Court Opinion

ID: 2783108
Source: CourtListenerOpinion
Date Created: 2015-02-28 00:01:08.639627+00
Date Added: 2024-06-11T11:28:26.126879
License: Public Domain

FILED
 1                          NOT FOR PUBLICATION                      FEB 27 2015
                                                              SUSAN M. SPRAUL, CLERK
 2                                                                 U.S. BKCY. APP. PANEL
                                                                   OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )       BAP No.      CC-14-1333-KuDKi
                                   )
 6   JEANETTE DRYER,               )       Bk. No.      14-13018
                                   )
 7                   Debtor.       )
     ______________________________)
 8                                 )
     EARSEY GREENWOOD,             )
 9                                 )
                     Appellant,    )
10                                 )
     v.                            )       MEMORANDUM*
11                                 )
     UNITED STATES TRUSTEE;        )
12   JEANETTE DRYER; TIMOTHY J.    )
     YOO, Chapter 7 Trustee,       )
13                                 )
                     Appellees.    )
14   ______________________________)
15
                    Argued and Submitted on February 19, 2015
16                          at Los Angeles, California
17                          Filed – February 27, 2015
18            Appeal from the United States Bankruptcy Court
                  for the Central District of California
19
          Honorable Ernest M. Robles, Bankruptcy Judge, Presiding
20
21   Appearances:      Appellant Earsey Greenwood argued pro se; Ron
                       Maroko argued for Appellee United States Trustee;
22                     Appellee Jeanette Dryer, on brief, pro se.
23
     Before: KURTZ, DUNN and KIRSCHER, Bankruptcy Judges.
24
25
26        *
           This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1                             INTRODUCTION
 2        Appellant Earsey Greenwood, who is not an attorney, admitted
 3   to assisting debtor Jeanette Dryer in preparing the forms she
 4   filed to commence her chapter 71 bankruptcy case.   The bankruptcy
 5   court fined Greenwood under § 110 for not complying with the
 6   restrictions and requirements § 110 imposes on non-attorney
 7   bankruptcy petition preparers.
 8        Greenwood appealed the bankruptcy court’s ruling.    In both
 9   the bankruptcy court and on appeal, Greenwood only has offered
10   one argument why he should not be fined under § 110.    He has
11   argued that he was unaware of the statute’s requirements and was
12   unaware that the statute applied to him.   But § 110 does not
13   condition the imposition of fines on the non-attorney petition
14   preparer’s knowledge of the statute or its applicability.    In any
15   event, the bankruptcy court found Greenwood’s claimed ignorance
16   of § 110 not credible, and we hold that this finding was not
17   clearly erroneous.
18        Accordingly, we AFFIRM.
19                                    FACTS
20        In February 2014, without the assistance of a licensed
21   attorney, Dryer commenced her bankruptcy case.   Roughly one month
22   later, the United States Trustee convened the § 341(a) meeting of
23   creditors for Dryer’s case, and Dryer duly appeared at the
24   creditor’s meeting for examination pursuant to § 343.    At that
25
26        1
           Unless specified otherwise, all chapter and section
27   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all "Rule" references are to the Federal Rules of Bankruptcy
28   Procedure, Rules 1001-9037.

                                        2
 1   time, the United States Trustee’s representative directed Dryer
 2   to complete a standard form Declaration for Debtors Without
 3   Attorney, which asks debtors whether and to what extent they were
 4   assisted in filing their bankruptcy papers by someone other than
 5   an attorney.   In her declaration, Dryer disclosed that she paid
 6   $1,000 to Greenwood to assist her in preparing her bankruptcy
 7   papers.   Dryer further disclosed that Greenwood advised her:
 8   (1) whether or not to file a bankruptcy petition; (2) the
 9   difference between chapter 7, 11, 12 and 13 of the bankruptcy
10   code; (3) whether she would be able to retain her home, car or
11   other property after the bankruptcy filing; and (4) how her debts
12   should be listed in her bankruptcy schedules as either priority,
13   secured or unsecured debts.2   Dryer subsequently provided the
14   United States Trustee with copies of two cancelled checks
15   totaling $1,000 that she paid to Greenwood.    The reverse side of
16   each check shows what appears to be Greenwood’s signature as an
17   endorsement.
18        Based on Dryer’s declaration and the contents of her
19   bankruptcy filings, the United States Trustee filed and served a
20   motion against Greenwood pursuant to § 110(h)(3) seeking
21   disgorgement of the $1,000 in fees that Greenwood collected from
22   Dryer and seeking the imposition of fines against Greenwood based
23   on his violations of § 110.    The United States Trustee pointed
24
          2
           Greenwood included with his appeal papers a new declaration
25   signed by Dryer in which she recanted many of the statements she
26   had made in her Declaration for Debtors Without Attorney. This
     new declaration, dated August 14, 2014, was not part of the
27   record before the bankruptcy court. Therefore, we will not
     consider it. See Castro v. Terhune, 712 F.3d 1304, 1316 n.5 (9th
28   Cir. 2013).

