Opinion
Case No. 03-42229-JBR
October 10, 2003
Ann Brennan and Stephen E. Shamban, Braintree, MA, Darryl J. Chimko, SHERMETA CHIMKO ADAMS, P.C., HOUSEHOLD FINANCE CORPORATION
Antonio Lucas, Lawrence, MA, Antonio Lucas (pro se) debtor
John Burdick, Jr., Esq., Worcester, MA Trustee
MEMORANDUM OF DECISION WITH RESPECT TO COURT'S ORDER TO SHOW CAUSE
In the instant case Creditor, Household Finance, through its agent Darryl J. Chimko, and Chimko's law firm of Shermeta, Chimko Adams, P.C. were ordered to show cause why sanctions should not be imposed for among other things, the unauthorized practice of law in Massachusetts.
The parties were ordered to show cause why (1) the notice of pro se reaffirmation agreement of debt secured by real property should not be stricken and the reaffirmation agreement not accepted for filing; (2) sanctions should not be imposed upon Household Finance Corporation and or its agent for attaching the notice to the reaffirmation agreement which (A) conflicts with the MLRB; (B) requires that notice be given to an address other than the creditor's address as it appears on the matrix when a notice of appearance has not been filed; and (C) purports to permit the creditor to ignore any binding order of this court with respect to the reaffirmation agreement if notice of a hearing is not given to the agent; and (3) sanctions, including any appropriate referrals, should not be imposed upon the agent for the unauthorized practice of law in Massachusetts.
This matter originated by way of a reaffirmation agreement by Household Finance with Antonio Lucas, the Debtor. On April 17, 2003, the Debtor filed a Chapter 7 petition pro se. He owns a residence located at 98 Auburn Street in Lawrence, Massachusetts which he values at $120,000. The property is encumbered by three mortgages: Fleet Bank with a balance of $14,000.00, Principle Residential with a balance of $37,900.00 and Household Finance with a balance of $23,700.00. Soon after filing his petition for Chapter 7 relief, the Debtor reaffirmed the obligation owed to Household Finance (Creditor). Darryl M. Chimko, a Michigan attorney not licensed to practice law in Massachusetts, conducted the process of reaffirmation for the Creditor. Chimko filed an appearance with this Court as "agent" for the Creditor. During the process, all correspondences and documents from Chimko were on stationary bearing his law firm's letterhead. Further, all documents sent by Chimko were signed by him and no reference to his status as an "agent" for the Creditor was made. On July 16, 2003, the Creditor filed a Reaffirmation Agreement executed by the Debtor on June 2, 2003. The agreement was sent to this Court and contained an attached notice that stated, "Now comes, Creditor, HOUSEHOLD FINANCE CORPORATION II, by and through its attorneys, SHERMETA, CHIMKO ADAMS, P.C."
On the basis of these facts, this Court entered in an order to show cause why sanctions should be imposed for the unauthorized practice of law. Subsequently this Court ordered Chimko to produce a chart of all cases in the District of Massachusetts in which Chimko and/or SHERMTA, CHIMKO AND ADAMS, PC had filed a reaffirmation agreement and/or appearance. It was further ordered that Chimko should designate whether the reaffirmation agreement and/or any notice regarding the reaffirmation agreement was filed as (a) attorney; (b) agent, or (c) both. Upon reviewing the chart submitted by Chimko in response to the order, he identified five cases in which he filed a "Request to be Added to the Matrix" which he signed as "attorney" for a creditor. In addition he identified two other instances in which he designated himself as "agent" for a Creditor. In both In re Tremblay, case no. 03-12331, and In re Keenan, case no. 02-10825, while Chimko's chart lists his role as being that of "agent" to the creditor, upon inspection of the Notices of Appearance and Requests for Notice, each clearly states that SHERMTA, CHIMKO AND ADAMS, PC is entering appearances as "attorney" for the creditor.
