Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Schuchardt

United States District Court, E.D. Tennessee, Knoxville

December 10, 2019

IN RE ELLIOTT J. SCHUCHARDT

          MEMORANDUM OPINION AND ORDER

         This is an attorney disciplinary matter regarding Elliott J. Schuchardt (“Schuchardt”). On June 22, 2018, then Chief United States District Judge Thomas A. Varlan received information suggesting that Schuchardt “violated the Rules of Professional Conduct as adopted by the Supreme Court of Tennessee” or “engaged in unethical conduct tending to bring the Court or the bar into disrepute.” E.D. Tenn. L.R. 83.7(a). The Court issued a Show Cause Order requiring Schuchardt to demonstrate why disciplinary action should not be taken against him. [D. 7]. Upon Schuchardt's responses [D. 9, 13] and motion to vacate prior sanction orders [D. 11], the matter was referred to the Honorable H. Bruce Guyton, Chief United States Magistrate Judge, for review and recommendation. E.D. Tenn. L.R. 83.7(h).

         This matter is now before the Court on the Report and Recommendation (“R&R”) filed by Judge Guyton [D. 14], regarding the disposition of the attorney discipline matter and Schuchardt's motion to vacate prior sanction orders [D. 11]. Schuchardt has raised eight objections to the R&R [D. 18] and has filed additional motions to unseal the case [D. 19], for oral argument [D. 20], and for a hearing [D. 21]. The R&R recommends that Schuchardt be found in violation of the Tennessee Rules of Professional Conduct and the Federal Rules of Bankruptcy Procedure. Further, the R&R recommends that this Court (1) reprimand Schuchardt for his accusations against Judge Bauknight (2) suspend Schuchardt from the practice of law in the United States District Court for the Eastern District of Tennessee and all of its divisions and units for a period of two years, and (3) permit Schuchardt to apply to this Court for early reinstatement pursuant to several application requirements after the expiration of one year.

         For the reasons that follow, the Court finds Schuchardt's objections to be without merit and all eight objections are overruled. The R&R will be adopted. Schuchardt's motion to vacate prior sanction orders will be denied. Schuchardt's motion to unseal the case will be granted. Schuchardt's motion for oral argument and a hearing was untimely, and will be denied as waived.

         Further, the Court finds that Schuchardt has violated the Tennessee Rules of Professional Conduct, the Federal Rules of Bankruptcy Procedure, the Local Rules for the Eastern District of Tennessee, and has “engaged in unethical conduct tending to bring the Court or the bar into disrepute.” Consequently, the Court has determined that disciplinary action is warranted.

         I. Nature of the Proceedings

         This Court has the inherent power and responsibility to oversee the conduct of attorneys that practice in the Eastern District of Tennessee. See In re Moncier, 550 F.Supp.2d 768, 772 (E.D. Tenn. 2008); see also In re Landstreet, 490 Fed.Appx. 698, 701-02 (6th Cir. 2012) (“The district court has inherent duty and responsibility to supervise the conduct of attorneys appearing before the court.”). Attorney disciplinary proceedings are part and parcel of that solemn responsibility. “A disciplinary proceeding is neither criminal nor civil; rather, it is an investigation into the lawyer's conduct to determine whether the lawyer may continue to practice a profession that is imbued with the public interest and trust.” In re Landstreet, 490 Fed.Appx. at 702 (quotations omitted).

         At a minimum, attorneys appearing before courts of the Eastern District of Tennessee bear the responsibility of adhering to the standards for all attorneys practicing in Tennessee. E.D. Tenn. L.R. 83.6. Even still, federal courts have their own distinct requirements and standards for attorneys appearing before them. These standards are not necessarily greater or lesser than courts of the state bar, but reflect the different nature of federal courts. To that end, “[a]ttorneys practicing law in the Eastern District of Tennessee are held to certain requirements and standards separate from those imposed by state regulatory bodies.” In re Cowan, 620 F.Supp.2d 867, 868 (E.D. Tenn. 2009) (citing In re Moncier, 550 F.Supp.2d at 769-70). When the professional standards for Tennessee attorneys, for attorneys in the Eastern District of Tennessee, or both, are violated, this Court bears the unwelcome, but necessary, task of imposing discipline upon the offending attorney.

         When discipline must be imposed, courts have inherent authority to suspend or disbar lawyers due to the lawyer's role as an officer of the court which granted admission. In re Snyder, 472 U.S. 634, 643 (1985). When an attorney transgresses both the standards of the bar of the Eastern District of Tennessee and the professional standards for all Tennessee attorneys without contrition, as is the case here, this Court must solemnly and soberly impose an appropriate sanction for that attorney's misconduct.

