In re: Wayne A. Seare and Marinette Tedoco ( 2014 )


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  •                                                             FILED
    1                               ORDERED PUBLISHED           AUG 25 2014
    SUSAN M. SPRAUL, CLERK
    2                                                         U.S. BKCY. APP. PANEL
    OF THE NINTH CIRCUIT
    3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
    4                             OF THE NINTH CIRCUIT
    5
    6   In re:                        )      BAP No.      NV-13-1196-KiTaJu
    )
    7   WAYNE A. SEARE and MARINETTE )       Bk. No.      2:12-bk-12173-MKN
    TEDOCO,                       )
    8                                 )      Adv. No.     2:12-ap-01108-MKN
    Debtors.      )
    9                                 )
    )
    10   ANTHONY J. DeLUCA,            )
    )
    11                   Appellant,    )
    )
    12   v.                            )      O P I N I O N
    )
    13   WAYNE A. SEARE,               )
    )
    14                   Appellee.     )
    ______________________________)
    15
    Argued and Submitted on January 24, 2014,
    16                             at Las Vegas, Nevada
    17                           Filed - August 25, 2014
    18              Appeal from the United States Bankruptcy Court
    for the District of Nevada
    19
    Honorable Bruce A. Markell, Bankruptcy Judge, Presiding
    20
    21
    Appearances:     Christopher Burke, Esq. argued for appellant,
    22                    Anthony J. DeLuca; Appellee Wayne A. Seare argued
    pro se.
    23
    24   Before:   KIRSCHER, TAYLOR and JURY, Bankruptcy Judges.
    25
    Opinion by Judge Kirscher
    26   Concurrence by Judge Jury
    27
    28
    1   KIRSCHER, Bankruptcy Judge:
    2
    3        Appellant Anthony J. DeLuca (“DeLuca”) was the bankruptcy
    4   attorney for chapter 71 debtors Wayne A. Seare (“Seare”) and his
    5   wife Marinette Tedoco (“Tedoco”) (collectively, “Debtors”).
    6   DeLuca appeals an order from the bankruptcy court sanctioning him
    7   for conduct related to his handling of Debtors’ case.    We AFFIRM.
    8                I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
    9   A.   Prepetition events
    10        1.     The district court lawsuit and judgment against Seare
    11        In December 2010, Seare sued his former employer St. Rose
    12   Dominican Health Foundation (“St. Rose”) for employment
    13   discrimination, alleging that he had been the victim of sexual
    14   harassment by a female co-worker and that he was wrongfully
    15   terminated in retaliation for his reporting the harassment.    The
    16   co-worker’s harassment of Seare allegedly included sending him
    17   sexually explicit emails.    After an investigation of the matter by
    18   St. Rose, Seare was terminated.
    19        While the lawsuit was pending in the United States District
    20   Court for the District of Nevada (“district court”), Seare
    21   admitted to his attorney that he had “embellished” the explicit
    22   emails to bolster his harassment claims.    Seare’s attorney
    23   disclosed the misconduct to the district court in a motion to
    24   withdraw.    Ultimately, on October 24, 2011, the district court
    25   ordered sanctions against Seare, dismissed his lawsuit against
    26
    27        1
    Unless specified otherwise, all chapter, code and rule
    references are to the Bankruptcy Code, 
    11 U.S.C. §§ 101-1532
    , and
    28   the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
    -2-
    1   St. Rose with prejudice, and ordered him to pay St. Rose’s
    2   attorney’s fees (“Sanctions Order”).    The district court found
    3   that Seare had committed “fraud upon the court” by knowingly
    4   providing false information, allowing his attorney to file an
    5   amended complaint based upon that false information and
    6   instituting and conducting litigation in bad faith.
    7          A judgment was entered on October 25, 2011, in favor of
    8   St. Rose for its attorney’s fees of $67,430.58 (“Judgment”).     The
    9   one-page Judgment did not mention “fraud” or provide any factual
    10   or legal bases for supporting the Judgment.    Thereafter, St. Rose
    11   obtained a Writ of Garnishment and served it on Seare’s current
    12   employer.    The garnishment of Seare’s wages prompted Debtors to
    13   seek counsel about whether to file bankruptcy.
    14          2.   Debtors retain bankruptcy attorney DeLuca
    15          Some of the facts surrounding Debtors’ meeting with DeLuca
    16   are disputed, but other facts are not.    DeLuca contends that
    17   certain facts asserted by Tedoco and relied upon by the bankruptcy
    18   court were not admissible, which we address below.
    19          Debtors consulted with DeLuca, a bankruptcy attorney of
    20   eleven years, at his office on February 13, 2012, at around 5:00
    21   p.m.   This meeting was Debtors’ only in-person contact with
    22   DeLuca, but DeLuca testified that he spoke with them at least once
    23   by phone thereafter.
    24          During an evidentiary hearing, Seare testified that Debtors
    25   gave DeLuca a copy of the “order” and the Writ of Garnishment and
    26   that DeLuca “thumbed through them.”    Seare had also asserted in a
    27   pre-hearing brief that Debtors gave DeLuca two documents at their
    28   initial consultation — a copy of the Order for Wage Garnishment
    -3-
    1   and the Sanctions Order.    Tedoco also asserted that Debtors gave
    2   DeLuca copies of the Order for Wage Garnishment and the “Wage
    3   Sanctions.”   DeLuca had no independent recollection of meeting
    4   Debtors or of reviewing the Sanctions Order or Judgment.     He did,
    5   however, concede that his firm knew about the Judgment and Order
    6   for Wage Garnishment at the time the bankruptcy petition was
    7   filed.
    8        Debtors claimed DeLuca reviewed the district court papers and
    9   told them that the debt referred to in the Order for Wage
    10   Garnishment and Judgment was dischargeable.   Seare claimed in a
    11   pre-hearing brief that during the consultation, Tedoco told DeLuca
    12   that the St. Rose debt and Order for Wage Garnishment were not
    13   from medical expenses.   Rather, the debt was based on the
    14   Sanctions Order for attorney’s fees, which was imposed because
    15   Seare submitted embellished emails to the district court in his
    16   lawsuit against St. Rose.   Seare also testified that he told
    17   DeLuca about his embellished emails.   According to Seare, DeLuca
    18   affirmatively told Debtors that the St. Rose debt referenced in
    19   the Order for Wage Garnishment was dischargeable, even though it
    20   was incurred through fraud.   However, Seare contradicted himself
    21   when he testified that “fraud” was never discussed during the
    22   consultation.   Seare testified that DeLuca did not discuss with
    23   Debtors about what sort of debts might not be dischargeable or
    24   that an adversary proceeding might be filed against him.
    25        After the brief consultation with DeLuca, Debtors were placed
    26   in a room to read, initial and sign the 19-page retainer agreement
    27   (“Retainer Agreement”) under which they hired DeLuca.   Tedoco
    28   claimed that DeLuca’s staff periodically checked to see if they
    -4-
    1   had completed the documents, but that no one sat with them to
    2   explain any part of the Retainer Agreement.    DeLuca testified that
    3   standard protocol in his office required a paralegal to sit with a
    4   client and explain every paragraph of the retainer agreement to
    5   make sure the client understood it.     However, he did not know and
    6   had no record of which paralegal met with Debtors because he did
    7   not keep such records.
    8        Debtors executed the Retainer Agreement, initialing every
    9   paragraph and signing every page, and paid DeLuca a $200 down
    10   payment.2   At the bottom of each page (right above Debtors’
    11   signatures) is the statement:   “I have read, understand, and agree
    12   to this page and its contents.”    On the last page (right above
    13   Debtors’ signatures) is the statement:    “I have read and received
    14   the foregoing NINETEEN (19) pages and I understand and agree to
    15   its terms and conditions.”   In addition, DeLuca provided Debtors
    16   with a 19-page document entitled “Frequently Asked Questions”
    17   (“FAQ”).    DeLuca did not sign the Retainer Agreement, which is
    18   evidently the same agreement signed by all clients, with only a
    19   few differences in fees depending on whether the case is filed
    20   under chapter 7 or 13.   His stamped signature is, however, on the
    21   first page of the Retainer Agreement, which is a form letter
    22   thanking clients for their business.    This letter also states that
    23   while “some advisories (in the retainer agreement) may not appear
    24   to apply to you at this time, we do need you to sign that you
    25   understand or that you agree that you have been advised on each
    26
    27        2
    DeLuca’s flat fee to file a chapter 7 case was $1,999,
    which included the $306 filing fee and the credit report fee of
    28   $35.
    -5-
    1   topic.”
    2        The Retainer Agreement separates basic services from those
    3   services requiring additional fees.   For matters beyond the “basic
    4   services,” DeLuca’s billing rate was $495.00 per hour (or perhaps
    5   $395.00, as the relevant paragraph refers to both figures).
    6   The Retainer Agreement provides:
    7        BASIC SERVICES: Services to be performed by DeLuca &
    Associates include:
    8
    a. Analysis of debtor’s financial situation and
    9        assistance in determining whether to file a petition
    under . . . Chapter 7 or chapter 13. . . .
    10        b. Review, preparation and filing of the petition,
    schedules, statement of affairs, and other documents
    11        required by the bankruptcy court;
    c. Representation at the meeting of creditors.
    12        d. Reasonable in person and telephonic consultation with
    the client . . . .
    13
    ADDITIONAL FEES: There are circumstances which may
    14        require additional fees.
    15        Additional attorney fees will be charged for additional
    services including but not limited to: [1] Addressing
    16        allegations of fraud or non-dischargeability; . . .
    [13] . . . Adversary Proceedings . . . .
    17
    18   For the additional fees, the Retainer Agreement does not explain
    19   the relationship between items [1] and [13].
    20        The Retainer Agreement also includes a “fraud” disclaimer:
    21   “DEBTS THAT DO NOT GO AWAY:   Non-dischargeable debts (debts that
    22   you must re-pay), or debts not affected by client’s bankruptcy,
    23   include but are not limited to the following:   debts incurred
    24   through fraud . . . .”   Seare testified that he signed the
    25   Retainer Agreement despite reviewing and understanding the fraud
    26   disclaimer because DeLuca had told him that the St. Rose debt was
    27   dischargeable.   The FAQ also explains that debts incurred through
    28   fraud are nondischargeable.   Seare said that he did not read the
    -6-
    1   FAQ because Debtors had already asked DeLuca questions during the
    2   consultation.    Seare testified that based on the Retainer
    3   Agreement, he understood that DeLuca would not be representing him
    4   against allegations of fraud.    Seare also testified that adversary
    5   proceedings were not discussed at the consultation and at that
    6   time he did not know what an adversary proceeding was.
    7        The Retainer Agreement also includes a request for copies of
    8   “ALL LAWSUITS you have been involved in within the last two (2)
    9   years . . . .”    DeLuca claimed Debtors never provided sufficient
    10   documentation relating to the district court lawsuit as required.
    11        Finally, the Retainer Agreement explains the length of
    12   DeLuca’s representation of a client:     “I understand that following
    13   the discharge of my bankruptcy DeLuca & Associates’ representation
    14   is concluded by operation of law.      I understand that DeLuca &
    15   Associates is no longer obligated to represent me in any capacity
    16   with regard to my bankruptcy filing after the discharge order is
    17   entered.   I understand that any work requested following discharge
    18   of the bankruptcy will be an additional fee.”
