation from lawsuits within the last two years, DeLuca

contended that Debtors provided only copies of a letter from

St. Rose indicating its intent to file a notice of name change and

the Writ of Execution, which indicated the amount of the Judgment

but did not disclose the nature of the award. In any event,

argued DeLuca, Seare knew he had committed fraud and the Retainer

Agreement expressly stated that debts incurred by fraud “do not go

away.” The FAQ given to Debtors provided the same information. 

Therefore, argued DeLuca, Seare was fully aware prior to filing

that debts incurred through fraud were nondischargeable. DeLuca

3 The bankruptcy court admonished DeLuca for attempting to

disclose settlement terms on the record. However, it did allow

him to question Seare about it on a limited basis and Seare

testified that the settlement offer amount was less than $67,000.

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disavowed ever telling Debtors that fraud debts were

dischargeable.

Lastly, DeLuca argued that even though the St. Rose debt was

nondischargeable, Debtors benefitted immensely from the bankruptcy

filing. Their total unsecured debt was approximately $220,000,

and they eliminated about $137,000 of it, excluding the $67,000

Judgment and $15,000 in student loans. Further, Seare’s credit

score had increased by over 100 points since the filing, which

Seare even conceded was a benefit. Thus, argued DeLuca, the

benefits clearly exceeded the $1,999 they paid. Moreover, the

filing temporarily stopped the garnishment; Debtors now had an

opportunity to settle with St. Rose. DeLuca did not address the

court’s concern regarding his potential violation of § 526(a).

The OSC evidentiary hearing was held on October 23, 2012. 

Seare and DeLuca testified. The bankruptcy court admitted all of

DeLuca’s exhibits and announced that the matter would be deemed

submitted once the transcripts from the two OSC hearings were

placed on the record. The OSC hearing transcripts were filed on

October 30, 2012. Tedoco filed a “Supplemental Hearing Brief” on

December 4, 2012, requesting that the bankruptcy court “make it

part of the record.” It provided most of the same information

already testified to by Seare, namely, what was said or not said

about the St. Rose debt at the consultation. The only new and

potentially relevant information it provided was that when making

calls to DeLuca’s office asking to speak to him personally,

Debtors were continually passed off to other staff members, who

also would not return their calls without Debtors leaving multiple

messages. Tedoco also claimed again that no staff member ever sat

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down with them to review the specifics of the Retainer Agreement.

4. The opinion and order for sanctions

The bankruptcy court issued its opinion and order sanctioning

DeLuca on April 9, 2013 (“Sanctions Opinion”).4 Dignity Health v.

Seare (In re Seare), 493 B.R. 158 (Bankr. D. Nev. 2013). The

court held that DeLuca had violated ethical rules NRPC 1.1, 1.2,

1.5, and 1.4. and certain sections of the Code — §§ 526(a)(1) and

(3), 528(a)(1) and (2), and 707(b)(4)(C).

a. The bankruptcy court’s findings and conclusions

To the bankruptcy court, this case presented the legal issue

of when consumer bankruptcy attorneys may limit the scope of their

representation, a practice referred to as “unbundling.” In re

Seare, 493 B.R. at 176. While acknowledging that unbundling is

permissible in Nevada, and that an attorney can charge additional

fees for adversary proceedings, the court noted that it had to be

4 After entry of the Sanctions Opinion, the bankruptcy court

granted DeLuca’s requests to temporarily stay, until determined by

this Panel, publication of the Sanctions Opinion and the

requirement that for the next two years DeLuca provide a copy of

the Sanctions Opinion to future adversary clients whose case he

declines. We address the latter issue later in this Memorandum.

As to the first issue, DeLuca disputes the bankruptcy court’s

decision to publish the Sanctions Opinion, contending that it

impermissibly went beyond its own list of what potential sanctions

DeLuca faced. DeLuca argues that due to his lack of a prior

disciplinary record and the court’s finding that he did not act

knowingly, and because he tried to represent Seare in a

settlement, publication of the Sanctions Opinion is too severe. 

He requests that we make the stay permanent or, at minimum, that

his name be deleted from the Sanctions Opinion, citing In re

Martinez, 393 B.R. 27, 30 n.1 (Bankr. D. Nev. 2008), a case where

the same bankruptcy judge did not publish the subject attorney’s

name.

Unfortunately, during our review of this appeal, we

discovered that the Sanctions Opinion has been published. 

Therefore, we are unable to provide this relief given prior

publication. Further, deleting DeLuca’s name from it, presuming

we could even order such a remedy, would be ineffective.

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done in a manner consistent with the rules of ethics and

professional responsibility binding on all attorneys. Id. In the

court’s view, DeLuca had not complied with the applicable rules in

this case; his boilerplate retainer agreement did not override

such mandatory rules. Id.

The court set forth several preliminary findings of fact to

support its decision to sanction DeLuca. It found that the issue

of Seare’s fraud was not overtly discussed during the consultation

and that DeLuca never affirmatively represented to Debtors that

the St. Rose debt was dischargeable. Id. at 180. It found that

DeLuca simply “thumbed through” the district court documents

without paying them much heed and that he did not represent either

way whether the debt was dischargeable. Id. The court also found

that DeLuca did not explain anything about adversary proceedings

during the consultation — what they are, whether one was likely in

this case, or what the potential consequences would be. Id. at

180-81. DeLuca’s cursory review of the district court documents

would not have led him to conclude that an adversary proceeding

was likely in Debtors’ case. Id. at 180. In sum, the court found

that DeLuca failed to carefully review the district court

documents or inquire about the nature of the Judgment during the

consultation, as had he known the debt was for fraud, he would

have told Debtors that St. Rose would likely seek to have it found

nondischargeable in an adversary proceeding. Id. at 180-81. The

court found that DeLuca moved quickly and did not pay sufficient

attention to Debtors’ individual goals and needs and that his

boilerplate forms and standardized approach, which may work for

most clients, failed to work for clients like Seare and Tedoco,

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whose circumstances do not fit the mold of the prototypical

consumer debtor. Id. at 181.

1. DeLuca violated NRPC 1.1.5

The bankruptcy court held that DeLuca had violated his duty

of competence under NRPC 1.1 by deciding to unbundle adversary

proceedings in Debtors’ case. In re Seare, 493 B.R. at 192. 

Specifically, the court found that as a result of a lack of

communication at the initial consultation DeLuca failed in his

primary duty — ascertaining Debtors’ objectives and defining the

goals of the representation. Id. at 190.

