You Promised Me, You Said You Would, You Gotta Give In So I'll Be Good, Just Pay My Darned Fee!

By Mary Pat Gallagher
New Jersey Law
JournalNew York Lawyer
January 29, 2010

Legal fees, like other debts, are usually wiped clean in a Chapter 7 bankruptcy, but Jason DiBattista's $35,000 debt to his divorce lawyer, Gregg Sodini, was not typical.

For one thing, DiBattista is himself a lawyer, concentrating in bankruptcy, and was once Sodini's colleague at Cuyler Burk in Parsippany, N.J.

For another, Sodini contends he handled the divorce based on DiBattista's promise to pay the fees even if his precarious finances landed him in bankruptcy.

Whether DiBattista made the promise is unclear; he has neither admitted nor denied it. But what is certain is that when he filed for bankruptcy last July, he listed the fees as an unsecured, nonpriority claim, and they were discharged along with his other debts on Aug. 21.

Sodini tried to block the discharge, filing an adversary action on July 24, but U.S. Bankruptcy Judge Donald Steckroth granted DiBattista's motion to dismiss on Oct. 13. Sodini is appealing that decision to the district court.

DiBattista paid a $3,000 retainer fee to Sodini & Spina in Freehold, N.J., in October 2008. At the time, he was of counsel at Morrison & Foerster in New York, making more than $400,000 a year, but according to Sodini, DiBattista said he expected to lose his job soon and had financial problems that might lead him to file for bankruptcy.

Sodini claims he made it clear that the firm would not represent DiBattista "without specific assurances that Debtor would satisfy any and all obligations to Sodini & Spina that he might incur in connection with the Matrimonial Action irrespective of whether Debtor might file for bankruptcy protection at some point."

Sodini says DiBattista promised he would pay the fees out of future income and would not seek to discharge them, so the representation went forward.

On Dec. 31, 2008, DiBattista lost his job and stopped paying his legal bills, but he kept reiterating that he would pay when he could and not discharge them, Sodini says.

The motion to dismiss filed by DiBattista's lawyer, Sam Della Fera Jr., admits DiBattista told Sodini up front that he had no assets, expected to be terminated in the near future and might have to file for bankruptcy, and both of those things did in fact happen.

The motion calls the alleged vow to pay the fees "the type of assurances commonly given by individuals facing severe financial challenges," which "do not rise to the level of an actionable claim for nondischargeability under all the circumstances."

Della Fera, of Trenk DiPasquale Webster Della Fera & Sodono in West Orange, N.J., says Steckroth threw out the adversary case because a debtor's pre-bankruptcy promise not to discharge a debt is unenforceable as a matter of public policy. The purpose of bankruptcy, which is to help people get back on their feet, would be undermined if creditors could enforce such commitments, he says, adding, "Lots of people make promises when they are in financial distress that the law does not require them to live up to."

That DiBattista is a lawyer should not make a difference, Della Fera says. "If attorneys as debtors should be held to a higher standard, then attorneys as creditors should be" too, he says, noting that Sodini could have protected himself by requiring a larger retainer. The firm's lawyers took the case despite being told about DiBattista's situation and "have no one to blame but themselves," he says.

"DiBattista did not file bankruptcy to screw them," but because of his financial circumstances, and he was able to discharge his debts and get on with his life because he met the requirements of the law, Della Fera says. "The debt to the Sodini firm is no different from any other debt."

The appeal is partly grounded on DiBattista's failure to deny making the promise, but Della Fera says the absence of a denial does not matter because Steckroth did not have to decide that issue to dismiss.

In the event the district court reverses, DiBattista has reserved the right to contest the existence of the promise and the reasonableness of the fees, he says.

DiBattista, now with Lowenstein Sandler in Roseland, N.J., declines comment, deferring to Della Fera.

Sodini & Spina recently split up. Sodini, who heads a Freehold firm, says what bothers him most is that DiBattista "lied to my face" even though Sodini interviewed him for his first job out of law school and they were once colleagues.

To Sodini, it does matter that DiBattista is a bankruptcy lawyer, who knows the law on the enforceability of non-discharge promises but still went ahead and made the promise.

In his view, the case denying enforcement of such a promise on which Steckroth relied, In re Kroen , is distinguishable because the debtor there was not a lawyer and the promise was not made at the start of the representation.

As for public policy, it "does not go so far as to excuse a fraud in the inducement," says Sodini.

The appeal, Sodini & Spina v. DiBattista , is assigned to U.S. District Judge Katharine Sweeney Hayden in Newark.

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