                                       3
 1   out that Greenwood: (1) had not signed any of Dryer’s bankruptcy
 2   filings (in violation of § 110(b)(1)); (2) had not filed the
 3   required Bankruptcy Petition Preparer’s form declaration and
 4   notice (Bankruptcy Official Form B19) regarding his fees and the
 5   limited scope of non-attorney services he was permitted to
 6   perform for debtors (in violation of § 110(b)(2) and (h)(2)); and
 7   (3) had not placed his social security number on Dryer’s
 8   bankruptcy filings (in violation of § 110(c)).
 9         Greenwood filed an opposition to the motion in which he
10   admitted that he helped prepare Dryer’s bankruptcy papers by
11   inputting or typing in the relevant information into the forms,
12   but he claimed that he was unaware that he qualified as a
13   bankruptcy petition preparer or that he needed to comply with
14   § 110.   The United States Trustee then filed a reply.   In
15   relevant part, the United States Trustee countered Greenwood’s
16   assertion that he did not know he qualified as a bankruptcy
17   petition preparer and did not know of § 110's requirements.    The
18   United States Trustee presented evidence demonstrating that, in
19   2013, the bankruptcy court had fined Greenwood in another
20   bankruptcy case for violating § 110.
21        At the hearing on the United States Trustee’s motion, the
22   bankruptcy court ruled in favor of the United States Trustee and
23   against Greenwood.   The court found that Greenwood was a
24   bankruptcy petition preparer within the meaning of the statute.
25   The bankruptcy court also found that Greenwood committed four
26   separate violations of § 110(b)(1) by not signing Dryer’s
27   petition, her schedules, her statement of financial affairs and
28   her statement of intention.   The bankruptcy court further found

                                      4
 1   that Greenwood committed three separate violations of § 110(c)(1)
 2   by not putting his social security number or other “identifying
 3   number” on Dryer’s petition, her schedules and her statement of
 4   financial affairs.    According to the court, Greenwood also
 5   violated § 110(b)(2) by not filing the required form notice to
 6   the debtor regarding the limitations and restrictions on his
 7   services and violated § 110(h)(2) by not signing and filing a
 8   declaration regarding the fees Dryer paid him.
 9        Finally, the bankruptcy court found Greenwood was not
10   credible when he claimed he was not aware of the above-referenced
11   requirements.   The court pointed out that Greenwood previously
12   had been fined for similar violations.    The court additionally
13   pointed out that the petition Greenwood filled out for Dryer
14   contained a prominent signature block for non-attorney petition
15   preparers.    In any event, the court reasoned, even if Greenwood
16   had not been aware of § 110's requirements, lack of knowledge of
17   the requirements is not a valid excuse for noncompliance.
18        On account of its findings, the court imposed $4,000 in
19   fines based on eight separate violations of § 110 at $500 per
20   violation (see § 110(l)(1)) and then trebled the $4,000 in
21   accordance with § 110(l)(2)(D), thereby bringing the total fines
22   imposed to $12,000.    The court also ruled that Greenwood had
23   forfeited the $1,000 in fees he collected from Dryer pursuant to
24   § 110(h)(3)(B) because of his violation of § 110's other
25   provisions.   The court ordered Greenwood to reimburse the $1,000
26
27
28

