Defeo v. Radius Global Solutions LLC (In re Defeo), C/A No. 20-03738-JW

• Decision Date: 25 March 2021
• Docket Number: Adv. Pro. No. 20-80090-JW,C/A No. 20-03738-JW, Adv. Pro. No. 21-80011-JW
• Court: U.S. Bankruptcy Court — District of South Carolina
• Parties: IN RE, James DEFEO, Jr., Debtor. James Defeo, Plaintiff, v. Radius Global Solutions LLC, Defendant. James Defeo, Plaintiff, v. Winyah Surgical Specialists, P.A. doing business as Winyah Surgical Specialists, Defendant.

627 B.R. 341

IN RE, James DEFEO, Jr., Debtor.

James Defeo, Plaintiff,

v.Radius Global Solutions LLC, Defendant.

James Defeo, Plaintiff,

v.Winyah Surgical Specialists, P.A. doing business as Winyah Surgical Specialists, Defendant.

C/A No. 20-03738-JW

Adv. Pro. No. 20-80090-JW

Adv. Pro. No. 21-80011-JW

United States Bankruptcy Court, D. South Carolina.

Signed March 25, 2021

David Hart Breen, Breen Law Firm, Myrtle Beach, SC, Matthew M. Breen, Lowcountry Law, LLC, Mount Pleasant, SC, for Plaintiff.

Kelsey Jan Brudvig, Collins & Lacy, P.C., Columbia, SC, for Defendant.

ORDER ON DISCLOSURES OF COMPENSATION

John E. Waites, US Bankruptcy Judge

This matter comes before the Court upon the Amended Attorney Fee Disclosure Statement filed by David Hart Breen of Breen Law Firm ("David Breen") on March 8, 2021 and the Disclosure of Compensation of Attorney for Debtor filed by Matthew M. Breen of Lowcountry Law, LLC ("Matthew Breen") on March 15, 2021, which related to their representation of James Defeo, Jr. ("Debtor") in the adversary proceeding Defeo v. Radius Global Solutions, LLC (Adv. Pro. No. 20-80090-jw) ("First Adversary Proceeding"). David Breen and Matthew Breen have also filed separate Disclosures of Compensation of Attorney for Debtor on March 15, 2021 as to the representation of Debtor in the pending adversary proceeding Defeo v. Winyah Surgical Specialists, P.A. (Adv. Pro. No. 21-80011-JW) ("Second Adversary Proceeding"). Pursuant to Fed. R. Civ. P. 52, which is made applicable to the present matter by Fed. R. Bankr. P. 7052 and 9014, the Court makes the following findings of fact and conclusions of law.¹

FINDINGS OF FACT

1. On October 2, 2020, Debtor, represented by David Breen, filed a petition for relief under chapter 13 of the Bankruptcy Code. As part of the schedules and statements filed with the petition, David Breen filed his first Disclosure of Compensation of Attorney for Debtor ("First Disclosure"), which indicated that he had agreed to accept a flat fee of $4,000.00 for certain services in the case, of which Debtor had paid $1,725.00 directly prior to filing the petition. The First Disclosure indicated that the $4,000.00 fee includes legal service for all aspects of the bankruptcy case, including:

a. Analysis of the debtor's financial situation, and rendering advice to the debtor in determining whether to file a petition in bankruptcy;

b. Preparation and filing of any petition, schedules, statement of affairs and plan which may be required;

c. Representation of the debtor at the meeting of creditors and confirmation hearing, and any adjourned hearings thereof;

d. Representation of the debtor in adversary proceedings and other contested bankruptcy matters ....

The First Disclosure indicated that David Breen had not agreed to share the $4,000 compensation with any other person. The First Disclosure also did not include a copy of David Breen's representation agreement as required by the District's local bankruptcy rules. See SC LBR 2016-1(b)(1).

2. On November 12, 2020, Debtor commenced the First Adversary Proceeding by filing a complaint against Radius Global Solutions, LLC ("Radius") for a violation of the automatic stay under 11 U.S.C. § 362(k) relating to the mailing of a post-petition collection letter. The complaint was signed by David Breen and Matthew Breen separately as attorneys for Debtor/Plaintiff and listed the contract address as the office of David Breen and the Breen Law Firm in Myrtle Beach, South Carolina.

3. Also on November 12, 2020, Matthew Breen of Lowcountry Law, LLC filed a notice of appearance in the First Adversary Proceeding, indicating his representation of Debtor is limited to the services provided in the First Adversary Proceeding and not Debtor's main bankruptcy case. The notice of appearance listed a different address in Mount Pleasant, South Carolina than the Myrtle Beach address included in the complaint.

4. Debtor and David Breen of the Breen Law Firm also entered a representation agreement on November 12, 2020 regarding the services to be provided in the First Adversary Proceeding. Debtor agreed to pay David Breen $400 per hour for work performed in the Court and $350 per hour for work performed outside of the court, $100 per hour for the time of David Breen's assistant, as well as all litigation costs incurred relating to the First Adversary Proceeding. The representation agreement also provided the following regarding the retention of co-counsel in the First Adversary Proceeding:

[Debtor] also permits and consents to Attorney David H. Breen and the Breen Law Firm in his sole discretion to associate and in [sic] retain co-counsel to assist in the adversarial litigation case and matter and [Debtor] agrees to pay said co-counsel's applicable hourly rate for all co-counsel attorney time and also pay for any litigation costs that said co-counsel incurs.