         II. Background [1]

         On August 3, 2017, Schuchardt made an allegation in open court during an August 3, 2017 hearing in the case In re Jennifer N. Roberts, No. 3:17-bk-31543, that the Honorable Suzanne Bauknight, Bankruptcy Judge for the Eastern District of Tennessee, had engaged in ex parte communications with the Chapter 13 Trustee, Gwendolyn Kerney (“Kerney”). On August 10, 2017, Judge Bauknight conducted a show cause hearing regarding Schuchardt's accusation. Prior to the hearing, Schuchardt, at Judge Bauknight's direction, filed an affidavit containing the basis for his accusation. As a basis for his accusation, Schuchardt pointed to conversations he had with Edward Shoemaker (“Shoemaker”), Maurice Guinn (“Guinn”), and Kevin Chern (“Chern”), present and former law partners of UpRight Law, Schuchardt's firm. Likewise, Schuchardt claimed that the “odd timing” of certain orders issued by Judge Bauknight sanctioning his misconduct “created an inference that [Tiffany] DiIorio” (“DiIorio”), Trial Attorney for Region 8 of the United States Trustee Program, “and/or Kerney might be discussing issues from the [UpRight] litigation with the court.”

         At the hearing, Judge Bauknight stated that Schuchardt's accusation violated Tennessee Rule of Professional Conduct 8.2, but permitted Schuchardt to present evidence supporting his position. Schuchardt's first two witnesses, Shoemaker and Guinn testified to conversations that they had with Schuchardt and others related to Schuchardt's accusation against Judge Bauknight. Both contradicted certain factual assertions Schuchardt had made and interpreted the content and meaning of prior conversations differently than Schuchardt. Trustee Kerney took the stand, unequivocally denying ex parte communications with Judge Bauknight, and testified that she reported a previous inappropriate confrontation by Schuchardt to the clerk and deputy clerk of the Court, not Judge Bauknight. Schuchardt testified, rehashing his accusations and asserting that he had evidence to support the existence of ex parte communications. At the conclusion of the hearing, Judge Bauknight ordered Schuchardt to attend further professionalism training, pay for and acquire the transcripts and recordings of several hearings, and forward the transcripts and recordings to the Board of Professional Responsibility. Further, Judge Bauknight put Schuchardt on notice that continued incivility would result in further sanctions.

         After a November 15, 2017 hearing in the case In re Perry L. Dupree, No. 3:17-bk-32158, regarding Schuchardt's fees, Judge Bauknight made a finding that Schuchardt was continuing in inappropriate conduct. On January 9, 2018, Judge Bauknight issued a show cause order in seventeen cases outlining the Court's concern about Schuchardt's conduct and competency. Schuchardt and a United States Trustee proposed an agreement, and, after further modification, an “Agreed Order Resolving the Order to Show Cause Dated January 9, 2018” (“Agreed Order”) was signed by Schuchardt and issued. The Agreed Order, dated February 9, 2018, placed a moratorium on Schuchardt's practice before the Knoxville Division of the United States Bankruptcy Court for the Eastern District of Tennessee for six months. Specifically, Schuchardt could not “undertake new representation or continue to represent any party in any bankruptcy case or proceeding currently pending or to be filed” before the Court. Likewise, if approached by clients or prospective clients, Schuchardt was directed to “immediately refer any such prospective clients to another attorney/attorneys to properly handle such matter.” Certain other requirements were also imposed related to specific cases before Judge Bauknight.

         In May of 2018, Judge Bauknight became aware that Schuchardt had possibly violated the Agreed Order in two cases, issuing show cause orders for Schuchardt to demonstrate why he should not be held in contempt for violating the Agreed Order. Schuchardt responded that he provided free legal advice to the two parties, but did not “represent” them as prohibited by the Agreed Order. Specifically, Schuchardt prepared the schedules and forms in In re Tressa L. Webb, No. 3:18-bk-31418, further advising her after the filing, and completed reaffirmation forms in In re Jason A. & Linda C. Edington, No. 3:18-bk-30299. Schuchardt had not referred Ms. Webb or the Edingtons to other attorneys. Schuchardt further moved to disqualify Judge Bauknight, making further accusations against Judge Bauknight, claiming that she demanded that Schuchardt withdraw a separate civil suit against Trustee Kerney and appeals of bankruptcy cases.

         After the June 7, 2018 hearing, Judge Bauknight found that Schuchardt's representation of Ms. Webb and the Edingtons violated the Agreed Order, citing Tennessee Code Annotated § 23-3-101 and the Tennessee Rules of Professional Conduct. Further, Judge Bauknight found that Schuchardt's accusations in his recusal motion were additional violations of Tennessee Rules of Professional Conduct 3.3 and 8.2(a)(1). On June 20, 2018, Judge Bauknight issued an order directing Schuchardt to show cause why he should not be sanctioned for violating the Tennessee Rules of Professional Conduct and Federal Rule of Bankruptcy Procedure 9011 and engaging in the unauthorized practice of law in violation of the Agreed Order and Tennessee Code Annotated § 23-3-101.