Debtors’ primary goal was to permanently stop the

garnishment, and once DeLuca was aware of a garnishment connected

to a prior judgment, he, as the bankruptcy expert, had an

affirmative duty to investigate. Id. at 190-91. It was not

Debtors’ burden to reach the legal conclusion that fraud, as

defined in the Code, included the fraudulent act Seare committed

in the district court. Id. at 190. The court found that DeLuca

either did not understand Debtors’ primary objective or he

negligently assumed the St. Rose debt was dischargeable and thus

Debtors’ objective would be met. Id. at 191. Either way, he did

not exercise the legal knowledge, skill and thoroughness

reasonably necessary for the representation. Id. The court found

that Debtors could have reasonably anticipated the St. Rose debt

would be discharged and that the garnishment would permanently

cease. Id. But, they did not likely expect that an adversary

5 NRPC 1.1 provides: “A lawyer shall provide competent

representation to a client. Competent representation requires the

legal knowledge, skill, thoroughness and preparation reasonably

necessary for the representation.”

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proceeding would be filed, especially since DeLuca did not explain

what an adversary proceeding was or the connection between

nondischargeable debts and adversary proceedings. Id. In the

court’s view, Debtors moved forward and filed a bankruptcy case

they might not have otherwise filed had they known it was nearly

certain to lead to an adversary proceeding. Alternatively, if

given adequate legal counsel, they may have sought an attorney who

had a different fee structure concerning adversary proceedings. 

Id.

The court found that DeLuca, without understanding Debtors’

goals for his representation, could not determine which legal

services were reasonably necessary to attain those goals or

explain to Debtors the challenges they were likely to face in

trying to achieve those goals by filing for bankruptcy. Id. In

the absence of such guidance, the court found that DeLuca had a

duty to offer the services reasonably necessary to achieve

permanent cessation of the wage garnishment. Id. at 191-92. 

Because an adversary proceeding was a near certainty in light of

what DeLuca should have known at the time of the initial

consultation — that the Judgment was based on fraud — representing

Debtors at an adversary proceeding was not only reasonably

necessary to achieve their goal of stopping the garnishment, but

likely the only way to stop it. Id. at 192. Consequently,

DeLuca’s decision to unbundle his representation in any adversary

proceedings in Debtors’ case violated the duty of competence under

NRPC 1.1. Id.

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2. DeLuca violated NRPC 1.2(c).6

The bankruptcy court held that DeLuca violated NRPC 1.2(c)

because unbundling the service of adversary proceedings was not

reasonable in light of Debtors’ circumstances. In re Seare, 493

B.R. at 196. Although the court did not find fault with DeLuca

using pre-prepared forms that limit the scope of services included

in a flat fee, it did find that deciding to unbundle services

reasonably necessary to achieve a client’s objectives before even

meeting the client was unreasonable and violated NRPC 1.2(c). Id.

at 194. Here, it appeared that his decision to unbundle adversary

services was made before he ever met Debtors. Alternatively, even

if DeLuca’s decision to unbundle such services was made during

Debtors’ initial consultation, that decision was also unreasonable

and violated the rule because an adversary proceeding was a near

certainty. Id. The court found DeLuca should have known, and

would have known had he cursorily investigated the nature of the

Judgment, that representing Seare in an adversary proceeding was

reasonably necessary to achieve Debtors’ reasonably anticipated

result — a discharge of the St. Rose debt. Id. at 194-95. 

Debtors’ expectation of a complete discharge was reasonable

because DeLuca did not inform them otherwise and they are not

bankruptcy experts. Id. at 195.

The court also faulted DeLuca for not communicating his

intent not to represent Seare in the adversary proceeding until

after the complaint had been filed, knowing that an adversary

6 NRPC 1.2 provides: “A lawyer may limit the scope of the

representation if the limitation is reasonable under the

circumstances and the client gives informed consent.”

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proceeding was the only way Seare could possibly discharge the

St. Rose debt. Unbundling such service at that point in time was

“patently unreasonable” and violated NRPC 1.2(c). Id. at 196.

Lastly, the unbundling was DeLuca’s idea, which the court

found ran contrary to the ABA’s guidance that unbundling should be

client-driven. Id.

The bankruptcy court held that DeLuca had further violated

NRPC 1.2(c) because he did not obtain Debtors’ informed consent in

limiting the scope of his representation. Id. at 203. First, the

court found that DeLuca did not comply with the rule by adequately

communicating the material risks of unbundling adversary

proceedings, either in general or in Debtors’ case, or the

available alternatives to such unbundling. Id. His failure to

properly understand their goals and details of their situation —

i.e., the nature of the Judgment — rendered adequate communication

impossible. Id. at 204. The Retainer Agreement, which the court

found to be DeLuca’s primary communication with Debtors, did not

constitute adequate communication. The Retainer Agreement’s

“fraud” disclaimer and statements that the flat fee does not

include representation for nondischargeability allegations and

adversary proceedings, which were in different sections, did not

communicate the material risks of proceeding without

representation in adversary proceedings, or even that DeLuca may

decide not to represent Debtors in an adversary proceeding. Id. 

Thus, reasoned the court, prospective clients are left to connect

the dots — that a debt incurred through fraud is raised in a claim

of nondischargeability that is litigated in an adversary

proceeding. Id. Hence, without adequate information upon which

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to base a decision, the court found that obtaining Debtors’ valid

consent was impossible. Id. at 203.

The means of consent here — initialing and signing DeLuca’s

contract of adhesion — did not sufficiently demonstrate that

Debtors understood what services were unbundled, or their

particular circumstance, or the seriousness of proceeding without

representation in adversary proceedings. Id. at 203-05. Without

any explanation to Debtors about the risks of unbundling services,

the court found that Debtors could not have known that the bundle

of services in the flat fee was unlikely to meet their objectives. 

Id. at 205. DeLuca neither explained the risks of going it alone

in adversary proceedings nor what particular risks Debtors faced,

or that they could seek counsel who structured his or her services

differently. Id. DeLuca did not communicate the high likelihood

of Debtors having to represent themselves pro se or find another

attorney, which the court found would have been evident had he

reviewed the Judgment. Id. Without DeLuca ever explaining

adversary proceedings to Debtors, they could have reasonably

agreed to exclude them, assuming that such proceedings were

unlikely to occur. However, the court doubted whether Debtors

actually made that decision, since DeLuca never explained what an

adversary proceeding was. Id.

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3. DeLuca violated NRPC 1.5.7

The bankruptcy court held that DeLuca violated NRPC 1.5(b)

because he did not sufficiently explain the scope of services

covered under the flat fee and the scope of services available for

additional fees, as the rule requires. In re Seare, 493 B.R. at

206. The problem with DeLuca’s Retainer Agreement was three-fold. 

First, the listed services were in legal jargon as opposed to

plain English. Id. Seare understood that adversary proceedings

were excluded, but did not know what they were. He also knew that

“nondischargeability allegations” were excluded, but similarly he

might not have known what they were. Id.

Second, Debtors were not aware of the likelihood that they

would need to pay for additional services. Id. at 206. Because

an adversary proceeding was reasonably foreseeable at the time

Debtors agreed to the fee structure and DeLuca did not explain

this eventuality to them, the court found that DeLuca improperly

unbundled the adversary proceeding from the flat fee. Id. at 206-

07. He unfairly placed them in the position of having to bargain

for additional legal services in the midst of an adversary

proceeding. Id. at 207.

