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There Is A Problem With Emails To And From Your Client Of Which You Should Be Aware

As is common these days, bankruptcy attorneys and clients communicate via email.  You think the emails are privileged communications between the attorneys and the clients.  Certainly they are privileged as to the copy maintained by the attorneys.  However, many of these emails are being sent to the clients using general email boxes accessed by many or to their email address maintained by their employer or company.  This might be a mistake because unless these emails are encrypted (and let us face the fact that they are not) then these emails, and the content in these emails, might not be protected.

An example is the decision by New York State Judge Charles W. Ramos (here) which found that a Beth Israel doctor who sent emails to his lawyer from the Beth Israel email server did not have an expectation of privacy.

And, this argument is not limited to New York State courts either.  The New York Bankruptcy Court ruled the same same way in In re Asia Global Crossing, Ltd., 324 B.R. 503 (Bankr. S.D.N.Y. 2005), where the Court found that emails between an attorney and the client left on the corporate email system waived the privilege.  This Court found that four factors should be taken into consideration when making a determination on this issue:

1.  Does the corporation maintain a policy banning personal or other objectionable use;
2.  Does the company monitor the use of the employee's computer or e-mail;
3.  Do third parties have a right of access to the computer or emails; and,
4.  Did the corporation notify the employee, or was the employee aware, of the use and monitoring       policies?

Especially in consumer bankruptcy cases these days attorneys often encourage clients to direct their questions to the law firm via email.  The law firms often collect email addresses from clients, without regard for these four factors, and send emails to the clients.  Now often the attorneys' emails are pretty mundane.  They remind someone of a hearing, give directions to the Court, inform them of the need to receive back signed paperwork.  Most of this is controllable as to content.  The problem is on the emails sent to the attorney.  Emails that might later suggest that the attorney knew of property not scheduled, or which might indicate a fraudulent transfer, or an uncorrected inaccurate answer to the Trustee during a creditor's meeting, or instructing a client how to answer a question at trial.  I do not know, but it would seem that this road is filled with potholes, and the attorney and client need to be mindful of this fact and act accordingly.

It might also open the door in future litigation for opposing counsel to subpoena the emails of your clients from their employer just so they can see what might be happening.

Judge Stacy Jernigan's Fight Against The New Bottom Feeders

In In re White Stacy Jernigan, the United States Bankruptcy Judge for the Northern District of Texas in Dallas took steps to expose and reel in those that she called "A New Cottage Industry of Bottom Feeders" who try to make a buck off down and out debtors who are about to lose their home after they seek bankruptcy relief.

Earlier in the Debtor's bankruptcy, Judge Jernigan believed she had to lift the automatic stay protecting the Debtor's home.  Given that a bankruptcy already existed it was unlikely that the Debtors could stop the foreclosure from taking place.  The Debtor's bankruptcy attorney insisted that there was little they could do to stop the foreclosure given that the automatic stay had been lifted.

But, with foreclosure comes lots of mail solicitations promising help.  Of the approximately 40 mailings that the Debtors received based on the posting of their home for foreclosure, the Debtors chose a company that represented itself as North American Foreclosure.  It what that company and its representatives called "a completely legal procedure" they convinced the Debtors to transfer a 1% ownership of their home to an individual who would file bankruptcy to stop the foreclosure.  The the Debtors would pay North American $650 per month until the 1% was paid back (whenever that would happen).

The paperwork selling the 1% of the house to an individual in California was apparently backdated.  Then the mortgage company, which was in the process of foreclosing the home, receive notification from the representatives of American Foreclosure that the property was included in the bankruptcy of a Debtor who had then filed bankruptcy in California.  The problem, as it turns out, is that the property was not listed on the California Debtor's bankruptcy case, and the Debtor claims she knew nothing of the transaction.  She was apparently duped as well.

The Debtors paid a gentleman by the name of David Curtis, North American Foreclosure's local representative, $650.00 for the first payment to begin the process.  The Debtors eventually made one payment to the company before their bankruptcy counsel contacted the Debtor's about Judge Jernigan's show cause order.

