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Bankruptcy Court Case In West VirginiaOn December 21, 2006, this court granted John Patrick Ball (the “Debtor”) permission to sell a condominium, located at 2 Waterfront Plaza, Morgantown, West Virginia, (the “Condominium”) that he claims to own jointly with is wife, Anita Ball, to Rita and Stephen Tanner for the sum of $885,000. The West Virginia University Foundation, Inc. (the “Foundation”), Ward D. Stone,1 and the United States Trustee (the “USTE”), all object to the Debtor’s motion to approve the disbursement of the net sale proceeds to the extent that Ms. Ball would immediately be paid that portion of the sale proceeds that represent her purported one-half interest in the Condominium (about $222,000). Pursuant to an Order entered by this court on January 31, 2007, the court converted the objections to Debtor’s motion into motions for a preliminary injunction under Fed. R. Bankr. P. 7065 and 9014.
Consistent with that Order, the Foundation and Mr. Stone argue that a preliminary injunction should be issued by the court to prevent sale proceeds being paid to Ms. Ball on the basis that Ms. Ball’s acquisition of an ownership interest in the Condominium was fraudulent as to present and future creditors under W. Va. Code § 40-1A-1, et seq. The USTE argues that at least $44,300 of the proceeds should not be paid over to Ms. Ball on the grounds that she is liable to the Debtor’s bankruptcy estate in that amount under a claim for unjust enrichment. For sundry reasons, the hearing on the motions for a preliminary injunction were continued until March 28, 2007, and post hearing briefs were submitted by April 17, 2007, at which time the court took the matter under advisement. For the reasons stated herein, the court will deny the motions for a preliminary injunction.
Based on the Statement of Charges, the West Virginia Supreme Court of Appeals eventually determined that the Debtor drafted three wills in which he gave himself excessive fees as executor, drafted two wills that improperly conveyed property to himself and his wife, and assisted in changing a client’s annuity to benefit his adult children. As a result, the Supreme Court of Appeals determined that the Debtor violated West Virginia Rule of Professional Conduct 1.5(a) (prohibition on excessive fees); 1.7(b) (prohibiting representation of a client when that representation is materially limited by the lawyer’s own interests); 1.8(c) (prohibition on preparing a will that gives the lawyer or a relative of the lawyer a substantial gift from the client); and 8.4(a) (prohibition against attempting to violate the Rules of Professional Conduct). Based on these ethical violations, the Supreme Court of Appeals ordered fullrestitution of all unethically obtained funds, which was later determined to be $2,978,848 as of July 17,2006. On October 31, 2006, the Debtor filed his Chapter 11 bankruptcy petition.
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