Third, DeLuca violated NRPC 1.5(b) by changing the basis of

his fees without advance warning to Debtors. Id. The Retainer

Agreement did not state that DeLuca may decide not to represent

7 NRPC 1.5(b) provides: “The scope of the representation and

the basis or rate of the fee and expenses for which the client

will be responsible shall be communicated to the client,

preferably in writing, before or within a reasonable time after

commencing the representation, except when the lawyer will charge

a regularly represented client on the same basis or rate. Any

changes in the basis or rate of the fee or expenses shall also be

communicated to the client.”

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Debtors in adversary proceedings, only that such services would

incur additional fees. The court found that Debtors agreed to pay

about $2,000 for an attorney that, for the additional fees, would

handle nondischargeability claims and adversary proceedings, and

part of the basis for the $2,000 fee was the availability of

services if needed. Id. By deciding later not to represent

Debtors at all, DeLuca essentially changed the basis of his fees. 

The court further found that because Debtors did not understand

adversary proceedings, the likelihood of one being filed against

them, and what it would cost them, they could not have known that

the approximately $2,000 they agreed to pay did not include the

scope of services reasonably necessary to achieve their goal. Id. 

Thus, reasoned the court, their choice to pay it could not be

considered voluntary. Id.

4. DeLuca violated NRPC 1.4.8

The bankruptcy court held that DeLuca violated NRPC 1.4 by

failing to properly communicate with Debtors. In re Seare, 493

B.R. at 208. Specifically, DeLuca violated NRPC 1.4(a)(2) by

failing to reasonably consult Debtors about the means to achieve

their objectives. Id. He also violated NRPC 1.4(a)(3) by failing

to forward the proposed stipulation and order DeLuca received

before St. Rose filed its complaint. Id. Finally, DeLuca

8 NRPC 1.4 provides, in relevant part:

 (a) A lawyer shall:

. . . 

(2) Reasonably consult with the client about the means

by which the client’s objectives are to be accomplished;

(3) Keep the client reasonably informed about the status

of the matter;

(4) Promptly comply with reasonable requests for

information[.]

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violated NRPC 1.4(a)(4) by failing to timely respond to Debtors’

requests for information. Id. Although the court generally

questioned Debtors’ credibility, it did find convincing Tedoco’s

claims about DeLuca’s and his staff’s failure to return phone

calls and to keep them informed of their case. Id. The court

also found independently that DeLuca’s own records evidenced his

office’s inattention to detail and poor client communication. He

failed to log which paralegal reviewed the retainer agreement with

each prospective client, he twice incorrectly filed his OSC briefs

in the main case and he failed to serve copies of his OSC briefs

on Debtors until after the OSC evidentiary hearing, even though he

was ordered to serve them immediately after the initial OSC

hearing. Id.

5. DeLuca violated § 707(b)(4)(C).9

The bankruptcy court reasoned that, as with DeLuca’s ethical

violations, his violation of § 707(b)(4)(C) flowed from his

failure to investigate the nature of the Judgment. In re Seare,

493 B.R. at 211. The court disagreed that DeLuca performed due

diligence in this case, finding that he had taken no steps to

9 Section 707(b)(4)(C) provides:

The signature of an attorney on a petition, pleading, or

written motion shall constitute a certification that the

attorney has—

(i) performed a reasonable investigation into the

circumstances that gave rise to the petition, pleading,

or written motion; and

(ii) determined that the petition, pleading, or written

motion—

(I) is well grounded in fact; and

(II) is warranted by existing law or a good faith

argument for the extension, modification, or

reversal of existing law and does not constitute an

abuse under paragraph (1).

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investigate independently or verify the circumstances underlying

the Order of Wage Garnishment, which fell far short of the

“reasonable investigation” requirement of § 707(b)(4)(C). Id. at

211-213. Debtors told DeLuca of the circumstances giving rise to

the petition — the wage garnishment — and gave him documents from

the district court case. Id. at 211. DeLuca demonstrated his

awareness of the action by listing it in Debtors’ SOFA, including

the case name and number. Id. DeLuca’s reasonable next step

should have been to investigate the Judgment supporting the

garnishment, which could have been accomplished by asking

questions or reviewing the district court’s electronic docket. 

Id. The fact that the Judgment led to a garnishment was a

sufficient “red flag” for further inquiry. Id. at 212. Instead,

the court found that DeLuca merely flipped through the documents

and assumed that since the debt was owed to a hospital, it must be

for medical bills and was thus dischargeable. Id. at 211-12. His

office also never obtained any further documents from Debtors,

which may have revealed information they failed to provide. Id.

at 212. Blaming his clients for that failure was inappropriate

because Debtors were not bankruptcy experts. Id.

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6. DeLuca violated §§ 526(a)10 and 528(a).11

First, the bankruptcy court found that DeLuca was required to

comply with §§ 526 and 528(a) based on his role as a bankruptcy

attorney and “debt relief agency,” Debtors’ role as “assisted

persons,” and the nature of Debtors’ debts. In re Seare, 493 B.R.

at 214. Through analysis similar to that utilized in connection

with NRPC 1.4, the court found that DeLuca violated § 526(a) by

failing to accurately explain that he would not represent Debtors

in an adversary proceeding and the risks Debtors could face in

bankruptcy. Id. at 215. Although the Retainer Agreement states

10 Section 526(a) provides, in relevant part:

(a) A debt relief agency shall not—

(1) fail to perform any service that such agency

informed an assisted person or prospective assisted

person it would provide in connection with a case or

proceeding under this title;

. . .

(3) misrepresent to any assisted person or prospective

assisted person, directly or indirectly, affirmatively

or by material omission, with respect to—

(A) the services that such agency will provide to

such person; or

(B) the benefits and risks that may result if such

person becomes a debtor in a case under this title.

11 Section 528(a) provides, in relevant part:

(a) A debt relief agency shall—

(1) not later than 5 business days after the first date

on which such agency provides any bankruptcy assistance

services to an assisted person, but prior to such

assisted person’s petition under this title being filed,

execute a written contract with such assisted person

that explains clearly and conspicuously—

(A) the services such agency will provide to such

assisted person; and

(B) the fees or charges for such services, and the

terms of payment;

(2) provide the assisted person with a copy of the fully

executed and completed contract.

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that representation for nondischargeability allegations and

adversary proceedings would result in additional fees, DeLuca

flatly refused to provide these services once the complaint was

filed. Thus, he violated § 526(a)(1) by failing to perform a

service he informed Debtors he would provide in connection with

their bankruptcy case. Id.

The court rejected DeLuca’s argument that because Debtors

could not afford the additional services anyway, it was immaterial

whether or not he was willing to perform them. This argument

improperly benefitted from hindsight. Id. The court found that

at the time DeLuca refused to perform the additional services, no

evidence existed that he ever offered these services to Debtors

and that Debtors refused them for lack of funds. Id. DeLuca

offered no evidence indicating he consulted at all with Debtors

before sending them the June 6 letter of nonrepresentation. Id. 