The Bankruptcy Court, upon learning of the fraud, took immediate action, finding that those associated with North American Foreclosure likely violated various bankruptcy laws, she found that the Debtors were likely innocent parties which were duped, and she order North American Foreclosure, and its representatives, David Curtis and his company, Jireh Capital Services, to appear and show cause why they did not violate the automatic stay provisions of 11 U.S.C. § 362 and are not liable pursuant to § 362(k).  The Court confirmed in its Order pursuant to 11 U.S.C. § 362(j) that the automatic stay was terminated in the Debtors' bankruptcy and, in case it was not, she annulled the stay retroactively pursuant to 11 U.S.C. § 362(d).  The Court voided the transfer of the 1% to the California bankruptcy filer.  The Court reported the actions as possible bankruptcy crimes pursuant to 18 U.S.C. §§ 3057, 152 and 157.  The Court provided a courtesy copy of her decision to the Chief Bankruptcy Judge in California and the Texas Attorney General, and the Judge issued a plea to the consumer debtors bankruptcy bar to be mindful of these actions and to warn their client's accordingly.

To date nobody has appeared before Judge Jernigan to show cause as ordered.

Democratic Candidates - Bankruptcy Reform Was A Mistake

What was interesting about the Democratic Candidate's Debate in Las Vegas was what did not much make the news.  Despite all of the back and forth about race and The War, when the issues turned to economic news all three candidates agreed that BAPCPA -- the bankruptcy reform bill from 2005 which passed and went into law -- was a bad mistake.  In fact, there was more than just a little discussion of it, which was good.  The candidates have either no or mixed records on bankruptcy reform, but they agree that there is no reason that a down on their luck family should not be able to get out of debt, especially given predatory lending practices as we have seen in the collapse of the sub-prime market.  All candidates agreed that we now need bankruptcy reform again.  Interesting in this discussions is something that did not exist before bankruptcy reform took place -- modification of residential mortgages in which the property is the person's or family's principal residence in a consumer bankruptcy context.  I, myself, have never understood why it would some harm the market to allow for the reasonable modification of a real estate note in bankruptcy.  Mortgage lenders say that these notes are different, but all financing is different.  Let us hope the discussion continues.

FDCPA May Not Be A Substitute For A Good Old Injunction Violation Case

Suing creditors and debt buyers under the FDCPA when they also violate a discharge injunction issued by a bankruptcy court may not be the panacea most newly minted consumer lawyers think.  (The same thing is true when considering automatic stay litigation).

Lawyers tend to like the FDCPA because they believe they can recover statutory damages for the debtor on top of actual damages and possible punitive damages.  The problem is that the FDCPA and litigating a typical discharge injunction violation have different defenses, with the FDCPA being more liberal.  Also, the extra money that can be recovered is limited to $1,000.00.

Libby's Law License Will Likely Be Suspended

Legal Profession Blog is of the opinion that Scooter Libby's license to practice law may eventually be permanently revoked, but in the interim it is certain is right to practice law will be suspended.

According to Mike Frisch, Legal Counsel at Georgetown University Law Center, Libby "will be suspended immediately when the D. C. Court of Appeals receives a certified copy of the docket entry reflecting the jury's guilty verdict. The court will then order the Board on Professional Responsibility to determine whether any crime for which Libby was convicted involves moral turpitude per se. Perjury and obstruction of justice are crimes that the court has previously held involve moral turpitude per se. Thus, the board is required to recommend disbarment. The court will not take final action until the appeals process is finished."

Frisch goes on to say, that if Libby is pardoned, "the court may impose sanction based on the underlying facts of the case but not on the conviction."

1 + 1 = 1 ?

Law school tries to teach you spin.  Big Law tries to teach you to make a ridiculous argument while keeping a straight face.  It is done by taking two disparate facts or terms or precedents, and combining them to draw a desperate conclusion.  In my line of work I am confronted with this tactic every single day.  My typical reaction is that I am either so stupid that I am missing something or the other side is just crazy.  The truth of the matter is that neither conclusion is true.  I know better.  The court knows better.  For that matter, the other side knows better.  (I think).  The other side is just desperate to find a claim or defense.  The problem is that under Rule 11 of the Federal Rules, and various state rules, this is probably sanctionable conduct.