In re Lucas

• Citation: 317 B.R. 195
• Decision Date: 30 September 2004
• Docket Number: No. CIV.A.03-40277-WGY.,CIV.A.03-40277-WGY.
• Parties: In re Antonio LUCAS, Debtor. Darryl Chimko, Appellant, v. Antonio Lucas, Appellee.
• Court: United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of Massachusetts

Page 195

317 B.R. 195

In re Antonio LUCAS, Debtor Darryl Chimko, Appellant, v. Antonio Lucas, Appellee.

No. CIV.A.03-40277-WGY.

United States Bankruptcy Court, D. Massachusetts.

September 30, 2004.

Ann Brennan, Stephen E. Shambam Law Offices, Braintree, MA, for Appellant.

Stephen E. Shamban, Stephen E. Shamban Law Offices, PC, Braintree, MA, for Appellant.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

I. INTRODUCTION

Michigan attorney Darryl Chimko ("Chimko") appeals from an order (the "Order") of the United States Bankruptcy Court for the District of Massachusetts (the "Bankruptcy Court") imposing sanctions for his misleading communications and unauthorized practice of law in Massachusetts. Chimko challenges the Order on two grounds, arguing that his communications with the Bankruptcy Court and a pro se debtor were not misleading and that his actions, which included mailing, completing, and filing a reaffirmation agreement, did not constitute the practice of law.

II. BACKGROUND

A. Factual Background

The following facts are essentially undisputed. On April 17, 2003, debtor Antonio Lucas ("Lucas") filed a pro se petition for Chapter 7 bankruptcy relief. Mem. of Decision [R. Item No. 15] at 1. Listed on Lucas's schedule were his residence in Lawrence, Massachusetts, and the three mortgages that encumber the property: Fleet Bank with a balance of $14,000, Principle Residential with a balance of $37,900, and Household Finance with a balance of $23,700. Id.

Chimko, a Michigan attorney acting on Household Finance's behalf, contacted Lucas by mail regarding reaffirmation of his debt.¹ Id. at 1-3. Chimko sent Lucas documents including a cover letter dated May 12, 2002,² a proposed reaffirmation agreement, a "reaffirmation data sheet," and a "notice of pro se reaffirmation." 2 Appellant's App. [Doc. No. 7] at AA 025. The cover letter, like all future correspondence with Lucas, was printed on the letterhead of Chimko's law firm, which appeared as follows:

SHERMETA, CHIMKO & ADAMS, P.C.

Attorneys and Counselors at Law

445 South Livernois Suite 333

P.O. Box 80490

Rochester Hills, MI 48308-0490

(248) 652-2000

Fax (248) 652-2896

Id.; Mem. of Decision at 2-3. The letter identified Household Finance as "Our Client," described the terms of the reaffirmation agreement, and was signed "SHERMETA, CHIMKO & ADAMS, P.C." 2 Appellant's App. at AA 025. The law firm advised Lucas that "we cannot give you legal advice," but encouraged him to contact "DARRYL J. CHIMKO" with "any questions or concerns." Id.

The proposed reaffirmation agreement incorporated the original terms of the Household Finance mortgage. See Appellant's Br. at 22. Chimko entered these terms, unchanged, into a form substantially similar to Official Bankruptcy Form 6. Id.; 7/31/03 Show Cause Hr'g Tr. [R. Item No. 9] at 15:4-10, 37:3-10. Chimko's form, however, differed in at least three respects: its "Notice to Debtor" was emphasized by bold as well as underlined text, it was signed by Chimko as "Agent for Creditor" rather than as "Creditor Representative," and it was shorter — two pages rather than six. See 7/31/03 Show Cause Hr'g Tr. at 37:12-38:15; compare 1 Appellant's App. [Doc. No. 6] at A 036-037, with Official Bankruptcy Form 6. Chimko testified that each of these changes was approved by corporate counsel for Household Financial. 7/31/03 Show Cause Hr'g Tr. at 15:11-18.

The enclosed "reaffirmation data sheet" called for Lucas to provide his address and phone number, the name, address, and phone number of his employer, and his monthly net income. Letter from Brennan to the Court of 3/4/04, Ex. A. The intended "notice of reaffirmation," which Chimko captioned as a pleading but included for Chimko's reference, informed the Court that the debtor had reaffirmed a debt secured by real property. 1 Appellant's App. at A 038. The notice began: "NOW COMES, Creditor, HOUSEHOLD FINANCE CORPORATION II, by and through its attorneys, SHERMETA, CHIMKO & ADAMS, P.C." Id. In its penultimate paragraph, the notice requested that the Bankruptcy Court "advise Creditor of any Hearing on the attached Reaffirmation Agreement by notifying agent for Creditor ..., Attention: DARRYL J. CHIMKO." Id. ¶ 7. 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 the aforestated statute [11 U.S.C. § 524] 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.

Id. ¶ 8. Chimko signed the notice on behalf of "SHERMETA, CHIMKO & ADAMS, P.C.[,] ... Agent for Creditor." 1 Appellant's App. at A 038.

