In re Chimko

• Decision Date: 22 July 2005
• Citation: 444 Mass. 743,831 N.E.2d 316
• Parties: In The Matter of Darryl CHIMKO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 316

831 N.E.2d 316

444 Mass. 743

In The Matter of Darryl CHIMKO.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 5, 2005.

Decided July 22, 2005.

Ann Brennan, Braintree, for Darryl Chimko.

Douglas W. Salvesen, Boston, for Real Estate Bar Association of Massachusetts, Inc., amicus curiae, submitted a brief.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, SOSMAN, & CORDY, JJ.

CORDY, J.

A judge in the United States Bankruptcy Court for the District of Massachusetts sanctioned Michigan attorney Darryl Chimko for misrepresentation and for the unauthorized practice of law in connection with Chimko's conduct as agent for Household Finance Corporation II (Household Finance). Chimko appealed from the order and elected to have his appeal heard by a judge of the United States District Court for the District of Massachusetts. See 28 U.S.C. § 158(c)(1) (2000). The District Court judge affirmed the order as to misrepresentation, and certified the following questions to this court. See S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981).

"1. Does an attorney admitted to practice in another United States jurisdiction but not admitted to practice in the Commonwealth of Massachusetts engage in the `practice of law' by:

"a. completing a reaffirmation form that modifies and creates rights but does not change the original terms of the loan;

"b. providing a pro se debtor with a notice intended to provide general assistance in understanding the reaffirmation process; and

"c. corresponding with a pro se debtor and the Bankruptcy Court using law firm letterhead but not clearly intending to hold himself out as practicing law?

"2. If the above constitutes the `practice of law,' may such services be provided on a temporary basis in the Commonwealth of Massachusetts if they are reasonably related to the attorney's practice in the other jurisdiction?"

For the reasons stated below, we answer the first question in the negative, and conclude further that, even if some of such services fell within the bounds of the practice of law, they were permissibly provided in the circumstances of this case.

1. Background. The undisputed facts and relevant procedural history are as follows. In April, 2003, Antonio Lucas (debtor), acting pro se, filed a voluntary petition for Chapter 7 bankruptcy relief. The petition listed the names and addresses of three creditors holding mortgages on the debtor's residence in Lawrence, including Household Finance. In May, Chimko, an attorney not licensed to practice law in Massachusetts, contacted the debtor by mail on behalf of Household Finance.¹ The mailing included a cover letter; a reaffirmation agreement, under which the debtor could elect to reaffirm the debt rather than surrender the property, see 11 U.S.C. § 521(2)(A) (2000); a "reaffirmation data sheet"; and a "notice of pro se reaffirmation of debt secured by real property" (notice of pro se reaffirmation).

The cover letter was printed on the letterhead of Chimko's Michigan law firm, Shermeta, Chimko & Adams, P.C., and identified Household Finance as "Our Client." The letter advised that the law firm could not give the debtor legal advice, but directed the debtor to contact Chimko if he had any questions or concerns. The enclosed reaffirmation agreement, into which Chimko had entered the original terms of the Household Finance mortgage, was modeled on Local Bankruptcy Form 6.² The reaffirmation data sheet requested the following information: the debtor's address and telephone number; the name, address, and telephone number of the debtor's employer; and the debtor's monthly net income. The notice of pro se reaffirmation, which Chimko captioned as a pleading and intended to file with the Bankruptcy Court as an attachment to the executed reaffirmation agreement, began: "NOW COMES, Creditor, HOUSEHOLD FINANCE CORPORATION II, by and through its attorneys, SHERMETA, CHIMKO & ADAMS, P.C. . . . ." The notice requested that the court advise Household Finance of any hearing on the reaffirmation agreement by contacting "agent for Creditor . . . DARRYL J. CHIMKO." The notice concluded: "If Creditor is not notified of any Hearing on Reaffirmation concerning the attached Reaffirmation Agreement, Creditor shall proceed in a manner consistent with the plain language of [11 U.S.C. § 524(c) ] and shall consider the attached Reaffirmation Agreement to be valid, so long as all other requirements to obtain a valid Reaffirmation Agreement are present under 11 U.S.C. [§ ] 524."