The unauthorized practice of law is prohibited, but not defined, by Massachusetts law. Massachusetts courts and courts in other jurisdictions have concluded that trying to express a comprehensive "definition of what constitutes the practice of law" is an impossibility and that "each case must be decided upon its own particular facts." In re Shoe Mfrs. Protective Ass'n, 295 Mass. 369, 3 N.E.2d 746, 748 (Mass. 1936). In general directing and managing the enforcement of legal claims and the establishment of the legal rights of others, where it is necessary to form and act upon opinions as to what rights are and as to the legal methods which must be adopted to enforce them; giving and furnishing legal advise as to such rights and methods; and drafting, in the course of one's work, documents by which such rights are created, modified, surrendered or secured constitute the practice of law. In re van Dyke, 296 B.R. 591, 594 (Bankr. D. Mass. 2003). Chimko prepared a Reaffirmation Agreement in which contractual rights were modified and created. Further, he provided pro se debtors with a form of notice he believed would be of assistance to them in understanding the reaffirmation process. Therefore all of his actions, including his correspondences, involving the Reaffirmation Agreement constitute the practice of law.
Chimko's use of his firm's letterhead suggests he was engaged in the practice of the law; that he was authorized to do so constitutes a misrepresentation to the Debtor and the Court. The first indication of this misrepresentation began with a cover letter Chimko first sent the Debtor dated May 12, 2002. The top of the letter shows the firm letterhead as follows:
SHERMETA, CHIMKO ADAMS, P.C. Attorneys and Counselors at Law 445 South Livernois Suite 333 P.O. Box 80490 Rochester Hills, MI 48308-0490 (248) 652-8200 Fax (248) 652-2896The cover letter goes on to list the case account number, case number, and client, Household Finance. The letter further goes into the terms of the proposed reaffirmation agreement and the manner in which it should be returned. It advises the Debtor that if he has any questions regarding the matter that he should feel free to contact DARRYL J. CHIMKO, the letter is signed SHERMETA, CHIMKO ADAMS, P.C. Chimko also sent another letter dated May 27, 2002 in which the firm letterhead and listings of case account number, case number, and client were identical to the first letter. The body of the letter explained that the executed reaffirmation agreement had not been received from the Debtor. The letter concludes, "Chapter 7 Bankruptcy Department". Following this, Chimko sent a letter dated June 25, 2003 to the Debtor with an attached copy of the completed reaffirmation agreement. The letter again contained the same firm letterhead and listings as in the previous letters. It was signed SHERMETA, CHIMKO ADAMS, P.C and DAWN M. ENGEL, Bankruptcy Manager. The attached copy of the reaffirmation agreement contained the agreement terms and was signed SHERMETA, CHIMKO ADAMS, P.C. In all correspondences with the Debtor, Chimko made no reference to his status as "agent" for the creditor, nor did he make any suggestion that the firm was acting in any other capacity than an "attorney".
The MASSACHUSETTS RULES OF PROFESSIONAL CONDUCT states the following in reference to misrepresentation concerning firm letterheads:
RULE 7.5 FIRM NAMES AND LETTERHEADS
(a) A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1.
(b) A law firm with offices in more than one jurisdiction may use the same name in each jurisdiction, but identification of the lawyers in an office of the firm shall indicate the jurisdictional limitations on those not licensed to practice in the jurisdiction where the office is located.
RULE 7.1 COMMUNICATIONS CONCERNING A LAWYER'S SERVICES
A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.
Chimko's correspondences on his Firm's letterhead in this instance constituted a violation of Rule 7.1 in that the communication is misleading and contains a material misrepresentation of fact about the exact services he is providing on behalf of the Creditor. Because Chimko makes no mention of his status as an "agent", the only indication of Chimko's role is held in the firm's letterhead contained in all correspondences. Thus, the Debtor and the Court are lead to believe that Chimko is acting as an attorney with the full support of his firm.
The use of the firm's letterhead can easily mislead the Debtor and the Court. In In Re Brown, 270 B.R. 43, (Bankr. D. S.C., 2001), Plaintiffs' communication with Defendant Rittenhouse was intertwined to such an extent with the Firm that the Firm impliedly represented that Rittenhouse was authorized to act on its behalf. For example, Defendant Rittenhouse communicated with Plaintiffs by correspondence drafted on the Firm's letterhead, and this letterhead included Rittenhouse's name. Id at 49. Also, the bankruptcy petition Rittenhouse prepared for Plaintiffs, represented that he was affiliated with the Firm. Id at 50.
