Opinion ID: 1509751
Heading Depth: 2
Heading Rank: 1

Heading: Ashley Case

Text: There is evidence in the record that, and Judge Stepler found that, respondent was retained by Robin and Kerry Ashley to represent the Ashleys in a bankruptcy case. The Ashleys were seeking bankruptcy protection because they were several months in arrears on their mortgage payments and there was a dispute with the mortgage company as to how much money the Ashleys actually owed. The Ashleys had not filed state or federal income tax returns for the years 1992 through and including 1996. The Ashleys also had other debts. [6] On May 1, 1997, respondent, on behalf of the Ashleys, filed a Voluntary Petition for Bankruptcy Protection under Chapter 13. As required by the bankruptcy rules, respondent then filed a Chapter 13 plan within fifteen days. A combined notice, dated June 13, 1997, was sent to respondent and the Ashleys notifying them of the section 341 Creditors' Meeting scheduled for July 11, 1997, and the plan confirmation hearing scheduled for July 22, 1997. Respondent did not receive this notice directly as it was mailed to his previous address. Mrs. Ashley testified, however, that she dropped off a copy of the combined notice at respondent's office when she received it in the mail. Respondent testified that upon receiving the combined notice from Mrs. Ashley, respondent faxed a request on July 11, 1997 to the U.S. Trustees to continue the section 341 Creditors' Meeting. On July 22, 1997, respondent and the Ashleys attended the scheduled plan confirmation hearing. The Trustee, Thomas Lackey, instead held the section 341 Creditors' Meeting and requested a continuance of the plan confirmation hearing. The continuance was granted and the plan confirmation hearing was rescheduled for September 11, 1997. By a Trustee Report filed on July 22, 1997 and a Trustee's Proceeding Memo filed on July 24, 1997, respondent was given notice that the Ashleys were required to make escrow payments as required under the Bankruptcy Code, make sure that there was not any post-petition arrearage to any secured creditor, make sure that all tax returns due to Federal and State authorities were filed and copies were provided to the Trustee, and provide income verification and valuation for the real property of the Ashleys within thirty days. The plan confirmation hearing was held on September 11, 1997 before Judge Keir. [7] At the hearing on the Petition for Disciplinary Action, Mrs. Ashley testified that respondent had not provided the Ashleys with a copy of the Trustee Report prior to the hearing. Respondent had told the Ashleys that he would meet with them forty-five minutes before the meeting to prepare them for the meeting, however, respondent was late, apparently due to a flat tire. Therefore, respondent did not have the opportunity to properly inform the Ashleys about the hearing. Mr. Lackey, Trustee, testified at the plan confirmation hearing that since the plan was filed, three plan payments had been due and Mr. Lackey had not received any payments. [8] Mr. Lackey also testified that the Ashleys' income tax returns still had not been filed and that Mr. Lackey had not received verification of the Ashleys' income and the valuation for the real property. Mr. Lackey also testified that the claim of First Union Mortgage had been an allowed claim and was for $15,000.00. Respondent failed to file an exception to the $15,000.00 claimed by First Union Mortgage, even though the Ashleys claimed to owe only $10,000.00. Mr. Wilkinson objected to the submitted plan because the plan did not include a provision to pay a secured claim held by the United States. The Bankruptcy Code [9] requires that secured claims be specifically identified in the plan and the secured claim of the IRS for unpaid taxes, penalty, and interest due was not identified. Respondent stated that he would make sure that the tax returns were filed and that of the three delinquent plan payments, two payments would be made that day. Judge Keir, at the conclusion of the September 11, 1996 hearing, ordered that the plan[, as] presently on file[, is] denied confirmation with leave to amend on or before ... October 13th. Hearing upon any amended plan will be November 13th at 3:15 p.m. The Court further notes that no further postponements will be granted in this case. Judge Keir filed an Order Denying Confirmation of Chapter 13 Plan With Leave to Amend on September 12, 1997. The IRS filed a Motion for an Enlargement of Time in Which to File an Amended Proof of Claim on October 1, 1997, because they had not received the tax returns. Judge Keir granted the motion without a hearing. On October 10, 1997, the Ashleys filed a debtors' certificate, which was required by the plan to show that the requirements of the plan were being satisfied by the Ashleys. The certificate, which was filed under the pain and penalty of perjury, showed the payments that had been made to First Union Mortgage and it also was marked that the Ashleys had filed all federal and state income tax returns. Mrs. Ashley testified, at the hearing on the Petition for Disciplinary Action, that when