At minimum, based on the Retainer Agreement, the court found that

DeLuca was obligated to at least quote Seare a price for the

adversary representation. Id.

The court found that DeLuca had also violated § 526(a)(3)

because he misrepresented, by omission, the risks associated with

an adversary proceeding that Debtors were nearly certain to face

if they filed for bankruptcy. Id. Because stopping the

garnishment was Debtors’ primary goal, DeLuca’s failure to address

the risks of a related adversary proceeding was a material

omission. Id.

DeLuca was also found to have violated § 528(a) for the same

reasons he had violated NRPC 1.5. Id. While he partially

complied with § 528(a)(1) by providing a written contract on the

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same day as the consultation, DeLuca had violated § 528(a)(2)

because he failed to provide a “fully executed and completed

contract”; he never signed the Retainer Agreement. Id. Further,

the court found that DeLuca also violated § 528(a)(1) because the

Retainer Agreement did not “clearly and conspicuously” explain the

scope of services and fees. Id. Specifically, DeLuca excluded

services using technical terms like “nondischargeability

allegations” and “adversary proceedings,” which a layperson would

not likely understand. Further, the standard form contract did

not relate these services to a client’s particular case, and,

without clarification from DeLuca about which additional services

were likely to be needed, Debtors had no way of knowing which

exclusions were likely to apply and what the chances were of

facing increased legal fees. Id. at 215-16.

b. The sanctions imposed

After carefully reviewing the range of available sanctions,

the bankruptcy court ordered the following: (1) that DeLuca

disgorge the $1,999 fee paid by Debtors; (2) that the Sanctions

Opinion be published to deter such conduct by other attorneys in

the future; (3) that DeLuca complete some Continuing Legal

Education credits; and (4) that for the next two years DeLuca

provide a copy of the Sanctions Opinion to every client who is

sued in an adversary proceeding, but only if DeLuca declines to

represent them in that adversary proceeding for any reason. Id.

at 224-27. The court declined to impose any further monetary

sanctions beyond disgorgement, despite the authority to do so,

because of DeLuca’s good standing and his efforts to mitigate the

situation by offering to refund the fee and represent Seare in

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negotiations with St. Rose. Id. at 226. DeLuca timely appealed.

5. The result of adversary proceeding

On January 2, 2013, St. Rose filed a Confession of Judgment,

in which Seare authorized a nondischargeable judgment against him

for $67,430.58.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.

III. ISSUES

Did the bankruptcy court abuse its discretion in sanctioning

DeLuca and imposing the types of sanctions that it did?

IV. STANDARDS OF REVIEW

“We review all aspects of an award of sanctions for an abuse

of discretion.” Orton v. Hoffman (In re Kayne), 453 B.R. 372, 380

(9th Cir. BAP 2011) (citing Price v. Lehtinen (In re Lehtinen),

332 B.R. 404, 411 (9th Cir. BAP 2005), aff’d, 564 F.3d 1052 (9th

Cir. 2009)); In re Nguyen, 447 B.R. 268, 276 (9th Cir. BAP 2011)

(en banc)). The bankruptcy court’s choices of sanctions are also

reviewed for abuse of discretion. U.S. Dist. Ct. for E.D. Wash.

v. Sandlin, 12 F.3d 861, 865 (9th Cir. 1993). A bankruptcy court

abuses its discretion if it applies the wrong legal standard or

its factual findings are illogical, implausible or without support

in the record. TrafficSchool.com v. Edriver Inc., 653 F.3d 820,

832 (9th Cir. 2011).

With respect to sanctions, a bankruptcy court’s factual

findings are reviewed for clear error and given great deference. 

Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th

Cir. 1997). A factual finding is clearly erroneous if it is

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illogical, implausible or without support in the record. Retz v.

Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010).

Whether an appellant’s due process rights were violated is a

question of law we review de novo. Miller v. Cardinale (In re

DeVille), 280 B.R. 483, 492 (9th Cir. BAP 2002), aff’d, 361 F.3d

539 (9th Cir. 2004).

V. DISCUSSION

A. The bankruptcy court’s power to sanction attorneys

“Bankruptcy courts have the inherent authority to regulate

the practice of attorneys who appear before them.” In re Nguyen,

447 B.R. at 280 (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43-

45 (1991); Caldwell v. Unified Capital Corp. (In re Rainbow

Magazine, Inc.), 77 F.3d 278, 284–85 (9th Cir. 1996)). 

“Bankruptcy courts also have express authority under the Code and

the Rules to sanction attorneys, including disbarment or

suspension from practice.” Id. at 281 (citing In re Lehtinen, 564

F.3d at 1058, 1062; § 105(a)). “The bankruptcy court has wide

discretion in determining the amount of a sanctions award.” In re

Kayne, 453 B.R. at 386 (internal quotation marks and citation

omitted). The Local Rules for the District Court of the District

of Nevada also grant considerable leeway in fashioning sanctions

for violations of the NRPC. Local Rule IA 10-7(a) provides that

“[a]ny attorney who violates these standards of conduct may be

disbarred, suspended from practice before this Court for a

definitive time, reprimanded or subjected to such other discipline

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as the court deems proper.”12

In reviewing attorney disciplinary sanctions, we determine

whether (1) the disciplinary proceeding was fair, (2) the evidence

supports the findings, and (3) the penalty imposed was reasonable. 

In re Nguyen, 447 B.R. at 276.

B. The bankruptcy court did not abuse its discretion when it

sanctioned DeLuca and imposed the sanctions that it did.

DeLuca raises several arguments on appeal, most of which 

pertain to the bankruptcy court’s findings of fact or his dispute

with some of the sanctions imposed. We address each of his

arguments in turn.

We begin with the bankruptcy court’s consideration of

Tedoco’s late-filed brief after the matter had been taken under

submission. The court stated at the OSC evidentiary hearing that

once the transcripts from the two OSC hearings were recorded on

the docket, the matter would stand submitted. The transcripts

were recorded on October 30, 2012. Presumably, evidence closed on

that date. Tedoco’s brief was filed on December 4, 2012. Citing

to no authority, DeLuca argues that the bankruptcy court committed

reversible error by considering Tedoco’s late-filed brief and

relying on the inadmissible facts contained therein for much of

its decision.

Reopening of a case after the close of evidence rests in the

discretion of the trial court. Mo. Pac. Ry. Co. v. Oleson, 213 F.

329, 331-32 (8th Cir. 1914); United States v. Hugh, 236 F. App’x

12 Part IA of the Local Rules of Practice for the U.S.

District Court for the District of Nevada apply in all bankruptcy

cases and proceedings in the U.S. Bankruptcy Court for the

District of Nevada. See Local Rule IA 2-1.