         On June 22, 2018, Judge Bauknight requested by letter that the Chief United States District Judge initiate proceedings against Schuchardt under Local Rule 83.7(b), outlining the conduct that undergirded her complaint. After reviewing the complaint, the Chief Judge found that reasonable grounds existed for further investigation, issuing a show cause order directing Schuchardt to respond to the complaint on June 29, 2018. The matter was referred to Chief United States Magistrate Judge H. Bruce Guyton to provide a report and recommendation in accordance with Local Rule 83.7(h).

         On July 10, 2018, Schuchardt responded to the Show Cause Order and answered the complaint, including twenty-six exhibits. That same day, Schuchardt moved to vacate the prior sanction orders issued against him by Judge Bauknight. On August 17, 2018, Schuchardt supplemented his answer, along with another fifteen exhibits. Neither the initial answer nor the supplemental answer included a specific request for a hearing or statement declining a hearing, as required by Local Rule 83.7(e)(4). Because Schuchardt did not request a hearing under Local Rule 83.7(e)(4) and Judge Guyton determined that a hearing was not necessary under Local Rule 83.7(i), no hearing was held.

         The R&R before the Court was issued on August 30, 2019. After considering the nature of the misconduct, Schuchardt's mental state and intent, the actual and potential injury of the misconduct, and aggravating and mitigating circumstances, Judge Guyton recommended that the Court reprimand Schuchardt for his accusations against Judge Bauknight, suspend Schuchardt from practicing in the Eastern District of Tennessee for two years, and permit Schuchardt to apply for early reinstatement should Schuchardt's application include evidence of reform.

         On September 26, 2019, pursuant to the Court's grant of an extension of time to respond to the R&R, Schuchardt raised eight objections to the R&R. Schuchardt additionally moved to unseal the case, for oral argument on the matter, and for a hearing.

         III. Discussion of Schuchardt's Objections

         Schuchardt raises eight objections to the R&R: (1) Local Rule 83.7 is unconstitutional; (2) the R&R is insufficiently specific as to any misconduct; (3) the R&R does not explain how the Chapter 13 plan in In re Perry L. Dupree was non-compliant; (4) the R&R improperly finds delay in In re Heather D. Kirkland and In re Roy V. Taylor; (5) the R&R does not address evidence of ex parte communications by Judge Bauknight; (6) the R&R does not identify any violation of the Agreed Order; (7) the R&R recommends an apology, which is disfavored by law; and (8) the R&R does not address the appearance of impropriety by Judge Bauknight. Each will be addressed in turn.

         A. Constitutionality of Local Rule 83.7

         Schuchardt's first objection challenges the constitutionality of Local Rule 83.7 under the Fifth Amendment. Specifically, Schuchardt challenges the facial constitutionality of Local Rule 83.7 for providing procedural due process and the constitutionality of Local Rule 83.7 as it has been applied to his case.

         As a court carries out attorney disciplinary proceedings, it must provide procedural due process.[2] See In re Ruffalo, 390 U.S. 544, 550 (1968). This means that this Court must provide attorneys notice and an opportunity to be heard. In re Landstreet, 490 Fed.Appx. 698, 701-02 (6th Cir. 2012); see also Walwyn v. Bd. of Prof'l Responsibility of the Supreme Court of Tennessee, 481 S.W.3d 151, 170 (Tenn. 2015) (explaining that, “In re Ruffalo stands for the proposition that a lawyer subject to discipline is entitled to procedural due process, including notice and an opportunity to be heard.”).

         To provide attorneys with procedural due process during disciplinary proceedings, the Eastern District of Tennessee has adopted Local Rule 83.7. Under Local Rule 83.7, “[t]he Court may impose discipline on any member of its bar who has violated the Rules of Professional Conduct as adopted by the Supreme Court of Tennessee, or has engaged in unethical conduct tending to bring the Court or the bar into disrepute.” The Court will first examine Schuchardt's challenge to the facial constitutionality of Local Rule 83.7 and then the constitutionality of the application of Local Rule 83.7 to Schuchardt's case.

         1. Facial Constitutionality of Local Rule 83.7

         Procedural due process for attorney disciplinary proceedings requires notice and an opportunity to be heard. In re Landstreet, 490 Fed.Appx. at 702.

         a. Notice

         Procedural due process requires notice that is “reasonably calculated, under all of the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Shoemaker v. City of Howell, 795 F.3d 553, 560 (6th Cir. 2015) (quoting Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 314 (1950)).