    19   B.   Postpetition events
    20        1.    The bankruptcy case is filed.
    21        DeLuca filed Debtors’ chapter 7 bankruptcy petition on
    22   February 29, 2012.    The St. Rose debt was listed as a
    23   “garnishment” on Schedule F in the amount of $67,431.00.      The
    24   Judgment underlying the St. Rose debt was listed in Debtors’
    25   Statement of Financial Affairs and indicated that the nature of
    26   the proceeding was a “collection.”     The Disclosure of Compensation
    27   of Attorney for Debtors stated that Debtors agreed to exclude
    28   “representation . . . in any dischargeability actions” or “any
    -7-
    1   other adversary proceedings” from the flat fee.
    2           At the § 341(a) meeting of creditors on March 30, 2012,
    3   St. Rose informed Debtors and counsel that it intended to enforce
    4   its rights under the Judgment through a nondischargeability
    5   action.
    6           2.   The adversary proceeding is filed.
    7           St. Rose filed an adversary complaint against Seare, seeking
    8   to except its debt from discharge under § 523(a)(4) and (a)(6).
    9   The summons and complaint were served on Seare on or about June 5,
    10   2012.    DeLuca apparently received electronic notice of the
    11   complaint the day it was filed.
    12           Debtors received a discharge on May 30, 2012.   Approximately
    13   $137,430 in unsecured debt was discharged, or 62% of Debtors’
    14   unsecured, nonpriority claims.
    15           On June 4, 2012, DeLuca sent Debtors an email informing them
    16   of their discharge and that, as of the discharge date, their case
    17   was completed.     The email is a “form” message and did not mention
    18   any particulars of Debtors’ case or the recently-filed adversary
    19   proceeding by St. Rose.     It stated, “[W]e are very happy to inform
    20   you that you can now move forward with a fresh start on life, free
    21   from the stress of excessive debt.      Now you can place your
    22   financial situation back on the right track.”
    23           Debtors replied to the June 4 email later that day, thanking
    24   DeLuca for his help with their bankruptcy and inquiring whether
    25   the St. Rose “Judgement [sic] Order” had been discharged, since
    26   St. Rose had indicated at the § 341(a) meeting that it was
    27   pursuing the adversary proceeding against them.     They closed the
    28   email by asking DeLuca to “[p]lease let us know what we need to
    -8-
    1   do.”
    2          DeLuca’s office responded to Debtors’ email on June 5, 2012.
    3   The response reminded Debtors of St. Rose’s expressed intent at
    4   the § 341(a) meeting to pursue legal action for the Judgment.     The
    5   response also stated that on April 16, 2012, about six weeks prior
    6   to the filing of the adversary complaint, DeLuca received from
    7   counsel for St. Rose a “fax cover letter . . . with an attached
    8   Stipulation and Order regarding the discharge-ability [sic] of
    9   subject debt in question as to Mr. Sear [sic] only,” and that his
    10   office had promptly responded to the letter advising counsel that
    11   DeLuca “would not sign off on any Stipulation regarding the
    12   discharge-ability [sic] of any debt listed in the schedules.”
    13   DeLuca never consulted with Seare before rejecting the proposed
    14   stipulation and order.    It is unknown whether DeLuca informed
    15   St. Rose that he was not representing Seare in the adversary
    16   proceeding.   The response went on to explain that DeLuca had
    17   performed all of the duties for which he was contracted, and that
    18   he would not be representing Seare in the St. Rose adversary
    19   proceeding.   DeLuca’s office referred Seare to another attorney.
    20          Debtors replied to the June 5 email on June 6, 2012.   They
    21   admitted that DeLuca was hired only to “do our bankruptcy,” but
    22   were very upset and frustrated that the proposed stipulation and
    23   order were never sent to them or that DeLuca’s office, “at the
    24   very least,” had not made them aware it.    Debtors requested copies
    25   of the referenced documents between St. Rose and DeLuca’s office.
    26   In closing, Debtors stated:    “Not informing your clients of very
    27   important documents and failing to return phone calls are
    28   unacceptable and unprofessional customer service.”
    -9-
    1        On June 6, 2012, DeLuca personally sent a letter to Debtors
    2   informing them that he would not be representing them in the
    3   adversary proceeding and referring them to another attorney.
    4   Seare later claimed that he and Tedoco found it disturbing that
    5   DeLuca advertises a “full service” bankruptcy firm, yet he was
    6   requesting that Debtors hire another attorney.   Seare testified
    7   that he tried to retain other law firms to represent him; one
    8   declined, one said they did not handle such matters and another
    9   said it would be very expensive.
    10        In his pro se answer to the St. Rose complaint, Seare argued
    11   that the debt was dischargeable “due to hardship on the dependents
    12   of debtor.”   Seare admitted to having embellished the emails in
    13   the district court case, but stated that other evidence existed to
    14   support his position.   Seare alternatively requested that the debt
    15   be “modified” to a feasible payment plan.   Notably, Seare
    16   complained that his district court attorney had “thrown [him]
    17   under the bus” when he informed the court of Seare’s manufacturing
    18   of the emails and that this same attorney had also “failed to
    19   forward settlement information” regarding St. Rose.
    20        On August 2, 2012, the bankruptcy court held a scheduling
    21   conference.   DeLuca did not appear for Seare.   Seare told the
    22   court that DeLuca had told Debtors that he did not represent
    23   clients in adversary proceedings.   Counsel for St. Rose stated
    24   that he had informed DeLuca shortly after Debtors filed their
    25   petition of his client’s intent to file a nondischargeability
    26   action.
    27        3.   The court issues the order to show cause.
    28        On August 3, 2012, the bankruptcy court issued its “Order to
    -10-
    1   Show Cause Why This Court Should Not Sanction Anthony J. DeLuca
    2   for Failing to Represent Debtor in the . . . Adversary Proceeding”
    3   (“OSC”).   The court was concerned that DeLuca had violated certain
    4   provisions of the Nevada Rules of Professional Conduct (“NRPC”),
    5   specifically, NRPC 1.2(c), NRPC 1.1 and NRPC 1.5.
    6        DeLuca was ordered to show his compliance with NRPC 1.2(c),
    7   particularly, whether not representing Seare in the adversary
    8   proceeding was reasonable and whether he had obtained Debtors’
    9   informed consent for such limitation.   DeLuca also had to produce
    10   a copy of his June 6 letter to Debtors.   The OSC provided that if
    11   the court found DeLuca had violated any of these rules, it could:
    12   (1) impose monetary sanctions, including requiring DeLuca to pay
    13   for Debtors’ representation in the adversary proceeding;
    14   (2) impose nonmonetary sanctions, such as requiring DeLuca to
    15   represent Debtors; (3) order disgorgement of his fees; or
    16   (4) refer the matter to the Nevada State Bar.
    17        In response to the OSC, DeLuca explained that Debtors had
    18   mentioned a judgment from “medical debts” during the consultation,
    19   but they failed to mention the significant detail that the debt
    20   was ordered by the district court as a result of Seare’s
    21   manufacturing of evidence, lying to his attorney and then allowing
    22   his attorney to submit an amended complaint containing false
    23   information to the court.   Had these details about the fraudulent
    24   nature of the debt, of which Debtors were well aware at the time
    25   of the consultation, been brought to DeLuca’s attention, DeLuca
    26   claimed he would have declined to represent them, citing to his
    27   “Tell the Truth” section of his retainer agreements.   In short,
    28   DeLuca contended that he undertook the representation of Debtors
    -11-
    1   based on incomplete, inaccurate or intentionally omitted
    2   information regarding the fraudulent nature of a significant
    3   portion of their debts.   DeLuca argued that he was entitled to
    4   accept representation of debtors based on full disclosure,
    5   particularly when it related to substantive issues such as a large
    6   debt incurred as a result of manufacturing evidence and committing
    7   fraud upon the court.
    8        DeLuca also noted that his retainer agreements specifically
    9   exclude adversary proceedings as part of the services he provides
    10   for the basic fee.    Further, his office had immediately advised
    11   Debtors via the June 5 email and his June 6 letter that he would
    12   not be representing Seare in the adversary proceeding and that
    13   they should seek alternative counsel.      Attached to DeLuca’s
    14   response were portions of an unsigned retainer agreement, copies
    15   of the emails between his office and Debtors and a copy of his
    16   June 6 letter.
    17             a.     The initial OSC hearing
    18        The bankruptcy court held an initial hearing on the OSC on
    19   September 13, 2012.   DeLuca, Seare and Tedoco appeared.    The court
    20   noted that DeLuca’s brief did not substantively address the
    21   specific provisions of the NRPC raised in the OSC, namely, whether
    22   DeLuca obtained informed consent from Debtors to limit his
    23   representation and whether limiting his representation was
    24   reasonable under these circumstances.      In response, DeLuca said
    25   that the Retainer Agreement excluded adversary proceedings and
    26   that it was reasonable to not represent debtors because they were
    27   not forthcoming about the fraudulent nature of the St. Rose debt,
    28   saying only that it was a debt to a hospital.     DeLuca further
    -12-
    1   argued that it was reasonable for any competent attorney to assume
    2   that a debt to a hospital was for medical services, which are
    3   dischargeable, and not a debt relating to fraud for manufacturing
    4   evidence and that it would be reasonable for a client to tell the
    5   attorney about it.   DeLuca conceded that he knew the Judgment
    6   existed, but contended that it would be incumbent upon the client
    7   to inform the attorney about the details of it.    DeLuca also
    8   conceded that had he reviewed the Sanctions Order and Judgment, it
    9   would have been obvious the St. Rose debt was based on fraud.
    10        Based on DeLuca’s responses, the bankruptcy court expressed
    11   concern that he may have also violated two sections of the Code:
    12   §§ 707(b)(4) and 526(a).   For that reason, the court ordered
    13   additional briefing and set an evidentiary hearing, during which
    14   either party could call witnesses.     DeLuca offered to return
    15   Debtors’ fee, but the court found this offer potentially
    16   insufficient as Debtors were now embroiled in a
    17   nondischargeability action and the court questioned the benefit of
    18   their discharge.
    19        On September 20, 2012, the bankruptcy court entered an order
    20   setting the evidentiary hearing and confirming its instructions
    21   that DeLuca be prepared to address his compliance with the
    22   aforementioned provisions of the NRPC, as well as his compliance
    23   with §§ 707(b)(4)(C) and 526(a)(1)-(3).