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796, 802 (3d Cir. June 14, 2007) (Ambro, J., dissenting) (“there

is no iron-bound, copper-fastened, double-riveted rule against the

admission of evidence after both parties have rested upon their

proof”) (quoting United States v. Blankenship, 775 F.2d 735, 741

(6th Cir. 1985) and citing Oleson). Therefore, it was within the

bankruptcy court’s discretion to consider Tedoco’s late-filed

brief.

However, we agree with DeLuca that Tedoco’s brief consisted

only of argument, not admissible evidence. As such, the

bankruptcy court erred in considering it. United States v.

Moreland, 622 F.3d 1147, 1162 (9th Cir. 2010) (argument is not

evidence); Hurley v. Student Loan Acquisition Auth. of Ariz. (In

re Hurley), 258 B.R. 15, 23 (Bankr. D. Mont. 2001). Nonetheless,

much of what Tedoco asserted had already been established by

Seare, either by his testimony at the OSC evidentiary hearing or

in documentary evidence the parties submitted. Therefore, it was

harmless error for the bankruptcy court to consider any facts

asserted in the brief because they were already before the court

through competent evidence. Lillie v. United States, 953 F.2d

1188, 1192 (10th Cir. 1992) (admission of improper evidence of a

fact in issue is harmless when the judgment is supported by

sufficient competent evidence). The few facts the court should

not have considered, however, as we discuss more fully below, are

insufficient to establish reversible error.

1. DeLuca’s arguments regarding the violations of the NRPC

a. NRPC 1.1 and NRPC 1.2

DeLuca first takes issue with the bankruptcy court’s findings

under NRPC 1.1 that his unbundling of adversary proceedings was

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unreasonable in this case because it failed to achieve Debtors’

reasonably anticipated result — i.e., discharge of the St. Rose

debt. DeLuca contends that three problems exist with this

finding: (1) it assumes the debt was dischargeable; (2) the

bankruptcy court made comments during the initial OSC hearing with

Seare present that led Seare to testify at the evidentiary hearing

that dischargeability and adversary proceedings were not explained

to him by DeLuca; and (3) it fails to recognize that because

St. Rose did not include Tedoco in the adversary proceeding and

she received a discharge, the debt is uncollectible against Seare

under the community discharge, so DeLuca did in fact achieve

Debtors’ reasonably anticipated result.

Any bankruptcy professional would recognize the obstacles a

debtor faces in trying to achieve the discharge of a debt based on

fraud. However, the bankruptcy court found that Debtors could

have reasonably anticipated the St. Rose debt would be discharged

and that the garnishment would permanently cease, based on

DeLuca’s failure to investigate the Judgment and inform his

clients of the inevitable adversary proceeding. It further found

it impossible for DeLuca to provide adequate counsel as a result

of his erroneous assumption that the Judgment arose from unpaid

medical bills. We see no clear error in that finding.

As for comments made by the bankruptcy court at the initial

OSC hearing, it is true that Seare testified at the later

evidentiary hearing that he did not know what adversary

proceedings were and that DeLuca never discussed them. However,

this was not the only evidence showing that DeLuca failed to

explain the meaning of dischargeable versus nondischargeable

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debts, the meaning of adversary proceedings or the connection

between them. It was reasonable for the court to infer that this

discussion never occurred with Debtors because, by DeLuca’s own

admission, he was not aware that the Judgment was based on fraud. 

Also, Seare testified that the issue of fraud never came up at the

consultation. If it had, one would expect DeLuca to have

explained nondischargeable debts and adversary proceedings. More

importantly, DeLuca never affirmatively testified that he did

explain these matters to Debtors and no record exists that any

member of DeLuca’s staff did either. Although it was his office’s

protocol to have a staff member go through every page of his

retainer agreement with clients, DeLuca could not establish that

it occurred in this case. Tedoco claimed that no one went through

the Retainer Agreement with Debtors, but this was an inadmissible

fact the bankruptcy court should not have considered.

As for his third argument that the St. Rose debt is

uncollectible due to the community discharge, DeLuca admits he did

not raise this issue before the bankruptcy court. As such, we are

not required to consider it for the first time on appeal. 

O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d

955, 957 (9th Cir. 1989); Concrete Equip. Co. v. Fox (In re Vigil

Bros. Constr., Inc.), 193 B.R. 513, 520 (9th Cir. BAP 1996). In

any event, when considering whether the community discharge under

§ 524(a)(3) applies, the bankruptcy court must first determine

whether the debt is a community debt under state law. The court

must then determine the scope of the discharge. Arcadia Farms

Ltd. v. Rollinson (In re Rollinson), 322 B.R. 879, 881 (Bankr. D.

Ariz. 2005) (“Once a debt has been determined to be a community

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debt pursuant to state law, the second issue is the scope of the

discharge.”). Neither of those determinations have been made

here. Further, “when the debtor has incurred a nondischargeable

debt or is not entitled to a discharge, or the debtor’s spouse

would have been denied a discharge or had a debt declared

nondischargeable in a hypothetical bankruptcy case commenced on

the same day as that of the debtor, the nondischargeable debt of

either spouse will survive against after-acquired community

property.” 4 COLLIER ON BANKRUPTCY ¶ 524.02[3][a] (Alan N. Resnick &

Henry J. Sommer eds., 16th ed. 2013). Therefore, Debtor was not

entitled to a community discharge of a debt he could not himself

discharge. Even if DeLuca’s argument has merit, which we do not

believe it does, we find it improper that he rely on subsequent

events beyond his control to try to negate his prior shortcomings

in complying with the rules of ethics.

DeLuca next takes issue with the bankruptcy court’s finding

that he failed to obtain Debtors’ informed consent to unbundle

adversary proceedings. DeLuca rests his arguments on the

disclosures in the Retainer Agreement and FAQ about the

nondischargeability of fraud debts and Seare’s admission that he

did not read the FAQ. DeLuca contends the court erred in finding

that Seare did not give informed consent, after Seare had admitted

he made no effort to read any of the documents he signed and

failed to ask any questions. In other words, argues DeLuca, a

client cannot argue that disclosures are insufficient and consent

invalid when he makes no effort to read, review and question

critical documents. The bankruptcy court considered and rejected

this argument. It found that the Retainer Agreement’s “fraud”

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disclaimer and its disconnected “legal jargon” statements about

what was or was not included in the flat fee left prospective

clients to “connect the dots” that a debt incurred through fraud

is raised in a claim of nondischargeability, which is litigated in

an adversary proceeding, and that it was something that requires

additional fees for representation. The court also found it

improper for DeLuca to put the onus on layperson debtors to make

these conclusions. We see no clear error here.

