Bankr. M.D.N.C.- Cournoyer v. Adrian Bruckner- Sanctions against Bankruptcy Petition Preparer

The bankruptcy court granted a default judgment in favor of the  Bankruptcy Administrator (BA) against Adrian Nathaniel Buckner, a non-attorney who acted improperly as a bankruptcy petition preparer (BPP) finding that Shemeika Ann Fuller filed a Chapter 7 bankruptcy petition and later converted the case to Chapter 13, then, when unable to fund her plan,  back to Chapter 7.  Buckner initially provided legal advice and prepared Fuller’s bankruptcy documents for compensation, despite not being an attorney.  After learning of Buckner's improper assistance to Fuller from her subsequent attorney,  the BA commenced suit and Buckner failed to respond to the adversary proceeding, leading to a default judgment.

Findings of Violations:

The bankruptcy court found that Buckner committed multiple violations of the Bankruptcy Code, including:

1. Failure to Disclose: Buckner did not include his name, address, or social security number on documents he prepared (§ 110(b), (c)) and failed to file required disclosures of compensation (§ 110(h)).

2. Unauthorized Practice of Law::  Buckner provided  (inaccurate) legal advice, including guidance on exemptions, debt classification, and reaffirmation agreements (§ 110(e)).

3. Misrepresentation:  Buckner advised the debtor that her property could not be liquidated, which was false (§ 526(a)(3)).

4. Failure to Provide Required Notices:  Buckner did not provide written notices or contracts outlining services, fees, or debtor rights (§ 526, § 527, § 528).

Damages and Penalties:

1. Turnover of Fees: Buckner must forfeit $450 of the $600 paid by Fuller.

2. Damages:

   • Actual damages of $1,354, including filing fees, attorney fees, lost wages, and mileage costs.

   • Statutory damages of $2,000, totaling $3,354.

3. Fines: Buckner was fined $500 per violation of § 110, tripled to $7,500 for failing to disclose his identity.

Injunctive Relief:

1. Granted: Buckner is permanently enjoined from acting as a bankruptcy petition preparer.

2. Not Granted: The court declined broader injunctions under § 110(j)(2)(B) and § 526(c)(5), finding insufficient evidence of a consistent pattern of violations.

Referral to Authorities: 
The court directed the Clerk to forward the judgment and findings to the North Carolina State Bar and Pennsylvania Bar Association for review of Buckner’s unauthorized practice of law.

Commentary:
It is rather odd that while the bankruptcy court here appropriately found in this case that the failure to respond to a complaint  constituted a waiver of both Mr.  Buckner's right to a jury trial and to assert that this matter be adjudicated by an Article III tribunal,  but that in In re Martin (Case No. 10-81271) 01/26/2011  the bankruptcy court held that the failure to  object to a Chapter 13 plan did not constitute acceptance of that plan.  That  constitutional rights can be waived through silence but bankruptcy protections cannot seem an inversion and an inconsistency.  Perhaps the Local Form Chapter 13 plans  (See EDNC  MDNC  and WDNC)  or non-standard provisions included in those pursuant to Trantham could define procedures for obtaining assent to a Chapter 13 plan,  including implicit assent ("qui tacet consentire videtur") following the lack of objection.  This could include  providing additional due process safeguards,  such as the commencement of an Adversary Proceeding for declaratory judgment and/or determination of the (continuing) extent of a lien under Rule 7001,  requiring additional heightened service of the plan or allowing extended periods of time to later object to the plan.   This implicit assent has been  inferred by other bankruptcy courts in North Carolina,  for example In re Rose,  which found the assent to a coerced foreclosure, subject to certain requirements and restrictions.

It is also rather odd that while a complete listing of Grievance Committee and DHC Actions is published quarterly in the NC Bar Journal,   any actions taken by the Authorized Practice of Law Committee,  to whom this matter was referred,  for the unauthorized practice of law,  do not appear to be published anywhere,  including even on the NC Bar website.  As this  is a particularly prevalent problem arising in the bankruptcy courts,  see for an additional example the recent opinion (and referral)  from the Eastern District of North Carolina in In re Bowen,  not only should  the bankruptcy courts and bankruptcy attorneys benefit  from being alerted to the illegal behavior of these BPPs,  but  the general public would certainly also be better protected by being warned against obtaining assistance from non-attorneys that fail to comply with the important protections and restrictions,  which the North Carolina Bar  describes on its Unauthorized Practice of Law website, as follows:

• Unauthorized practice of law allegations have increased over the last few years. While some complaints of unauthorized practice of law reflect an attempt to gain an advantage of an opposing party in litigation or in a personal matter, other complaints manifest the victimization of members of the public that the unauthorized practice of law statutes were meant to prevent. People with limited funds are often those who seek legal services from non-attorneys in an effort to save money. The non-attorneys typically act in a manner detrimental to the legal rights and obligations of those hiring them, leaving those who can least afford it with a legal mess in what, in many cases, should have been a simple matter.