In re Jay

• Decision Date: 17 August 2010
• Docket Number: Bankruptcy No. 09–72934–SCS.,Adversary No. 09–07138–SCS.
• Citation: 446 B.R. 227
• Court: U.S. Bankruptcy Court — Eastern District of Virginia
• Parties: In re Pamela Ann JAY, Debtor.W. Clarkson McDow, Jr., United States Trustee for Region Four, Plaintiff,v.Sonya Skinner, individually, and doing business as A1 Credit Services, Defendant.

446 B.R. 227

In re Pamela Ann JAY, Debtor.W. Clarkson McDow, Jr., United States Trustee for Region Four, Plaintiff,

v.Sonya Skinner, individually, and doing business as A1 Credit Services, Defendant.

Bankruptcy No. 09–72934–SCS.

Adversary No. 09–07138–SCS.

United States Bankruptcy Court, E.D. Virginia,Norfolk Division.

Aug. 17, 2010.

Kenneth N. Whitehurst, III, Office of the U.S. Trustee, Norfolk, VA, for Plaintiff.Sonya Skinner, pro se.

MEMORANDUM OPINION

STEPHEN C. ST. JOHN, Bankruptcy Judge.

This matter came on for trial on June 2, 2010, on the Complaint of W. Clarkson McDow, Jr., United States Trustee for Region Four (“United States Trustee”), seeking fines, disgorgement of compensation, and injunctive relief pursuant to 11 U.S.C. § 110 against the defendant, Sonya Skinner (“Skinner”). The Court has jurisdiction over these proceedings pursuant to 28 U.S.C. §§ 157(b)(2) and 1334(b). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. Upon consideration of the evidence and arguments presented by counsel for the United States Trustee and the pro se defendant and the pleadings submitted, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.

I. The Complaint

The Complaint filed by the United States Trustee alleges Skinner is an individual who resides in Hampton, Virginia; conducts business within the jurisdiction of the Eastern District of Virginia; is a “person, other than an attorney for the debtor or an employee of such attorney under the direct supervision of such attorney;” and is a “bankruptcy petition preparer” as that term is defined in 11 U.S.C. § 110(a)(1). Compl. ¶¶ 6, 7. The Complaint further alleges Skinner prepared “documents for filing” within the meaning of 11 U.S.C. § 110 in numerous bankruptcy cases currently or recently pending before this Court; is not licensed to practice law in the Commonwealth of Virginia; and is neither admitted to practice before this Court nor is she employed by an attorney licensed to practice law in the Commonwealth of Virginia or before this Court. Id. ¶¶ 8–10. The United States Trustee further alleges that Skinner prepared documents for filing in this Court in at least nine cases recently or currently pending in the Norfolk and Newport News divisions of this Court.¹ Id. ¶ 14. The United States Trustee alleges that “Skinner has violated one or more subsections of 11 U.S.C. § 110 by and through the documents and pleadings she prepared for filing in this Court by the debtors in the cases detailed herein, and by the unauthorized legal advice she has given to those debtors.” Id. ¶ 15. As a result of these alleged violations, the United States Trustee seeks disgorgement of the monies paid to Skinner by the Debtors, the imposition of monetary sanctions pursuant to § 110 of the United States Bankruptcy Code, and requests that this Court permanently enjoin Skinner from acting as a bankruptcy petition preparer.

II. The Evidence at Trial

The evidence at trial was composed principally of the transcript of the deposition of Sonya Skinner conducted May 18, 2010, by counsel for the United States Trustee and the deposition exhibits of the United States Trustee admitted as United States Trustee Exhibit 1 (“Skinner Deposition”).² As the case in chief of the United States Trustee against Skinner is largely contained within the Skinner Deposition, a detailed analysis of its contents is necessary.

Skinner is not an attorney and does not work for an attorney. Skinner Deposition, at 8. In 2008, Skinner started a sole proprietorship called A1 Credit Services, for which she has a business license issued by the city of Hampton, Virginia. Id. Skinner prepared bankruptcy pleadings in the Bankruptcy Cases and was paid the amounts set forth in paragraph 14 of the Complaint.³ Id. at 12–13. Skinner admits that she is a bankruptcy petition preparer as defined by the Bankruptcy Code. Id. at 16. She began bankruptcy petition preparation by sending copies of her own bankruptcy papers (which she filed in 2006) to members of the church where she worked. Id. at 30. After more people approached her for assistance with their bankruptcy papers, she began her bankruptcy petition preparation business. Id. at 31. The first person she assisted in filing bankruptcy was her husband in December 2007, which was without compensation. Id. The first person Skinner assisted in bankruptcy petition preparation for a fee was Derrick Frazier, who paid her $200.00 or $250.00. Id. at 32–33.

