Opinion ID: 2260979
Heading Depth: 1
Heading Rank: 5

Heading: Perez v. Campbell is factually and legally distinguishable.

Text: ¶ 11 In Perez, the issue was identified by the Supreme Court as whether a state statute that protected judgment creditors from financially irresponsible persons conflicted with a federal statute that gives discharged debtors a new start unhampered by the pressure and discouragement of preexisting debt. The Court held that a specific provision in Arizona's statutory scheme providing that a discharge in bankruptcy would not relieve the individual from having a driver's license suspended if the individual failed to satisfy a judgment entered against him in an action arising from the operation of a motor vehicle was unconstitutional. The Perez Court found the provision invalid under the supremacy clause of the United States Constitution as conflicting with the mandate of the Bankruptcy Act providing that receipt of a discharge in bankruptcy fully discharged all but certain specified judgments. ¶ 12 Perez differs factually from the situation presented here on three significant grounds. First, although this Court is certainly concerned with the fiscal responsibility of those attorneys it licenses, the primary purpose of a reinstatement proceeding is not to protect judgment creditors from financially irresponsible persons. It is to protect the public from being harmed by unscrupulous individuals holding a license to practice law. Second, the issue presented is not whether an individual should be allowed to maintain a license to operate a vehicle on the public roads and highways. Rather, it is to determine whether Stewart has the moral character necessary of one in the legal profession to undertake the representation of clients. Third, there is no statutory provision or disciplinary rule, as existed in Perez, which provides specifically that a discharge of debt in bankruptcy will ipso facto prohibit the suspended or disbarred attorney from returning to the practice of law. ¶ 13 A number of decisions from sister states have made it clear that Perez stands as no bar to our inquiry into Stewart's discharge in bankruptcy to the extent that it reflects on her good moral character or lack thereof. [8] In analyzing Perez in Matter of Anonymous, 74 N.Y.2d 938, 550 N.Y.S.2d 270, 549 N.E.2d 472 (1989), the New York court held that the denial of a license to practice law did not violate the federal statute prohibiting governmental units from refusing to grant licenses solely because the applicant is or has been a bankruptcy debtor. In so doing, it recognized that Perez was intended to protect debtors from being denied governmentally granted privileges because of the bankruptcy. Nevertheless, it looked to the legislative history of the bankruptcy code and determined that Congress' concern was that discrimination against debtors, based upon the fact of bankruptcy alone, should not exist. Nevertheless, it also acknowledged that the statutory scheme was not intended to shield debtors from reasonable inquiries about their ability to manage financial matters when the ability to do so is related to their fitness for the license sought. ¶ 14 The New York court recognized, as this Court has done on numerous occasions, that the mishandling of financial affairs, reflects on an attorney's character. It found that where the determination of unfitness does not rest on the fact of bankruptcy but on conduct reasonably viewed as incompatible with the lawyer's duties and responsibilities as a member of the Bar, neither the Bankruptcy Code nor Perez prohibit the refusal to allow licensure. ¶ 15 In Matter of Application for Reinstatement of Gunter, 344 Or. 368, 182 P.3d 187 (2008), reconsideration allowed to correct factual statements without alteration of conclusion of opinion, 344 Or. 540, 186 P.3d 286 (2008), [9] the Oregon Supreme Court has taken the same position on attorney licensure as did the New York court in its analysis of the bankruptcy code. It held that the federal statutory scheme did not prohibit examination of the circumstances surrounding bankruptcy, as those circumstances illustrate the judgment of the applicant for admission to the Bar in handling serious financial obligations. Like the New York court, the Oregon tribunal determined Congress intended that where bankruptcy filings were intimately connected with the license, grant, or employment in question, an examination into the circumstances surrounding the bankruptcy would be allowed, giving governmental units the authority to pursue regulatory policies without running afoul of bankruptcy policy. It determined that the filing of bankruptcy can demonstrate a selfish exercise of legal rights and a disregard of moral responsibilities. [10] ¶ 16 In Hippard v. State Bar of California, 49 Cal.3d 1084, 264 Cal.Rptr. 684, 782 P.2d 1140, the petitioner contended that he satisfied his burden of proving rehabilitation, and that the State Bar erred in concluding he had made insufficient efforts to repay clients or the State Bar Client Security Fund. He maintained, as does Stewart here, that the denial of reinstatement based on his failure to repay debts discharged in bankruptcy in the absence of a clear showing of financial inability to do so undermined the purpose of the bankruptcy laws. ¶ 17 The California Court found the argument unpersuasive noting that the purpose of attorney discipline was to protect the public from specified professional misconduct and at the same time rehabilitate the attorney. It determined that restitution was not imposed solely because the attorney failed to pay a debt but instead sought relief in bankruptcy. Therefore, evaluation of the debt as an indication of character did not violate the bankruptcy laws. The Hippard Court held that consideration of the efforts to pay debts due and owing should be considered in the evaluation of a petition for reinstatement as an indicator in the steps taken towards rehabilitation. ¶ 18 The Minnesota Supreme Court was faced, in Application of Gahan, 279 N.W.2d 826, 4 A.L.R.4th 426 (Minn.1979), with the question of whether an applicant for admission to the Bar Association could be denied participation for his failure to repay several student loans under the Supreme Court's decision in Perez. The Minnesota Court acknowledged, as has this Court on countless occasions, that an applicant's conduct in satisfying his financial obligations has been widely recognized as a relevant factor in assessing good moral character. It determined that Perez did not stand as a bar to it considering evidence of the applicant's good moral character prior to discharge on grounds that there was no undertaking to repay student loans. It went on to state that the applicant could not rely on an argument that his failure to repay the debt related to some compelling hardship reasonably beyond control, when the applicant like Stewart here, was making a salary sufficient to have retired the debt during the period prior to bankruptcy. [11] ¶ 19 Florida's highest Court took the same position as that espoused in Gahan when faced with the question of whether an applicant for admission to the Bar Association could be denied under Perez when bankruptcy was sought to defeat creditors. [12] It held that consideration of an individuals good moral character extended to conduct which would cause reasonable persons to have substantial doubts about an individual's honesty, fairness, and respect for rights of others and for laws of the state and nation. It refused admission to the applicant who had admittedly exercised a legal right to be freed of debts through bankruptcy but decried the individual's failure to recognize his moral obligation of repayment. [13]