    24             b.   The OSC evidentiary hearing
    25        In response to the bankruptcy court’s concern about his
    26   compliance with NRPC 1.2(c) and NRPC 1.5, DeLuca contended in his
    27   supplemental brief that Debtors had consented to the limited scope
    28   of representation and that limiting his representation was
    -13-
    1   reasonable under the circumstances.    To show Debtors’ consent,
    2   DeLuca argued that Debtors had signed the pages of the Retainer
    3   Agreement where it explained the scope of services covered under
    4   “Basic Services” and “Additional Fees.”    Debtors had also signed
    5   the last page, which stated they had read the Retainer Agreement
    6   and agreed to its terms and conditions.    DeLuca contended that
    7   Debtors were clearly advised of what services would be covered
    8   under the $1,999 flat fee and what services would require
    9   additional fees because it was his office’s protocol for a
    10   paralegal to review a retainer agreement line by line with each
    11   client.   Debtors had also initialed the paragraph and signed the
    12   corresponding page setting forth the Length of Representation,
    13   which stated that DeLuca was no longer obligated to represent them
    14   after entry of the discharge order.
    15        As for reasonability, DeLuca made several arguments.    First,
    16   Debtors had indicated they could not afford to pay DeLuca the
    17   additional fees for litigation services.    Therefore, argued
    18   DeLuca, he was not required to work without compensation, citing
    19   the Thirteenth Amendment.   DeLuca next argued that it was
    20   reasonable and within his discretion to not represent Seare
    21   because Seare had a history of lying to his own attorneys and
    22   manipulating them into pursuing judicial claims.   DeLuca asserted
    23   that once he learned of the full breadth of Seare’s unscrupulous
    24   conduct, he determined that representing Seare was a liability to
    25   him and his firm, so he did not wish to represent him.
    26        Next, DeLuca argued that the adversary proceeding was legally
    27   indefensible because Seare had committed fraud, so representing
    28   him in litigation would have been futile.   However, DeLuca claimed
    -14-
    1   that after the initial OSC hearing, he did try to procure a
    2   settlement with St. Rose on Seare’s behalf.    According to DeLuca,
    3   St. Rose was receptive and willing to reduce its claim to $23,000,
    4   with a nominal down payment and monthly payments of $300.00.3
    5   DeLuca advised Debtors of the offer, but they wished to pursue
    6   their own settlement directly with St. Rose.    Lastly, DeLuca
    7   argued that Seare was not prejudiced by the nonrepresentation
    8   because DeLuca had advised him immediately after the adversary
    9   complaint had been filed that he was unable to represent him.
    10   Thus, Seare had months to find substitute counsel, yet he chose to
    11   represent himself.
    12        As for his compliance with § 707(b)(4)(C), DeLuca argued that
    13   he performed due diligence in light of the limited information
    14   Debtors provided and their urgency to file bankruptcy to stop the
    15   garnishment.   Despite the Retainer Agreement’s request for all
    16   documentation from lawsuits within the last two years, DeLuca
    17   contended that Debtors provided only copies of a letter from
    18   St. Rose indicating its intent to file a notice of name change and
    19   the Writ of Execution, which indicated the amount of the Judgment
    20   but did not disclose the nature of the award.   In any event,
    21   argued DeLuca, Seare knew he had committed fraud and the Retainer
    22   Agreement expressly stated that debts incurred by fraud “do not go
    23   away.”   The FAQ given to Debtors provided the same information.
    24   Therefore, argued DeLuca, Seare was fully aware prior to filing
    25   that debts incurred through fraud were nondischargeable.   DeLuca
    26
    3
    The bankruptcy court admonished DeLuca for attempting to
    27   disclose settlement terms on the record. However, it did allow
    him to question Seare about it on a limited basis and Seare
    28   testified that the settlement offer amount was less than $67,000.
    -15-
    1   disavowed ever telling Debtors that fraud debts were
    2   dischargeable.
    3        Lastly, DeLuca argued that even though the St. Rose debt was
    4   nondischargeable, Debtors benefitted immensely from the bankruptcy
    5   filing.   Their total unsecured debt was approximately $220,000,
    6   and they eliminated about $137,000 of it, excluding the $67,000
    7   Judgment and $15,000 in student loans.     Further, Seare’s credit
    8   score had increased by over 100 points since the filing, which
    9   Seare even conceded was a benefit.      Thus, argued DeLuca, the
    10   benefits clearly exceeded the $1,999 they paid.     Moreover, the
    11   filing temporarily stopped the garnishment; Debtors now had an
    12   opportunity to settle with St. Rose.     DeLuca did not address the
    13   court’s concern regarding his potential violation of § 526(a).
    14        The OSC evidentiary hearing was held on October 23, 2012.
    15   Seare and DeLuca testified.   The bankruptcy court admitted all of
    16   DeLuca’s exhibits and announced that the matter would be deemed
    17   submitted once the transcripts from the two OSC hearings were
    18   placed on the record.   The OSC hearing transcripts were filed on
    19   October 30, 2012.   Tedoco filed a “Supplemental Hearing Brief” on
    20   December 4, 2012, requesting that the bankruptcy court “make it
    21   part of the record.”    It provided most of the same information
    22   already testified to by Seare, namely, what was said or not said
    23   about the St. Rose debt at the consultation.     The only new and
    24   potentially relevant information it provided was that when making
    25   calls to DeLuca’s office asking to speak to him personally,
    26   Debtors were continually passed off to other staff members, who
    27   also would not return their calls without Debtors leaving multiple
    28   messages.   Tedoco also claimed again that no staff member ever sat
    -16-
    1   down with them to review the specifics of the Retainer Agreement.
    2        4.   The opinion and order for sanctions
    3        The bankruptcy court issued its opinion and order sanctioning
    4   DeLuca on April 9, 2013 (“Sanctions Opinion”).4   Dignity Health v.
    5   Seare (In re Seare), 
    493 B.R. 158
     (Bankr. D. Nev. 2013).    The
    6   court held that DeLuca had violated ethical rules NRPC 1.1, 1.2,
    7   1.5, and 1.4. and certain sections of the Code — §§ 526(a)(1) and
    8   (3), 528(a)(1) and (2), and 707(b)(4)(C).
    9             a.   The bankruptcy court’s findings and conclusions
    10        To the bankruptcy court, this case presented the legal issue
    11   of when consumer bankruptcy attorneys may limit the scope of their
    12   representation, a practice referred to as “unbundling.”    In re
    13   Seare, 493 B.R. at 176.   While acknowledging that unbundling is
    14   permissible in Nevada, and that an attorney can charge additional
    15   fees for adversary proceedings, the court noted that it had to be
    16
    17        4
    After entry of the Sanctions Opinion, the bankruptcy court
    granted DeLuca’s requests to temporarily stay, until determined by
    18   this Panel, publication of the Sanctions Opinion and the
    requirement that for the next two years DeLuca provide a copy of
    19   the Sanctions Opinion to future adversary clients whose case he
    declines. We address the latter issue later in this Memorandum.
    20         As to the first issue, DeLuca disputes the bankruptcy court’s
    decision to publish the Sanctions Opinion, contending that it
    21   impermissibly went beyond its own list of what potential sanctions
    DeLuca faced. DeLuca argues that due to his lack of a prior
    22   disciplinary record and the court’s finding that he did not act
    knowingly, and because he tried to represent Seare in a
    23   settlement, publication of the Sanctions Opinion is too severe.
    He requests that we make the stay permanent or, at minimum, that
    24   his name be deleted from the Sanctions Opinion, citing In re
    Martinez, 
    393 B.R. 27
    , 30 n.1 (Bankr. D. Nev. 2008), a case where
    25   the same bankruptcy judge did not publish the subject attorney’s
    name.
    26         Unfortunately, during our review of this appeal, we
    discovered that the Sanctions Opinion has been published.
    27   Therefore, we are unable to provide this relief given prior
    publication. Further, deleting DeLuca’s name from it, presuming
    28   we could even order such a remedy, would be ineffective.
    -17-
    1   done in a manner consistent with the rules of ethics and
    2   professional responsibility binding on all attorneys.    
    Id.
       In the
    3   court’s view, DeLuca had not complied with the applicable rules in
    4   this case; his boilerplate retainer agreement did not override
    5   such mandatory rules.   
    Id.
    6        The court set forth several preliminary findings of fact to
    7   support its decision to sanction DeLuca.     It found that the issue
    8   of Seare’s fraud was not overtly discussed during the consultation
    9   and that DeLuca never affirmatively represented to Debtors that
    10   the St. Rose debt was dischargeable.   Id. at 180.   It found that
    11   DeLuca simply “thumbed through” the district court documents
    12   without paying them much heed and that he did not represent either
    13   way whether the debt was dischargeable.    Id.   The court also found
    14   that DeLuca did not explain anything about adversary proceedings
    15   during the consultation — what they are, whether one was likely in
    16   this case, or what the potential consequences would be.    Id. at
    17   180-81.   DeLuca’s cursory review of the district court documents
    18   would not have led him to conclude that an adversary proceeding
    19   was likely in Debtors’ case.   Id. at 180.   In sum, the court found
    20   that DeLuca failed to carefully review the district court
    21   documents or inquire about the nature of the Judgment during the
    22   consultation, as had he known the debt was for fraud, he would
    23   have told Debtors that St. Rose would likely seek to have it found
    24   nondischargeable in an adversary proceeding.     Id. at 180-81.   The
    25   court found that DeLuca moved quickly and did not pay sufficient
    26   attention to Debtors’ individual goals and needs and that his
    27   boilerplate forms and standardized approach, which may work for
    28   most clients, failed to work for clients like Seare and Tedoco,
    -18-
    1   whose circumstances do not fit the mold of the prototypical
    2   consumer debtor.      Id. at 181.
    3                    1.    DeLuca violated NRPC 1.1.5
    4        The bankruptcy court held that DeLuca had violated his duty
    5   of competence under NRPC 1.1 by deciding to unbundle adversary
    6   proceedings in Debtors’ case.        In re Seare, 493 B.R. at 192.
    7   Specifically, the court found that as a result of a lack of
    8   communication at the initial consultation DeLuca failed in his
    9   primary duty — ascertaining Debtors’ objectives and defining the
    10   goals of the representation.        Id. at 190.
    11        Debtors’ primary goal was to permanently stop the
    12   garnishment, and once DeLuca was aware of a garnishment connected
    13   to a prior judgment, he, as the bankruptcy expert, had an
    14   affirmative duty to investigate.        Id. at 190-91.      It was not
    15   Debtors’ burden to reach the legal conclusion that fraud, as
    16   defined in the Code, included the fraudulent act Seare committed
    17   in the district court.      Id. at 190.     The court found that DeLuca
    18   either did not understand Debtors’ primary objective or he
    19   negligently assumed the St. Rose debt was dischargeable and thus
    20   Debtors’ objective would be met.        Id. at 191.    Either way, he did
    21   not exercise the legal knowledge, skill and thoroughness
    22   reasonably necessary for the representation.          Id.   The court found
    23   that Debtors could have reasonably anticipated the St. Rose debt
    24   would be discharged and that the garnishment would permanently
    25   cease.   Id.   But, they did not likely expect that an adversary
    26
    5
    NRPC 1.1 provides: “A lawyer shall provide competent
    27   representation to a client. Competent representation requires the
    legal knowledge, skill, thoroughness and preparation reasonably
    28   necessary for the representation.”
    -19-
    1   proceeding would be filed, especially since DeLuca did not explain
    2   what an adversary proceeding was or the connection between
    3   nondischargeable debts and adversary proceedings.     Id.   In the
    4   court’s view, Debtors moved forward and filed a bankruptcy case
    5   they might not have otherwise filed had they known it was nearly
    6   certain to lead to an adversary proceeding.      Alternatively, if
    7   given adequate legal counsel, they may have sought an attorney who
    8   had a different fee structure concerning adversary proceedings.
