Barbknecht Firm, P.C. v. Keese (In re Keese)
| Decision Date | 28 February 2021 |
| Docket Number | Adversary No. 18-4057,Case No. 18-40817 |
| Parties | IN RE: HOPE RENEE KEESE xxx-xx-0192 Debtor THE BARBKNECHT FIRM, P.C. Plaintiff and Counter-Defendant v. HOPE RENEE KEESE Defendant and Counter-Plaintiff |
| Court | U.S. Bankruptcy Court — Eastern District of Texas |
Upon trial of the fourth amended complaint filed by the Plaintiff, The Barbknecht Firm, P.C. seeking to deny the entry of a Chapter 7 discharge in favor of the Debtor-Defendant, Hope Renee Keese, pursuant to 11 U.S.C §§ 727(a)(2)(A) and (a)(2)(B) or, alternatively, seeking a determination of whether an alleged debt owed to it by the Debtor-Defendant should be excepted from discharge pursuant to 11 U.S.C. § 523(a)(2)(A) and/or 11 U.S.C. § 523(a)(4), the Court issues the following findings of fact and conclusions of law. This memorandum disposes of all issues pending before the Court.
1. The Defendant, Hope Renee Keese, is an individual residing in Plano, Collin County, Texas.1
2. The Plaintiff is a law firm in Plano, Texas, through which Joseph Barbknecht ("Barbknecht") conducts his law practice. Barbknecht is the owner and sole member of such law firm.2
3. Barbknecht has practiced law for more than 36 years and is licensed to practice in three states and the District of Columbia.
4. In February 2016, the Defendant hired the Plaintiff to represent her in a divorce from her ex-husband, Corey Keese.3
5. On or about February 10, 2016, the Defendant and the Plaintiff executed an agreement entitled "Agreement for Employment and Power of Attorney" (the "Original Fee Agreement").4
6. At that time, the Defendant paid the Plaintiff $3,000.00 as a retainer for the Plaintiff's legal services.5 That amount was paid by credit card.
7. The Original Fee Agreement provided, inter alia, that:
8. When the Defendant signed the Original Fee Agreement she represented and communicated both verbally and in writing that she would pay the Plaintiff's fees.7
9. The divorce case was initiated in February 2016 in the 470th Judicial District Court of Collin County, Texas, styled In the Matter of the Marriage of Hope Renee Keese and Corey Michael Keese, Case No. 470-50864-2016 (the "Divorce Case").8
10. In the initial stages of the divorce case, the parties thought that the divorce case would proceed quickly without a great deal of animosity,9 thereby holding the accrual of fees to a minimum.
11. The first fee invoice from the Plaintiff to the Defendant virtually exhausted the $3,000 retainer.10
12. The second fee invoice from the Plaintiff to the Defendant totaled $9,536.21 and reflected the application of the remaining $196.29 of the retainer and the remainder thereafter remained unpaid by the Defendant.11
13. In fact, the $3,000 initial retainer paid by the Defendant was the only payment that the Defendant ever made to the Plaintiff.12
14. Thus, soon after the Divorce Case was initiated, the Defendant defaulted on her payment obligations to the Plaintiff for accrued attorneys' fees.13
15. In June 2016, the hope for a simpler, friendlier divorce dissipated at a temporary orders hearing when serious accusations regarding misbehavior and parental fitness were made against the Defendant by her husband.
16. This myriad of issues complicated the Divorce Case which increased the number of attorney services required to be rendered. These issues included:
17. These developments occurred at a time in which the Defendant was already in arrears to the Plaintiff on accrued fees.
18. In response to the payment default, the Plaintiff intended to terminate its representation of the Defendant and withdraw as her attorney of record in the Divorce Case.15
19. The Defendant wanted to retain the Plaintiff as her attorney in the Divorce Case.16
20. In response, beginning around mid-June, 2016, the Plaintiff sought assurances from the Defendant that she would pay its accruing fees and costs in light of the case growing in size and complexity.17
21. The Defendant invited the Plaintiff to rely on the money that she anticipated to receive from the sale of her house and the receipt of a portion of her ex-husband's pension plan as assurance for her ability to pay the Plaintiff's fees and costs.18
22. Barbknecht had previously advised the Defendant in May 2016 that she would likely incur adverse tax consequences should she decide to liquidate any portion of the retirement funds that she might receive from her soon-to-be ex-spouse's pension plan in order to pay expenses.19
23. Barbknecht gave similar advice to the Defendant before she executed the Supplemental Fee Agreement.20
24. When the Defendant agreed to pay the Plaintiff's fees and expenses from the proceeds of her anticipated divorce settlement, such was the only source of funds that she had available to her to pay its fee.21
25. Indeed, the assets designated in the Supplemental Fee Agreement constituted the only source of funds that the Defendant had available to pay the approximate $9,500 that she owed the Plaintiff for accrued fees at the end of June 2016.22
26. The July 27, 2016 invoice illustrated the growing problem. The services billed by the Plaintiff in that month totaled $11,057 and increased the overall accrued fees to $20,593.71.23
27. Accordingly, on or about August 18, 2016, the Defendant and the Plaintiff entered into a supplemental fee agreement (the "Supplemental Fee Agreement"), which acknowledges the Defendant's default under the Fee Agreement and provides the following:
28. By signing the Supplemental Fee Agreement, the Defendant again represented and communicated her intention to pay the Plaintiff's fees.25
29. Throughout the Divorce Case, the Plaintiff generated monthly invoices which itemized attorneys' fees and expenses incurred to date.26
30. The Defendant has admitted her receipt of these invoices as they were generated.27
31. Despite her receipt of those monthly invoices, the Defendant never instructed the Plaintiff to cease its activities or to limit the time that it spent on her case.28
32. Fees continued to accrue at a significant rate. By the end of calendar year 2016, the invoiced amounts totaled over $40,000.29
33. On March 1, 2017, the parties engaged in a successful daylong mediation of the outstanding disputed issues in the Divorce Case, involving significant preparation and participation time by the Plaintiff.30
34. Through April 7, 2017, the attorneys' fees billed by the Plaintiff had risen to $73,751.01.31
35. Significant services were required to be rendered in the succeeding months in attempts to process the mediated settlement into final orders.
36. An Agreed Decree of Divorce was signed in the Divorce Case on May 26, 2017.
37. The Defendant and her ex-spouse subsequently reached an agreement whereby the Defendant would abandon her interest in the homestead in favor of a larger award from her ex-husband's retirement plan.
38. In mid-August 2017, the Defendant convinced the Plaintiff to allow the transfer of the pension plan award directly to her rather than having any portion paid directly to the Plaintiff for its fees or otherwise having the awarded funds paid jointly to both the Defendant and to the Plaintiff.32
39. On August 29, 2017, the presiding judge in the Divorce Case signed an Agreed Order Modifying Agreed Decree of Divorce (the "Modified Divorce Decree") that, among other things, awarded to the Defendant $182,094.00 as her portion of her ex-husband's retirement benefits in the retirement plan sponsored by his employer, Ingersoll-Rand Company.33
40. The presiding judge also signed on August 29, 2017, a First Amended Qualified Domestic Relations Order ("QDRO") to facilitate the transfer of the designated Retirement Funds to the Defendant as a...
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