A federal appeals court today reversed monetary sanctions against a bankruptcy lawyer in Maryland who had represented an elderly woman facing foreclosure.
John Burns, a solo practitioner in Greenbelt, Md., filed a voluntary bankruptcy petition in May 2007 on behalf of debtor Frances Haylock. Bankruptcy Judge S. Martin Teel Jr. in Washington dismissed the petition a month later, saying Haylock failed to comply with a credit counseling requirement before filing the petition.
The law requires a debtor receive counseling from an approved nonprofit budget and counseling agency within 180 days before filing a bankruptcy petition. Burns said he made the petition in good faith after the client told him she had sought credit counseling at her church and online. Burns’ position: requesting counseling from an unapproved agency can still satisfy the requirement. Teel disagreed.
Lawyers for George Basilika Trust, a secured creditor with a lien on Haylock’s home, filed for sanctions against Burns. Burns reached a settlement with the trust and paid $2,000 in fees and expenses. Still, he appealed the sanctions order to the U.S. District Court for the District of Columbia, where Judge Richard Leon affirmed in March 2009.
Burns took his case to the U.S. Court of Appeals for the D.C. Circuit, where Judges Judith Rogers and David Tatel, sitting with Senior Judge Stephen Williams, heard argument in February. Jackson & Campbell's Jeffrey Sherman, a bankruptcy practitioner, represented the trust on appeal.
The appeals court today unanimously agreed with Burns. Williams, writing for the court, said Teel’s “view of the law” was mistaken and that the judge’s award of sanctions was an abuse of discretion.
“Judges are not free to sanction lawyers in an arbitrary and capricious manner,” Burns said today. Burns, who has already paid the $2,000, said he did not appeal for monetary reasons but instead for the “integrity of the practice of law.”
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