Skinner is a member of a company named the National Association of Bankruptcy Petition Preparers, where her “teacher” is Don Harris. Id. at 45, 51. Skinner found this organization on the Internet. Id. Don Harris is an attorney; Skinner stated Harris advised her that he has a “national” license to practice law. Id. at 45–46.⁴ Skinner took two classes from the National Association of Bankruptcy Petition Preparers entitled “Preparation 101” and “Preparation 102” for which she paid $150.00 each; she also took classes regarding dealing with clients and dealing with courts (for which she paid $75.00 and $150.00 respectively). Id. at 29, 48–49.

Skinner discussed the process of preparing Pamela Jay's bankruptcy papers; upon their filing, Jay's case was assigned Case Number 09–72934. Skinner admitted that, while she signed the bankruptcy papers filed for Jay, she did not file a separate disclosure regarding how much she was paid as a bankruptcy petition preparer. Id. at 70–71. The amount of Skinner's fee, however, was set forth in Jay's Statement of Financial Affairs. Id. Skinner provided Pamela Jay with a Statement of Current Monthly Income and Means Test for Jay to complete (“Means Test”).⁵ Id. at 74. She also provided Jay with a chart showing the median income in Virginia for various household sizes that Jay utilized to complete the Means Test. Id. at 75–76. Skinner also gave Jay a form to apply for waiver of the Chapter 7 filing fee. Id. at 76–77.

Later in Jay's case, Skinner prepared a “Debtor's Response to Trustee's Objection to Exemption for Expected Income Tax Refund,” filed on October 30, 2009 (United States Trustee Exh. 1–A–6 (“Jay Response to Trustee”)). She described the process of preparing that document as follows:

I will tell you exactly how it is constructed. We go the website—which I mean by “we” me and Pam—go to the website and we type in a search for whatever it is that was the complaint. And so that is what we did, we typed in the search. And then we found another case that had pretty much the same situation. We copied that information and pasted it into a Word document and then modify it and she tells me what she wants to change on it, or whatever.

Skinner Deposition, at 17.⁶ Skinner did not sign the Jay Response to Trustee. Id. at 90. The Jay Response to Trustee argued that Jay had timely forwarded her homestead deed to the Chapter 7 Trustee, that relinquishment of her income tax refund would impair her fresh start, and that under Section 522(b)(2)(A) of the Bankruptcy Code, Jay had been a householder for three years. Jay also argued that the Trustee had not carried her burden of proof. Jay Response to Trustee, at 3–4.

Skinner also prepared a homestead deed for Pamela Jay (“Jay Homestead Deed”). Skinner Deposition, at 87. Skinner testified that the National Association of Bankruptcy Petition Preparers reviewed the Jay Homestead Deed after Jay's homestead exemption was objected to by the Chapter 7 Trustee. Id. at 50–51. Skinner provides abstracted information about homestead deeds, including where to file a homestead deed, to her customers who “have a homestead.” Id. at 88.

In the Margie Owens case, Case Number 09–72910, Skinner prepared a motion to vacate the order dismissing the case (“Owens Motion to Vacate”). Id. at 19–20. Skinner prepared the Owens Motion to Vacate by using a motion to reinstate received from attorney Philip Boardman ⁷ that was filed in an unrelated bankruptcy case. Id. at 20. Skinner received a copy of the earlier-filed motion by going to Boardman's office in connection with the Tysha Chase case, Case Number 09–71399. Id. at 20–21. Skinner prepared a motion to vacate on behalf of Tysha Chase that was filed in her case on May 29, 2009 (United States Trustee Exh. 1–C–4 (“Chase Motion to Vacate”)). Skinner described these circumstances as follows:

Because the first case that we had that I have done that [prepare a motion to vacate dismissal] was Tysha Chase.... So I actually went to [Boardman] at that point and talked to him and I told him what had happened, and everything, and he had given me a copy of [the motion to vacate dismissal] then.

....

I showed [Boardman] the letter [indicating Tysha Chase's case had been dismissed]. I showed him the letter stating the reason that her case was reinstated, or whatever. And he got out this really thick book and he showed me the book where there was a code and it—he showed me the time frame. I think he said it was, like, ten days that you had to actually file the motion to try to vacate the dismissal. So he said to make sure you did it within that time frame. And that is—I don't remember what else he said but I know that he gave me the motion. And, you know, I went back, of course, to Ms. Chase, which I see very often, and, you know, I would type it up for her.

....

And so, like I said, he gave me that motion and told me to just scratch out. And he scratched out his name at the bottom and some other information that was on it, or whatever, he just X'ed it out. And he said just change that.

Skinner Deposition, at 20, 22–23.⁸ Skinner believes Boardman gave her the document because she told him she wanted to go to law school. Id. at 23.⁹ Although Boardman told Skinner the motion to vacate needed to be filed within ten days of the dismissal, Skinner does not recall if she told Tysha Chase that the motion to vacate the dismissal had to be filed within ten days of the...