IN RE ELZIE

THOMAS TUCKER, Bankruptcy Judge

This case came before the Court for hearings on September 21, 2006 and on November 9, 2006 on the Court's show-cause order filed September 1, 2006 (Docket #31), entitled "Order to Appear and Show Cause Why Counsel for Chapter 13 Debtors Should Not Be Required to Disgorge Fees." That show-cause order explained the background and issues:

On March 31, 2006, Debtors, thorough their attorney, Robert D. Stein, filed a voluntary petition for relief under Chapter 13, initiating this case, which was Debtors' second bankruptcy case [footnote omitted]. On April 11, 2006, Mr. Stein filed a Certificate of Credit Counseling (Docket # 14); and a Summary of Schedules; Schedules A-J; a Statement of Financial Affairs; and a "Statement of Attorney For Debtor(s) Pursuant to F.R.Bankr.P. 2016(b)" (Docket # 15). All of these documents, however, were for a Chapter 7 Debtor named Ronald E. Tate (Case No. 06-43822), not for Debtors in this case. On April 12, 2006, the Clerk of the Court issued a deficiency notice informing attorney Stein of this problem, and requiring that he file correct documents or the case would be dismissed.

On April 17, 2006, attorney Stein filed a "Statement of Attorney For Debtor(s) Pursuant to F.R.Bankr.P. 2016(b)" (Docket # 20); a "Certificate of Counseling" (Docket # 18); and a Chapter 13 Plan. The Rule 2016(b) statement disclosed that Debtors had paid Mr. Stein $500.

On April 19, 2006, the Court issued another deficiency notice, informing attorney Stein that he had still not filed Debtors' Summary of Schedules; Schedules A-J; or a Statement of Financial Affairs, and that if he did not immediately file those documents, the case would be dismissed. Mr. Stein failed to file the missing documents specified in the April 19, 2006 deficiency notice, and on May 1, 2006, the case was dismissed. On July 11, 2006, the case was closed.

On July 17, 2006, Debtors filed a voluntary petition for relief under Chapter 13, through a new attorney, Scott F. Smith, initiating their third bankruptcy case (Case No. 06-49231). On August 17, 2006, the Court held a hearing on a motion filed by Debtors to impose the automatic stay in that case. ( See "Motion to Impose Stay Under 11 U.S.C. § 362(c)(4)(B)" (Docket # 7).) At the hearing, Debtor Alexander Elzie stated that he had paid $1,100 to his attorney, Robert D. Stein in this case (Case No. 06-43924). Debtors' attorney stated that Debtor Alexander Elzie had requested that those fees be returned to him but Mr. Stein had failed to do so. There were no fee applications ever filed in this case.

The Court concludes that a hearing on the fees in this case (Case No. 06-43924) is necessary. It would appear that the $1,100 that Debtor alleges he paid and/or the $500.00 that the Rule 2016(b) statement says was paid, is unreasonable given the work performed and the results obtained. The Court also needs an explanation as to why the Rule 2016(b) Statement filed in this case stated that Mr. Stein was paid only $500 when Debtor alleges that he paid $1,100.

After the September 21, 2006 hearing, the Court ordered Mr. Stein to file a fee application in this case, and in an earlier case he handled for the Debtors, Case No. 04-67395. The Court also ordered Mr. Stein to state in these fee applications "the date(s) and amount(s) of all payments he received from the Debtors for attorney fees or for payment of filing fees." See Order for Further Proceedings, etc., filed September 22, 2006 (Docket #33).

Mr. Stein filed a fee application in each of these cases, and the Court held a hearing on them, as well as a further hearing on the show-cause order in this case, on November 9, 2006. At that hearing, the Court noted that Mr. Stein had not complied with the requirement that he file an itemization of the dates and amounts of all payments he received from the Debtors in the two cases. The Court orally ordered Mr. Stein to do this, by November 16, 2006. He finally filed the required itemization, for both cases, although he filed it in Case No. 04-67395, on November 14, 2006 (Docket #31).

Upon consideration of the documents filed in this case, in Case No. 04-67395, and presented at the show-cause hearings held in this case on September 21, 2006 and November 9, 2006, the Court finds, concludes, and orders as follows:

First, the Debtors paid their attorney Robert Stein $700.00 on March 29, 2006, which payment was for $500.00 in attorney fees for Mr. Stein's services in this case (06-43924) and the $189.00 filing fee to file this case, plus an excess amount of $11.00. This $700.00 payment is shown by a receipt presented by Debtors to the Court at the September 21, 2006 show-cause hearing in this case. The Court credits and accepts Mr. Stein's representation that this was the only payment he received from Debtors for this case, and that the other sums the Debtors paid Mr. Stein in February and March 2006, i.e., two payments of $200.00 each, were for post-confirmation services by Mr. Stein in Case No. 04-67395. This finding is supported by the Rule 2016(b) statement signed by each of the Debtors and by Mr. Stein for this case (No. 06-43924). A copy of the original, signed Rule 2016 statement in this case was filed by Mr. Stein on October 4, 2006 at Docket # 35. This original, signed version is consistent with the electronically-signed version that was filed in this case on April 17, 2006 (Docket # 20).

Second, Mr. Stein must disgorge the $500.00 in attorney fees, plus the $11.00 excess amount, that he received from Debtors for this case. 11 U.S.C. § 329(b). The $500.00 that Debtors paid is unreasonable and excessive, given the work performed and the results obtained by Mr. Stein in this case. Rather, the reasonable value of Mr. Stein's services in this case is zero. As described above (quoting the September 1, 2006 show cause order,) Mr. Stein's errors, and failure to correct those errors, or if necessary, to move for additional time to do so, after twice receiving notice of the problem from the Clerk's office, led to the dismissal of this case at a very early stage. This forced Debtors to file yet another bankruptcy case, with a different attorney, Case No. 06-49231, and pay yet another filing fee.

For these reasons,

IT IS ORDERED that Debtors' attorney, Robert Stein, is denied any attorney fees for work performed for the Debtors in this case, and his fee application (Docket #34) is denied.

IT IS FURTHER ORDERED that under 11 U.S.C. § 329(b), Debtors' attorney, Robert Stein, must disgorge the $500.00 in attorney fees that he received from the Debtors for this case, plus the $11.00 in excess payments made by Debtors, by paying the total sum of $511.00 to the Debtors no later than December 15, 2006.

IT IS FURTHER ORDERED that the Debtors' attorney, Robert Stein, must file, no later than December 15, 2006, an affidavit verifying his timely compliance with this Order.

IT IS FURTHER ORDERED that the Court retains jurisdiction of this case to ensure the compliance with this Order.