DeLuca also quibbles with the bankruptcy court’s

characterization of Debtors’ goal as one to “permanently” stop the

wage garnishment, when Seare testified that his desire was “to get

the wage garnishment stopped.” DeLuca argues that the court added

the word “permanently,” which it inferred from Tedoco’s late-filed

brief — a brief it should not have considered. Although Tedoco

used the word “permanently” in her brief, Seare also testified at

the evidentiary hearing that the sole reason for filing bankruptcy

was to “get rid of” the garnishment and that the temporary

cessation of it was not the benefit they were seeking. Further,

DeLuca’s argument defies logic. Of course Debtors wanted the

garnishment to disappear forever, not just for a few months.

DeLuca alternatively argues that even if Debtors’ goal was

permanent cessation of the garnishment, the garnishment was

stopped as of the date of the OSC evidentiary hearing, so DeLuca

did fulfill his duty of competence by achieving the goal of

“stopping the garnishment.” For the reasons already discussed and

given by the bankruptcy court, we need not address this meritless

argument.

Lastly, DeLuca argues that the bankruptcy court “improperly

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put itself in Debtors’ place” and went outside the record when it

found that Debtors may have chosen not to file bankruptcy or may

have sought an attorney with a different fee structure, had they

known about the dischargeability concerns related to the St. Rose

debt. We disagree. This inference was reasonable for the court

to make in light of this record. Plus, this fact alone does not

change the conclusion that DeLuca violated his duty of competence. 

Despite DeLuca’s contentions, whether the St. Rose debt was

actually dischargeable is not the point. The point is: What is

the nature of the debt; what relief may the creditor seek against

Debtors; and what will Debtors need to do to defend against the

claim? Debtors needed DeLuca to inform them sufficiently of the

risks associated with the St. Rose debt before they could properly

provide informed consent to allow DeLuca to unbundle services. 

DeLuca failed to advise them about the debt or its risks because

he did not perform even a minimal investigation, which would have

revealed that the Judgment arose from fraud. Without that

knowledge, it was impossible for DeLuca to determine Debtors’

circumstances and advise them as to what sort of representation

would be needed to achieve their goal of eliminating the St. Rose

debt and the garnishment.

We conclude the bankruptcy court did not err in determining

DeLuca violated NRPC 1.1 and 1.2(c).

b. NRPC 1.4 and NRPC 1.5

DeLuca next argues that the bankruptcy court erred in

determining he violated NRPC 1.5 because he did not sufficiently

explain the scope of services covered under the flat fee and the

scope of services available for additional fees. DeLuca points to

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Seare’s testimony that he understood DeLuca would not be

representing him in any allegations of fraud. Again, DeLuca

misses the point. Seare may have understood that defending fraud

allegations would require an additional fee or that adversary

proceedings or nondischargeability allegations were excluded from

the flat fee, but the Retainer Agreement — the only communication

to Debtors explaining the scope of DeLuca’s services and/or for

what fees — failed to make the connection between these issues. 

Accordingly, we perceive no error with the bankruptcy court’s

decision that DeLuca violated NRPC 1.5.

Finally, DeLuca contends the bankruptcy court erred in

determining that he violated NRPC 1.4 by failing to properly

communicate with Debtors. DeLuca first asserts a due process

concern over whether he received sufficient notice that the

bankruptcy court was considering sanctioning him under this rule. 

DeLuca correctly notes that any potential violations of NRPC 1.4

were not raised in the OSC, or in the order setting the

evidentiary hearing, or at either hearing. Therefore, he argues

that sanctioning him under this rule violated his due process

rights and should be reversed. “When an attorney is subject to

discipline, he or she has a right to notice and an opportunity to

be heard.” In re Nguyen, 447 B.R. at 278 (citing In re Ruffalo,

390 U.S. 544, 551-52 (1968); In re Lehtinen, 564 F.3d at 1060)). 

To satisfy the requirements of due process in this context, “the

attorney must receive prior notice of the ‘the particular alleged

misconduct and of the particular disciplinary authority under

which the court is planning to proceed’ along with an opportunity

to respond.” Id. (quoting In re DeVille, 361 F.3d at 548). The

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rule, however, is not absolute. In re Deville, 361 F.3d at 548.

Here, the OSC notified DeLuca of his alleged misconduct and

that the bankruptcy court was considering disciplining him under

NRPC 1.1, 1.2 and 1.5. Absent from this is any reference to

NRPC 1.4. Despite the court’s omission of NRPC 1.4 in the OSC or

in the order setting the evidentiary hearing, we conclude that

DeLuca was not deprived of due process. DeLuca had notice of the

conduct potentially subjecting him to discipline under several

provisions of the NRPC and under sections of the bankruptcy code,

which interrelatedly address similar, if not, identical

requirements imposed under the general rubric of professional

conduct. If the attorney has been sufficiently informed of the

alleged misconduct, the Ninth Circuit has upheld sanctions even

when a bankruptcy court, in advance of a disciplinary proceeding,

stated that Rule 9011 was the basis for discipline, yet it

proceeded to impose sanctions under its inherent authority. See

In re DeVille, 361 F.3d at 550. Even if the court improperly

considered NRPC 1.4, it committed harmless error as the elements

of this rule are also generally included in the provisions that

were identified by the court in its orders, i.e., NRPC 1.4,

§ 526(a) and § 528(a) involve what services and means are

necessary to accomplish the client’s objectives. The bankruptcy

court informed DeLuca through orders and at the hearings of the

conduct that would be the subject of any discipline.

Nonetheless, we must address a second issue. Many of the

facts asserted in Tedoco’s brief were used extensively in the

bankruptcy court’s decision to find that DeLuca had violated

NRPC 1.4. Again, these “facts” should not have been considered. 

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However, other admissible facts in the record support the court’s

decision to find that DeLuca violated NRPC 1.4, namely, DeLuca’s

failure to inform Debtors of the St. Rose fax containing the

proposed stipulation and order about the Judgment. Also in

evidence was Debtors’ email to DeLuca’s office that his failure to

return phone calls was unacceptable and unprofessional customer

service. Finally, the court found independently that DeLuca’s own

records indicated his office’s inattention to detail and poor

client communication. He fails to log which paralegal reviewed

the retainer agreement with each prospective client. As such, we

see no error in the bankruptcy court’s decision that DeLuca

violated NRPC 1.4.

2. DeLuca’s arguments regarding the violations of

§§ 707(b)(4)(C), 526(a)(1) and (3), and

528(a)(1) and (2)

DeLuca also raises a due process concern with respect to the

bankruptcy court’s decision to sanction him under these various

sections of the Code. DeLuca contends that the court only

“orally” added §§ 707(b)(4) and 526(a), both of which have four

subparts each, at the initial OSC hearing and failed to specify

which subpart(s) DeLuca potentially violated. Thus, because he

was not provided adequate written notice of these alleged

violations, nor the potential sanctions associated with them,

DeLuca contends they should all be stricken. While it is true

that the court orally added these Code sections at the initial OSC

hearing out of concern for some of DeLuca’s answers, this was not

the only notice DeLuca received about them.