    9   Id.
    10         The court found that DeLuca, without understanding Debtors’
    11   goals for his representation, could not determine which legal
    12   services were reasonably necessary to attain those goals or
    13   explain to Debtors the challenges they were likely to face in
    14   trying to achieve those goals by filing for bankruptcy.     Id.   In
    15   the absence of such guidance, the court found that DeLuca had a
    16   duty to offer the services reasonably necessary to achieve
    17   permanent cessation of the wage garnishment.     Id. at 191-92.
    18   Because an adversary proceeding was a near certainty in light of
    19   what DeLuca should have known at the time of the initial
    20   consultation — that the Judgment was based on fraud — representing
    21   Debtors at an adversary proceeding was not only reasonably
    22   necessary to achieve their goal of stopping the garnishment, but
    23   likely the only way to stop it.    Id. at 192.   Consequently,
    24   DeLuca’s decision to unbundle his representation in any adversary
    25   proceedings in Debtors’ case violated the duty of competence under
    26   NRPC 1.1.   Id.
    27   ///
    28   ///
    -20-
    1                      2.     DeLuca violated NRPC 1.2(c).6
    2        The bankruptcy court held that DeLuca violated NRPC 1.2(c)
    3   because unbundling the service of adversary proceedings was not
    4   reasonable in light of Debtors’ circumstances.        In re Seare, 493
    5   B.R. at 196.   Although the court did not find fault with DeLuca
    6   using pre-prepared forms that limit the scope of services included
    7   in a flat fee, it did find that deciding to unbundle services
    8   reasonably necessary to achieve a client’s objectives before even
    9   meeting the client was unreasonable and violated NRPC 1.2(c).           Id.
    10   at 194.   Here, it appeared that his decision to unbundle adversary
    11   services was made before he ever met Debtors.        Alternatively, even
    12   if DeLuca’s decision to unbundle such services was made during
    13   Debtors’ initial consultation, that decision was also unreasonable
    14   and violated the rule because an adversary proceeding was a near
    15   certainty.   Id.        The court found DeLuca should have known, and
    16   would have known had he cursorily investigated the nature of the
    17   Judgment, that representing Seare in an adversary proceeding was
    18   reasonably necessary to achieve Debtors’ reasonably anticipated
    19   result — a discharge of the St. Rose debt.        Id. at 194-95.
    20   Debtors’ expectation of a complete discharge was reasonable
    21   because DeLuca did not inform them otherwise and they are not
    22   bankruptcy experts.        Id. at 195.
    23        The court also faulted DeLuca for not communicating his
    24   intent not to represent Seare in the adversary proceeding until
    25   after the complaint had been filed, knowing that an adversary
    26
    27        6
    NRPC 1.2 provides: “A lawyer may limit the scope of the
    representation if the limitation is reasonable under the
    28   circumstances and the client gives informed consent.”
    -21-
    1   proceeding was the only way Seare could possibly discharge the
    2   St. Rose debt.   Unbundling such service at that point in time was
    3   “patently unreasonable” and violated NRPC 1.2(c).     Id. at 196.
    4        Lastly, the unbundling was DeLuca’s idea, which the court
    5   found ran contrary to the ABA’s guidance that unbundling should be
    6   client-driven.   Id.
    7        The bankruptcy court held that DeLuca had further violated
    8   NRPC 1.2(c) because he did not obtain Debtors’ informed consent in
    9   limiting the scope of his representation.     Id. at 203.   First, the
    10   court found that DeLuca did not comply with the rule by adequately
    11   communicating the material risks of unbundling adversary
    12   proceedings, either in general or in Debtors’ case, or the
    13   available alternatives to such unbundling.     Id.   His failure to
    14   properly understand their goals and details of their situation —
    15   i.e., the nature of the Judgment — rendered adequate communication
    16   impossible.   Id. at 204.   The Retainer Agreement, which the court
    17   found to be DeLuca’s primary communication with Debtors, did not
    18   constitute adequate communication.      The Retainer Agreement’s
    19   “fraud” disclaimer and statements that the flat fee does not
    20   include representation for nondischargeability allegations and
    21   adversary proceedings, which were in different sections, did not
    22   communicate the material risks of proceeding without
    23   representation in adversary proceedings, or even that DeLuca may
    24   decide not to represent Debtors in an adversary proceeding.        Id.
    25   Thus, reasoned the court, prospective clients are left to connect
    26   the dots — that a debt incurred through fraud is raised in a claim
    27   of nondischargeability that is litigated in an adversary
    28   proceeding.   Id.   Hence, without adequate information upon which
    -22-
    1   to base a decision, the court found that obtaining Debtors’ valid
    2   consent was impossible.    Id. at 203.
    3         The means of consent here — initialing and signing DeLuca’s
    4   contract of adhesion — did not sufficiently demonstrate that
    5   Debtors understood what services were unbundled, or their
    6   particular circumstance, or the seriousness of proceeding without
    7   representation in adversary proceedings.    Id. at 203-05.   Without
    8   any explanation to Debtors about the risks of unbundling services,
    9   the court found that Debtors could not have known that the bundle
    10   of services in the flat fee was unlikely to meet their objectives.
    11   Id. at 205.    DeLuca neither explained the risks of going it alone
    12   in adversary proceedings nor what particular risks Debtors faced,
    13   or that they could seek counsel who structured his or her services
    14   differently.   Id.   DeLuca did not communicate the high likelihood
    15   of Debtors having to represent themselves pro se or find another
    16   attorney, which the court found would have been evident had he
    17   reviewed the Judgment.    Id.   Without DeLuca ever explaining
    18   adversary proceedings to Debtors, they could have reasonably
    19   agreed to exclude them, assuming that such proceedings were
    20   unlikely to occur.   However, the court doubted whether Debtors
    21   actually made that decision, since DeLuca never explained what an
    22   adversary proceeding was.    Id.
    23   ///
    24   ///
    25   ///
    26   ///
    27   ///
    28   ///
    -23-
    1                    3.     DeLuca violated NRPC 1.5.7
    2          The bankruptcy court held that DeLuca violated NRPC 1.5(b)
    3   because he did not sufficiently explain the scope of services
    4   covered under the flat fee and the scope of services available for
    5   additional fees, as the rule requires.      In re Seare, 493 B.R. at
    6   206.   The problem with DeLuca’s Retainer Agreement was three-fold.
    7   First, the listed services were in legal jargon as opposed to
    8   plain English.    Id.    Seare understood that adversary proceedings
    9   were excluded, but did not know what they were.         He also knew that
    10   “nondischargeability allegations” were excluded, but similarly he
    11   might not have known what they were.      Id.
    12          Second, Debtors were not aware of the likelihood that they
    13   would need to pay for additional services.      Id. at 206.     Because
    14   an adversary proceeding was reasonably foreseeable at the time
    15   Debtors agreed to the fee structure and DeLuca did not explain
    16   this eventuality to them, the court found that DeLuca improperly
    17   unbundled the adversary proceeding from the flat fee.         Id. at 206-
    18   07.    He unfairly placed them in the position of having to bargain
    19   for additional legal services in the midst of an adversary
    20   proceeding.   Id. at 207.
    21          Third, DeLuca violated NRPC 1.5(b) by changing the basis of
    22   his fees without advance warning to Debtors.         Id.   The Retainer
    23   Agreement did not state that DeLuca may decide not to represent
    24
    7
    NRPC 1.5(b) provides: “The scope of the representation and
    25   the basis or rate of the fee and expenses for which the client
    will be responsible shall be communicated to the client,
    26   preferably in writing, before or within a reasonable time after
    commencing the representation, except when the lawyer will charge
    27   a regularly represented client on the same basis or rate. Any
    changes in the basis or rate of the fee or expenses shall also be
    28   communicated to the client.”
    -24-
    1   Debtors in adversary proceedings, only that such services would
    2   incur additional fees.        The court found that Debtors agreed to pay
    3   about $2,000 for an attorney that, for the additional fees, would
    4   handle nondischargeability claims and adversary proceedings, and
    5   part of the basis for the $2,000 fee was the availability of
    6   services if needed.     Id.     By deciding later not to represent
    7   Debtors at all, DeLuca essentially changed the basis of his fees.
    8   The court further found that because Debtors did not understand
    9   adversary proceedings, the likelihood of one being filed against
    10   them, and what it would cost them, they could not have known that
    11   the approximately $2,000 they agreed to pay did not include the
    12   scope of services reasonably necessary to achieve their goal.        Id.
    13   Thus, reasoned the court, their choice to pay it could not be
    14   considered voluntary.        Id.
    15                     4.   DeLuca violated NRPC 1.4.8
    16        The bankruptcy court held that DeLuca violated NRPC 1.4 by
    17   failing to properly communicate with Debtors.        In re Seare, 493
    18   B.R. at 208.     Specifically, DeLuca violated NRPC 1.4(a)(2) by
    19   failing to reasonably consult Debtors about the means to achieve
    20   their objectives.      Id.    He also violated NRPC 1.4(a)(3) by failing
    21   to forward the proposed stipulation and order DeLuca received
    22   before St. Rose filed its complaint.        Id.   Finally, DeLuca
    23
    8
    NRPC 1.4 provides, in relevant part:
    24
    (a) A lawyer shall:
    25                . . .
    (2) Reasonably consult with the client about the means
    26                by which the client’s objectives are to be accomplished;
    (3) Keep the client reasonably informed about the status
    27                of the matter;
    (4) Promptly comply with reasonable requests for
    28                information[.]
    -25-
    1   violated NRPC 1.4(a)(4) by failing to timely respond to Debtors’
    2   requests for information.      Id.   Although the court generally
    3   questioned Debtors’ credibility, it did find convincing Tedoco’s
    4   claims about DeLuca’s and his staff’s failure to return phone
    5   calls and to keep them informed of their case.      Id.    The court
    6   also found independently that DeLuca’s own records evidenced his
    7   office’s inattention to detail and poor client communication.          He
    8   failed to log which paralegal reviewed the retainer agreement with
    9   each prospective client, he twice incorrectly filed his OSC briefs
    10   in the main case and he failed to serve copies of his OSC briefs
    11   on Debtors until after the OSC evidentiary hearing, even though he
    12   was ordered to serve them immediately after the initial OSC
    13   hearing.    Id.
    14                     5.    DeLuca violated § 707(b)(4)(C).9
    15        The bankruptcy court reasoned that, as with DeLuca’s ethical
    16   violations, his violation of § 707(b)(4)(C) flowed from his
    17   failure to investigate the nature of the Judgment.         In re Seare,
    18   493 B.R. at 211.       The court disagreed that DeLuca performed due
    19   diligence in this case, finding that he had taken no steps to
    20
    21        9
    Section 707(b)(4)(C) provides:
    22        The signature of an attorney on a petition, pleading, or
    written motion shall constitute a certification that the
    23        attorney has—
    (i) performed a reasonable investigation into the
    24             circumstances that gave rise to the petition, pleading,
    or written motion; and
    25             (ii) determined that the petition, pleading, or written
    motion—
    26                  (I) is well grounded in fact; and
    (II) is warranted by existing law or a good faith
    27                  argument for the extension, modification, or
    reversal of existing law and does not constitute an
    28                  abuse under paragraph (1).
