FLORIDA BOARD OF BAR EXAMINERS RE: S.M.D.
No. 79,863
SUPREME COURT OF FLORIDA
609 So. 2d 1309;
1992 Fla. LEXIS 2037;
17 Fla. Law W. S 747
December 10, 1992, Decided
PRIOR HISTORY:
[**1]
Original Proceeding - Florida Board of Bar Examiners
COUNSEL: Lewis Kapner of Lewis Kapner, P.A., West Palm Beach, Florida, for Petitioner.
Virginia B. Townes, Chairman, Orlando, Florida; John H. Moore, Executive
Director and Thomas A. Pobjecky, General Counsel, Tallahassee, Florida, for
Respondent.
JUDGES: BARKETT, OVERTON, McDONALD, SHAW, KOGAN, GRIMES, HARDING
OPINIONBY: PER CURIAM
OPINION:
[*1310] This is a petition for review of a
recommendation by the Florida Board of Bar Examiners not to admit an applicant to The Florida
Bar. We have jurisdiction under article V, section 15 of the Florida
Constitution.
S.M.D. completed her secondary education in 1981. After high school, she
attended community college and worked to support herself. She married her
first husband in July 1982. With her husband, she moved to Virginia where she
continued to attend school while working. S.M.D. and her husband returned to
Florida and were divorced in August of 1987. Pursuant to the divorce, S.M.D.
was assigned $ 7,000 of debt, one half of the debt
accumulated by her and her husband during the
marriage.
S.M.D. received her undergraduate degree in December
[**2] 1986. At that point, she had only been able to
repay the interest on the debt from her first
marriage. Despite the $ 7,000 debt, S.M.D. enrolled in a New England
law
school in September 1987. During her first year, she received the maximum student
loans to cover tuition, books, and
living expenses. During the summer after her first year in
law school, S.M.D. returned to Florida and worked as a
law clerk with a private firm.
In her second year of
law school, S.M.D. again received the maximum amount in student loans. At this time, she
married a third-year law student. Their wedding cost $ 2,000 and was
financed primarily with
credit cards. Prior to May 1989, S.M.D. owed approximately $ 8,000 to
credit card companies.
After her second year in
law school, S.M.D. and her husband moved to Florida. He had a obtained a position with a
private
law firm which he was to begin after completing the bar exam. S.M.D. had arranged to
complete her third year at a
Florida
law school. S.M.D. and her husband
financed their move from New England to Florida and their
living expenses that summer primarily with
credit cards.
During her third year in
law school, S.M.D. was employed as a
law clerk.
[**3] However, she had a hard time
securing
permanent employment. The
credit card debt accrued by her and her husband had ballooned to approximately $ 25,000
and they were unable to maintain the interest payments. They were receiving
"dunning" letters daily and were being sued by one
credit card company in Virginia. S.M.D. sought help at Consumer Counseling and attempted
to arrange a payment plan with the individual companies to no avail. During
her final semester in
law school, she sought legal advice and, on April 14, 1990, filed a joint petition for
bankruptcy with her husband under Chapter 7 of the United States
Bankruptcy Code. At this time
S.M.D. and her husband had
accumulated debt of $ 109,235.74. About $ 25,000 of the debt was
credit card charges, and the balance was student and family loans. However, when the
petition was filed, her husband had obtained a job with a
law firm at an annual salary of $ 37,000, and she was still earning about $ 1,000 per
month.
S.M.D. graduated from
law school on May 20, 1990. She filed her application for admission to the bar on May
21, 1990, and passed the summer 1990 bar exam. Her
credit card debts and family loans were
discharged on
[**4] September 6, 1990. S.M.D. appeared at an investigative hearing in February
1991 to answer questions concerning the
circumstances surrounding the
bankruptcy. She was served with
specifications on June 24, 1991, and a formal hearing was held on January 10, 1992. The
Board recommended that S.M.D. not be admitted.
