Page 9 - John Hundley 2013

Sharp Thinking

No. 86 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. March 2013

It's “Forgery” and “Never Justified” ...

Court Levies Harsh Sanctions for Filing

Bankruptcy Papers Without Actual Signature

By John T. Hundley, jhundley@lotsharp.com, 618-242-0246

There are no circumstances that would ever justify an attorney filing a bankruptcy petition, the
supporting schedules, or the debtor's Statement of Financial Affairs (“SOFA”) without first obtaining
the debtor's actual signature thereto, the chief judge of a Texas bankruptcy court has held.

Moreover, electronically filing a document that purports to have the debtor's
signature but which was not, in fact, signed by the debtor constitutes forgery, the
court held. In re Stomberg, __ B.R. __, 2013 WL 142396 (Bankr. S.D. Tex.
2013).

The court imposed a series of sanctions under Federal Rule of Bankruptcy
Procedure 9011, 11 U.S.C. § 105, and its inherent authority to sanction bad-faith
conduct. Significantly, the court found that the forgery – i.e., electronic filing of
a document with the familiar /s/ designation when the purported signer had
not “wet signed” an original – necessarily evidenced the bad faith neces-
sary to impose sanctions under § 105 and the inherent-authority doctrine. Hundley

Furthermore, the court said its “wet signature” rule prohibited the attorney from making changes
to the papers – even allegedly de minimus ones – without obtaining the client's signature to the
revised document. Quoting In re Phillips, 317 B.R. 518 (8th Cir. BAP 2004), it said that under
Bankruptcy Rules 1008 and 9011 “‘(t)he issue is not whether the debtor authorized the filing of a
petition, but whether she signed the petition that was filed,’ because the signature is not only
authorization to file, but verification that the information provided is correct.”

“[Lawyer] attempts to justify his decision to file the Schedules . . . without first obtaining the
Debtor’s signature on the changes he made by stating that the Debtor was unable to come down to
his office, that it was a unique situation, and that the changes were very minor in nature. [Lawyer’s]
excuse fails: regardless of the circumstances and whether the changes were substantial or not, no
changes are to be made without the Debtor expressly signing off on them.”

But that is not all: the court found that an attorney's failure to personally
meet with his or her client to review the accuracy and importance of the
schedules and SOFA “is also bad faith.” Relying in part on local ethical rules,
the court said an attorney breaches duties owed to both the client and to
the judicial system when he fails to personally go over the schedules

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
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