Yormak v. Yormak (In re Yormak)

• Decision Date: 13 April 2022
• Docket Number: Case No: 2:21-cv-156-JES,Bankr. No: 2:15-bk-04241-FMD
• Parties: IN RE: Benjamin H. YORMAK Steven R. Yormak, Appellant, v. Benjamin H. Yormak, Appellee.
• Court: U.S. District Court — Middle District of Florida

640 B.R. 491

IN RE: Benjamin H. YORMAKSteven R. Yormak, Appellant,

v.Benjamin H. Yormak, Appellee.

Case No: 2:21-cv-156-JES

Bankr. No: 2:15-bk-04241-FMD

United States District Court, M.D. Florida, Fort Myers Division.

Signed April 13, 2022

Steven R. Yormak, London, ON, Pro Se.

Richard J. Hollander, Miller, Hollander & Jeda, Naples, FL, for Appellee.

OPINION AND ORDER

JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on appeal of the Bankruptcy Court's Order (1) Granting Debtor's Motion for Summary Judgment as to Creditor's Unlicensed Practice of Law; (2) Sustaining Debtor's Second Amended Objection to Claim and Disallowing Claim No. 4-2; (3) Denying Creditor's Motion for Summary Judgment Regarding Unlicensed Practice of Law; (4) Denying Debtor's Motion to Bar Creditor's Proposed Expert Witness; and (5) Denying Creditor's Motion to Rescind Protective Orders (Doc. #11-4)¹ and the Order Denying Creditor Steven R. Yormak's Motion for Reconsideration (Doc. #11-525). Appellant filed an initial Brief (Doc. #13), appellee filed a responsive Brief (Doc. #23), and appellant filed a Reply Brief (Doc. #24).

Appellant Steven R. Yormak is an attorney who at all relevant times has been licensed to practice law in Canada. Mr. Steven Yormak is also the father of Appellee Benjamin H. Yormak, an attorney licensed to practice in Florida and the debtor in the underlying bankruptcy case. Given the same surnames, the Court refers to these parties by their first names for brevity and clarity.²

I.

The Court summarizes the relevant material undisputed background facts, borrowing liberally from the factual findings of the Bankruptcy Court found at Document #11-4, pp. 7-34:

In 1979, Steven graduated from the University of Western Ontario School of Law in Canada. In 1981, Steven opened a law firm in Canada and has been licensed to practice law in Ontario, Canada ever since. In 2013, Steven was admitted to practice law in the State of Massachusetts. Steven specializes in litigation, disability, employment, and workers’ compensation matters. At no time has Steven been admitted to The Florida Bar or licensed to practice law in Florida.

By at least mid-2007 Steven began actively considering starting a law-related consulting business in Florida. On June 14, 2007, while his son Benjamin was in law school in Florida, Steven sent Benjamin an email asking him to "Research Florida Bar Regulations which I might encounter a difficulty with my consulting firm (Obviously the consulting firm cannot be seen to be doing attorney work-merely advising)". On June 15, 2007, Benjamin responded by email, stating "Let me know what you think, but I suspect you may run into some problems with legal ‘consulting’ if you are not a member of the Florida bar or if you are not under the supervision of a member of the Florida bar. The state seems to be quite strict with this-it would appear that you, a non-lawyer in the state of Florida, can assist someone with completing blank forms, but cannot dispense legal advice." (Doc. #36-3.) Steven replied:

As discussed pl. research all case law (Fla.) re: defining what is considered "legal" i.e. prosecutions involving illegal practice of law by non-lawyers and out of state lawyers.

How did Court define "practicing law"?

Another question is parameter i.e. limits for out of state lawyers to render advise-

You may also resource Florida Bar proceedings. (Discipline proceedings by Fla. Bar Assn.)

(Doc. #36-4.)

Benjamin graduated from law school in 2009 and was admitted to The Florida Bar in September 2009. Benjamin initially worked in the employment litigation practice of a small law firm in Fort Myers, Florida, but the law firm terminated that practice in 2010. On October 19, 2010, Steven sent Benjamin an email saying,

I have come up with what may be a brilliant idea to address your situation on a number of fronts, as well as mine. Let's see if we can talk tomorrow.

On October 25, 2010, Benjamin sent Steven an email under the subject "BHY Disability Group" which attached an outline titled "BHY/SRY Arrangement". The "BHY/SRY Arrangement" included the following terms:

(1) "SRY will act as consultant to BHY Disability Group;"

(2) "SRY will charge monthly fee of $10,000, which may be adjusted in the course of business based upon BHY gross receipts;"

(3) "Unofficially, fees received will be split" in different percentages between SRY and BHY depending on whether pleadings are filed in the representation;

(4) "Advertising costs will be split evenly between BHY and SRY;"

(5) "SRY will have same physical address as BHY;"

(6) "SRY keeps fees generated from SSD [Social Security Disability] cases;" and

(7) "SRY will keep track of his own hours."

