In re David

• Decision Date: 21 February 2013
• Docket Number: No. 08–33932.,08–33932.
• Citation: 487 B.R. 843
• Parties: In re Yousif Ayesh DAVID, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Texas

487 B.R. 843

In re Yousif Ayesh DAVID, Debtor.

No. 08–33932.

United States Bankruptcy Court,

S.D. Texas,

Houston Division.

Feb. 21, 2013.

Recognized as Unconstitutional

28 U.S.C.A. § 157(b)(2)(C)

Russell Van Beustring, Attorney at Law, Houston, TX, David Adam Fettner, The Fettner Law Firm, Houston, TX, Michael Glen Walker, Walker Patterson PC, Houston, TX, for Debtor.

Stephen Douglas Statham, Office of US Trustee, Corpus Christi, TX, for US Trustee, Office of the US Trustee.

MEMORANDUM OPINION REGARDING: (1) ORDER REQUIRING YOUSIF AYESH DAVID AND JIM L. CULPEPPER TO APPEAR AND SHOW CAUSE; AND (2) ORDER REQUIRING THE DEBTOR TO APPEAR AND SHOW CAUSE WHY HE SHOULD NOT BE SANCTIONED FOR: (1) USING TWO DIFFERENT SOCIAL SECURITY NUMBERS IN FILING TAX RETURNS; AND (2) USING HIS BROTHER'S SOCIAL SECURITY NUMBER AND HIS BROTHER'S NAME IN FILING THE CHAPTER 13 PETITION INITIATING THE CHAPTER 13 CASE PRESENTLY PENDING BEFORE THIS COURT

[Doc. Nos. 244 & 261]

JEFF BOHM, Chief Judge.

I. Introduction

The show cause orders at issue in the case at bar arise from a Chapter 13 bankruptcy petition filed by the debtor (the Debtor) in 2008. This bankruptcy petition, as well the Debtor's Schedules and Statement of Financial Affairs (SOFA), list the name of the Debtor as Yousif Ayesh David. The bankruptcy petition, Schedules, and SOFA also list the social security number of the Debtor as xxxx-xxx-xxxx. Further, in his Schedules, the Debtor lists three tracts of real property with a total aggregate value of $180,000.00.

In 2010, the Debtor's bankruptcy case was dismissed. Yet, when the Debtor later initiated a separate lawsuit in state court, this Court learned of material discrepancies between the values of the real property tracts listed in the Debtor's Schedules and the values of these same tracts listed in the Debtor's state court suit. This Court therefore issued a show cause order against the Debtor and his attorney in the state court suit, Jim Culpepper (Culpepper), regarding these inconsistent values (the First Show Cause Order).

At the resulting hearing, the Debtor testified before the Court that his name is Josef Daud and that his social security number is xxxx-xxx-xxxx; the Debtor also testified that his brother's name is Yousif A. David, and that his brother's social security number is xxxx-xxx-xxxx. Following this revelation, the Court issued a second show cause order (the Second Show Cause Order) requiring the Debtor to appear and show cause why he should not be sanctioned for: (1) using his brother's name ¹ and social security number in filing his Chapter 13 petition; and (2) using two different social security numbers in filing his tax returns.

In this Memorandum Opinion, the Court discusses the Debtor's flippant disregard for the truth, and concludes that sanctions are appropriate. Additionally, the Court issues this Opinion to discuss its reasons for rejecting case law that would permit the availability of sanctions under Federal Rule of Bankruptcy Procedure 9011(b) in these circumstances: i.e., where the debtor was represented by counsel. The plain language of Rule 9011(b) provides that sanctions may only be issued against a debtor if he is “unrepresented.” The Court instead concludes that sanctions against the Debtor are both available and appropriate under this Court's inherent power and its powers under 11 U.S.C. § 105(a).² By using a false name and false social security number to file his Chapter 13 bankruptcy petition, the Debtor has defiled the “temple of justice.” Goldin v. Bartholow, 166 F.3d 710, 722 (5th Cir.1999).

Based upon the entire record, the Court now makes the following written Findings of Fact and Conclusions of Law pursuant to Fed. R. Bankr.P. 7052, as made applicable to this contested matter by Fed. R. Bankr.P. 9014(c). To the extent that any Finding of Fact is construed to be a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law is construed to be a Finding of Fact, it is adopted as such. The Court reserves the right to make any additional Findings and Conclusions as may be necessary or as requested by any party.

II. Findings of Fact

1. On June 20, 2008, a Chapter 13 petition was filed to initiate Case No. 08–33932. [Doc. No. 1]. This petition was filed to stop a receiver from collecting a judgment against the Debtor that had been awarded in a lawsuit styled “ Star Markets, Plaintiff v. Yousif David, Defendant, No.2002–56891” in the 334th Judicial District Court of Harris County, Texas (the State Court Lawsuit).

