In re Gomez
| Decision Date | 20 February 2001 |
| Docket Number | No. 00-17455 MSK.,00-17455 MSK. |
| Parties | In re Monica R. GOMEZ, SSN XXX-XX-XXXX, Debtor. |
| Court | U.S. Bankruptcy Court — District of Colorado |
COPYRIGHT MATERIAL OMITTED
William E. Zurinkskas, Boulder, CO, for Debtor.
M. Evan Sweet, Denver, CO, for Colorado Law Works, Inc., d/b/a Eagle Paralegals, LTD, Page Arnold and Candace Arnold.
ORDER CERTIFYING VIOLATION OF 11 U.S.C. § 110 BY BANKRUPTCY PETITION PREPARER
THIS MATTER came before the Court on November 29, 2000, and December 11, 2000, for an evidentiary hearing on the Debtor's Motion Under Section 110 (Motion). The issue presented was whether petition preparers Colorado Law Works, Inc., d/b/a Eagle Paralegals, LTD, Page Arnold, and Candace Arnold violated 11 U.S.C. § 110(b), (c), (f), (h) or (i). At such hearings, the Debtor was represented by William E. Zurinskas. Colorado Law Works, Inc., d/b/a Eagle Paralegals, LTD, Page Arnold and Candace Arnold were represented by M. Evan Sweet. Having considered the evidence presented and the legal arguments made by counsel, the Court
FINDS and CONCLUDES as follows:
I. JURISDICTION
This Court has jurisdiction in this matter pursuant to 28 U.S.C. § 1334(a) and the Order of the United States District Court for the District of Colorado referring bankruptcy cases to this Court. The matter would be a "core" matter pursuant to 28 U.S.C. § 157(b)(2)(A) absent specific provisions of the Bankruptcy Code requiring certification to the United States District Court.
In matters involving bankruptcy petition preparers, 11 U.S.C. § 110(i)1 compels the Bankruptcy Court to certify factual findings that a bankruptcy petition preparer has violated other provisions of § 110. Section 110 further provides that the United States District Court shall impose a fine (of not more than $500.00) against the petition preparer for each violation and, upon motion of the trustee, debtor or creditor it may order the petition preparer to pay the debtor actual damages, the greater of $2,000.00 or twice the petition preparer's fees, and reasonable attorneys fees and costs. The Debtor, Monica Gomez, has requested an award of damages.
The following constitute the factual findings and legal conclusions made by this Court that Colorado Law Works, Inc., d/b/a Eagle Paralegals, LTD, Candace Arnold and Page Arnold have violated the provisions of 11 U.S.C. § 110.
III. FACTUAL FINDINGS
1. Colorado Law Works, Inc. (Colorado Law Works) is a closely held Colorado corporation. Candace and Page Arnold are its sole officers, directors, shareholders and employees. Colorado Law Works conducts a business of preparing various legal documents. For preparation of bankruptcy petitions, schedules and statements of affairs (bankruptcy documents) it operates under the trade name Eagle Paralegals, LTD.2 Candace Arnold is a paralegal3 who prepares bankruptcy documents for individuals desiring to file Chapter 7 bankruptcy cases. Ms. Arnold uses a bankruptcy computer program which generates a questionnaire which the prospective debtor completes. Based on the information input by Ms. Arnold from the completed questionnaire, the program prepares bankruptcy documents which substantially conform to the official bankruptcy form petition, schedules and statements of affairs. Page Arnold works as the office manager and secretary. He answers telephone calls, schedules appointments and meets with prospective debtors. At such a meeting, the prospective debtor is provided with a disclosure which states that Colorado Law Works, d/b/a Eagle Paralegal, LTD, is not an attorney and does not provide legal services. After obtaining a signature on the disclosure, Mr. Arnold then provides the prospective debtor with the questionnaire, reviews responses, answers questions and supplies information about the bankruptcy process and how bankruptcy law applies to the individual's circumstances. For general information, such as what is a secured or unsecured debt or whether a prospective debtor should file for relief under Chapter 7 or Chapter 13, Page Arnold refers the prospective debtor to a collection of legal materials maintained in the offices of Colorado Law Works. The materials have been selected by the Arnolds from internet web sites and published and unpublished sources. Some questions, such as the exemptions to which an individual may be entitled, are answered directly by Page Arnold, or he may refer the prospective debtor to counsel.
