Thursday, July 30, 2020

Duties And Debt Discharged

The District of Columbia Court of Appeals affirmed three rulings in a dispute between an attorney with a judgment and a former client who had declared bankruptcy.

Michael D.J. Eisenberg was awarded $7,800 in unpaid attorney’s fees against his former client, Shirley Swain. After garnishing $1,499 of Ms. Swain’s wages, Mr. Eisenberg learned that she had received a discharge of debt through a Chapter 7 bankruptcy filing in the United States Bankruptcy Court for the Western District of Virginia. The Superior Court ordered Mr. Eisenberg to return the garnished wages to Ms. Swain until a decision was reached on whether his judgment against her was included in the bankruptcy discharge. Mr. Eisenberg did not comply. The Superior Court then issued an order that included three rulings: (1) it ruled that Ms. Swain’s debt to Mr. Eisenberg had been discharged, (2) it held Mr. Eisenberg in contempt of court for his failure to return the garnished wages, and (3) it rejected Mr. Eisenberg’s request to add Ms. Swain’s bankruptcy attorney as a defendant in the underlying breach of contract case after Mr. Eisenberg alleged that Ms. Swain’s attorney had conspired with her to defraud Mr. Eisenberg. Mr. Eisenberg now challenges each of those rulings. We detect no error and affirm.

The bankruptcy

We begin with the core question at issue: whether Ms. Swain’s $7,800 debt to Mr. Eisenberg was subject to the discharge order of the United States Bankruptcy Court for the Western District of Virginia. We agree with the trial court that it was.

...Mr. Eisenberg’s bald assertion that Ms. Swain “actively concealed and converted” his property comes nowhere close to establishing either false representation or actual fraud by a preponderance of the evidence.

The settlement payment

The $35,000 in settlement funds was paid directly to Ms. Swain under the terms of her settlement agreement with the Department of Veterans Affairs. It was her money. The fact that she owed $7,000 to Mr. Eisenberg pursuant to a separate representation agreement between the two of them does not alter this fact and Ms. Swain’s mere knowledge of her obligation and subsequent failure to satisfy it does not meet the high scienter of actual fraud. Mr. Eisenberg did not allege or provide evidence of any specific representations, false or otherwise, made by Ms. Swain  upon which he relied outside of her general agreement to pay him under the terms of their contract. And despite Mr. Eisenberg’s repeated assertions to the contrary, nothing in the record suggests any intentionally deceptive or otherwise immoral conduct on the part of Ms. Swain. The record depicts Ms. Swain as a woman who, despite some confusion as to why her attorney continued to request money from her after initially receiving $48,000, and despite having limited money on hand, has
consistently attempted to engage in good-faith efforts to fulfill her obligations to Mr. Eisenberg. The fact that Ms. Swain owed Mr. Eisenberg a debt she was ultimately unable to pay is precisely the circumstance a Chapter 7 discharge was designed to address.

The court affirmed the civil contempt for failure to return the garnished payments and deemed other arguments frivolous

There is no evidence in the record of any misconduct or judicial violations on the part of Judge Pan, who exhibited patience and lenity in dealing with Mr. Eisenberg’s protracted disregard of the court’s orders. We remind Mr. Eisenberg that, although he is entitled to an impartial arbiter, he is not entitled to disobey court orders because he disagrees with them. His evident disappointment at having to return Ms. Swain’s wages does not diminish the legality of the court’s order; nor is it a justification for lobbing baseless accusations against a Superior Court judge.

The trial judge sent the matter to Disciplinary Counsel

We note...that Judge Pan was on firm ground when concluding that she was “obligated to refer this matter to the Disciplinary [Counsel] of the Bar.” Under Rule 2.15(B) of the D.C. Code of Judicial Conduct, “A judge having knowledge that a lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question regarding the lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects shall inform” Disciplinary Counsel. Mr. Eisenberg’s willful and protracted disobedience of the court’s orders meets that standard.  See D.C. Rules of Prof’l Conduct R. 8.4 cmt. 2 (“failure to obey court orders” constitutes conduct that “seriously interferes with the administration of justice” per Rule 8.4(d)). Judge Pan was right to bring her well-founded concerns to Disciplinary Counsel’s attention.

Associate Judge Deahl authored the opinion. (Mike Frisch)

Bar Discipline & Process | Permalink


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