In reaching its decision, the Board found three
specifications proven and
disqualifying. In
specification 1, the Board found that S.M.D. had demonstrated financial
irresponsibility
[*1311] between 1981 and 1990 by incurring, with her husband, $ 109,000 in debts,
including $ 25,000 in
credit card charges, and that her
irresponsibility included purchasing goods and services on credit beyond her ability to
repay the obligations in a timely manner. In
specification 2, the Board found that the
circumstances surrounding the
bankruptcy evidenced substantial doubts as to S.M.D.'s respect for the rights of her
creditors and a disregard of her
moral obligation to pay her credit obligations. In
specification 6, the Board found that S.M.D. made a statement on her
bankruptcy petition that was false,
misleading and lacking in candor.
With respect to
specification 1, S.M.D. denies that she
[**5] exhibited any financial
irresponsibility. Most of the
debt incurred was non-dischargeable
student loan obligations. As to the remaining debt, only $ 14,000 is attributable to
S.M.D. because the remainder was incurred by her husband. S.M.D. argues that
the
debt incurred during
law school and
discharged in
bankruptcy represented reasonable and necessary
living expenses and that the accrual of these expenses indicates nothing negative about her
character. Further, S.M.D. denies that she ran up her
credit card charges knowing she did not have the present ability to
repay them.
Regarding
specification 2, S.M.D. denies that the
bankruptcy evidences any disregard to the rights of her creditors or any disregard of her
moral obligations to them. While the Board alleges that S.M.D. and her husband
filed for
bankruptcy at a time when they were experiencing only a $ 113 deficit in their ability to
meet their monthly debt obligations, she asserts that the figure does not
include monthly expenses for any
credit card liabilities, increased costs of supporting her husband's child, or
student loan obligations which had not yet come due. Also, while S.M.D. did eventually
find
permanent employment,
[**6] it was not until five months after filing the petition.
Despite the Board's contentions, S.M.D. asserts that the decision to seek
relief in
bankruptcy occurred only after all other reasonable alternatives had been
exhausted and unforeseeable
misfortunes had aggravated the dilemma to the point where
bankruptcy appeared to be the only option. She and her husband had recently been turned
down for additional loans. Finally, S.M.D. says she did not discharge any of
her student loans and, in fact, is faithfully repaying them. Further, she has
shown her
moral responsibility to her creditors by attempting to work out
repayment plans prior to filing and by actually paying her debts as best she could, both
prior to and subsequent to the
bankruptcy. S.M.D. says she has sent letters to her creditors reaffirming her intent to
pay the debts. Regarding
specification 6, S.M.D. denies that any statements on her
bankruptcy petition regarding her take-home pay are
misleading. The figure S.M.D. claimed on the
petition was adjusted for taxes and unusual time periods in which S.M.D. was
able to work longer than normal hours. The adjustments were made pursuant to
the instructions of her
bankruptcy
[**7] lawyer and no objections were made by the court or the creditors. She
contends that the figure was not
misleading and, under the circumstances, was reasonable.
The Board is rightly concerned over the morality of a person who continues to
incur large debts with little or no prospect of
repayment. Further, it cannot be doubted that a lawyer who is constantly in debt is more
likely to succumb to temptations to the detriment of his or her clients or the
public. On the other hand, the costs of a legal education are high and the
ability to maintain oneself while attending school at the same time is limited.
We suspect that it is the rule rather than the exception for today's
law school graduate to be in debt.
There are also two sides to the
declaration of
bankruptcy. In
Florida Board of Bar Examiners re G.W.L., 364 So. 2d 454 (Fla. 1978), this Court accepted the Board's
recommendation that the applicant not be admitted because he had
declared
bankruptcy. This Court stated:
The record before us reflects that the petitioner suffered no unusual
misfortune or financial catastrophe prior to his filing the
bankruptcy petition. His position
[*1312] was no different
[**8] than that of other students who used student loans to obtain and complete
their education. Although he did not have employment at the time of his
graduation and for six months thereafter, the student loans were not yet due
and for the most part would not be due for at least a year. In our view, his
filing of the
bankruptcy petition showed a disregard not only for the rights of his creditors but also for
future
student loan applicants. The filing of the
bankruptcy petition was not illegal, but in our view it was done in such a
morally
reprehensible fashion that it directly affects his
fitness to practice law.