By letter dated May 27, 2003,³ the bankruptcy department of Chimko's law firm advised Lucas that they had not received the executed reaffirmation agreement. Mem. of Decision at 3-4. Like the initial cover letter, this letter was printed on law firm letterhead and identified Household Finance as "Our Client." 2 Appellant's App. at AA026. On June 2, 2003, Lucas executed the reaffirmation agreement, which Chimko then signed on behalf of Shermeta, Chimko & Adams, P.C., "Agent for Creditor." 1 Appellant's App. at A037.

Chimko filed the executed reaffirmation agreement with the Bankruptcy Court on June 16, 2003. Mem. of Decision at 2. Enclosed with the agreement were a cover letter and the notice of reaffirmation described above. Id.; 1 Appellant's App. at A 039. The cover letter, like those previously sent to Lucas, was printed on law firm letterhead and signed by Chimko on behalf of "Shermeta, Chimko & Adams P.C." 1 Appellant's App. at A 039.

B. Procedural Posture

The Bankruptcy Court, noting that Chimko had entered an appearance as an "agent" but submitted the notice of reaffirmation as an "attorney[]," ordered Chimko to appear at a hearing that would take place on July 31, 2003. See Mem. of Decision at 2. There, counsel for Chimko argued that preparing and filing the reaffirmation agreement was merely "ministerial": "It's something that could be performed by someone who doesn't happen to be an attorney, and I know from my own experience that some of the other large companies handle these things in-house." 7/31/03 Show Cause Hr'g Tr. at 54:16-20. The United States Trustee ("Trustee") disagreed. Id. at 58:16-59:6. The Trustee noted that Chimko had revised Local Form 6, signed the reaffirmation agreement, and drafted the accompanying notice, tasks which "other firms ... hire local counsel to do .. for a good reason." Id. at 58:16-59:6. The Bankruptcy Court, concurring with the Trustee, later ordered Chimko to identify all cases pending in the District of Massachusetts in which he or his law firm had filed a reaffirmation agreement or an appearance. Id. at 59:7-11; Order of 8/4/03 [R. Item No. 11].

The Bankruptcy Court issued its decision on October 10, 2003. [R. Item No. 14]. The accompanying memorandum explained that Chimko, in preparing the reaffirmation agreement, providing Lucas with the notice of reaffirmation, and printing correspondence on law firm letterhead, had misrepresented his status to Lucas and the Bankruptcy Court, and engaged in the unauthorized practice of law in Massachusetts. Mem. of Decision at 3-6. In addition, the Bankruptcy Court determined that Chimko had "never fully complied" with the order to identify his cases pending before the District of Massachusetts. Id. at 6. In fact, Chimko had omitted nine such cases, three of which listed Chimko or his law firm as "agents." Id. at 6, Attach. As a remedy for Chimko's actions, the Bankruptcy Court sanctioned Chimko in the amount of $500, and forwarded copies of its decision to the Massachusetts Board of Bar Overseers and the Michigan Attorney Discipline Board. Id. at 7.

On Chimko's motion for reconsideration, the Bankruptcy Court revised its findings to recognize that Chimko had provided a satisfactory explanation — namely errors in his law firm's records — for his omission of certain pending cases. Decision & Order of 10/31/03 [R. Item No. 19] ¶ 2. The Bankruptcy Court stated, however, that Chimko's "compliance or non-compliance with the Court's Order is not material to the Court's conclusion that he held himself out as an attorney without being licensed by this Commonwealth." Id. ¶ 3.

Chimko appealed the decision to this Court by notice and election dated November 10, 2003. See Notice of Appeal [R. Item No. 20]; Election of Appeal [R. Item No. 21]. Neither Lucas, the Trustee, nor any other party submitted briefs in opposition. On February 12, 2004, after hearing oral argument, the Court affirmed the Bankruptcy Court's decision as to misrepresentation. See 2/12/04 Hr'g Tr. at 5:21-23. As to unauthorized practice, however, the Court found state policies less clear. Id. at 4:23-5:5. The Court accordingly invited supplemental briefing on both substance and procedure. Specifically, the Court inquired whether Chimko's actions constituted the unauthorized practice of law, and whether the question ought be certified to the Supreme Judicial Court of Massachusetts. See 2/12/04 Hr'g Tr. at 10:5-11:2. Having since received Chimko's⁴ supplemental memorandum, the Court proceeds to decide the appeal.

III. DISCUSSION

A. Jurisdiction

As an initial matter, it is unclear that Chimko in fact challenged a "final Order" when filing his notice of appeal. See Appellant's Br. at 2. If extended to appeals in bankruptcy, the Supreme Court's opinion in Cunningham v. Hamilton County, Ohio, 527 U.S. 198, 119 S.Ct. 1915, 144 L.Ed.2d 184 (1999), suggests otherwise. In Cunningham, the Supreme Court held that an order of sanctions, even if imposed on an attorney who no longer represents a party to the case, is not a "final decision" from which an immediate appeal will lie. Id. at 200, 119 S.Ct. 1915; see also Empresas Omajede, Inc. v. Bennazar-Zequeira, 213 F.3d 6, 9 & n. 4 (1st...