In re Samuels
| Decision Date | 29 December 1994 |
| Docket Number | Bankruptcy No. 93-5398-BKC-3F3. Adv. No. 94-91. |
| Citation | 176 BR 616 |
| Parties | In re Sandra J. SAMUELS, Debtor. Sandra J. SAMUELS, Plaintiff, v. AMERICAN LEGAL CLINIC, INC., and Suseen Longley, a/k/a Susan Guthrie, individually and d/b/a American Legal Clinic, Inc., Defendants. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
COPYRIGHT MATERIAL OMITTED
Lynn Poyner Drysdale, Jacksonville, FL, for debtor/plaintiff.
Robert H. Wood, Jacksonville, FL, for defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This proceeding is before the Court upon a complaint in an adversary proceeding filed pursuant to Rule 7001(1), (7), and (9), and Rule 2017(a), Federal Rules of Bankruptcy Procedure, to recover monetary damages and to obtain injunctive and declaratory relief pursuant to 11 U.S.C. § 329, and pursuant to the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes. A trial was held on September 27, 1994 and the proceeding was taken under advisement.
Subject matter jurisdiction is conferred on this Court by 28 U.S.C. § 157(b)(1) and 28 U.S.C. § 1334. This is a core proceeding. The plaintiff, SANDRA J. SAMUELS, alleges the defendant, SUSEEN LONGLEY, performed services in a Chapter 13 bankruptcy case which constituted the practice of law without a license and overcharged her for the typing services Ms. Longley could have legally provided.
At all times material to these proceedings, the defendant, SUSEEN LONGLEY, f/k/a SUSEEN GUTHRIE, has operated and she continues to operate AMERICAN LEGAL CLINIC, INC., a "legal clinic" in Jacksonville, Florida. Ms. Longley incorporated AMERICAN LEGAL CLINIC, INC. in 1990 and has been the sole officer, director and shareholder of the corporation subsequent to incorporation. She maintains control over all hiring, advertising and business operations of the corporation. Ms. Longley advertises her services in the Florida Times Union and in the Southern Bell Yellow Pages in the Jacksonville telephone directory. The telephone advertisements are placed exclusively in the section entitled "Legal Clinics" (Plaintiff's Exhibit "4"). Ms. Longley testified at the trial that she had no control over where the advertisements were placed in the telephone directory. The telephone company made those decisions.
Ms. Samuels contacted Ms. Longley because she had received a Summons and Complaint concerning the foreclosure of her home. Ms. Longley advised Ms. Samuels to file a Chapter 13 bankruptcy case, which Ms. Longley could prepare and file. Ms. Samuels did not have knowledge of bankruptcy law or the bankruptcy process, nor how a bankruptcy case might affect her foreclosure case, prior to the time she contacted Ms. Longley or during the time Ms. Longley was preparing her bankruptcy case. Ms. Longley told Ms. Samuels that a Chapter 13 case would be necessary to try to save her home from the mortgage foreclosure lawsuit.
Ms. Longley prepared and filed the following documents for the Plaintiff: a Chapter 13 bankruptcy petition and the accompanying schedules; a Statement of Financial Affairs; a Statement of Intention; a Chapter 13 Plan; a Motion for Valuation and an accompanying Affidavit As To Value.
According to the testimony at the trial, Ms. Longley made the following decisions in Ms. Samuels' bankruptcy case: the type of bankruptcy case to file, the status of Ms. Samuels' creditors, the nature and value of her property, the method of retention of her property, the exemptions to assign to her property, which creditors to pay in the Chapter 13 Plan and the amount to pay to those creditors. Ms. Longley also decided it would be appropriate to file a motion to value in the bankruptcy case. Ms. Longley was the exclusive provider of consumer services to Ms. Samuels. The Chapter 13 Plan prepared and filed by Ms. Longley for Ms. Samuels did not meet the requirements of 11 U.S.C. § 1322. The Motion to Value which was prepared, filed and served by Ms. Longley on behalf of Ms. Samuels was denied by the Court because it was improperly served.
Within one year of the filing of the bankruptcy case, Ms. Samuels paid a total of $215.00 to Ms. Longley for the preparation of bankruptcy documents. (Plaintiff's Exhibit "5") In addition to these sums, Ms. Samuels gave Ms. Longley money orders totaling $160.00 payable to the Clerk of the United States Bankruptcy Court for the bankruptcy filing fee.