In the order entered on September 20, 2012, and setting the

evidentiary hearing, the bankruptcy court specifically set forth

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which subpart(s) of each section were at issue, citing them right

in the order. Notably, DeLuca failed to include this order in his

excerpts of record. Given his failure to include the order,

DeLuca’s contention on appeal that he did not receive written

notice of the Code sections at issue is sanctionable.

DeLuca asserts that even if we conclude he received adequate

notice, he nonetheless complied with each section. As for

§ 707(b)(4)(C), DeLuca argues that the “reasonable investigation”

requirement goes more to the omission of assets or debts, not

whether a debt is dischargeable. While it is true that much of

the case law on this issue has concerned an attorney’s omission of

assets in bankruptcy schedules, DeLuca has not cited any authority

establishing that this section could not be applied in the way the

bankruptcy court did here. Bottom line, DeLuca did not perform a

“reasonable investigation into the circumstances that gave rise to

the petition.” § 707(b)(4)(C). Accordingly, we see no error.

DeLuca also contends that he complied with § 526(a)(1) and

(3). Although his argument is somewhat unclear, DeLuca apparently

argues that he did not violate § 526(a)(1) because the Retainer

Agreement stated only that he would not represent Debtors in an

adversary proceeding without additional fees, not that he would

not represent them in one at all, as the bankruptcy court found. 

DeLuca says he decided to not represent Debtors after the full

scope of Seare’s actions became known. First, the bankruptcy

court did not find that the Retainer Agreement said DeLuca would

never represent Debtors in an adversary proceeding. In fact, it

found just the opposite, which led to DeLuca’s problem. The

Retainer Agreement stated that representation for

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nondischargeability allegations and adversary proceedings was

available for an additional fee, but DeLuca flatly refused to

provide these services once the complaint was filed. Hence, the

court found he violated § 526(a)(1) for his failure to perform a

service he informed Debtors that he would provide in connection

with their bankruptcy case.

As for § 526(a)(3), DeLuca contends that because the St. Rose

complaint did not include Tedoco and she received a community

discharge, and thus the debt is ultimately uncollectible against

Seare, the bankruptcy court erred in determining that he violated

§ 526(a)(3). For the same reasons stated above, we reject this

argument. In any event, the record supports the bankruptcy

court’s decision. DeLuca failed to comply with § 526(a)(3)

because he did not inform Debtors about the risks associated with

an adversary proceeding they were nearly certain to face once they

filed for bankruptcy.

Lastly, DeLuca contends that he received even less due

process regarding any violations of § 528 because it was never

mentioned prior to the bankruptcy court’s decision. We agree that

§ 528 was not mentioned anywhere prior to the entry of the court’s

Sanctions Opinion. However, as a bankruptcy attorney, DeLuca knew

he had not signed the Retainer Agreement as required by § 528. 

Further, as noted by the bankruptcy court, DeLuca satisfied the

qualifying factors imposed by § 528 and was required by statute to

comply with its requirements. As § 528 mandates compliance, we

find no error.

3. DeLuca’s arguments about the sanctions imposed

DeLuca argues that the sanctions imposed upon him were too

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severe. Specifically, he argues that the bankruptcy court

impermissibly went far beyond the list in its OSC of potential

sanctions DeLuca faced. The orders specifically provided that

monetary and nonmonetary sanctions may be considered and imposed. 

Keeping in mind that bankruptcy judges have broad discretion in

determining the type of sanctions to impose, the court imposed

sanctions encompassed within the general designation of monetary

and nonmonetary sanctions expressly stated in the OSC. The court

did not impermissibly exceed the described sanctions. We further

conclude that the sanctions were fair, supported by the evidence

and reasonable. See In re Nguyen, 447 B.R. at 276.

DeLuca argues that ordering him to provide a copy of the 

Sanctions Opinion to potential adversary clients whose case he

declines for the next two years is excessive and violates his

commercial free speech. Leaving aside momentarily the “excessive”

argument, DeLuca has not cited a case holding that ordering a

sanctioned attorney to provide prospective clients with the

court’s decision sanctioning the attorney violates his or her free

speech. In any event, this sanction was of particular importance

to the bankruptcy court as a means to protect future debtors by

ensuring they are properly informed of the risks of unbundling,

and to promote a systematic change in DeLuca’s practice, which the

court characterized as a “mill” practice. The court also saw this

sanction as a means of informing the bar that being disciplined

for unethical conduct has repercussions beyond just paying a fine

and moving on. We find it difficult to disagree with this

reasoning. Accordingly, we do not conclude that this sanction was

excessive.

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Lastly, DeLuca argues that he should not have to disgorge his

fee, particularly the filing fee and credit report fee, because

Debtors did obtain the benefit of a discharge, and Seare’s credit

score increased by over 100 points following the discharge. As

for the actual fee paid to DeLuca, we cannot say the bankruptcy

court abused its discretion under the circumstances. In fact, it

did not, despite the authority to do so, order any additional

monetary sanctions because of DeLuca’s efforts to return his fee

to Debtors and to represent Seare in settlement negotiations with

St. Rose. Given the record, we conclude the bankruptcy court did

not abuse its discretion in including the filing and credit report

fees within the total amount to be disgorged, especially when

prior to the issuance of the Sanctions Opinion, DeLuca agreed to

return Debtors’ money.13

VI. CONCLUSION

Consumer bankruptcy attorneys can unbundle their services in

Nevada, particularly, adversary proceedings. However, unbundling,

or limited scope representation, needs to comply with the rules of

ethics and the Bankruptcy Code. A qualitative analysis of each

individual debtor’s case must be done at intake to ensure that his

or her reasonable goals and needs are being met. That calculus

13 DeLuca also argues that the bankruptcy court erred in

refusing to allow him to disclose the terms of the settlement

offer between St. Rose and Seare that he helped procure, before it

imposed sanctions. Actually, the “cat is already out of the bag”

since DeLuca mentioned it on the record at the OSC evidentiary

hearing, and the transcript is on the docket for the world to see. 

Certainly, the bankruptcy court was aware of it at the time it

entered the Sanctions Opinion. In any event, we fail to see how

allowing this into the record would have made any significant

difference in the sanctions the court imposed. Actually, DeLuca’s

offer to help Seare procure a settlement with St. Rose appears to

have helped him.

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was not applied in this case. For the foregoing reasons, we

AFFIRM.

Concurrence begins on next page.

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JURY, Bankruptcy Judge, Concurring:

I write separately to highlight what this disposition, and

the lengthy published opinion of the bankruptcy court in In re

Seare, 493 B.R. 158, hold and what they do not hold. Importantly,

they do not hold that unbundling representation of a debtor in a

nondischargeability adversary proceeding from general

representation of that debtor in a bankruptcy case is prohibited. 

What they do say is that an attorney who wishes to limit her or

his scope of bankruptcy representation should be mindful of the

ethical minefield he or she must navigate.

