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Wynns v. Adams

March 29, 2010

GEORGE S. WYNNS, APPELLANT,
v.
DIANA G. ADAMS, UNITED STATES TRUSTEE, APPELLEE.



The opinion of the court was delivered by: Seybert, District Judge

Bankr. Adv. Pro. No. 08-8133

ORDER

On May 31, 2009,*fn1 the Bankruptcy Court found that Appellant George S. Wynns violated the United States Bankruptcy Code by: (1) serving as a non-attorney bankruptcy petition preparer without providing the required disclosures; (2) engaging in the unauthorized practice of law; and (3) serving as a "debt relief agency" without providing his clients with written contracts. As a remedy, the Bankruptcy Court ordered Mr. Wynns to pay $6,750 in fines, statutory damages and attorneys' fees. In addition, the Bankruptcy Court enjoined Mr. Wynns from committing further violations. Mr. Wynns appealed.

For the foregoing reasons, the Bankruptcy Court's Order is AFFIRMED IN PART AND REVERSED IN PART.

BACKGROUND

George Wynns is a California resident. Although he graduated from law school, Mr. Wynns is not an attorney. For the past 20 years, he has operated a part-time business known as The Bankruptcy Assistant. The Bankruptcy Assistant primarily performs contract paralegal work for attorneys. Its website, www.thebankruptcyassistant.com advertises its services exclusively to attorneys, not to the general public. See Docket No. 1-5 at p. 1 ("Bankruptcy Attorneys: Gain more time, service more clients, and increase your firm's net income by outsourcing tedious and time consuming forms preparation tasks"). The website contains a legal disclaimer informing potential clients that "The Bankruptcy Assistant is not a law firm and cannot provide legal advice." Id. (emphasis in original).

Although Mr. Wynns primarily works for attorneys, in April 2008, he agreed to prepare some bankruptcy petitions for non-attorney Jeffery Giordano, who operated a New York debt resolution service. (Tr. 79). Under this arrangement, Mr. Giordano forwarded Mr. Wynns information he received from his clients, Debtors Charles and Donalee Clarke and George and Theodora Najdek, and promised to pay Mr. Wynns $150 for each petition. Mr. Wynns then got to work preparing the Clarkes' and Najdeks' bankruptcy petitions. He did so without first providing the Clarkes or the Najdeks with written notice that he "is not an attorney and may not practice law or give legal advice." See 11 U.S.C. § 110(b)(2) (requiring non-attorney bankruptcy preparers to provide such notice). Mr. Wynns did, however, provide this notice after he began working on the petitions. Mr. Wynns also did not provide a written contract to either the Clarkes or Najdeks. See 11 U.S.C. § 528(a).

The Najdeks, apparently, had no further issues with their bankruptcy petition that involved Mr. Wynns. But the Clarkes did. On April 4, 2008, the Clerk of the Court issued a Notice of Deficiency informing them that they needed to file additional documents in support of their petition. In response, Mr. Wynns wrote the Clarkes to explain what the Notice of Deficiency required, provide his thoughts on what else the Clarkes should submit, enclose certain documents, and remind them about upcoming filing deadlines. After the Clarkes completed the requisite forms, Mr. Wynns then wrote the Clerk of the Court on the Clarkes' behalf.

The U.S. Trustee then commenced this action, alleging that Mr. Wynns' conduct violated 11 U.S.C. §§ 110, 528. On April 7, 2008, the Bankruptcy Court held a trial. On May 31, 2008, the Bankruptcy Court issued a Memorandum Decision, finding that: (1) Mr. Wynns violated § 110(b)(2)(A) by serving as a bankruptcy petition preparer for the Clarkes and Najdeks without first providing the proper disclosures; (2) Mr. Wynns violated § 110(e)(2)(A) by engaging in the unauthorized practice of law; and (3) Mr. Wynns violated § 528(a)(1) by serving as a "debt relief agency" without providing written contracts to his clients. The Bankruptcy Court then: (1) fined Mr. Wynns $500 for his role in the Clarkes' petition and $250 for his role in the Najdeks' petition; (2) ordered him to pay the Clarkes and Najdeks $2,000 each in statutory damages under § 110(i)(1); (3) ordered him to pay the U.S. Trustee $2,000 in attorneys' fees under § 110(i)(2); and (4) enjoined Mr. Wynns from further "improper conduct." See In re Clarke, 2009 WL 1704492 at *9.

On appeal, Mr. Wynns argues: (1) the Bankruptcy Court lacked personal jurisdiction over him; (2) the U.S. Trustee violated his due process rights in litigating against him; (3) the Bankruptcy Court erred in finding that he engaged in the unauthorized practice of law; (4) the Bankruptcy Court erred in issuing an injunction; (5) the Bankruptcy Court erred in assessing fines, damages and attorneys' fees against him under § 110(i); and (6) the Bankruptcy Court should have awarded him attorneys' fees and costs. Mr. Wynns' appeal does not contest his violations of §§ 110(b)(2)(A) and 528(a)(1).

In responding to Mr. Wynns' appeal, the U.S. Trustee concedes that the Bankruptcy Court erred when it ordered Mr. Wynss to pay the U.S. Trustee $2,000 in attorneys' fees. But the U.S. Trustee opposes Mr. Wynns' remaining contentions.

STANDARD OF REVIEW

"On an appeal the district court . . . may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings." FED. R. BANK. P. 8013. The Bankruptcy Court's "finding[s] of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous . . . ." Id.; see also In re Momentum Mfg. Co., 25 F.3d 1132, 1136 (2d Cir. 1994); In re PCH Assoc., 949 F.2d 585, 597 (2d Cir. 1992). "A finding of fact is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. . . . Factual findings must be upheld if plausible in light of the record viewed in its entirety." Robbins Int'l, Inc. v. Robbins MBW Corp., 275 B.R. 456, 464-65 (S.D.N.Y. 2002) (internal quotations, citations omitted). The Bankruptcy Court's legal conclusions are reviewed de novo. See In re Momentum Mfg. Co., 25 F.3d at 1136.

DISCUSSION

I. Personal Jurisdiction

Mr. Wynns first argues that the Bankruptcy Court lacked personal jurisdiction over him because he lives in California and lacks minimum contacts with New York. The Court disagrees. The U.S. Trustee's claim against Mr. Wynns derives from Mr. Wynns' acts in New York, specifically his: (1) preparation of New York residents' bankruptcy petitions for filing in the E.D.N.Y. Bankruptcy Court; (2) his failure to provide New York residents with legally required disclosures; (3) his letter to the Clarkes, sent to their home in Bellport, New York; and (3) his letter to the E.D.N.Y. Bankruptcy Court's Clerk of the Court. Accordingly, although Mr. Wynn has few ongoing contacts with New York, personal jurisdiction is appropriate under the specific jurisdiction doctrine. See N.Y. C.P.L.R. ยงยง 302 (permitting New York courts to ...


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