2. The attorney of record who signed the Chapter 13 petition is Michael Walker (Walker), who is a partner at the law firm of Walker Patterson, P.C. (the Law Firm). [ Id.]. Walker had first met with the Debtor on June 19, 2008 to discuss the Debtor's concerns over the hearing to be held on June 20, 2008 in the State Court Lawsuit on the receiver's pending motion for turnover of the Debtor's real estate (on which two laundromat businesses were operated). [Tr. 01/13/12 at 34:11–36:5]. Walker recognized the urgent need to file a bankruptcy petition to stop the receiver from going forward the next day in the State Court Lawsuit to take control of the Debtor's real estate and laundromat businesses. [ Id. at 35:21–36:5]. Walker, therefore, had the Debtor sit in his law office while Walker inputted all of the information required to be included in the Chapter 13 petition, the Schedules, and the SOFA. [ Id.]. Walker, therefore, asked the Debtor numerous questions—“What's your name? What's your address? What's your social security number? Where do you live?” [ Id. at 36:11–12]—in order to complete the various documents to be filed with the Clerk of Court.

3. When Walker asked the Debtor what his name is, the Debtor stated “Yousif David.” [ Id. at 36:16–18, 113:14–16]. Walker typed in this name on the petition. The Debtor also informed Walker that he uses the name “Josef Daud” from time to time, and told Walker that this name is the same name as “Yousif David.” [ Id. at 111:3–17]. Walker therefore added the name “Gosef K. Daud” on the petition.³ Additionally, the Debtor informed Walker that he also used his business name, which was David & Daud Enterprise ⁴. See[Doc. No. 1]. Thus, in sum, Walker typed on the Chapter 13 petition that the name of the Debtor is Yousif Ayesh David, aka Gosef K. Daud, and aka David & Daud Enterprise. [ Id.].

4. At the June 19 meeting, Walker also asked the Debtor for his social security number. [Tr. 01/13/12 at 36:11–12, 19–23]. The Debtor responded by providing Walker with a social security number ending in xxxx-xxx-xxxx. [ Id. at 36:19–23]. Walker entered this number, and the social security number appearing on the Chapter 13 petition is xxxx-xxx-xxxx. [Doc. No. 1].

5. At the June 19 meeting with the Debtor, Walker also asked the Debtor to provide his social security card and driver's license. [Tr. 01/13/12 at 36:1–14]. The Debtor did so, and Walker made copies of these two items. [ Id.]. The social security card that the Debtor gave to Walker for copying reflects that the Debtor's social security number is xxxx-xxx-xxxx. [ Id.]. Further, the Texas driver's license that the Debtor gave to Walker for copying reflected that the Debtor's name is Yousif David and that his Texas driver's license number is XXXXX169. [ Id.]. The Debtor never provided Walker with any other social security card or driver's license. [ Id. at 41:10–24]. Under these circumstances, Walker believed that the Debtor's name was Yousif David. [ Id. at 42:12–15].

6. Also at the June 19 meeting, Walker asked the Debtor to provide him with his address, and the Debtor did so. [ Id. at 36]. Walker inputted this address onto the Chapter 13 petition, and the address showing on the petition is 13739 Ortega Lane, Houston, TX 77083 (the Ortega Lane Property). [Doc. No. 1].

7. During the June 19 meeting, Walker, with the Debtor's assistance, typed in the required information on the Chapter 13 petition, the Schedules, and the SOFA. [Tr. 01/13/12 at 35:16–36:13]. Walker, however, did not file these documents on June 19, 2008. Rather, Walker sent the Debtor home with copies of these documents for him to review. [ Id. at 37:15–23]. Walker chose not to file these documents on June 19, 2008 because he first wanted to speak with his law partner, Johnie Patterson (Patterson), who was attending a CLE conference at the time. [ Id. at 37:23–38:3].

8. Walker was able to confer with Patterson on the evening of June 19, 2008. [ Id. at 38:1–3]. After this conversation, Walker decided that he would file the petition, the Schedules, and the SOFA on the following day after meeting with the Debtor. See [ Id.].

9. On the morning of June 20, 2008, the Debtor returned to the Law Firm and had a meeting with Walker. At this meeting, Walker and the Debtor reviewed the petition, the Schedules, and the SOFA that they had worked up the previous day. [ Id. at 38:4–6]. Walker sat in a chair right next to the Debtor and reviewed with him all of the information set forth in these documents; Walker explained to him, line by line, and item by item, what these documents were requesting and what was provided, and verified with the Debtor that all of this information was correct. [ Id. at 40:1–41:7]. After Walker reviewed all of these matters with the Debtor, the Debtor signed the Chapter 13 petition, the Schedules, and the SOFA. [ Id. at 41:8–9]. Walker then filed the petition, the Schedules, and the SOFA on June 20, 2008 (the Petition Date). [Doc. No. 1]. As a result of this filing, the automatic stay took effect and the hearing scheduled to be held in the State Court Lawsuit was cancelled.

10. Schedule A represents that the Debtor owns three tracts of real property. [Doc. No. 1 at p. 6]. The first tract is the Ortega Lane Property, which the Debtor represents (in Schedule C) is his exempt homestead.⁵ [ Id. at p. 12]. The second tract is property located at 5116 Yale, Houston, TX (the Yale Property)...