In re Jones

632 B.R. 138

IN RE: Joshua V. JONES and Amanda M. Jones, Debtors.

Case No. 18-13425

United States Bankruptcy Court, S.D. Ohio, WESTERN DIVISION AT CINCINNATI.

Signed September 2, 2021

Brian D. Flick, DannLaw, Cuyahoga, OH, for Debtor.

OPINION AND ORDER IMPOSING SANCTIONS AGAINST DEBTORS JOSHUA V. JONES AND AMANDA M. JONES (DOC. 132)

Jeffrey P. Hopkins, United States Bankruptcy Judge

It has long been the rule that "[bankruptcy] gives to the honest but unfortunate debtor ... a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt." Local Loan Co. v. Hunt , 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230 (1934) (emphasis added). What the law does not do, however, is give a debtor (or in this case, joint debtors) unrestrained freedom to run roughshod over the court system and insist that their attorney not follow well established law and ethical rules—and, when unsatisfied with that attorney's predilection to adhere to the rule of law, to then begin a campaign of disparaging him, or worse, engaging in boorish even physically threatening behavior towards him and his staff.

I. Procedural Posture

This matter came before the Court for hearing on February 24, 2021 (the "Show Cause Hearing") on this Court's Order to Show Cause Why Sanctions Should Not Be Imposed Against Debtors (Doc. 132) (the "Show Cause Order"). The hearing was attended by attorney Nicholas Zingarelli (the Debtors' former counsel), George Jonson (co-counsel for Mr. Zingarelli), Margaret A. Burks (Chapter 13 Trustee), and Brian Flick (also the Debtors' former counsel). The Debtors filed a pleading in advance of the Show Cause Hearing (Doc. 141), but they failed to appear, despite being forewarned that sanctions might be imposed against them based on their conduct in these proceedings.

II. Preliminary Statement

Even while represented by counsel, the Debtors have taken it upon themselves to file, pro se , several pleadings with this Court. The Debtors' pleadings have repeatedly mischaracterized facts and contained allegations and assertions about the law and their former attorney that demonstrate a lack of reasonable investigation into the veracity of those statements. At times, the factual assertions in the pleadings were reckless and, in instances, totally disregarded whether they were nonfrivolous or capable of having evidentiary support. Much of what the Debtors state in these pleadings was directed at impugning the character of their former attorney, Mr. Zingarelli. The Debtors' quibble in this case, however, was not so much with their former attorney as it was with the constraints placed on him—and ultimately themselves—by the statutes and rules that govern individuals seeking debt relief from their creditors under the bankruptcy laws. The way we change or amend laws in this country, however, is not to verbally castigate or physically threaten those charged with following the law under our system of government but rather to peacefully petition Congress or state legislatures.

Still, when litigants cross the line and their conduct during the litigation becomes abusive, courts cannot remain idle bystanders. Judges are obligated to address that behavior lest the judiciary, our Third Branch of government, risks devolving into just another place where individuals can act out their aggressions and frustrations unbound by respect for the rule of law, common etiquette, and proper decorum. The bankruptcy court, like any federal court, is a forum for peaceful resolution of financial disputes and where mutual respect among parties and attorneys should be exhibited at all times. Although one would be ill advised to do so, debtors can represent themselves. Or, as is the better practice, they can choose an attorney to advocate on their behalf. Here, the Debtors chose the latter approach, but apparently decided at some point during the proceedings that they would go their own way against counsel's advice. Thereafter, the Debtors engaged in a pattern of conduct that leaves no doubt but to conclude that they crossed the line. And instead of self-correcting their behavior by withdrawing those pleadings or issuing a simple apology to those they offended, the Debtors dug in and remain defiant. But unruly or boorish behavior acted out under the auspices of court proceedings, even by pro se litigants, is not without consequence.

III. Summary of the Facts

Mr. Zingarelli represented the Debtors in this bankruptcy case from the time they filed their Chapter 13 petition on September 13, 2018 until the Court granted his motion to withdraw as counsel on June 21, 2019.¹ See Doc. 66. In late 2020, the Debtors filed several pleadings pro se challenging Mr. Zingarelli's representation of them and the validity of these Chapter 13 proceedings. See Docs. 118, 121 & 122. The Debtors' main contention against Mr. Zingarelli has been for ineffective assistance of counsel. The Debtors have argued repeatedly, without proof, that Mr. Zingarelli improperly or unethically mishandled an ongoing dispute they have had with The Commons of Eastgate Condominium Owners Association, Inc. ("Eastgate" or "the homeowners' association"). The Debtors take issue with the dues and fees assessed by Eastgate, which had initiated a prepetition foreclosure action over those unpaid assessments.

