In re Burdick
| Decision Date | 04 January 1996 |
| Docket Number | 95-60206 and 95-60103.,Bankruptcy No. 95-60573 |
| Citation | 191 BR 529 |
| Parties | In re Scott A. BURDICK, Joyce M. Burdick, Debtors. In re Harold LAYAW, Victoria Layaw, Debtors. In re Cherie OVEREND, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of New York |
Michael Collins, Office of the U.S. Trustee, Utica, New York.
MEMORANDUM-DECISION, FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
Presently before the Court are the motions of Michael E. Collins, Esq. of the Office of the U.S. Trustee ("UST") requesting that the Court impose penalties upon Patricia Dattolo ("Dattolo") pursuant to § 110 of the Bankruptcy Code (11 U.S.C. §§ 101-1330) ("Code"). The UST's motion was interposed on May 18, 1995, in the three cases herein filed under Chapter 7 of the Code.
The motions were heard at a regular motion term of the Court in Syracuse, New York on June 20, 1995. At the request of the UST, the three cases were scheduled for a consolidated evidentiary hearing on August 17, 1995, in Utica, New York. The Court heard testimony from Joyce Burdick ("Mrs. Burdick") and Cherie Overend ("Ms. Overend") on August 17, 1995. At the request of the UST, the hearing was adjourned to September 8, 1995, in order to hear the testimony of Victoria Layaw ("Mrs. Layaw"). Although served with notice of the evidentiary hearing, Dattolo failed to appear and was not represented by counsel at either hearing.1
At the conclusion of the hearing held on September 8, 1995, the UST apprised the Court that he had, on August 21, 1995, commenced adversary proceedings against Dattolo in each of the three cases seeking an order enjoining her from acting as a bankruptcy petition preparer pursuant to Code § 110(j)(1) and from engaging in the unauthorized practice of law pursuant to Code § 110(k). Dattolo was served with the Summons and Complaint in each of the three adversary proceedings on August 23, 1995. The UST requested that the Court delay rendering its decision on the motions herein until it could be determined whether Dattolo would file an answer in the adversary proceedings. Dattolo failed to timely file an answer, and the Court granted a default judgment under Rule 7055(b) of the Federal Rules of Bankruptcy Procedure ("Fed. R.Bankr.P.") in the Overend and Layaw adversary proceedings on October 12, 1995, and in the Burdick adversary proceeding on October 13, 1995. The matter presently before the Court was deemed submitted for decision on October 13, 1995.
The Court has core jurisdiction over the parties and subject matter of this contested matter pursuant to 28 U.S.C. §§ 1334, 157(a), (b)(1), and (b)(2)(A).
The Court heard testimony from Mrs. Layaw that she and her husband had decided to file bankruptcy sometime between the end of October, 1994 and the beginning of November, 1994. Pursuant to an advertisement in a local community newspaper, The Pennysaver, they contacted Dattolo requesting that she assist them in filing their petition.2 It was Mrs. Layaw's testimony that she and her husband went to Dattolo's house on November 12, 1994, with all their bills. Dattolo took personal information from them, including their names, social security numbers, address and Mr. Layaw's place of employment. At the meeting, Mrs. Layaw wrote a check made payable to "Pat Dattolo" in the amount of $175 (see UST's Exhibit 10). On January 14, 1995, the Layaws met with Dattolo again to sign their petition. Although Dattolo reviewed the petition with the Layaws, she did not furnish them with a copy. The Layaws provided Dattolo with a certified bank draft made payable to the U.S. Bankruptcy Court in the amount of $160 and on January 23, 1995, their petition was filed. Thereafter, the Layaws received notice of the § 341 Meeting of Creditors ("§ 341 Meeting") scheduled for February 23, 1995, in Syracuse, New York.
On February 22, 1995, Dattolo called the Layaws and requested that they not mention her name as having been the one who prepared their petition. If asked whether anyone had completed the petition for them, they were to say that a "friend helped me." Dattolo informed the Layaws that she had forgotten to renew her license and had only recently sent in the necessary $5,000 fee.
Mrs. Layaw testified that at the § 341 Meeting she initially denied that anyone had assisted her in the preparation of the petition and then admitted that a friend had helped her. Following the meeting, Mrs. Layaw contacted Dattolo and informed her that the Chapter 7 Trustee had mentioned Dattolo by name. Dattolo explained to her that the Trustee was out to get her because he was losing business as a result of the services provided by Dattolo.