On May 27, 2003, Chimko sent the debtor a second letter. Printed on law firm letterhead and designating Household Finance as "Our Client," this letter advised the debtor that the Chapter 7 bankruptcy department of Shermeta, Chimko & Adams, P.C. had not received the debtor's executed reaffirmation agreement. The debtor subsequently executed the reaffirmation agreement. In June, Chimko signed the reaffirmation agreement as "Agent for Creditor" and filed it with the Bankruptcy Court, along with the notice of pro se reaffirmation and a cover letter that was printed on law firm letterhead and made no reference to Chimko's status as Household Finance's "agent."

On July 7, 2003, on the basis of these filings, a Bankruptcy Court judge ordered Chimko to appear at a hearing "and show cause why (1) the Notice of Pro Se Reaffirmation of [D]ebt Secured by Real Property should not be stricken and the Reaffirmation Agreement not accepted for filing; (2) sanctions should not be imposed upon Household Finance Corporation II and/or its agent for attaching the Notice to the Reaffirmation Agreement which (a) conflicts with the Massachusetts Local Bankruptcy Rules; (b) requires that notice be given to an address other than the creditor's address . . . and (c) purports to permit the creditor to ignore any binding order of this Court with respect to the Reaffirmation Agreement if notice of a hearing is not given to the agent; and (3) sanctions, including any appropriate referrals, should not be imposed upon the agent for the unauthorized practice of law in Massachusetts."

At the hearing, Chimko testified that the reaffirmation agreements he sends to pro se debtors are drafted by corporate counsel for the creditor. He further testified that the use of the word "attorneys" in the notice of pro se reaffirmation was a typographical error and that Shermeta, Chimko & Adams, P.C., and Household Finance were parties to a "management agreement," rather than attorney and client. Based in part on a chart produced by Chimko (by order of the court) that identified a number of additional cases in Massachusetts in which he had signed documents referring to himself as attorney for the creditor, the judge concluded that, "[a]lthough Chimko might have not intentionally held himself out to be anything other than an agent, through his habitual correspondences with the firm's letterhead, admitted typographical error, and repeated behavior in committing these errors, Chimko has misrepresented his status to the Debtor and the Court." The judge further concluded that Chimko (acting as agent for Household Finance) had engaged in the unauthorized practice of law by preparing a reaffirmation agreement in which contractual rights were modified and created, by providing the debtor "with a form of notice he believed would be of assistance to [him] in understanding the reaffirmation process," and by corresponding with the debtor and the court on firm letterhead. As a remedy, the judge sanctioned Chimko in the amount of $500 and forwarded a copy of his memorandum of decision to the Massachusetts board of bar overseers and the Michigan attorney discipline board.³

On November 10, 2003, Chimko appealed from the decision to the United States District Court for the District of Massachusetts. After oral argument, the District Court judge affirmed the order "as to its conclusion that Chimko's communications were misleading under the Massachusetts Rules of Professional Conduct." Applying Massachusetts law to the question whether Chimko engaged in the unauthorized practice of law, the judge concluded that Chimko's actions did not constitute the practice of law. Finding the "question. . . not entirely free from doubt," however, the judge certified the above questions to this court.

2. Discussion. Rule 9010(a) of the Federal Rules of Bankruptcy Procedure provides that a "debtor, creditor, equity security holder, indenture trustee, committee or other party may (1) appear in a case under the [Bankruptcy] Code and act either in the entity's own behalf or by an attorney authorized to practice in the court, and (2) perform any act not constituting the practice of law, by an authorized agent, attorney in fact, or proxy." Rule 9010(a) "is certainly not a model of clarity." Wilson v. Valley Elec. Membership Corp., 141 B.R. 309, 312 (E.D.La.1992). It has been interpreted as follows:

"A . . . creditor . . . may (1) appear in a case under the [Bankruptcy] Code and act in the entity's own behalf, (2) appear in a case under the [Bankruptcy] Code through an attorney authorized to practice in the court, (3) appear in a case under the [Bankruptcy] Code through an authorized agent or attorney in fact, who may perform any act not constituting the practice of law, or (4) appear in a case under the [Bankruptcy] Code by proxy."

Id. 10 Collier, Bankruptcy, par. 9010.02 (15th ed. rev.2005). In relevant part, the rule thus permits a creditor to "appear" either through an attorney authorized to practice in the court or through an agent, so long as that agent does not perform any act constituting the practice of law. Wilson v. Valley Elec. Membership Corp., supra at 312-313.

The District Court judge first addressed whether Chimko was an attorney authorized to practice in the United States Bankruptcy Court for the District of Massachusetts. Local Bankruptcy Rule 9010-1 (2005) provides that only "a member in good standing of the bar of United...