Opinion ID: 835263
Heading Depth: 1
Heading Rank: 7

Heading: Failure to file amended bankruptcy schedules

Text: The Bar also contends that the accused engaged in acts prejudicial to the administration of justice by failing to file an amended financial disclosure statement and schedules on behalf of MLP setting forth the existence of the notes. The bankruptcy trustee sent the accused a letter on September 4, 1997, asking for those documents, and, on October 24, 1997, obtained an order requiring Hoyt to file them. The Bar cites In re Brown, 262 Or. 171, 177, 493 P.2d 1376 (1972), for the proposition that a lawyer's repeated failure to respond to a court's request for information demonstrates a lack of respect and conduct prejudicial to the administration of justice, but that citation demonstrates only the significant difference that this case presents. In Brown, the trial court's rules and its numerous written requests were directed specifically to the accused, not to his client. Here, the court's rule and its one order required action by Hoyt. A lawyer does not demonstrate a lack of respect for the court each time a client is recalcitrant, and client recalcitrance alone does not establish a lawyer's violation of the code of ethics. Moreover, the court's order requiring MLP to file amended documents came so close to the date on which the accused filed his motion to withdraw that we cannot attribute to him the willful noncompliance that would justify a finding of guilt. c. Failure to disclose attorney fees and their source The Bar next argues that the accused's failure to file a timely 329 statement revealing the fees he had been paid for representing MLP and the source of those payments, as required by Section 329, caused harm to the administration of justice because, if the trustee had been apprised of the payments that the accused had received, the trustee would have been entitled to collect those funds for the benefit of the estate. Under Section 329, the bankruptcy court may review fees for reasonableness and order their return only if they are excessive. [17] The Bar does not argue that the accused's fees were excessive under Section 329; rather, the Bar seems to assert that the funds used to pay the accused's fees were MLP's assets that were diverted to the accused. To prevail on that argument, the Bar was required to establish that the payments that the accused received were the property of MLP at the time that the payments were made  a fact that the Bar did not succeed in proving. The accused received payment of his fees from Feedlot, investor partnerships, and DSR. The Bar did not prove by clear and convincing evidence that the funds that those entities used to pay the accused were owned by MLP. The Bar adduced evidence that the bankruptcy trustee was successful in reaching a settlement with the accused, the terms of which apparently required that the accused return at least some of the fees that he received. By the time of the settlement, however, the interests of the investor partnerships and the other Hoyt entities had been consolidated, and the assets of all Hoyt entities had become assets of the estate. The fact of that subsequent settlement does not establish that, when the accused initially received the fees, they belonged to the MLP. In addition, we observe that Jensen, an assistant trustee and an attorney who was aware that the accused had not filed a 329 statement, told the accused near the time of his withdrawal from representation of MLP that they would deal with it later, which they in fact did. We conclude that the Bar did not prove by clear and convincing evidence that the accused caused harm to the estate by failing to file a 329 statement.