    -26-
    1   investigate independently or verify the circumstances underlying
    2   the Order of Wage Garnishment, which fell far short of the
    3   “reasonable investigation” requirement of § 707(b)(4)(C).     Id. at
    4   211-213.   Debtors told DeLuca of the circumstances giving rise to
    5   the petition — the wage garnishment — and gave him documents from
    6   the district court case.    Id. at 211.   DeLuca demonstrated his
    7   awareness of the action by listing it in Debtors’ SOFA, including
    8   the case name and number.    Id.   DeLuca’s reasonable next step
    9   should have been to investigate the Judgment supporting the
    10   garnishment, which could have been accomplished by asking
    11   questions or reviewing the district court’s electronic docket.
    12   Id.   The fact that the Judgment led to a garnishment was a
    13   sufficient “red flag” for further inquiry.    Id. at 212.   Instead,
    14   the court found that DeLuca merely flipped through the documents
    15   and assumed that since the debt was owed to a hospital, it must be
    16   for medical bills and was thus dischargeable.    Id. at 211-12.     His
    17   office also never obtained any further documents from Debtors,
    18   which may have revealed information they failed to provide.     Id.
    19   at 212.    Blaming his clients for that failure was inappropriate
    20   because Debtors were not bankruptcy experts.    Id.
    21   ///
    22   ///
    23   ///
    24   ///
    25   ///
    26   ///
    27   ///
    28   ///
    -27-
    1                    6.   DeLuca violated §§ 526(a)10 and 528(a).11
    2        First, the bankruptcy court found that DeLuca was required to
    3   comply with §§ 526 and 528(a) based on his role as a bankruptcy
    4   attorney and “debt relief agency,” Debtors’ role as “assisted
    5   persons,” and the nature of Debtors’ debts.     In re Seare, 
    493 B.R. 6
       at 214.    Through analysis similar to that utilized in connection
    7   with NRPC 1.4, the court found that DeLuca violated § 526(a) by
    8   failing to accurately explain that he would not represent Debtors
    9   in an adversary proceeding and the risks Debtors could face in
    10   bankruptcy.    Id. at 215.   Although the Retainer Agreement states
    11
    12        10
    Section 526(a) provides, in relevant part:
    13        (a) A debt relief agency shall not—
    14               (1) fail to perform any service that such agency
    informed an assisted person or prospective assisted
    15               person it would provide in connection with a case or
    proceeding under this title;
    16               . . .
    (3) misrepresent to any assisted person or prospective
    17               assisted person, directly or indirectly, affirmatively
    or by material omission, with respect to—
    18                     (A) the services that such agency will provide to
    such person; or
    19                     (B) the benefits and risks that may result if such
    person becomes a debtor in a case under this title.
    20
    11
    Section 528(a) provides, in relevant part:
    21
    (a) A debt relief agency shall—
    22
    (1) not later than 5 business days after the first date
    23               on which such agency provides any bankruptcy assistance
    services to an assisted person, but prior to such
    24               assisted person’s petition under this title being filed,
    execute a written contract with such assisted person
    25               that explains clearly and conspicuously—
    (A) the services such agency will provide to such
    26                    assisted person; and
    (B) the fees or charges for such services, and the
    27                    terms of payment;
    (2) provide the assisted person with a copy of the fully
    28               executed and completed contract.
    -28-
    1   that representation for nondischargeability allegations and
    2   adversary proceedings would result in additional fees, DeLuca
    3   flatly refused to provide these services once the complaint was
    4   filed.   Thus, he violated § 526(a)(1) by failing to perform a
    5   service he informed Debtors he would provide in connection with
    6   their bankruptcy case.   Id.
    7        The court rejected DeLuca’s argument that because Debtors
    8   could not afford the additional services anyway, it was immaterial
    9   whether or not he was willing to perform them.         This argument
    10   improperly benefitted from hindsight.         Id.   The court found that
    11   at the time DeLuca refused to perform the additional services, no
    12   evidence existed that he ever offered these services to Debtors
    13   and that Debtors refused them for lack of funds.         Id.   DeLuca
    14   offered no evidence indicating he consulted at all with Debtors
    15   before sending them the June 6 letter of nonrepresentation.          Id.
    16   At minimum, based on the Retainer Agreement, the court found that
    17   DeLuca was obligated to at least quote Seare a price for the
    18   adversary representation.   Id.
    19        The court found that DeLuca had also violated § 526(a)(3)
    20   because he misrepresented, by omission, the risks associated with
    21   an adversary proceeding that Debtors were nearly certain to face
    22   if they filed for bankruptcy.     Id.    Because stopping the
    23   garnishment was Debtors’ primary goal, DeLuca’s failure to address
    24   the risks of a related adversary proceeding was a material
    25   omission.   Id.
    26        DeLuca was also found to have violated § 528(a) for the same
    27   reasons he had violated NRPC 1.5.       Id.    While he partially
    28   complied with § 528(a)(1) by providing a written contract on the
    -29-
    1   same day as the consultation, DeLuca had violated § 528(a)(2)
    2   because he failed to provide a “fully executed and completed
    3   contract”; he never signed the Retainer Agreement.        Id.   Further,
    4   the court found that DeLuca also violated § 528(a)(1) because the
    5   Retainer Agreement did not “clearly and conspicuously” explain the
    6   scope of services and fees.       Id.   Specifically, DeLuca excluded
    7   services using technical terms like “nondischargeability
    8   allegations” and “adversary proceedings,” which a layperson would
    9   not likely understand.       Further, the standard form contract did
    10   not relate these services to a client’s particular case, and,
    11   without clarification from DeLuca about which additional services
    12   were likely to be needed, Debtors had no way of knowing which
    13   exclusions were likely to apply and what the chances were of
    14   facing increased legal fees.       Id. at 215-16.
    15                b.     The sanctions imposed
    16        After carefully reviewing the range of available sanctions,
    17   the bankruptcy court ordered the following:         (1) that DeLuca
    18   disgorge the $1,999 fee paid by Debtors; (2) that the Sanctions
    19   Opinion be published to deter such conduct by other attorneys in
    20   the future; (3) that DeLuca complete some Continuing Legal
    21   Education credits; and (4) that for the next two years DeLuca
    22   provide a copy of the Sanctions Opinion to every client who is
    23   sued in an adversary proceeding, but only if DeLuca declines to
    24   represent them in that adversary proceeding for any reason.           Id.
    25   at 224-27.        The court declined to impose any further monetary
    26   sanctions beyond disgorgement, despite the authority to do so,
    27   because of DeLuca’s good standing and his efforts to mitigate the
    28   situation by offering to refund the fee and represent Seare in
    -30-
    1   negotiations with St. Rose.    Id. at 226.    DeLuca timely appealed.
    2        5.   The result of adversary proceeding
    3        On January 2, 2013, St. Rose filed a Confession of Judgment,
    4   in which Seare authorized a nondischargeable judgment against him
    5   for $67,430.58.
    6                              II. JURISDICTION
    7        The bankruptcy court had jurisdiction under 
    28 U.S.C. §§ 1334
    8   and 157(b)(2)(A).   We have jurisdiction under 
    28 U.S.C. § 158
    .
    9                                 III. ISSUES
    10        Did the bankruptcy court abuse its discretion in sanctioning
    11   DeLuca and imposing the types of sanctions that it did?
    12                          IV. STANDARDS OF REVIEW
    13        “We review all aspects of an award of sanctions for an abuse
    14   of discretion.”   Orton v. Hoffman (In re Kayne), 
    453 B.R. 372
    , 380
    15   (9th Cir. BAP 2011) (citing Price v. Lehtinen (In re Lehtinen),
    16   
    332 B.R. 404
    , 411 (9th Cir. BAP 2005), aff’d, 
    564 F.3d 1052
     (9th
    17   Cir. 2009)); In re Nguyen, 
    447 B.R. 268
    , 276 (9th Cir. BAP 2011)
    18   (en banc)).   The bankruptcy court’s choices of sanctions are also
    19   reviewed for abuse of discretion.    U.S. Dist. Ct. for E.D. Wash.
    20   v. Sandlin, 
    12 F.3d 861
    , 865 (9th Cir. 1993).     A bankruptcy court
    21   abuses its discretion if it applies the wrong legal standard or
    22   its factual findings are illogical, implausible or without support
    23   in the record.    TrafficSchool.com v. Edriver Inc., 
    653 F.3d 820
    ,
    24   832 (9th Cir. 2011).
    25        With respect to sanctions, a bankruptcy court’s factual
    26   findings are reviewed for clear error and given great deference.
    27   Primus Auto. Fin. Servs., Inc. v. Batarse, 
    115 F.3d 644
    , 649 (9th
    28   Cir. 1997).   A factual finding is clearly erroneous if it is
    -31-
    1   illogical, implausible or without support in the record.     Retz v.
    2   Samson (In re Retz), 
    606 F.3d 1189
    , 1196 (9th Cir. 2010).
    3        Whether an appellant’s due process rights were violated is a
    4   question of law we review de novo.      Miller v. Cardinale (In re
    5   DeVille), 
    280 B.R. 483
    , 492 (9th Cir. BAP 2002), aff’d, 
    361 F.3d 6
       539 (9th Cir. 2004).
    7                                V. DISCUSSION
    8   A.   The bankruptcy court’s power to sanction attorneys
    9        “Bankruptcy courts have the inherent authority to regulate
    10   the practice of attorneys who appear before them.”     In re Nguyen,
    11   
    447 B.R. at
    280 (citing Chambers v. NASCO, Inc., 
    501 U.S. 32
    , 43-
    12   45 (1991); Caldwell v. Unified Capital Corp. (In re Rainbow
    13   Magazine, Inc.), 
    77 F.3d 278
    , 284–85 (9th Cir. 1996)).
    14   “Bankruptcy courts also have express authority under the Code and
    15   the Rules to sanction attorneys, including disbarment or
    16   suspension from practice.”    
    Id.
     at 281 (citing In re Lehtinen, 564
    17   F.3d at 1058, 1062; § 105(a)).    “The bankruptcy court has wide
    18   discretion in determining the amount of a sanctions award.”     In re
    19   Kayne, 
    453 B.R. at 386
     (internal quotation marks and citation
    20   omitted).   The Local Rules for the District Court of the District
    21   of Nevada also grant considerable leeway in fashioning sanctions
    22   for violations of the NRPC.    Local Rule IA 10-7(a) provides that
    23   “[a]ny attorney who violates these standards of conduct may be
    24   disbarred, suspended from practice before this Court for a
    25   definitive time, reprimanded or subjected to such other discipline
    26
    27
    28
    -32-
    1   as the court deems proper.”12
    2        In reviewing attorney disciplinary sanctions, we determine
    3   whether (1) the disciplinary proceeding was fair, (2) the evidence
    4   supports the findings, and (3) the penalty imposed was reasonable.
