In re Desilets

• Decision Date: 03 June 2002
• Docket Number: No. 00-2411.,00-2411.
• Citation: 291 F.3d 925
• Parties: In re Ernest J. DESILETS, Debtor. Allan J. Rittenhouse, Plaintiff-Appellant, v. Delta Home Improvement, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

291 F.3d 925

In re Ernest J. DESILETS, Debtor Allan J. Rittenhouse, Plaintiff-Appellant, v. Delta Home Improvement, Inc., Defendant-Appellee.

No. 00-2411.

United States Court of Appeals, Sixth Circuit.

Argued January 24, 2002.

Decided and Filed June 3, 2002.

Allan J. Rittenhouse (argued and briefed), Iron Mountain, MI, for Plaintiff-Appellant.

Daniel M. Morley (briefed), Butch, Quinn, Rosemurgy, Jardis, Bush, Burkhart & Parks, Escanaba, MI, Victoria V. Kremski (argued), State Bar of Michigan, Lansing, MI, for Defendant-Appellee.

Before MERRITT, BOGGS, and MOORE, Circuit Judges.

BOGGS, J., delivered the opinion of the court, in which MOORE, J., joined. MERRITT, J., (pp. 931-32), delivered a separate dissenting opinion.

OPINION

BOGGS, Circuit Judge.

Allan J. Rittenhouse appeals the judgment of the district court that he is not an attorney as defined by the Bankruptcy Code, 11 U.S.C. § 101(4). Because the district court erred in its interpretation of the relevant section of the Bankruptcy Code, we reverse.

I

Allan J. Rittenhouse was counsel of record for debtor Ernest J. Desilets. During Desilets's bankruptcy proceeding, Delta Home Improvement, Inc. (Delta) moved the court to suspend Rittenhouse from practicing before the bankruptcy courts, to require him to disgorge fees, and to sanction him for the unauthorized practice of law.

Because Rittenhouse had not been authorized by the State Bar of Michigan to practice law in the State of Michigan, the bankruptcy court held that Rittenhouse was not an "attorney" within the meaning of the Bankruptcy Code, 11 U.S.C. § 101(4). The bankruptcy court held that Rittenhouse was a "bankruptcy preparer" under 11 U.S.C. § 110(a), and because he had failed to comply with several requirements imposed by the Code on bankruptcy preparers, ordered him to pay a $3500 fine and disgorge fees of $872.

A brief factual synopsis is useful. Rittenhouse graduated from the South Texas College of Law, and was admitted to practice law in Texas in 1992. In December 1992, he moved to Wisconsin. His applications for admission to the Wisconsin and Michigan bars were denied. In February 1994, Rittenhouse applied for admission to the bar of the United States District Court for the Western District of Michigan, and was admitted. Rittenhouse has an office in his home in Wisconsin. He also has an office in Iron Mountain, Michigan. His practice was limited to bankruptcy matters in federal court.

In July 1995, the State Bar of Michigan informed Rittenhouse by letter that his conduct constituted the unauthorized practice of law. Rittenhouse responded to the letter and argued that a practice limited to federal bankruptcy did not constitute the unauthorized practice of law. The Michigan Bar took no further action until December 9, 1999, when it instituted a suit in state court to enjoin Rittenhouse from unauthorized practice. This state court action was terminated on August 18, 2000, by the issuance of a stipulated injunction prohibiting Rittenhouse from engaging in conduct deemed to be the unauthorized practice of law.

The bankruptcy court fined Rittenhouse and required him to return fees for engaging in the unauthorized practice of law, while referring the matter of his suspension for en banc consideration by the bankruptcy court. En banc review resulted in an order indefinitely suspending Rittenhouse from appearing before the bankruptcy court.

Rittenhouse appealed to the district court, which affirmed the bankruptcy court determination. Rittenhouse now timely appeals the district court's decision.

II

Rittenhouse does not dispute any of the facts established by the bankruptcy or district courts. We determine the remaining statutory questions de novo. In re Baker & Getty Financial Services, Inc., 106 F.3d 1255, 1259 (6th Cir.1997).

All parties agree that Rittenhouse was eligible for admission to the bar of the Western District of Michigan, and was properly admitted pursuant to Local Rule (W.D.Mich.) 83.1, which reads in pertinent part:

Eligibility — A person who is duly admitted to practice in a court of record of a state, and who is in active status and in good standing, may apply for admission to the bar of this Court....