                                       5
 1   to Dryer.3
 2        On June 30, 2014, the bankruptcy court entered its order
 3   imposing the $12,000 in fines and directing Greenwood to disgorge
 4   the $1,000 in fees, and Greenwood timely appealed.
 5                               JURISDICTION
 6        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
 7   §§ 1334 and 157(b)(2)(A).   We have jurisdiction under 28 U.S.C.
 8   § 158.
 9                                  ISSUE
10        Did the bankruptcy court err when it fined Greenwood for
11   violating § 110?
12                           STANDARDS OF REVIEW
13        We review the bankruptcy court's imposition of fines under
14   § 110 for an abuse of discretion.    See Frankfort Digital Servs.,
15   Ltd. v. U.S. Trustee (In re Reynoso), 315 B.R. 544, 550 (9th Cir.
16   BAP 2004), aff'd, 477 F.3d 1117 (9th Cir. 2007).
17        The abuse of discretion standard of review first requires us
18   to consider whether the bankruptcy court identified the correct
19   legal rule to apply.   Berger v. Home Depot USA, Inc., 741 F.3d
20   1061, 1067 (9th Cir. 2014).   And second, if the court identified
21   the correct legal rule to apply, we then must determine whether
22
23
          3
           Greenwood claimed that he used a portion of the $1,000 from
24   Dryer to pay Dryer’s filing fees. The bankruptcy court found
     that Greenwood’s claim was not as credible as Dryer’s statement
25   in her Declaration for Debtors Without Attorney that she
26   separately paid her bankruptcy filing fees. In any event, as the
     court noted, § 110(g) prohibited Greenwood from collecting the
27   court fees from Dryer, and Greenwood’s violation of this
     prohibition served as a separate and independent basis for
28   Greenwood’s forfeiture of the entire $1,000.

                                      6
 1   the court's findings of fact, and its application of those
 2   findings to the law, were illogical, implausible, or without
 3   support in the record.   Id.
 4                                  DISCUSSION
 5        Perceiving a need to curtail widespread fraud, abuse and the
 6   unauthorized practice of law, Congress enacted legislation in
 7   1994 seeking to restrict the activities of non-attorney
 8   bankruptcy petition preparers.     See Ferm v. U.S. Trustee
 9   (In re Crawford), 194 F.3d 954, 957 (9th Cir. 1999).      The
10   centerpiece of that legislation was § 110.      Id.   As indicated in
11   the facts section above, § 110 imposes a number of requirements
12   and restrictions on bankruptcy petition preparers and also
13   imposes fines for noncompliance.       See In re Branch, 504 B.R. 634,
14   639 (Bankr. E.D. Cal. 2014)(explaining requirements, restrictions
15   and fines).   In the 2005 amendments to the Bankruptcy Code,
16   Congress went even further and enhanced the restrictions, added
17   further requirements, and streamlined the procedures for imposing
18   fines for noncompliance.   See H.R. Rep. No. 109-31(Pt. 1), at 62,
19   as reprinted in 2005 U.S.C.C.A.N. 88, 132.
20        In the bankruptcy court and on appeal, Greenwood contends
21   that he did not know that he qualified as a bankruptcy petition
22   preparer.   According to Greenwood, he should not have been fined
23   under § 110 when he was unaware that the statute applied to him
24   or of the statute’s requirements.      Interpreting Greenwood’s pro
25   se contentions liberally as we must, see Keys v. 701 Mariposa
26   Project, LLC (In re 701 Mariposa Project, LLC), 514 B.R. 10, 12
27   (9th Cir. BAP 2014), we will first consider the bankruptcy
28   court’s determination that Greenwood qualified as a bankruptcy