    5   In re Nguyen, 
    447 B.R. at 276
    .
    6
    B.   The bankruptcy court did not abuse its discretion when it
    7        sanctioned DeLuca and imposed the sanctions that it did.
    8        DeLuca raises several arguments on appeal, most of which
    9   pertain to the bankruptcy court’s findings of fact or his dispute
    10   with some of the sanctions imposed.     We address each of his
    11   arguments in turn.
    12        We begin with the bankruptcy court’s consideration of
    13   Tedoco’s late-filed brief after the matter had been taken under
    14   submission.   The court stated at the OSC evidentiary hearing that
    15   once the transcripts from the two OSC hearings were recorded on
    16   the docket, the matter would stand submitted.     The transcripts
    17   were recorded on October 30, 2012.      Presumably, evidence closed on
    18   that date.    Tedoco’s brief was filed on December 4, 2012.   Citing
    19   to no authority, DeLuca argues that the bankruptcy court committed
    20   reversible error by considering Tedoco’s late-filed brief and
    21   relying on the inadmissible facts contained therein for much of
    22   its decision.
    23        Reopening of a case after the close of evidence rests in the
    24   discretion of the trial court.    Mo. Pac. Ry. Co. v. Oleson, 
    213 F. 25
       329, 331-32 (8th Cir. 1914); United States v. Hugh, 236 F. App’x
    26
    12
    Part IA of the Local Rules of Practice for the U.S.
    27   District Court for the District of Nevada apply in all bankruptcy
    cases and proceedings in the U.S. Bankruptcy Court for the
    28   District of Nevada. See Local Rule IA 2-1.
    -33-
    1   796, 802 (3d Cir. June 14, 2007) (Ambro, J., dissenting) (“there
    2   is no iron-bound, copper-fastened, double-riveted rule against the
    3   admission of evidence after both parties have rested upon their
    4   proof”) (quoting United States v. Blankenship, 
    775 F.2d 735
    , 741
    5   (6th Cir. 1985) and citing Oleson).      Therefore, it was within the
    6   bankruptcy court’s discretion to consider Tedoco’s late-filed
    7   brief.
    8        However, we agree with DeLuca that Tedoco’s brief consisted
    9   only of argument, not admissible evidence.     As such, the
    10   bankruptcy court erred in considering it.     United States   v.
    11   Moreland, 
    622 F.3d 1147
    , 1162 (9th Cir. 2010) (argument is not
    12   evidence); Hurley v. Student Loan Acquisition Auth. of Ariz. (In
    13   re Hurley), 
    258 B.R. 15
    , 23 (Bankr. D. Mont. 2001).     Nonetheless,
    14   much of what Tedoco asserted had already been established by
    15   Seare, either by his testimony at the OSC evidentiary hearing or
    16   in documentary evidence the parties submitted.     Therefore, it was
    17   harmless error for the bankruptcy court to consider any facts
    18   asserted in the brief because they were already before the court
    19   through competent evidence.   Lillie v. United States, 
    953 F.2d 20
       1188, 1192 (10th Cir. 1992) (admission of improper evidence of a
    21   fact in issue is harmless when the judgment is supported by
    22   sufficient competent evidence).    The few facts the court should
    23   not have considered, however, as we discuss more fully below, are
    24   insufficient to establish reversible error.
    25        1.   DeLuca’s arguments regarding the violations of the NRPC
    26             a.   NRPC 1.1 and NRPC 1.2
    27        DeLuca first takes issue with the bankruptcy court’s findings
    28   under NRPC 1.1 that his unbundling of adversary proceedings was
    -34-
    1   unreasonable in this case because it failed to achieve Debtors’
    2   reasonably anticipated result — i.e., discharge of the St. Rose
    3   debt.    DeLuca contends that three problems exist with this
    4   finding:    (1) it assumes the debt was dischargeable; (2) the
    5   bankruptcy court made comments during the initial OSC hearing with
    6   Seare present that led Seare to testify at the evidentiary hearing
    7   that dischargeability and adversary proceedings were not explained
    8   to him by DeLuca; and (3) it fails to recognize that because
    9   St. Rose did not include Tedoco in the adversary proceeding and
    10   she received a discharge, the debt is uncollectible against Seare
    11   under the community discharge, so DeLuca did in fact achieve
    12   Debtors’ reasonably anticipated result.
    13           Any bankruptcy professional would recognize the obstacles a
    14   debtor faces in trying to achieve the discharge of a debt based on
    15   fraud.    However, the bankruptcy court found that Debtors could
    16   have reasonably anticipated the St. Rose debt would be discharged
    17   and that the garnishment would permanently cease, based on
    18   DeLuca’s failure to investigate the Judgment and inform his
    19   clients of the inevitable adversary proceeding.    It further found
    20   it impossible for DeLuca to provide adequate counsel as a result
    21   of his erroneous assumption that the Judgment arose from unpaid
    22   medical bills.    We see no clear error in that finding.
    23           As for comments made by the bankruptcy court at the initial
    24   OSC hearing, it is true that Seare testified at the later
    25   evidentiary hearing that he did not know what adversary
    26   proceedings were and that DeLuca never discussed them.     However,
    27   this was not the only evidence showing that DeLuca failed to
    28   explain the meaning of dischargeable versus nondischargeable
    -35-
    1   debts, the meaning of adversary proceedings or the connection
    2   between them.   It was reasonable for the court to infer that this
    3   discussion never occurred with Debtors because, by DeLuca’s own
    4   admission, he was not aware that the Judgment was based on fraud.
    5   Also, Seare testified that the issue of fraud never came up at the
    6   consultation.   If it had, one would expect DeLuca to have
    7   explained nondischargeable debts and adversary proceedings.    More
    8   importantly, DeLuca never affirmatively testified that he did
    9   explain these matters to Debtors and no record exists that any
    10   member of DeLuca’s staff did either.   Although it was his office’s
    11   protocol to have a staff member go through every page of his
    12   retainer agreement with clients, DeLuca could not establish that
    13   it occurred in this case.   Tedoco claimed that no one went through
    14   the Retainer Agreement with Debtors, but this was an inadmissible
    15   fact the bankruptcy court should not have considered.
    16        As for his third argument that the St. Rose debt is
    17   uncollectible due to the community discharge, DeLuca admits he did
    18   not raise this issue before the bankruptcy court.   As such, we are
    19   not required to consider it for the first time on appeal.
    20   O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 
    887 F.2d 21
       955, 957 (9th Cir. 1989); Concrete Equip. Co. v. Fox (In re Vigil
    22   Bros. Constr., Inc.), 
    193 B.R. 513
    , 520 (9th Cir. BAP 1996).    In
    23   any event, when considering whether the community discharge under
    24   § 524(a)(3) applies, the bankruptcy court must first determine
    25   whether the debt is a community debt under state law.   The court
    26   must then determine the scope of the discharge.   Arcadia Farms
    27   Ltd. v. Rollinson (In re Rollinson), 
    322 B.R. 879
    , 881 (Bankr. D.
    
    28 Ariz. 2005
    ) (“Once a debt has been determined to be a community
    -36-
    1   debt pursuant to state law, the second issue is the scope of the
    2   discharge.”).    Neither of those determinations have been made
    3   here.    Further, “when the debtor has incurred a nondischargeable
    4   debt or is not entitled to a discharge, or the debtor’s spouse
    5   would have been denied a discharge or had a debt declared
    6   nondischargeable in a hypothetical bankruptcy case commenced on
    7   the same day as that of the debtor, the nondischargeable debt of
    8   either spouse will survive against after-acquired community
    9   property.”    4 COLLIER ON BANKRUPTCY ¶ 524.02[3][a] (Alan N. Resnick &
    10   Henry J. Sommer eds., 16th ed. 2013).     Therefore, Debtor was not
    11   entitled to a community discharge of a debt he could not himself
    12   discharge.    Even if DeLuca’s argument has merit, which we do not
    13   believe it does, we find it improper that he rely on subsequent
    14   events beyond his control to try to negate his prior shortcomings
    15   in complying with the rules of ethics.
    16           DeLuca next takes issue with the bankruptcy court’s finding
    17   that he failed to obtain Debtors’ informed consent to unbundle
    18   adversary proceedings.    DeLuca rests his arguments on the
    19   disclosures in the Retainer Agreement and FAQ about the
    20   nondischargeability of fraud debts and Seare’s admission that he
    21   did not read the FAQ.    DeLuca contends the court erred in finding
    22   that Seare did not give informed consent, after Seare had admitted
    23   he made no effort to read any of the documents he signed and
    24   failed to ask any questions.     In other words, argues DeLuca, a
    25   client cannot argue that disclosures are insufficient and consent
    26   invalid when he makes no effort to read, review and question
    27   critical documents.    The bankruptcy court considered and rejected
    28   this argument.    It found that the Retainer Agreement’s “fraud”
    -37-
    1   disclaimer and its disconnected “legal jargon” statements about
    2   what was or was not included in the flat fee left prospective
    3   clients to “connect the dots” that a debt incurred through fraud
    4   is raised in a claim of nondischargeability, which is litigated in
    5   an adversary proceeding, and that it was something that requires
    6   additional fees for representation.      The court also found it
    7   improper for DeLuca to put the onus on layperson debtors to make
    8   these conclusions.   We see no clear error here.
    9        DeLuca also quibbles with the bankruptcy court’s
    10   characterization of Debtors’ goal as one to “permanently” stop the
    11   wage garnishment, when Seare testified that his desire was “to get
    12   the wage garnishment stopped.”    DeLuca argues that the court added
    13   the word “permanently,” which it inferred from Tedoco’s late-filed
    14   brief — a brief it should not have considered.     Although Tedoco
    15   used the word “permanently” in her brief, Seare also testified at
    16   the evidentiary hearing that the sole reason for filing bankruptcy
    17   was to “get rid of” the garnishment and that the temporary
    18   cessation of it was not the benefit they were seeking.     Further,
    19   DeLuca’s argument defies logic.    Of course Debtors wanted the
    20   garnishment to disappear forever, not just for a few months.
    21        DeLuca alternatively argues that even if Debtors’ goal was
    22   permanent cessation of the garnishment, the garnishment was
    23   stopped as of the date of the OSC evidentiary hearing, so DeLuca
    24   did fulfill his duty of competence by achieving the goal of
    25   “stopping the garnishment.”   For the reasons already discussed and
    26   given by the bankruptcy court, we need not address this meritless
    27   argument.
    28        Lastly, DeLuca argues that the bankruptcy court “improperly
    -38-
    1   put itself in Debtors’ place” and went outside the record when it
    2   found that Debtors may have chosen not to file bankruptcy or may
    3   have sought an attorney with a different fee structure, had they
    4   known about the dischargeability concerns related to the St. Rose
    5   debt.    We disagree.   This inference was reasonable for the court
    6   to make in light of this record.     Plus, this fact alone does not
    7   change the conclusion that DeLuca violated his duty of competence.