In the instant case all of Chimko's or the firm's correspondence with the Debtor was conducted on Chimko's firm letterhead. All correspondence was always similarly concluded SHERMETA, CHIMKO ADAMS, P.C. instead of just Chimko. Thus the Debtor and the Court could easily be lead to believe that Chimko was acting as an attorney with the support of his firm. Therefore, Chimko's use of the letterhead is a misrepresentation.
Moreover Chimko's status of an attorney was raised by his use of the title "attorney" in the notice sent to this Court attached to the Reaffirmation Agreement. The notice submitted by Chimko reads, "NOW COMES, Creditor, HOUSEHOLD FINANCE CORPORATION II, by and through its attorneys, SHERMETA, CHIMKO ADAMS, P.C.". Chimko claims that the word attorneys should have been agents and was the result of a typographical error on his part. Chimko claims that he made the mistake due to an oversight of not modifying the notice form from the one he typically uses when practicing in Michigan. Chimko's attitude would indicate that this "typo" was a rare occurrence and insignificant. However, upon inspection of other notice forms composed by Chimko a repeated behavior has surfaced in of these "typos". Further, Chimko testified that he sent his form of Notice only to pro se debtors. An unrepresented party is exactly the kind of individual likely to believe that the Notice which this Court read as containing information contrary to the Code, was an attorney's statement of what the Debtor's mere signing of the reaffirmation obligated him to do.
Moreover, as noted previously when Chimko produced the chart required by the show cause order, there were eight cases in which he signed documents, which at least in part, refer to him as attorney for the Creditor, a fact he seeks to gloss over by labeling them "typos". The troublesome fact that Chimko's pleadings have contained the same "typo" in so many separate instances suggests that this was no common oversight. Chimko appears to believe that his status as either an "agent" or "attorney" makes no difference to the Debtor or the Court. It is disturbing to think of potential debtors who would be confused and intimidated by these "typos" should Chimko continue to make them. Chimko's behavior is misleading and irresponsible for an experienced bankruptcy attorney.
Further, Chimko never fully complied with this Court's order. Upon further investigation, there are nine other cases pending in the District of Massachusetts in which Chimko and/or SHERMTA, CHIMKO AND ADAMS, PC had filed a reaffirmation agreement and/or appearance which were omitted from the list submitted by Household Finance. In three of those cases SHERMTA, CHIMKO AND ADAMS, PC. are listed as "agents" while in the remaining six they are listed as "attorneys".
See attached chart
As a response Chimko claimed that the "typo" was not committed in bad faith. Regardless of whether the error was done in bad faith or not, Chimko had a responsibility to ensure his communications with the Debtor and the Court were accurate and would not lead to a misrepresentation. It is obvious that Chimko has made a habit of committing these typographical errors in his notices. Household Finance contends in its memorandum in response to the show cause that Chimko never held himself out to be anything other than an agent of the Creditor. Although Chimko might have not intentionally held himself out to be anything other than an agent, through his habitual correspondences with his firm's letterhead, admitted typographical error, and repeated behavior in committing these errors, Chimko has misrepresented his status to the Debtor and the Court.
As a remedy for Chimko's actions, this Court will provide this decision to the Massachusetts Board of Bar Overseers and the Michigan Attorney Discipline Board. Additionally he will be sanctioned in the amount of $500.
A separate order will issue. Chart of cases pending in the District of Massachusetts in which Chimko and/or SHERMTA, CHIMKO AND ADAMS, P.C. had filed a Reaffirmation Agreement and/or appearance that are not included in their submitted chart ordered by this Court.
DEBTOR CASE# STATUS DATE FILED
RAY 02-13933 AGENT 07/12/02 McGOWAN 02-14727 AGENT 07/30/02 DEAN 02-18476 AGENT 08/04/03 ADJEI 03-13375 ATTORNEY 06/09/03 SANCHEZ 01-46509 ATTORNEY 02/11/02 PARKER 00-42923 ATTORNEY 02/27/01 BURT 99-18282 ATTORNEY 11/20/00 FORTIN 00-44826 ATTORNEY 10/23/00 MORSE 00-43827 ATTORNEY 09/19/00