2. Colorado Law Works owns the telephone number XXX-XXX-XXXX, which it uses to advertise in the U.S. West Dex Metro Denver Yellow Pages Directory November 1999-2000 issue. The advertisement offers "Affordable Document Preparation" and "Low Cost Bankruptcy" by "fast paralegal or attorney service." Despite reference to "attorney service," Colorado Law Works does not employ nor have any formal relationship with any licensed attorney. Ms. Arnold does not work under the supervision or review of any licensed attorney.
3. Using its trade name, Eagle Paralegals, LTD, Colorado Law Works and Candace Arnold prepared the bankruptcy petition, schedules and statements of affairs filed by Monica Gomez in this case. Initially, Page Arnold answered a telephone call from Monica Gomez and scheduled an appointment with her. At the appointment, he provided her with general information relating to various aspects of bankruptcy law and bankruptcy procedure and obtained her signature on Colorado Law Works' disclosure. He gave her the questionnaire, reviewed her responses, assisted her in filling out portions of the questionnaire, asked further questions and modified her responses. In particular, he advised her to increase her listed expenses to match her income and inquired about the ownership of her motor vehicle, which her mother was using, and about her use of and payment of amounts owed on her mother's car. In response to her question about what property she could keep if she filed for bankruptcy, Ms. Gomez recalled that Mr. Arnold told her that he had been in the business a long time and therefore believed that "they would go after her car." When she asked why "they would go after her car," she was told that "people in power can do that." He advised her about the exemptions to which she would be entitled under Colorado law, and expressed concern about the available exemption for her motor vehicle. He told her that the law had recently changed and he was not sure of the exemption amount. He suggested that she consult with an attorney. When she declined, Page Arnold contacted an attorney, obtained pertinent information and later called Ms. Gomez with the information.
4. Candace Arnold used Ms. Gomez' questionnaire to enter information into the computer program and thereby prepared the bankruptcy petition, schedules and statements of affairs for Ms. Gomez. Where the information on the questionnaire was incomplete or the questionnaire did not provide information required by the bankruptcy forms, Candace Arnold or the computer program unilaterally inserted information in the bankruptcy documents without consultation with Ms. Gomez. For example, the questionnaire did not ask how long Ms. Gomez had resided in the district of Colorado, which information is pertinent to the venue for filing a bankruptcy case. Ms. Arnold assumed that Ms. Gomez had resided in Colorado for six months or the longer portion thereof and therefore selected Colorado. Ms. Arnold or the computer program also selected the exemptions to be claimed and determined that all of Ms. Gomez' debts were unsecured and unliquidated without any information from Ms. Gomez. Finally, although the questionnaire asked for ownership of some personal property, it did not refer specifically to government or corporate bonds and other negotiable instruments (Statement of Affairs, Schedule B No. 14) or alimony/support (Statement of Financial Affairs, Schedule B No. 16). Although Ms. Gomez was never asked to supply information as to these items, Ms. Arnold or the computer program filled out the statement of financial affairs to reflect that she had no interest in such assets.
5. Candace Arnold signed the bankruptcy documents which she prepared for Ms. Gomez and printed her name, address and Social Security Number on such documents. However, the bankruptcy documents included no reference to Page Arnold, Colorado Law Works or Eagle Paralegal, LTD, their addresses or identifying numbers. According to the Arnolds, this practice was approved by the United States Trustee's Office.
6. For preparation of the bankruptcy documents, Ms. Gomez paid a fee of $199.00. Colorado Law Works mailed the documents to Ms. Gomez and she filed them with the Bankruptcy Court on June 26, 2000. Ms. Gomez has received a discharge. The deficiencies or inaccuracies contained in the documents prepared for her have not resulted in any delay or cost to her.
III. ANALYSIS
Section 110 of the Bankruptcy Code regulates the conduct of bankruptcy petition preparers. A bankruptcy petition preparer is defined to be "a person, other than an attorney or an employee of an attorney, who prepares for compensation" a "petition or other document . . . for filing by a debtor in the United States Bankruptcy Court. . . ." 11 U.S.C. § 110(a)(1), (2). A person is defined by the Bankruptcy Code as an individual, partnership or corporation. 11 U.S.C. § 104(41). Applying these definitions, both Colorado Law Works, Inc. and its employee, Candace Arnold, are bankruptcy petition preparers. Page Arnold is not a petition preparer because he prepared no document filed in this case. However, as an owner and employee of Colorado Law Works, his actions are imputable to Colorado Law Works.
The Debtor, Ms. Gomez, alleges that Colorado Law Works, Candace Arnold and Page Arnold have violated numerous provisions of § 110. Each will be dealt with in turn.
First, the Debtor alleges that Colorado Law Works violated §§ 110(...
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