Local Rule (W.D.Mich.) 83.1(c)(i). We look to 11 U.S.C. § 101(4) for the definition of "attorney" for purposes of the bankruptcy code:

`attorney' means attorney, professional law association, corporation, or partnership, authorized under applicable law to practice law;

The central issue of the case is, therefore, whether the "applicable law" authorizing an attorney to practice before the bankruptcy court consists solely of the federal rules for admission to the federal bar, or also includes the state rules for admission to the state bar, even when not referenced in the federal rules.

This question has not been resolved by our Circuit. We turn therefore to persuasive authority. In In re Poole, 222 F.3d 618 (9th Cir.2000), the Ninth Circuit determined that federal standards control admission to the federal bar. Poole concerned an attorney admitted to the Illinois State Bar, and admitted to practice in the Arizona federal courts. The trustee in a bankruptcy proceeding moved to require the attorney to disgorge his fees because he was not an "attorney" under 11 U.S.C. § 101(4). The Ninth Circuit rejected this argument. In so doing, the court noted:

Admission to practice law before a state's courts and admission to practice before the federal courts in that state are separate, independent privileges. The two judicial systems of courts, the state judicatures and the federal judiciary, have autonomous control over the conduct of their officers, among whom, in the present context, lawyers are included.... In short, a federal court has the power to control admission to its bar and to discipline attorneys who appear before it.

Poole, 222 F.3d at 620 (citations and quotations omitted).

The plaintiff in Poole argued, as does Delta here, that a lawyer not admitted in the forum state is not an "attorney" as defined in 11 U.S.C. § 101(4). The Poole plaintiff argued that the "applicable law" was Arizona law, and that under Arizona law, the defendant attorney could not practice law, including practice before a federal court.

The Poole court found that the states did not have the power to determine who could be admitted to the federal bar. The court stated:

As we have discussed, and as nearly a century of Supreme Court precedent makes clear, practice before federal courts is not governed by state court rules. Further, and more importantly, suspension from federal practice is not dictated by state rules.

Poole, 222 F.3d at 622. See also Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) ("a federal court has the power to control admission to its bar"); Theard v. United States, 354 U.S. 278, 77 S.Ct. 1274, 1 L.Ed.2d 1342 (1957) (disbarment by federal courts does not necessarily flow from disbarment by state courts); In re Ruffalo, 390 U.S. 544, 88 S.Ct. 1222, 20 L.Ed.2d 117 (1968) (accord). Since the state and federal systems are separate and independent, the court held that the "applicable law" to which 11 U.S.C. § 101(4) refers was federal rather than Arizona law.

Further, in Sperry v. Florida ex rel. the Florida Bar, 373 U.S. 379, 385, 83 S.Ct. 1322, 10 L.Ed.2d 428 (1963), the United States Supreme Court held that the State of Florida could not apply its licensing provisions to the defendant attorney to prevent him from preparing patent applications, because he was registered to practice before the United States Patent Office. The district court in the instant case cited Sperry as holding that when federal and state law do not directly conflict, state law need not give way. This misstates the holding of Sperry. There, the Court held that when a state licensing law excludes a lawyer from practice that federal rules expressly allow, the two rules do conflict, and the state law must give way. Sperry, 373 U.S. at 385, 83 S.Ct. 1322.

Sperry provides strong guidance for the current case. The Sperry Court noted:

A State may not enforce licensing requirements which, though valid in the absence of federal regulation, give the State's licensing board [in Sperry, the Florida Bar Association] a virtual power of review over the federal determination that a person or agency is qualified and entitled to perform certain functions, or which impose upon the performance of activity sanctioned by federal license additional conditions not contemplated by Congress.

Ibid. (citations and quotations omitted). The only plausible distinction between Sperry and Poole is that the enabling Congressional statute in Sperry expressly allowed for the prosecution of patents by non-lawyers.¹ This is a distinction without a difference, given that Rittenhouse is a duly licensed lawyer who meets the requirements for admission to the Bar of the Western District of Michigan.

There is countervailing persuasive authority. The bankruptcy court and district court relied primarily on a Connecticut bankruptcy court decision, In re Peterson, 163 B.R. 665 (Bankr.D.Conn. 1994). In Peterson, the court determined that an attorney was engaged in the unauthorized practice of law because he maintained an extensive federal bankruptcy practice in Connecticut, while being licensed in New York. The Peterson court held that when the attorney maintained an office and conducted significant business in Connecticut, he violated Connecticut state rules prohibiting the unauthorized practice of law.

In response to the argument that the attorney was allowed to practice law before the federal courts because he was admitted to the federal bar, the Peterson court held that there was a difference between the right to practice law, and the right to practice before a court. Peterson, 163 B.R. at 673. The court cited Leis v. Flynt, 439 U.S. 438, 99 S.Ct. 698, 58 L.Ed.2d 717 (1979), as holding that the licensing...