Pursuant to a motion filed by the UST on March 7, 1995, the Court granted an Order on April 7, 1995, for an examination of the Layaws pursuant to Fed.R.Bankr.P. 2004 ("2004 Exam"). Upon receiving notice of the 2004 Exam, Mrs. Layaw testified that she called Dattolo "in a panic" and was informed by Dattolo that she (Dattolo) was being investigated by the UST. Dattolo requested to meet with Mrs. Layaw and asked that she sign a document stating that Dattolo had merely typed the Layaws' petition. She also requested that Mrs. Layaw copy the information contained in their petition onto a new form in her own handwriting. It was Mrs. Layaw's testimony that she signed the document without reading it and could not recall whether it had also stated that Dattolo had not provided any legal advice to the Layaws. Mrs. Layaw admitted that she had completed a petition in her own handwriting as Dattolo had requested. Dattolo also asked that Mrs. Layaw not mention her name at the 2004 Exam and if asked, Mrs. Layaw was to indicate that she had sent for a bankruptcy kit which she and her husband had completed on their own.
At the 2004 Exam Mrs. Layaw testified under oath that she had ordered a bankruptcy kit and had later sought the assistance of Dattolo to complete the forms. It was Mrs. Layaw's testimony before this Court that subsequent to the 2004 Exam she contacted the UST for the purpose of straightening out the inconsistencies in her statements made at the § 341 Meeting and the 2004 Exam, explaining that "I still don't know why I did it, other than I felt sorry for her."
Mrs. Burdick testified that sometime in July 1994 she consulted with her mother about the advisability of filing bankruptcy. Eventually, she sent all of their bills out to her mother in Oregon in order for her to complete the necessary forms. At her mother's suggestion, that it would be advisable to consult with someone concerning whether the forms complied with New York laws, the Burdicks contacted Dattolo, after reading an advertisement in The Pennysaver. Mrs. Burdick met with Dattolo on or about January 13, 1995, and was quoted a fee of $125 based on the fact that the forms had already been completed by Mrs. Burdick's mother. Dattolo explained that it would be necessary to transfer the information from the forms used by Mrs. Burdick's mother to a five-part form preferred by the bankruptcy court. Dattolo also increased her fee from $125 to $150 based on the fact that the Burdicks had in excess of 100 creditors.
On January 19, 1995, Mrs. Burdick paid Dattolo $150 and on January 27, 1995, she paid an additional $160 filing fee in the form of a money order made payable to the U.S. Bankruptcy Court. The Burdicks signed their petition on January 27, 1995, but were not provided with a copy at that time (see UST's Exhibit 2).
On or about February 3, 1995, in response to Mrs. Burdick's call, Dattolo gave her a docket number which was to have been effective January 30, 1995. Mrs. Burdick testified that she had contacted various creditors and had given them the number. On or about February 17, 1995, she called the Bankruptcy Court Clerk's Office ("Clerk's Office") and was informed by one of the clerks that the docket number the Burdicks had been given was not correct. When confronted with the fraudulent docket number, Dattolo explained that there had been a mistake and the number she had been given by a friend in the Clerk's Office was only a temporary one which had been assigned while the Burdicks' petition was being reviewed. According to Mrs. Burdick, Dattolo suggested that the Burdicks wait until Friday, February 24, 1995, before again checking with the Clerk's Office so as not to raise any "red flags." On February 23, 1995, the deputy clerk with whom Mrs. Burdick had previously spoken, called her and informed her that their petition had been filed that day.
On March 22, 1995, the day prior to the scheduled § 341 Meeting, Dattolo called the Burdicks requesting that they not mention her name at the meeting. It was Mrs. Burdick's testimony that Dattolo explained that another debtor had indicated that she/he had received assistance from his/her "lawyer", i.e. Dattolo, in completing the petition, and the New York State Attorney General's Office was investigating the matter. Dattolo suggested to the Burdicks that mentioning her name at the § 341 Meeting would only result in "red flags." However, at the § 341 Meeting, Mrs. Burdick admitted to the Chapter 7 Trustee that Dattolo had prepared their petition.
In response to an advertisement in The Pennysaver, Ms. Overend testified that she contacted Dattolo in December 1994 and was advised that it would cost her $150 for Dattolo to complete her petition. Dattolo came to Ms. Overend's residence and completed the forms. She returned to Ms. Overend's residence on January 5, 1995, with the typed petition, which she had Ms. Overend sign (see UST's Exhibit 3). Dattolo did not provide a copy to her at that time. According to the case docket, the petition was filed on January 12, 1995.
The § 341 Meeting was scheduled for February 9, 1995. The day before the § 341 Meeting, Dattolo called Ms. Overend...
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