To prepare a bankruptcy case, Ms. Longley uses a form she developed entitled "Bankruptcy Application" (Plaintiff's Exhibit "2"). She uses this form as a guide to feed information into a computer programmed to prepare bankruptcy petitions, schedules, statements, motions and Chapter 13 Plans. Her computer uses the Matthew Bender bankruptcy form software which is designed for use by attorneys. It is necessary for Ms. Longley to paraphrase and explain bankruptcy concepts in order to obtain the requisite information from consumers and place it in the proper form for the software. It is sometimes necessary for Ms. Longley to make inquiries and answer questions pertaining to bankruptcy laws, process or concepts, while obtaining information required by her bankruptcy computer program.
During the process of preparing bankruptcy forms, Ms. Longley stated she provides consumers with forms usually provided by the Bankruptcy Court Clerk and the Trustee directly to pro se debtors. Ms. Longley uses a form provided by the Chapter 13 Trustee exclusively to pro se debtors and attorneys to prepare Chapter 13 Bankruptcy Plans. Ms. Longley testified that she uses Ronald Bergwerk, Florida Bankruptcy Practice, Third Edition as a reference guide for her use, and she sometimes points out passages in this book to consumers to help them understand bankruptcy concepts when they have questions.
Ms. Longley is not an attorney. There are no attorneys involved in Ms. Longley's process of preparing bankruptcy documents for consumers, and no attorney supervises her work at the clinic. However, each of the former clients testifying at Ms. Longley's request testified that they were certain that Ms. Longley would be able to produce a legally sufficient bankruptcy case. Ms. Longley testified that she does not consider herself merely a typing service.
Ms. Longley prepared a Chapter 13 bankruptcy petition and the accompanying schedules; a Statement of Financial Affairs; a Statement of Intention; a Chapter 13 Plan; for Thomas Bouchelle (Plaintiff's Exhibit "7"), for Valerie Zellner (Plaintiff's Exhibit "8") and for Charles and Drucilla Blanton (Plaintiff's Exhibit "9"). Ms. Longley prepared and filed a Chapter 13 bankruptcy case for Thomas Bouchelle approximately one month after she prepared and filed a Chapter 7 case on his behalf. The Chapter 13 case was dismissed. Valerie Zellner was advised of her right to decrease the value of a secured claim in her Chapter 13 bankruptcy case by Ms. Longley. Valerie Zellner testified that she was not aware of Florida laws cited as providing exemptions in her Chapter 13 bankruptcy case. Charles Blanton testified that Ms. Longley decided the method of retention of the property listed on his Statement of Intention form.
Ms. Longley used the phrase "F. CONST. X.4"1 to describe the law providing the exemption for each type of property listed upon each of the witnesses' "Schedule C — Property Claimed as Exempt". According to the testimony of each of the former clients, Ms. Longley selected this language and this law, since none of them even knew what it meant. This law was used for Charles Blanton's automobile, even though his case was filed subsequent to the change in Florida law providing a separate exemption for automobiles.2
Neither Ms. Longley nor AMERICAN LEGAL CLINIC, INC. has insurance to cover expenses created by errors or omissions arising from her provision of bankruptcy services and her preparation and filing of bankruptcy cases. The Plaintiff contends that Ms. Longley is engaging in the unauthorized practice of law in her preparation of bankruptcy petitions through American Legal Clinic, Inc., and that she is dispensing legal advice that she is not qualified to give. Whether Ms. Longley engaged in the unauthorized practice of law in regards to her assistance to Ms. Samuels in the preparation of her bankruptcy case is the central issue in this case.
Traditionally, when dealing with cases involving the unauthorized practice of law, United States Bankruptcy Courts, have looked to state law for guidance. In re Bachmann, 113 B.R. 769 (Bankr.S.D.Fla. 1990); In re Minchew, 150 B.R. 275 (Bankr. N.D.Fla.1992); In re Anderson, 79 B.R. 482 (Bankr.S.D.Cal.1987); In re Arthur, 15 B.R. 541 (Bankr.E.D.Pa.1981).3 The Florida Constitution, Article V, § 15 prohibits persons not licensed as attorneys-at-law from practicing law within the State of Florida.
The question of what constitutes the practice of law is a complex one that many courts have pondered. Practicing law involves much more than merely appearing in front of a court. The bulk of a lawyer's time is spent in researching problems and advising her clients as to her opinion. There is no precise definition of what is and is not the practice of law, but some courts have tried to devise one. A good definition is set forth in Howton v. Morrow, 269 Ky. 1, 106 S.W.2d 81 (Ct.App.1937) which says:
The practice of law is not limited to the conduct of cases in Court. According to generally understood definition of the practice of law in this country, it embraces the preparation of pleadings and other papers incident to actions and special proceedings and the management of such actions and proceedings on behalf of clients before Judges and Courts, and, in addition, conveyancing, the preparation of legal instruments of all kinds and, in general, all advice to clients and all action taken for them in matters connected with the law and an...
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