I agree with the majority that the bankruptcy judge here did

not abuse his discretion in concluding that DeLuca violated

numerous sections of the Nevada Rules of Professional Conduct

(NRPC) and also failed to comply with certain requirements of the

Bankruptcy Code when he unbundled representation of Seare in the

St. Rose adversary. The factual findings amply support the

conclusion that Deluca stumbled in that ethical minefield. 

However, unbundling representation of a consumer debtor in an

adversary proceeding is neither prohibited by state ethical

standards nor by the Bankruptcy Code. If done correctly,

unbundling may be key to competent consumer bankruptcy attorneys

providing much needed representation to debtors at an affordable

price. Without the ability to unbundle adversaries, the flat fee

which a consumer attorney would need to charge for basic

bankruptcy representation might become prohibitive and exacerbate

the already existing problem of pro se filings.

To be sure, the bankruptcy judge here did not suggest that

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unbundling was never appropriate. Indeed, in his opinion he

describes the background and general acceptance of limited scope

representation by the American Bar Association (ABA), which has

provided for limited scope in its Model Rules, the American

Bankruptcy Institute (ABI), and by most states in their ethical

rules which monitor the performance of lawyers. Seare, 493 B.R.

at 183. Despite recognizing this broad acceptance, however, the

bankruptcy judge found that DeLuca fell woefully short of

complying with the ethical standards which surround unbundling and

therefore sanctioned him for this shortcoming. The judge found

that unbundling the adversary proceeding in the representation of

Seare based on the unique facts of this case was not possible to

achieve the reasonably anticipated result of the client. 

Therefore, I believe it is useful to focus on why this unbundling

failed and how a consumer bankruptcy lawyer might avoid the

pitfalls which brought down DeLuca.

As highlighted by the bankruptcy judge, both the NRPC and the

ABA Model Rules state that an attorney may “limit the scope of

representation if the limitation is reasonable under the

circumstances and the client gives informed consent.” 

NRPC 1.2(c); ABA Model Rule 1.2. It was the implementation of

this rule from the initial intake interview that tripped DeLuca up

because he did not properly define the goal of the representation

of Seare: to permanently stop the garnishment on the St. Rose

judgment. The failure to recognize this goal was caused by the

circumstances described by the bankruptcy judge and the majority

and need not be repeated here. In a nutshell, the communication

between Seare and DeLuca did not cause DeLuca to recognize that

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the St. Rose judgment was likely nondischargeable as based on

fraud14; therefore, his representation would not stop the

garnishment permanently unless he defended and won or settled the

adversary proceeding. By not making the necessary reasonable

inquiry about the judgment, DeLuca’s attempt to unbundle did not

achieve the goal of limited scope: to provide a bundle of services

reasonably necessary to achieve the client’s reasonably

anticipated result. In re Seare, 493 B.R. at 188.

All the other ethical and statutory violations found by the

bankruptcy judge flowed from this initial deficiency in the

limited scope representation. DeLuca failed to perform

competently because he did not identify the goal and provide

services to accomplish the goal - i.e. representing Seare in the

adversary proceeding, causing the violation of NRPC 1.1. The

unbundled services he promised for the agreed flat fee was not a

reasonable limited scope, causing the NRPC 1.2 error. He did not

obtain informed consent because he relied on a boilerplate

Retainer Agreement with legal jargon which, although it described

fraud as nondischargeable and that representation in an adversary

was not included in the flat fee, did not connect the dots such

that Seare was made aware of the risk of accepting such limited

scope representation and why it would not achieve his desired

result, being free of the St. Rose garnishment. Just Seare

initialing every page of the Retainer Agreement did not provide

the particularized communication necessary for informed consent. 

14 It is ironic to me that although every reference to this

judgment as being nondischargeable talks about fraud, the grounds

under which St. Rose sought nondischargeability were §§ 523(a)(4)

and (6), not fraud.

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The other violations of the NRPC are similarly tied to failure to

identify the goal and provide the services necessary to achieve

it.

The Bankruptcy Code violations are founded on the same

deficiencies: DeLuca’s failure to investigate the St. Rose

judgment to determine its nondischargeable nature caused the

§ 707(b)(4)(c) violation; the failure to get informed consent

regarding nonrepresentation in the adversary resulted in the

§ 526(a)(1) violation (when DeLuca refused to represent Seare at

all in the adversary, even for a further fee); and DeLuca violated

§ 526(a)(3) when he did not fully explain the limitation on the

services which the flat fee would buy.15

The bankruptcy judge chose to publish his opinion as part of

the sanctions of DeLuca “to deter such conduct by all attorneys.”16

I summarize here my suggestions for such attorneys to avoid

violating ethical rules and the Bankruptcy Code when they limit

the scope of representation of consumer debtors:

1. At the initial intake interview with the debtor, identify

fully and completely the debtor’s goals. Almost by definition,

the attorney therefore cannot have a predetermined business

practice that excepts representation in adversary proceedings from

the services the attorney will render unless the attorney and

15 The violation of § 528 is based on the failure of DeLuca to

sign the Retainer Agreement and is not related to the unbundling

issue.

16 In joining the majority, I also endorse their view that the

bankruptcy judge followed the proper procedures and had the

authority to impose the sanctions ordered, in accordance with In

re Nguyen, 447 B.R. 268 (9th Cir. BAP 2011) (en banc).

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debtor identify that exception before deciding to commence

representation. As noted by the bankruptcy judge, the decision to

unbundle must be driven by the debtor’s needs, not the attorneys.

2. The attorney may not rely solely on the debtor’s input to

help him or her ascertain the debtor’s goal. Both the ethical

rules and the Code require the attorney to conduct a reasonable

investigation of the debtor’s assets and liabilities. If the

attorney learns that a judgment has been taken against the debtor,

the attorney must make reasonable inquiry into the nature of the

judgment in order to determine whether it might be subject to

nondischargeability.

3. If, after ascertaining the debtor’s goals, the attorney

believes that limited scope representation is consistent with

those goals, the attorney must then fully explain to the debtor

the consequences and inherent risks which might arise if an

adversary is filed against the debtor and the attorney has not

included representation in that proceeding in the unbundled

services. Informed consent is just that: informed. The debtor

must understand the “legal jargon” and the practical effect on him

or her of the limited scope representation before the consent is

informed.

4. The attorney must customize the retainer agreement to the

goals of debtor. That is not to say that much of the agreement

cannot be boilerplate, but boilerplate without the attorney’s

active role in its preparation will be insufficient for limited

scope representation. Just having the debtor read and initial the

agreement does not assure the debtor is giving informed consent.

5. After describing to the debtor the risks of limited scope

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representation, the attorney must give the debtor the opportunity

to “shop elsewhere” for an attorney who will provide full

representation before entering into the contractual relationship

with the debtor for the limited scope.

6. The attorney should document as fully as possible all the

steps taken to comply with these requirements.

Following these suggestions should go a long way to allowing

consumer bankruptcy attorneys to unbundle adversary proceeding

representation without violating ethical rules.

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