                                        7
 1   petition preparer, and then we will address Greenwood’s argument
 2   regarding his lack of knowledge.
 3        The statute defines the term “bankruptcy petition preparer”
 4   broadly, as follows:
 5        (a) In this section –
 6        (1) “bankruptcy petition preparer” means a person,
          other than an attorney for the debtor or an employee of
 7        such attorney under the direct supervision of such
          attorney, who prepares for compensation a document for
 8        filing; and
 9        (2) “document for filing” means a petition or any other
          document prepared for filing by a debtor in a United
10        States bankruptcy court or a United States district
          court in connection with a case under this title.
11
12   11 U.S.C. § 110; see also In re Reynoso, 477 F.3d at 1123
13   (broadly construing § 110's definition of bankruptcy petition
14   preparers).
15        Under the statute’s broad definition of the term “bankruptcy
16   petition preparer,” the record here amply supports the bankruptcy
17   court’s determination that Greenwood qualified as a bankruptcy
18   petition preparer.   Greenwood admitted that Dryer compensated him
19   for inputting information into the relevant forms to assist Dryer
20   in filing her bankruptcy documents.    Under these circumstances,
21   we perceive no error regarding the court’s bankruptcy petition
22   preparer determination.
23        As for Greenwood’s asserted lack of knowledge, § 110 does
24   not condition the imposition of fines for noncompliance on the
25   violator’s state of mind.    When it wants to do so, Congress knows
26   how to limit the consequences for noncompliance with the
27   Bankruptcy Code to violators who acted knowingly and/or wilfully.
28   See, e.g., §§ 111(g)(2), 362(k)(1), 363(n), 524(i),

                                        8
 1   1141(d)(6)(B)(ii).   Congress included no such limitation in
 2   § 110, and we know of no rationale that would permit us to read
 3   into the statute such a limitation.       See generally   Lamie v. U.S.
 4   Trustee, 540 U.S. 526, 534 (2004) (when interpreting statute that
 5   is clear on its face, the court’s only task is to apply the
 6   statute in accordance with its non-absurd plain meaning).       Our
 7   reading of § 110 also is consistent with the general principle
 8   that ignorance of the law is no excuse.       See Antonio-Martinez v.
 9   INS, 317 F.3d 1089, 1093 (9th Cir. 2003).
10        Furthermore, as the United States Trustee has pointed out,
11   § 110 previously contained language that directed the court to
12   excuse noncompliance when there was a “reasonable cause” for the
13   violator’s noncompliance.   However, when Congress amended the
14   bankruptcy code in 2005, it deleted the “reasonable cause”
15   language from § 110 and thereby removed it as an exception to the
16   imposition of fines under § 110.       See In re Woodward, 314 B.R.
17   201, 205 (Bankr. N.D. Iowa 2004) (pre-2005 case explaining former
18   reasonable cause exception).   Simply put, Congress’ 2005 deletion
19   of the reasonable cause exception from § 110 bolsters our
20   conviction that there is no excuse available to Greenwood based
21   on his asserted ignorance of § 110.
22        Even if there existed some exception to § 110's fines based
23   on Greenwood’s ignorance of the statute, the bankruptcy court
24   found that Greenwood’s asserted ignorance was not credible.       The
25   basis for the court’s credibility determination was twofold.
26   First, the court pointed out that the bankruptcy forms Greenwood
27   filled out for Dryer contained conspicuous signature blocks for
28   bankruptcy petition preparers to complete.       Given that Greenwood

                                        9
 1   was confronted with these signature blocks when he filled out the
 2   forms for Dryer, the court reasoned that Greenwood’s asserted
 3   ignorance of § 110's requirements was feigned.    Second, according
 4   to the court, Greenwood previously was fined under § 110 in
 5   another bankruptcy case, and thus the court could not accept
 6   Greenwood’s claim to have been unaware of § 110 and its
 7   requirements.
 8        Greenwood has not offered any explanation or argument why
 9   the bankruptcy court’s finding that he was aware of § 110 was
10   illogical, implausible or without support in the record.    Nor is
11   any such deficiency evident to us.    Accordingly, we have no
12   grounds to overturn the bankruptcy court’s finding on this point.
13        Greenwood does not challenge or dispute any other aspect of
14   the bankruptcy court’s decision.     Moreover, having reviewed the
15   record, we cannot say that any of the bankruptcy court’s other
16   findings were illogical, implausible or unsupported by the
17   record.   Consequently, there are no grounds here that would
18   justify our reversing the bankruptcy court’s decision.
19                               CONCLUSION
20        For the reasons set forth above, we AFFIRM the bankruptcy
21   court’s order against Greenwood based on his violation of § 110.
22
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