The Debtors appear to have two unshakeable beliefs about their case: (1) that the proof of claim asserted by Eastgate is inaccurate (and Mr. Zingarelli improperly refused to object to it); and (2) that all along, they should have been in a Chapter 7—not a Chapter 13—bankruptcy case (and Mr. Zingarelli not only improperly but also fraudulently pushed them into Chapter 13). According to the Debtors, they were eligible for and had come to Mr. Zingarelli for advice exclusively on filing a Chapter 7 bankruptcy petition, but Mr. Zingarelli wrongly advised them to file for relief under Chapter 13. The Debtors maintain, unsubstantiated by the evidence, that Mr. Zingarelli grossly and fraudulently overstated their income when applying the means test in their bankruptcy case in order to push them into Chapter 13, even going so far as to suggest that Mr. Zingarelli was in cahoots with the homeowners' association in working against the Debtors'—his clients'—interests. Ostensibly (and erroneously), the Debtors believe that their home would have been safe from foreclosure had they received a discharge in Chapter 7. In their pro se "Motion for Ineffective Assistance of Counsel and Fraudulent Bankruptcy Proceedings" (Doc. 118) (the "Motion for Ineffective Assistance") and related pleadings, the Debtors sought to obtain a refund of any and all payments they have made in accordance with their confirmed Chapter 13 plan—more than two years of payments—and to have their case converted to Chapter 7.²

Credible evidence presented at the hearing and uncontested facts contained in the Debtors' Chapter 13 petition and schedules, however, belie each of the Debtors' contentions about Mr. Zingarelli's purported incompetence. From a factual and legal standpoint, just the opposite seems to have occurred. By all accounts, Mr. Zingarelli appears to have provided the Debtors with sound legal advice. The income figures Mr. Zingarelli used to calculate the Debtors' means test—the very figures the Debtors claim were grossly inflated—matched the figures contained in Debtor Amanda Jones's pay stubs for the six months prior to their bankruptcy filing. See Doc. 120, Ex. C (spreadsheet summarizing Mrs. Jones's pay stubs) & Ex. D (copies of Mrs. Jones's pay stubs). And the Debtors both signed declarations under penalty of perjury confirming the accuracy and contents of their bankruptcy schedules and filed statements, including the means test and Schedule I. See Doc. 1 at 35, 48 (signatures attesting that the schedules and that the information in the means test, respectively, were true and correct); Doc. 120, Ex. E (copy of "Declaration About an Individual Debtor's Schedules" containing Debtors' "wet" signatures). Thus, rather than grossly or fraudulently inflated, the Debtors' income as represented in their schedules and in their means test calculation appears to have been accurate and based on the information provided and attested to by the Debtors themselves.

More importantly, because of the significant arrearage in their homeowners' association dues that had accrued prepetition, the Debtors were advised and indeed needed to file a petition under Chapter 13 to accomplish their goals. The prepetition debt owed to Eastgate—over $20,000—resulted in a statutory lien and the institution of foreclosure proceedings in state court by the homeowners' association. See Claim 10-1 (Eastgate proof of claim showing over $6,000 in past-due fees and charges and $14,000 in attorneys' fees involved in the collection thereof); Doc. 90 (Eastgate's motion for relief from stay indicating the prepetition amount and referencing the judgment based on that debt obtained in the Court of Common Pleas in Clermont County); Doc. 1 (Debtors' Schedule D estimating the (disputed) prepetition debt, secured by a statutory lien, at about $19,000). Despite the Debtors' beliefs to the contrary, the only way they could keep their home and avoid foreclosure in state court (as they had expressed a desire to prevent during their initial consultation with Mr. Zingarelli) was by filing for bankruptcy relief under Chapter 13.³ Thus, rather than receiving inadequate legal advice, in this Court's view, the Debtors obtained quite competent bankruptcy counseling from Mr. Zingarelli. Despite this, the Debtors—over two years into their bankruptcy case and over a year after Mr. Zingarelli's representation of them had ended—began a campaign of filing motions with this Court making bald assertions and accusations against Mr. Zingarelli, all while sending Mr. Zingarelli and his staff threatening communications.

During the Show Cause Hearing, the...