5. Lastly, David Breen and Matthew Breen/Lowcountry Law, LLC entered a Co-Counsel Representation Agreement on November 12, 2020, which indicated that David Breen and the Breen Law Firm retained Lowcountry Law, LLC and Matthew Breen to provide services in the First Adversary Proceeding at an hourly rate of $250.00 per hour. Apparently, these services would be additional to those provided by David Breen and the Breen Law Firm.

6. On February 15, 2021, Debtor commenced the Second Adversary Proceeding for a violation of the automatic stay under § 362(k) against Winyah Surgical Specialists (Adv. Pro. No. 21-80011). The Second Adversary Proceeding remains pending as of the entry of this Order.

7. On March 3, 2021, David Breen emailed the Court to advise that the First Adversary Proceeding was settled by Radius agreeing to pay $7,500 to Debtor. Of that $7,500, $1,500 would be paid to Debtor for damages for emotional distress and lost wages, while the remainder would be paid to counsel for the services provided in the First Adversary Proceeding. On March 3, 2021, David Breen and Matthew Breen filed a proposed stipulation of dismissal; however, the proposed stipulation did not include the consent of Radius, and the Court issued a deficiency notice accordingly. Thereafter, David Breen, Matthew Breen and counsel for Radius filed a revised stipulation of dismissal with prejudice on March 5, 2021, which resolved and concluded the First Adversary Proceeding.

8. In Debtor's bankruptcy case, David Breen filed the Amended Attorney Fee Disclosure Statement ("Amended Disclosure") on March 8, 2021. The Amended Disclosure indicated that David Breen agreed to accept $10,000 for legal services with $6,000 to be paid by Radius. The Amended Disclosure indicated that David Breen agreed that $3,000 of the compensation paid by Radius would be provided to Matthew Breen and Lowcountry Law, LLC.

9. Thereafter, David Breen submitted the time records for the services provided in the First Adversary Proceeding, which listed the time entries for both David Breen and Matthew Breen, listing services in nine-minute increments at the $350 per hour rate for David Breen and $250 per hour rate for Matthew Breen. The time records indicate a total fee of $11,795.20, with Matthew Breen completing 22.6 hours of work and David Breen completing 17.55 hours of work.² It appears Matthew Breen assisted with negotiations with counsel for Radius and certain matters involving discovery, summary judgment, and consideration of Radius's offer of settlement.

10. On March 15, 2021, Matthew Breen of the Lowcountry Law, LLC filed a Disclosure of Compensation of Attorney for Debtor ("First Disclosure") in the main case (C/A No. 20-03738-JW), indicating that he agreed to accept $3,000 for the legal services provided in the First Adversary Proceeding.

11. Also on March 15, 2021, David Breen filed a Second Amended Disclosure of Compensation of Attorney for Debtor ("Second Amended Disclosure") for his representation of Debtor in the Second Adversary Proceeding. The Second Amended Disclosure indicates David Breen has agreed to accept "TBD" for legal services for representation of Debtor in the Second Adversary Proceeding and that he has agreed to share the compensation from the Second Adversary Proceeding with a person who is not a member of Breen Law Firm. Attached to Second Amended Disclosure are David Breen's representation agreement with Debtor for services in the Second Adversary Proceeding as well as David Breen's agreement with Matthew Breen and Lowcountry Law, LLC to serve as his co-counsel. The representation agreement and co-counsel agreement for the Second Adversary Proceeding are dated February 15, 2021 and are nearly identical to the agreements entered by the parties in the First Adversary Proceeding.

12. Matthew Breen filed a second Disclosure of Compensation of Attorney for Debtor ("Second Disclosure") on March 15, 2021 in the main case (C/A No. 20-03738-JW), indicating that he has agreed to accept "TBD" for legal services in the Second Adversary Proceeding.

CONCLUSIONS OF LAW

The circumstances of the matter before the Court appear uncommon, including the involvement of co-counsel and the form of agreement between them for services in the adversary proceedings. The issues presented include whether co-counsel in this matter is a debt relief agency subject to the requirements included in the Bankruptcy Code and whether the compensation disclosures were timely filed.

1. Are Matthew Breen and Lowcountry Law, LLC Debt Relief Agencies?

As part of the 2005 amendments to the Bankruptcy Code, Congress enacted sections 526, 527, and 528 of the Bankruptcy Code to regulate the practice of debt relief agencies.³ The Code defines a "debt relief agency" as "any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration ...."⁴ 11 U.S.C. § 101(12A) (2021). This definition includes two additional terms that are themselves defined by the Bankruptcy Code, "assisted person" and "bankruptcy assistance." "Assisted person" is defined as "any...