Under the heading "Promotion," typed notes listed the Yellow Pages, with "SRY to use corner of BHY ad" and "SRY to advertise in Veteran's Affairs," and "Website – James to provide more info." The "BHY/SRY Arrangement" also included a "BHY TO DO" list.

In late February and early March 2011, Steven and Benjamin communicated by email to coordinate the opening of a law firm. In March 2011, Benjamin formed the Yormak Disability Law Group (the "Law Firm"), with an office in Bonita Springs, Florida. In early March 2011, Steven sent Benjamin drafts of the Law Firm's initial client documents, including a retainer agreement to be signed by clients. The Law Firm created a website, began advertising in the Yellow Pages, and printed business cards. Steven was mentioned prominently on the website and in the Yellow Pages and Steven had Law Firm business cards in his own name.

On or about May 1, 2011, Steven and Benjamin entered an oral consulting agreement. Steven described this oral consulting agreement as covering a wide variety of business matters which make up a law practice, including assisting Benjamin "in every aspect of creating and operating a law practice," for compensation of $600 per hour. (See Case No. 2:14-cv-33, Doc. #10, ¶¶ 12, 18.) The terms of the oral consulting agreement were memorialized at least in part in the subsequent written consulting agreement described below.

Steven and Benjamin operated under the oral consulting agreement from May 1, 2011, until August 18, 2012, when they executed three separate written agreements:

• The Consulting Agreement (the "Main Consulting Agreement") recites that: there existed "a previous ongoing oral agreement" between Benjamin and Steven; Steven had expertise and experience in areas beneficial to Benjamin; Benjamin had retained the expert services of Steven since May 1, 2011; Benjamin confirmed the retention of Steven as consultant since May 1, 2011; the parties recognized that Steven was an independent contractor; and Steven "will continue to provide services and has been compensated and will continue to be compensated at the agreed rate of $20,000 per calendar month payable since May 1, 2011." The Main Consulting Agreement acknowledged that Steven had not actually been paid anything and provided for a "payment plan" whereby Steven "will be paid bi-annually for fees incurred and owed to [Steven] according to Schedule A1 and A2." In the event of termination, the Main Consulting Agreement provided that Steven be paid "... on the basis of hours expended ... (1100 hours to July 1, 2012), at the rate of $600/hour" pursuant to attached schedules instead of the $20,000 per month. Separate payments were due pursuant to Schedule A3, a "consultant payment plan" under which Benjamin agreed to pay Steven an amount based on 67% of the gross fees received by Benjamin from seven named files and "[a]ny other files by mutual agreement and/or any files [Steven] has provided services on."

(Id., pp. 10-21.) The next two consulting agreements related to specific cases pending at the Law Firm:

• The Consulting Agreement Re: Funari Class Action (the "Class Action Agreement") relates to attorney's fees anticipated to be earned by the Law Firm in connection with a CBL Class Action. The Class Action Agreement confirms "a previous ongoing oral agreement" and recites that Benjamin desired to retain the expert services of Steven, "which [Benjamin] has determined is essential and key to the successful completion of this matter [the CBL Class Action] as a key participant to render advise [sic] in the best interests of the firm and client." Under the Class Action Agreement, Benjamin agreed to pay "70% of fees received in this file to a charitable organization as directed and designated by" Steven, and both parties agreed to execute a partnership agreement when Steven "becomes a member of any State bar in the U.S."

• The Consulting Agreement Re: Barnes Qui Tam (the "Qui Tam Agreement") is identical in form and content to the Class Action Agreement, except that it relates to a specific Qui Tam Action.

(Id., pp. 22-25.) The Bankruptcy Court examined in some detail the services provided by Steven to Law Firm clients both before and after the written consulting agreements. (Doc. #11-4, pp. 13-29.) The Bankruptcy Court found that Steven and Benjamin met with at least twenty Law Firm clients and that Steven actively participated in the management of their cases. (Id. at 13.) The record fully supports the Bankruptcy Court's factual findings as to these cases, and the Court adopts those factual findings. (Doc. #11-4, pp. 13-29.)

Steven provided services to the Law Firm pursuant to the written Consulting Agreements for less than four months. On December 4, 2012, Steven wrote an email to Benjamin stating:

This is to notify you as of today pursuant to our agreement that I no longer Consent to your use of me in any way connected to your firm in Florida, including but not limited to any reference to me on your website, promotional material, or any other matter. I will require you to specifically remove any reference to me whatsoever from your website within the next 7 days. I am sure you will be pleased to comply. To do otherwise appears to make no sense professionally for either of us.

I

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