         Local Rule 83.7 sets forth the formal process for attorney discipline in the Eastern District of Tennessee. First, formal proceedings are initiated by a show cause order by the Chief Judge, either upon the Chief Judge's initiative or upon complaint. E.D. Tenn. L.R. 83.7(b). When an action is prompted by complaint, such a complaint must be detailed. A complaint must include:

(1) The name, address, and telephone number of the complainant;
(2) The specific facts that require discipline, including the date, place and nature of the alleged misconduct, and the names of all persons and witnesses involved;
(3) Copies of all available documents or other evidence that support the factual allegations, including a copy of any rule or order of the Court that is alleged to have been violated; and (4) At the end of the complaint, a statement signed by the complainant under penalty of perjury that the complainant has read the complaint and the factual allegations contained therein are correct to the best of the complainant's knowledge.

Id. at (b)(1)-(4). If the Chief Judge finds that the complaint warrants further investigation, she may issue a show cause order to the subject of the complaint, along with all accompanying documents. Id. at (b), (c).

         As this is a pre-deprivation process, all documents are kept under seal to preserve the attorney's reputation pending adjudication as “a lawyer's professional reputation is his stock in trade, and blemishes may prove harmful in a myriad of ways.” In re Moncier, 550 F.Supp.2d 768, 774 (E.D. Tenn. 2008) (citations omitted). The Chief Judge may impose interim suspension on an attorney's rights to practice in this Court only in exceptional circumstances. E.D. Tenn. L.R. 83.7(c)(5).

         After a show cause order is issued, the respondent has 21 days to file a response. Id. at (e). That response must include:

(1) The name, address and telephone number of the respondent.
(2) A specific admission or denial of each of the factual allegations contained in the complaint and order to show cause and, in addition, a specific statement of any facts on which respondent relies, including all other material dates, places, persons and conduct relevant to the allegations of the order.
(3) All documents or other supporting evidence not previously filed with the complaint or order that are relevant to the charges of alleged misconduct.
(4) A specific request for a hearing or a statement specifically declining a hearing.
(5) A statement signed by the respondent under penalty of perjury indicating that the respondent has read the response and that, to the best of respondent's knowledge, the facts alleged therein are correct.

Id. at (e)(1)-(5). Lastly, the Local Rule enumerates that “[d]iscipline which may be imposed includes disbarment, suspension, reprimand, or such other further disciplinary action as the Court may deem appropriate and just.” Id. at (a).

         This detailed, rigorous process has been established to ensure that attorneys have clear, specific notice of their offenses and the chance to meet them. Further, should an attorney's response disclose that the complaint is meritless, the Chief Judge may dismiss the matter, much like ruling on a motion to dismiss in the civil context. See Id. at (f). In short, the process set forth in Local Rule 83.7 is “reasonably calculated, under all of the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Shoemaker, 795 F.3d at 560.

         b. Opportunity to be Heard

         Procedural due process requires an opportunity to be heard. In the attorney discipline context, the Sixth Circuit has construed this requirement to mean that “courts must provide ‘ample opportunity . . . to show cause why an accused practitioner should not be disbarred.'” In re Cook, 551 F.3d 542, 549 (6th Cir. 2009) (quoting Theard v. United States, 354 U.S. 278, 282 (1957)).

         In addition to the aforementioned response to a show cause order, Local Rule 83.7 requires attorneys to specifically request or decline a hearing. E.D. Tenn. L.R. 83.7(e)(4). A hearing shall be held whenever such a request is made, or when the appointed judge or judicial officer determines that a hearing is necessary. Id. at (i). This hearing must be noticed 21 days in advance, overseen by a judicial officer with authority to resolve procedural disputes, carried out confidentially to protect the attorney, and recorded in the event of subsequent review. Id. at (i)(1)- (2). Likewise, all testimony must occur under penalty of perjury, witnesses may be cross-examined and confronted, and respondents may be represented by counsel. Id. at (i)(1)-(3). Any accusation of sanctionable misconduct must be proven by clear and convincing evidence. Id. at (i)(4). Further, if a judicial officer is appointed pursuant to Local Rule 83.7(h), the appointed judicial officer then prepares a written recommendation, to which the respondent may then object. Id. at (j)(2).

         In sum, not only does Local Rule 83.7 provide for notice to attorneys of the specific allegations against them and the possible penalties they may face, the Rule provides attorneys the opportunity to meet the allegations with evidence and request a hearing to do so. Local Rule 83.7 is not facially unconstitutional.

         2. Constitutionality of Local Rule 83.7 as Applied to Schuchardt

         This specific application of Local Rule 83.7 to Schuchardt has also complied with due process requirements. Nevertheless, Schuchardt challenges several ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.