Bankruptcy court judge shows little mercy on attorneys

Yet another Las Vegas bankruptcy attorney has ended up with an official tongue lashing from U.S. Bankruptcy Judge Bruce Markell.

David Winterton joined the growing list of attorneys with whom Markell found fault professionally.

Winterton, a lawyer in Nevada since 1990 and an experienced bankruptcy attorney, received more than stern words and sanctions.

He was fined nearly $110,000, which counts as serious money. That's the amount two other firms had to pay in costs and legal fees to fight Winterton in two courts.

It's an unusual case in that Winterton represented a Nevada corporation called Blue Pine Group, which was owned equally by two other corporations of two people each. All the businesses were commercial refrigeration gasket businesses, and Blue Pine was created to operate in Clark County

Blue Pine's board of directors consisted of the owners of the two corporations, M&G Group Enterprises based in Las Vegas and Humitech of Northern California. Each owned 50 percent of Blue Pine Group.

The board of Blue Pine never authorized Winterton to file a Chapter 7 bankruptcy. And the experienced bankruptcy attorney actually didn't. On March 10, 2009, he filed documents, but not an actual bankruptcy petition.

He filed the documents at the request of M&G owner John Grose, relying on the word of another attorney, Hannah Irsfeld, who also worked for Grose. She told Winterton that Blue Pine had passed the resolution authorizing the bankruptcy filing and she had it. It wasn't true, but Winterton took her word for it and didn't ask to see documents.

Three days later, Humitech's attorney wrote Winterton saying he had no authorization for his actions.

Despite that, four days later, Winterton filed an actual Chapter 7 petition signed by John and Brenda Grose, but not by Humitech's owners, John Pink and Adam Sweeney.

Markell said Winterton shouldn't have relied on the words of his client or even another attorney and should have made sure he had the documents authorizing him to file a bankruptcy.

Essentially, Winterton filed a frivolous claim and cost Humitech $109,528 in legal fees. Winterton's fine will be paid to Humitech.

Markell quoted one of his earlier opinions, saying Winterton, by filing such a frivolous claim, succumbed to a "butler-style" of legal representation where the "sequaciously servile lawyer does whatever the client wants and then cites that client's command as a shield to the improper actions." That style of lawyering has no place in any court, Markell wrote.

"Lawyers are not given the privilege of assuming that their clients or other lawyers are unfailingly truthful."

Markell said Winterton "stubbornly persisted" in his efforts and failed to follow the court's rules, wasting the time of Humitech's attorneys.

Left unsaid was that Winterton also wasted Markell's time.

Winterton isn't the only attorney to be sanctioned by Markell.

Markell sanctioned Randolph Goldberg in April and asked the U.S. attorney's office to consider a possible criminal complaint for forgery of documents. No complaint has been filed against Goldberg in federal court.

The judge also referred Goldberg to the State Bar of Nevada, which currently has 11 pending grievances from the public against him. The grievances are being handled together and have not yet gone before the Bar's screening panel to decide if a complaint should be filed, Assistant Bar Counsel Phil Pattee said.

Markell's opinions put bankruptcy attorneys on notice they must follow the rules of the court or suffer the consequences of a public humiliation, and, in this case, a huge fine.

If the judge frightens attorneys into taking those extra steps to assure everything is done correctly, accurately and ethically, then he protects people who rely on their bankruptcy attorneys to help them, not hurt them.

Jane Ann Morrison's column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call (702) 383-0275. She also blogs at lvrj.com/blogs/morrison.