To foreclose any misconstruction of this decision, we must emphasize that this
ruling should not be interpreted to approve any general principle concerning
bankruptcies nor to hold that the
securing of a discharge in
bankruptcy is an act inherently requiring the denial of admission to the bar. We further
do not wish this decision to be construed to hold that any comparable exercise
of a clear legal right will necessarily imperil bar admission.
Id. at 459-60.
However, one month later we directed the admission of another applicant who had
also
[**9]
declared
bankruptcy.
Florida Bd. of Bar Examiners re Groot, 365 So. 2d 164 (Fla. 1978). We distinguished G.W.L. as follows:
Unlike G.W.L., Groot was the father and legal custodian of two children born of
his recently-terminated
marriage. His expenses included not only his own living costs and those of his
dependents, but to some degree those of his former wife. When his personal
resources became
exhausted, he was forced to
prevail upon family members to loan him the money, to meet current
living expenses while he was without a job. Thus, unlike G.W.L., Groot had suffered unusual
misfortune at the time he finally secured employment, and he had a valid present need to
devote his entire employment income to his current, not past, financial
responsibilities. His circumstances warranted his turning to the remedy
provided by federal law for persons in just such situations, and we hold that
Groot's conduct under these circumstances is not
morally
reprehensible or indicative of a present unfitness for admission to the bar.
Groot, 365 So. 2d at 168.
There is little or no dispute over the relevant facts. n1 Upon consideration,
[**10] we cannot agree that the evidence sufficiently demonstrates the financial
irresponsibility necessary to preclude S.M.D. from admission to the bar (specification 1). The vast majority of her debts were incurred in order to sustain herself
and to
go to school. With respect to the
declaration of
bankruptcy, we believe the case is closer to Groot than to G.W.L. Many of S.M.D.'s debts
were overdue, and her creditors were contacting her on a daily basis. She had
been unsuccessful in her job search. We do not believe that her decision to
declare
bankruptcy was
morally
reprehensible (specification 2).
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 Regarding
specification 6, while the Board's calculation may have been a more accurate reflection of
S.M.D.'s pay at the time, the record does not support a finding that the figure
arrived at by S.M.D. was false or lacking in candor.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
For the reasons expressed above, we direct the admission of S.M.D. to The
Florida Bar.
It is so ordered.
BARKETT, C.J., and OVERTON, McDONALD, SHAW and KOGAN, JJ., concur.
GRIMES,
[**11] J., dissents with an opinion, in which HARDING, J., concurs.
DISSENTBY: GRIMES
DISSENT:
GRIMES, J., dissenting.
While the facts may not be in substantial dispute, there is more than one
conclusion which may be drawn from these facts. The Board made the following
finding:
The Board concludes that the proven allegations of the
Specifications cause grave concern as to the applicant's character and
fitness to practice law. [S.M.D.'s]
course of conduct in amassing
[*1313] a sizeable amount of creditor debts to subsidize her own standard of living at
a time when she had little financial means in which to satisfy her creditors,
combined with her actions of filing
bankruptcy at the very time when her ability to
repay was likely to markedly improve without having
exhausted all reasonable alternatives to filing
bankruptcy and her action of misrepresenting her true financial picture at the time of
the petition, raises substantial doubts regarding [S.M.D.'s] honesty, fairness
and respect for the rights of others. It appears to the Board that [S.M.D.'s]
principal motive for filing
bankruptcy was to
defeat the creditors who had supported her day to day living for a substantial
period of time. (S.M.D.'s]
course of conduct
[**12] also raises serious questions concerning the propriety of her being a
counselor to others in their legal affairs.
There is sufficient evidence to support this conclusion. I would not
substitute my judgment for that of the Board members who personally heard all
of the testimony.
HARDING, J., concurs.