    8   Despite DeLuca’s contentions, whether the St. Rose debt was
    9   actually dischargeable is not the point.    The point is:   What is
    10   the nature of the debt; what relief may the creditor seek against
    11   Debtors; and what will Debtors need to do to defend against the
    12   claim?    Debtors needed DeLuca to inform them sufficiently of the
    13   risks associated with the St. Rose debt before they could properly
    14   provide informed consent to allow DeLuca to unbundle services.
    15   DeLuca failed to advise them about the debt or its risks because
    16   he did not perform even a minimal investigation, which would have
    17   revealed that the Judgment arose from fraud.     Without that
    18   knowledge, it was impossible for DeLuca to determine Debtors’
    19   circumstances and advise them as to what sort of representation
    20   would be needed to achieve their goal of eliminating the St. Rose
    21   debt and the garnishment.
    22           We conclude the bankruptcy court did not err in determining
    23   DeLuca violated NRPC 1.1 and 1.2(c).
    24                b.   NRPC 1.4 and NRPC 1.5
    25           DeLuca next argues that the bankruptcy court erred in
    26   determining he violated NRPC 1.5 because he did not sufficiently
    27   explain the scope of services covered under the flat fee and the
    28   scope of services available for additional fees.    DeLuca points to
    -39-
    1   Seare’s testimony that he understood DeLuca would not be
    2   representing him in any allegations of fraud.   Again, DeLuca
    3   misses the point.   Seare may have understood that defending fraud
    4   allegations would require an additional fee or that adversary
    5   proceedings or nondischargeability allegations were excluded from
    6   the flat fee, but the Retainer Agreement — the only communication
    7   to Debtors explaining the scope of DeLuca’s services and/or for
    8   what fees — failed to make the connection between these issues.
    9   Accordingly, we perceive no error with the bankruptcy court’s
    10   decision that DeLuca violated NRPC 1.5.
    11        Finally, DeLuca contends the bankruptcy court erred in
    12   determining that he violated NRPC 1.4 by failing to properly
    13   communicate with Debtors.   DeLuca first asserts a due process
    14   concern over whether he received sufficient notice that the
    15   bankruptcy court was considering sanctioning him under this rule.
    16   DeLuca correctly notes that any potential violations of NRPC 1.4
    17   were not raised in the OSC, or in the order setting the
    18   evidentiary hearing, or at either hearing.   Therefore, he argues
    19   that sanctioning him under this rule violated his due process
    20   rights and should be reversed.   “When an attorney is subject to
    21   discipline, he or she has a right to notice and an opportunity to
    22   be heard.”   In re Nguyen, 
    447 B.R. at
    278 (citing In re Ruffalo,
    23   
    390 U.S. 544
    , 551-52 (1968); In re Lehtinen, 
    564 F.3d at 1060
    )).
    24   To satisfy the requirements of due process in this context, “the
    25   attorney must receive prior notice of the ‘the particular alleged
    26   misconduct and of the particular disciplinary authority under
    27   which the court is planning to proceed’ along with an opportunity
    28   to respond.”   
    Id.
     (quoting In re DeVille, 361 F.3d at 548).    The
    -40-
    1   rule, however, is not absolute.    In re Deville, 361 F.3d at 548.
    2        Here, the OSC notified DeLuca of his alleged misconduct and
    3   that the bankruptcy court was considering disciplining him under
    4   NRPC 1.1, 1.2 and 1.5.   Absent from this is any reference to
    5   NRPC 1.4.   Despite the court’s omission of NRPC 1.4 in the OSC or
    6   in the order setting the evidentiary hearing, we conclude that
    7   DeLuca was not deprived of due process.   DeLuca had notice of the
    8   conduct potentially subjecting him to discipline under several
    9   provisions of the NRPC and under sections of the bankruptcy code,
    10   which interrelatedly address similar, if not, identical
    11   requirements imposed under the general rubric of professional
    12   conduct.    If the attorney has been sufficiently informed of the
    13   alleged misconduct, the Ninth Circuit has upheld sanctions even
    14   when a bankruptcy court, in advance of a disciplinary proceeding,
    15   stated that Rule 9011 was the basis for discipline, yet it
    16   proceeded to impose sanctions under its inherent authority.     See
    17   In re DeVille, 361 F.3d at 550.    Even if the court improperly
    18   considered NRPC 1.4, it committed harmless error as the elements
    19   of this rule are also generally included in the provisions that
    20   were identified by the court in its orders, i.e., NRPC 1.4,
    21   § 526(a) and § 528(a) involve what services and means are
    22   necessary to accomplish the client’s objectives.    The bankruptcy
    23   court informed DeLuca through orders and at the hearings of the
    24   conduct that would be the subject of any discipline.
    25        Nonetheless, we must address a second issue.   Many of the
    26   facts asserted in Tedoco’s brief were used extensively in the
    27   bankruptcy court’s decision to find that DeLuca had violated
    28   NRPC 1.4.   Again, these “facts” should not have been considered.
    -41-
    1   However, other admissible facts in the record support the court’s
    2   decision to find that DeLuca violated NRPC 1.4, namely, DeLuca’s
    3   failure to inform Debtors of the St. Rose fax containing the
    4   proposed stipulation and order about the Judgment.   Also in
    5   evidence was Debtors’ email to DeLuca’s office that his failure to
    6   return phone calls was unacceptable and unprofessional customer
    7   service.   Finally, the court found independently that DeLuca’s own
    8   records indicated his office’s inattention to detail and poor
    9   client communication.   He fails to log which paralegal reviewed
    10   the retainer agreement with each prospective client.   As such, we
    11   see no error in the bankruptcy court’s decision that DeLuca
    12   violated NRPC 1.4.
    13        2.    DeLuca’s arguments regarding the violations of
    §§ 707(b)(4)(C), 526(a)(1) and (3), and
    14              528(a)(1) and (2)
    15        DeLuca also raises a due process concern with respect to the
    16   bankruptcy court’s decision to sanction him under these various
    17   sections of the Code.   DeLuca contends that the court only
    18   “orally” added §§ 707(b)(4) and 526(a), both of which have four
    19   subparts each, at the initial OSC hearing and failed to specify
    20   which subpart(s) DeLuca potentially violated.   Thus, because he
    21   was not provided adequate written notice of these alleged
    22   violations, nor the potential sanctions associated with them,
    23   DeLuca contends they should all be stricken.    While it is true
    24   that the court orally added these Code sections at the initial OSC
    25   hearing out of concern for some of DeLuca’s answers, this was not
    26   the only notice DeLuca received about them.
    27        In the order entered on September 20, 2012, and setting the
    28   evidentiary hearing, the bankruptcy court specifically set forth
    -42-
    1   which subpart(s) of each section were at issue, citing them right
    2   in the order.    Notably, DeLuca failed to include this order in his
    3   excerpts of record.   Given his failure to include the order,
    4   DeLuca’s contention on appeal that he did not receive written
    5   notice of the Code sections at issue is sanctionable.
    6          DeLuca asserts that even if we conclude he received adequate
    7   notice, he nonetheless complied with each section.    As for
    8   § 707(b)(4)(C), DeLuca argues that the “reasonable investigation”
    9   requirement goes more to the omission of assets or debts, not
    10   whether a debt is dischargeable.     While it is true that much of
    11   the case law on this issue has concerned an attorney’s omission of
    12   assets in bankruptcy schedules, DeLuca has not cited any authority
    13   establishing that this section could not be applied in the way the
    14   bankruptcy court did here.   Bottom line, DeLuca did not perform a
    15   “reasonable investigation into the circumstances that gave rise to
    16   the petition.”   § 707(b)(4)(C).    Accordingly, we see no error.
    17          DeLuca also contends that he complied with § 526(a)(1) and
    18   (3).   Although his argument is somewhat unclear, DeLuca apparently
    19   argues that he did not violate § 526(a)(1) because the Retainer
    20   Agreement stated only that he would not represent Debtors in an
    21   adversary proceeding without additional fees, not that he would
    22   not represent them in one at all, as the bankruptcy court found.
    23   DeLuca says he decided to not represent Debtors after the full
    24   scope of Seare’s actions became known.    First, the bankruptcy
    25   court did not find that the Retainer Agreement said DeLuca would
    26   never represent Debtors in an adversary proceeding.    In fact, it
    27   found just the opposite, which led to DeLuca’s problem.    The
    28   Retainer Agreement stated that representation for
    -43-
    1   nondischargeability allegations and adversary proceedings was
    2   available for an additional fee, but DeLuca flatly refused to
    3   provide these services once the complaint was filed.    Hence, the
    4   court found he violated § 526(a)(1) for his failure to perform a
    5   service he informed Debtors that he would provide in connection
    6   with their bankruptcy case.
    7        As for § 526(a)(3), DeLuca contends that because the St. Rose
    8   complaint did not include Tedoco and she received a community
    9   discharge, and thus the debt is ultimately uncollectible against
    10   Seare, the bankruptcy court erred in determining that he violated
    11   § 526(a)(3).    For the same reasons stated above, we reject this
    12   argument.    In any event, the record supports the bankruptcy
    13   court’s decision.    DeLuca failed to comply with § 526(a)(3)
    14   because he did not inform Debtors about the risks associated with
    15   an adversary proceeding they were nearly certain to face once they
    16   filed for bankruptcy.
    17        Lastly, DeLuca contends that he received even less due
    18   process regarding any violations of § 528 because it was never
    19   mentioned prior to the bankruptcy court’s decision.    We agree that
    20   § 528 was not mentioned anywhere prior to the entry of the court’s
    21   Sanctions Opinion.    However, as a bankruptcy attorney, DeLuca knew
    22   he had not signed the Retainer Agreement as required by § 528.
    23   Further, as noted by the bankruptcy court, DeLuca satisfied the
    24   qualifying factors imposed by § 528 and was required by statute to
    25   comply with its requirements.    As § 528 mandates compliance, we
    26   find no error.
    27        3.     DeLuca’s arguments about the sanctions imposed
    28        DeLuca argues that the sanctions imposed upon him were too
    -44-
    1   severe.   Specifically, he argues that the bankruptcy court
    2   impermissibly went far beyond the list in its OSC of potential
    3   sanctions DeLuca faced.    The orders specifically provided that
    4   monetary and nonmonetary sanctions may be considered and imposed.
    5   Keeping in mind that bankruptcy judges have broad discretion in
    6   determining the type of sanctions to impose, the court imposed
    7   sanctions encompassed within the general designation of monetary
    8   and nonmonetary sanctions expressly stated in the OSC.   The court
    9   did not impermissibly exceed the described sanctions.    We further
    10   conclude that the sanctions were fair, supported by the evidence
    11   and reasonable.   See In re Nguyen, 
    447 B.R. at 276
    .
    12        DeLuca argues that ordering him to provide a copy of the
    13   Sanctions Opinion to potential adversary clients whose case he
    14   declines for the next two years is excessive and violates his
    15   commercial free speech.    Leaving aside momentarily the “excessive”
    16   argument, DeLuca has not cited a case holding that ordering a
    17   sanctioned attorney to provide prospective clients with the
    18   court’s decision sanctioning the attorney violates his or her free
    19   speech.   In any event, this sanction was of particular importance
    20   to the bankruptcy court as a means to protect future debtors by
    21   ensuring they are properly informed of the risks of unbundling,
    22   and to promote a systematic change in DeLuca’s practice, which the
    23   court characterized as a “mill” practice.   The court also saw this
    24   sanction as a means of informing the bar that being disciplined
    25   for unethical conduct has repercussions beyond just paying a fine
    26   and moving on.    We find it difficult to disagree with this
    27   reasoning.   Accordingly, we do not conclude that this sanction was
    28   excessive.
