Thursday, February 17, 2011

Lawyer Goes to Jail Because he was not Strategic-Just Stupid

When I was at the University of Florida, one of the preeminent professors there was often heard to say, "If someone has to go to jail, make sure its the client."  I guess those sage words of advice never graced the ears of California lawyer, Michael J. Pines.  In a Housingwire article which details Mr. Pines contempt charges for helping his clients break back into a foreclosed home, the lawyer is made out to look like a bit of a Thoreau or Ghandi type figure for his civil disobedience.  My take, is that the lawyer in question is just stupid because he wasn't strategic.

I don't make that claim lightly, because I have great respect for anyone that can endure three brutal years of law school and then pass a bar, especially a difficult bar like California's.  The problem that I read in the article came from the following paragraph:"In January 2010, Canejo Capital Partners, an investment firm based in California, purchased the home through a foreclosure auction court documents show, but the Earls remained in the property and delayed eviction through bankruptcy filings."

To the average person, there doesn't seem to be any issue with this, but from my Washington perspective there are huge issues.  Mr. Pines was trying to create a forum where he could air his client's grievances with robo-signing, produce the note, and I am sure, a whole smattering of other claims that could discredit the bank's legal right to foreclose the home.  The huge issue that first comes to mind is that nonjudicial foreclosure is designed to ensure continuity of title, thus once the sale takes place, you have very little legal standing to challenge the sale.  Here in Washington, we saw the Albice case back at the end of the third quarter of last year where the Court of Appeals did overturn a sale, but that is incredibly rare. So strike one is that Mr. Pines didn't challenge the legality of foreclosure prior to the sale, he was too late to implement a valid strategy.

The second big issue that I saw was that Mr. Pines didn't strategically place his bankruptcy.  Bankruptcy is a tool, and in my opinion, shouldn't even be the mainstay of any attorney's practice.  Bankruptcy mills in my opinion are a disservice to the client because the attorney has a conflict of interest with his client.  He only gets paid for doing bankruptcy and if he lets his client walk out the door without a bankruptcy he doesn't get paid.  As my MBA professor would say, bankruptcy attorneys, when they open their tool box, have a big shiny hammer and the whole world looks like a nail.  The bankruptcy should have been placed prior to the sale, which would have had the same effect of keeping the client in the home for a longer period of time and then would have provided a proper venue to challenge the foreclosure.

See, the bank, upon receiving notice of the bankruptcy would be subjected to the automatic stay.  The automatic stay is the provision that is so powerful in bankruptcy because it stops all collection activities, including foreclosure.  The bank would have been forced to either wait for the bankruptcy proceedings to conclude or request relief from the stay.  In requesting relief, a well informed attorney would have the proper venue to challenge the legality of the foreclosure in the first place.  Mr. Pines instead waited too long and then had essentially no legal standing for the challenge.

The third issue is that the lawyer made the case about him, instead of about his client.  Self agrandizment during your client's proceedings is in bad taste.  Mr. Pines had spent too many nights reading Civil Disobedience and dreaming of changing the world through sit-ins instead of looking out for the best interests of his clients.  He helped his client's break into the house, after the foreclosure, and then spouted off to the court saying, "Well then I think you should hold a contempt hearing, and I welcome that..."  He was proud that he would bring attention to the plight of his client's case by getting sent to jail.  Idiot.

If you want to bring attention to the plight of your client, win the case.  Have a better argument!  Implement a strategy!  Don't get sent to the jail because you're too stupid to come up with a better plan.  The only thing that he can hope for now is that his complexion won't clash with his orange jumpsuit.

When strategically defaulting and forcing a foreclosure, sometimes it becomes obvious the bank is not following the rules, or maybe doesn't have legal rights to do what it claims to be doing.  At that point in time, you have to have a plan, a strategy, and if you are the attorney, it better not end with you going to really should be the client.  Wink, wink, nudge, nudge.

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