she picked up the debtors' certificate from the respondent's office, the certificate was blank except for an X where the Ashleys were supposed to sign. Dawn Kretchmyer, respondent's secretary, testified that she typed in the information on the certificate about the Ashleys' payments to First Union Mortgage but did not mark the X indicating that all federal and state income tax returns had been filed. Respondent, or someone in his office, marked that the federal and state income tax returns had been filed. The hearing on confirmation of the amended plan convened before Judge Keir on November 13, 1997. [10] At the hearing, Mr. Lackey stated that although the Ashleys were current on their payments under the plan, he had not seen the state tax returns. Mr. Lackey also stated that the plan was underfunded to cover all of the disbursements that the Ashleys intended to put in their plan. After Mr. Lackey addressed the court, Judge Keir turned his attention to the debtors' certificate that was filed on October 10, 1997. The certificate, signed under penalty of perjury, stated that all federal and state income tax returns had been filed. Judge Keir, concerned that false testimony had been presented to the court, questioned Mrs. Ashley and respondent about the circumstances surrounding the filing of the certificate. Mrs. Ashley stated to Judge Keir that she gave the completed tax returns from H & R Block to respondent, along with pre-addressed envelopes. The Ashleys signed the debtors' certificate on the advice of respondent [11] and in reliance on respondent's promise to file the tax returns. Judge Keir then questioned respondent as to the location of the missing federal and state income tax returns. Respondent, during the hearing, had looked in his briefcase and found the originals of the federal income tax returns, the Ashleys' W-2, and the preaddressed envelopes. Respondent claimed that the tax returns were probably placed in his file by one of his employees and he was unaware that the returns were still in his possession. Respondent was confused at the hearing about what the order from September 12, 1997 required him to have done. He thought he did not have to file an amended plan prior to October 13, 1997, even though it was stated in the order from September 12, 1997. The clerk's office had attached an order to dismiss for respondent's failure to amend, however, Judge Keir had not executed the order. If the order had been signed, the Ashleys would have lost their ability to file for bankruptcy protection and could have possibly lost their home through foreclosure. Respondent stated to Judge Keir that he thought the missing documentation was all that was needed by October 13th, 1997. Judge Keir then stated that he was going to amend the court's previous order allowing the Ashleys an extended period of time to amend the plan. The court did not think that the problems, which were before the court were caused by the debtors, and Judge Keir stated that he did not want to punish them for the errors of respondent. Judge Keir also told the Ashleys that if they wished to change counsel, he would order the fee paid to respondent to be immediately refunded to the Ashleys so they could hire new counsel. The Ashleys stated that they would like new counsel. Judge Keir ordered respondent to refund any fee to the Ashleys. Judge Keir ordered that an amended plan would be due on or before December 27, 1997. At the hearing on the Petition for Disciplinary Action, Mrs. Ashley testified that following the September 11, 1997 hearing, she kept a log of her contacts with the respondent and his office because of the Ashleys' frustration with respondent's performance and their concern with his appearance and ability. Mrs. Ashley's log indicated that she left thirty-one telephone messages for the respondent from September 29 through November 12, 1997. They were unanswered. Respondent testified, at the disciplinary hearing, that he had not received a copy of Judge Keir's order from September 12, 1997. However, John Reburn, Bar Counsel Investigator, testified that he found that order in respondent's client file. Respondent testified that his office received the state and federal tax returns and mailed them to proper authorities, however, neither set of returns were properly filed by the time of the confirmation hearing on November 13, 1997. Respondent also testified that he sent letters to the Ashleys updating them about the case, Mrs. Ashley testified that the Ashleys never received the letters. Even though respondent claims not to have received Judge Keir's order of September 12, 1997, respondent's personal calendar had the notation, deadline Ashley, on the date of October 13, 1997. [12] Respondent testified that notation just meant that he had to have certain documents to Mr. Lackey by or on that date. Respondent sent a letter on October 3, 1997 to the Trustee, Mr. Lackey, indicating that the Ashleys' tax returns for the years 1992 to 1997 were enclosed with the letter. At the confirmation hearing on November 13, 1997, Mr. Lackey stated to Judge Keir that he had not yet received the state tax returns.