    -45-
    1        Lastly, DeLuca argues that he should not have to disgorge his
    2   fee, particularly the filing fee and credit report fee, because
    3   Debtors did obtain the benefit of a discharge, and Seare’s credit
    4   score increased by over 100 points following the discharge.   As
    5   for the actual fee paid to DeLuca, we cannot say the bankruptcy
    6   court abused its discretion under the circumstances.   In fact, it
    7   did not, despite the authority to do so, order any additional
    8   monetary sanctions because of DeLuca’s efforts to return his fee
    9   to Debtors and to represent Seare in settlement negotiations with
    10   St. Rose.   Given the record, we conclude the bankruptcy court did
    11   not abuse its discretion in including the filing and credit report
    12   fees within the total amount to be disgorged, especially when
    13   prior to the issuance of the Sanctions Opinion, DeLuca agreed to
    14   return Debtors’ money.13
    15                              VI. CONCLUSION
    16        Consumer bankruptcy attorneys can unbundle their services in
    17   Nevada, particularly, adversary proceedings.   However, unbundling,
    18   or limited scope representation, needs to comply with the rules of
    19   ethics and the Bankruptcy Code.    A qualitative analysis of each
    20   individual debtor’s case must be done at intake to ensure that his
    21   or her reasonable goals and needs are being met.   That calculus
    22
    13
    DeLuca also argues that the bankruptcy court erred in
    23   refusing to allow him to disclose the terms of the settlement
    offer between St. Rose and Seare that he helped procure, before it
    24   imposed sanctions. Actually, the “cat is already out of the bag”
    since DeLuca mentioned it on the record at the OSC evidentiary
    25   hearing, and the transcript is on the docket for the world to see.
    Certainly, the bankruptcy court was aware of it at the time it
    26   entered the Sanctions Opinion. In any event, we fail to see how
    allowing this into the record would have made any significant
    27   difference in the sanctions the court imposed. Actually, DeLuca’s
    offer to help Seare procure a settlement with St. Rose appears to
    28   have helped him.
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    1   was not applied in this case.   For the foregoing reasons, we
    2   AFFIRM.
    3
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    1   JURY, Bankruptcy Judge, Concurring:
    2
    3        I write separately to highlight what this disposition, and
    4   the lengthy published opinion of the bankruptcy court in In re
    5   Seare, 
    493 B.R. 158
    , hold and what they do not hold.    Importantly,
    6   they do not hold that unbundling representation of a debtor in a
    7   nondischargeability adversary proceeding from general
    8   representation of that debtor in a bankruptcy case is prohibited.
    9   What they do say is that an attorney who wishes to limit her or
    10   his scope of bankruptcy representation should be mindful of the
    11   ethical minefield he or she must navigate.
    12        I agree with the majority that the bankruptcy judge here did
    13   not abuse his discretion in concluding that DeLuca violated
    14   numerous sections of the Nevada Rules of Professional Conduct
    15   (NRPC) and also failed to comply with certain requirements of the
    16   Bankruptcy Code when he unbundled representation of Seare in the
    17   St. Rose adversary.   The factual findings amply support the
    18   conclusion that Deluca stumbled in that ethical minefield.
    19   However, unbundling representation of a consumer debtor in an
    20   adversary proceeding is neither prohibited by state ethical
    21   standards nor by the Bankruptcy Code.   If done correctly,
    22   unbundling may be key to competent consumer bankruptcy attorneys
    23   providing much needed representation to debtors at an affordable
    24   price.   Without the ability to unbundle adversaries, the flat fee
    25   which a consumer attorney would need to charge for basic
    26   bankruptcy representation might become prohibitive and exacerbate
    27   the already existing problem of pro se filings.
    28        To be sure, the bankruptcy judge here did not suggest that
    -1-
    1   unbundling was never appropriate.      Indeed, in his opinion he
    2   describes the background and general acceptance of limited scope
    3   representation by the American Bar Association (ABA), which has
    4   provided for limited scope in its Model Rules, the American
    5   Bankruptcy Institute (ABI), and by most states in their ethical
    6   rules which monitor the performance of lawyers.     Seare, 
    493 B.R. 7
       at 183.   Despite recognizing this broad acceptance, however, the
    8   bankruptcy judge found that DeLuca fell woefully short of
    9   complying with the ethical standards which surround unbundling and
    10   therefore sanctioned him for this shortcoming.     The judge found
    11   that unbundling the adversary proceeding in the representation of
    12   Seare based on the unique facts of this case was not possible to
    13   achieve the reasonably anticipated result of the client.
    14   Therefore, I believe it is useful to focus on why this unbundling
    15   failed and how a consumer bankruptcy lawyer might avoid the
    16   pitfalls which brought down DeLuca.
    17        As highlighted by the bankruptcy judge, both the NRPC and the
    18   ABA Model Rules state that an attorney may “limit the scope of
    19   representation if the limitation is reasonable under the
    20   circumstances and the client gives informed consent.”
    21   NRPC 1.2(c); ABA Model Rule 1.2.    It was the implementation of
    22   this rule from the initial intake interview that tripped DeLuca up
    23   because he did not properly define the goal of the representation
    24   of Seare: to permanently stop the garnishment on the St. Rose
    25   judgment.   The failure to recognize this goal was caused by the
    26   circumstances described by the bankruptcy judge and the majority
    27   and need not be repeated here.   In a nutshell, the communication
    28   between Seare and DeLuca did not cause DeLuca to recognize that
    -2-
    1   the St. Rose judgment was likely nondischargeable as based on
    2   fraud14; therefore, his representation would not stop the
    3   garnishment permanently unless he defended and won or settled the
    4   adversary proceeding.   By not making the necessary reasonable
    5   inquiry about the judgment, DeLuca’s attempt to unbundle did not
    6   achieve the goal of limited scope: to provide a bundle of services
    7   reasonably necessary to achieve the client’s reasonably
    8   anticipated result.   In re Seare, 493 B.R. at 188.
    9        All the other ethical and statutory violations found by the
    10   bankruptcy judge flowed from this initial deficiency in the
    11   limited scope representation.   DeLuca failed to perform
    12   competently because he did not identify the goal and provide
    13   services to accomplish the goal - i.e. representing Seare in the
    14   adversary proceeding, causing the violation of NRPC 1.1.    The
    15   unbundled services he promised for the agreed flat fee was not a
    16   reasonable limited scope, causing the NRPC 1.2 error.   He did not
    17   obtain informed consent because he relied on a boilerplate
    18   Retainer Agreement with legal jargon which, although it described
    19   fraud as nondischargeable and that representation in an adversary
    20   was not included in the flat fee, did not connect the dots such
    21   that Seare was made aware of the risk of accepting such limited
    22   scope representation and why it would not achieve his desired
    23   result, being free of the St. Rose garnishment.   Just Seare
    24   initialing every page of the Retainer Agreement did not provide
    25   the particularized communication necessary for informed consent.
    26
    14
    It is ironic to me that although every reference to this
    27   judgment as being nondischargeable talks about fraud, the grounds
    under which St. Rose sought nondischargeability were §§ 523(a)(4)
    28   and (6), not fraud.
    -3-
    1   The other violations of the NRPC are similarly tied to failure to
    2   identify the goal and provide the services necessary to achieve
    3   it.
    4         The Bankruptcy Code violations are founded on the same
    5   deficiencies: DeLuca’s failure to investigate the St. Rose
    6   judgment to determine its nondischargeable nature caused the
    7   § 707(b)(4)(c) violation; the failure to get informed consent
    8   regarding nonrepresentation in the adversary resulted in the
    9   § 526(a)(1) violation (when DeLuca refused to represent Seare at
    10   all in the adversary, even for a further fee); and DeLuca violated
    11   § 526(a)(3) when he did not fully explain the limitation on the
    12   services which the flat fee would buy.15
    13         The bankruptcy judge chose to publish his opinion as part of
    14   the sanctions of DeLuca “to deter such conduct by all attorneys.”16
    15   I summarize here my suggestions for such attorneys to avoid
    16   violating ethical rules and the Bankruptcy Code when they limit
    17   the scope of representation of consumer debtors:
    18         1.   At the initial intake interview with the debtor, identify
    19   fully and completely the debtor’s goals.   Almost by definition,
    20   the attorney therefore cannot have a predetermined business
    21   practice that excepts representation in adversary proceedings from
    22   the services the attorney will render unless the attorney and
    23
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    15
    The violation of § 528 is based on the failure of DeLuca to
    25   sign the Retainer Agreement and is not related to the unbundling
    issue.
    26
    16
    In joining the majority, I also endorse their view that the
    27   bankruptcy judge followed the proper procedures and had the
    authority to impose the sanctions ordered, in accordance with In
    28   re Nguyen, 
    447 B.R. 268
     (9th Cir. BAP 2011) (en banc).
    -4-
    1   debtor identify that exception before deciding to commence
    2   representation.    As noted by the bankruptcy judge, the decision to
    3   unbundle must be driven by the debtor’s needs, not the attorneys.
    4        2.     The attorney may not rely solely on the debtor’s input to
    5   help him or her ascertain the debtor’s goal.    Both the ethical
    6   rules and the Code require the attorney to conduct a reasonable
    7   investigation of the debtor’s assets and liabilities.    If the
    8   attorney learns that a judgment has been taken against the debtor,
    9   the attorney must make reasonable inquiry into the nature of the
    10   judgment in order to determine whether it might be subject to
    11   nondischargeability.
    12        3.     If, after ascertaining the debtor’s goals, the attorney
    13   believes that limited scope representation is consistent with
    14   those goals, the attorney must then fully explain to the debtor
    15   the consequences and inherent risks which might arise if an
    16   adversary is filed against the debtor and the attorney has not
    17   included representation in that proceeding in the unbundled
    18   services.    Informed consent is just that: informed.   The debtor
    19   must understand the “legal jargon” and the practical effect on him
    20   or her of the limited scope representation before the consent is
    21   informed.
    22        4.     The attorney must customize the retainer agreement to the
    23   goals of debtor.    That is not to say that much of the agreement
    24   cannot be boilerplate, but boilerplate without the attorney’s
    25   active role in its preparation will be insufficient for limited
    26   scope representation.    Just having the debtor read and initial the
    27   agreement does not assure the debtor is giving informed consent.
    28        5.     After describing to the debtor the risks of limited scope
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    1   representation, the attorney must give the debtor the opportunity
    2   to “shop elsewhere” for an attorney who will provide full
    3   representation before entering into the contractual relationship
    4   with the debtor for the limited scope.
    5        6.   The attorney should document as fully as possible all the
    6   steps taken to comply with these requirements.
    7        Following these suggestions should go a long way to allowing
    8   consumer bankruptcy attorneys to unbundle adversary proceeding
    9   representation without violating ethical rules.
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