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July 21 — A lawyer who represented a group of class action plaintiffs may have believed he was acting on their behalf when he filed an involuntary bankruptcy against the defendant in the class action case, but what he believed didn't change the truth.
Judge C. Darnell Jones, II, found that even if the lawyer mistakenly believed he was representing the plaintiffs in the bankruptcy, he wasn't in fact their lawyer. Therefore, the plaintiffs weren't properly notified about the bankruptcy through the lawyer, because he wasn't actually representing them.
Vincent Coppola represented the class action plaintiffs in a suit against their former employer, Joseph Straub. Coppola represented five named class members who were the representatives for 71 unnamed class members.
A jury entered a verdict of $635,278 against Straub and found he committed fraud by underpaying his employees.
Coppola filed an involuntary bankruptcy against Straub on behalf of three of the named class members. The bankruptcy court set a deadline for creditors to oppose the dischargeability of their debts. After that deadline had passed, Coppola filed a suit with the bankruptcy court objecting to the discharge of the jury verdict on behalf of the unnamed members of the class.
Straub argued that the suit wasn't filed in time because the deadline to object to dischargeability had passed. But the bankruptcy court found that the unnamed class members hadn't received proper notice of the deadline, and therefore the late-filed suit was allowed to proceed.
A debt can only be discharged if the creditor has “notice or actual knowledge” of the impending discharge under Section 523(a)(3)(A) of the Bankruptcy Code. If an attorney is actually representing a creditor, then notice of a bankruptcy given to the attorney generally satisfies any notice requirement as to the creditor.
In this case, Coppola had notice of the deadline, but the district court found that this was insufficient to give notice to the unnamed class members because he wasn't representing them at the relevant time.
In Coppola's fee agreement in the class action case, it specified that Coppola would represent the class “to verdict.” Therefore, once the verdict was issued in the class action suit, Coppola's representation of the plaintiffs officially ceased.
The district court said that when an attorney represents a plaintiff in one case, it doesn't automatically mean the attorney is an agent for that party in a different case between the same parties. The court also said that “an attorney given notice of the bankruptcy on behalf of a particular client is not called upon to review all of his or her files to ascertain whether any other client may also have a claim against the bankrupt,” quoting Maldonado v. Ramirez, 757 F.2d 48 (3d Cir. 1985).
Straub argued that Coppola believed he was representing the unnamed class members when he filed the involuntary bankruptcy. Straub noted that Coppola filed a proof of claim in the bankruptcy for the jury verdict and listed the entire amount of the verdict, which was intended for all the plaintiffs.
“Even if Mr. Coppola's subjective understanding when he filed the involuntary bankruptcy action was that he was representing the unnamed class members, such subjective understanding does not change the fact that, contractually, he was not,” the court said.
The court said that the notice requirement is intended to protect creditors like the unnamed class members, who had “no existing contract” with Coppola, and that their right to notice “cannot be mitigated by the subjective belief of a person who was not contractually their attorney.”
Therefore, the court found that Coppola wasn't representing the unnamed class members when notice of the deadline was issued, and so they weren't bound to the deadline.
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