Backdating Court Documents by Lawyers OK in NY, But Not in PA

Judge Chews Out Lawyer, Firm for Backdated Filings. Lies
The Legal Intelligencer by Zack Needles - December 3, 2010

PHILADELPHIA, PA - The chief judge of the U.S. Bankruptcy Court for the Western District of Pennsylvania has publicly admonished Philadelphia attorney Leslie A. Puida and her firm, Goldbeck McCafferty & McKeever, for filing backdated documents in a foreclosure proceeding and then lying to the court in an attempt to cover it up. But despite having found their actions sanctionable following a hearing on the matter, Chief Judge Thomas P. Agresti decided not to impose any penalties on Puida or the firm, instead letting his findings serve as a "public reprimand" and requiring the parties to report to the Disciplinary Board of the Supreme Court of Pennsylvania and the American Bankruptcy Institute. Agresti said in his Nov. 24 memorandum order in Hill v. Countrywide Home Loans that Puida and her firm had either intentionally or recklessly filed payment change letters that were doctored to look as if they had been sent to the debtor's attorney years earlier even though they hadn't. Agresti added that Puida and the firm later "made inaccurate oral statements in response to the court's inquiry regarding when Leslie Puida told the debtor's attorney that the three payment change letters were not what they purported to be, but instead were memoranda created years after the event." But Agresti denied a bankruptcy trustee's request to impose monetary sanctions on Goldbeck McCafferty, a 10-attorney real estate law boutique, saying instead that his Oct. 5 memorandum opinion and order and his Nov. 24 order should serve as public reprimands of the firm. Agresti noted in his Nov. 24 order that Michael McKeever, one of Goldbeck McCafferty's two principal shareholders, testified during a Nov. 22 sanctions hearing that the firm had incurred $400,000 in out-of-pocket attorney and expert fees in this matter that would not be reimbursed by insurance. According to Agresti, McKeever also testified that two large clients had discontinued referrals to the firm because of the matter. Because of these financial losses, Agresti said, imposing a $50,000 sanction on the firm as suggested by the trustee is "unlikely to have any significant further deterrent effect" on the firm. In addition, Agresti said imposing a significantly higher sanction could cause the firm to dissolve, "possibly threatening the livelihoods of innocent employees who had nothing to do with the violations." Agresti also declined to require mandatory CLE or ethical training."

Honesty and truthfulness are matters of character that cannot be taught, if at all, in a few hours of CLE training," he said, adding that he likewise would not impose sanctions requiring the firm to do pro bono work because it should already be voluntarily doing that, nor would he mandate that the firm act as a pro bono mediator, as the firm's professional reputation is currently too damaged to allow it to be an effective mediator. Agresti also rejected the trustee's suggestion that Puida be suspended from practicing in the Western District bankruptcy court for one year. "Puida has already, in a sense, been suspended from practice in this court," he said. "The firm has taken her off assignment to any cases filed in this district, and it seems highly unlikely that is going to change anytime soon." Agresti also refused to impose monetary sanctions against Puida, saying she has already suffered financially because of this matter and such sanctions "would be unnecessarily punitive and could harm her family." Agresti said Puida and her firm must forward the Nov. 24 order along with an Oct. 5 order detailing their misconduct to both the Disciplinary Board and the ABI by Dec. 3. Larry Fox, a former chair of the American Bar Association's standing committee on ethics and professional responsibility, said that while Puida and her firm committed a "very serious offense," he believes Agresti chose not to impose harsher penalties because the parties still have to face the Disciplinary Board. "Whatever the judge does is not the end of the story," Fox, of Drinker Biddle & Reath in Philadelphia, said.

The matter stemmed from Hill v. Countrywide Home Loans , in which, according to Agresti's Oct. 5 order, the debtor, Sharon Diane Hill, filed for Chapter 13 bankruptcy in Western District bankruptcy court on March 19, 2001. In April 2001, National City Mortgage Company asserted $7,210.89 in arrears on Hill's home mortgage and in June 2001, Hill hired attorney Kenneth Steidl of Steidl & Steinberg in Pittsburgh, who put her on a 45-month plan to pay off her debt, according to Agresti. In March 2007, the Western District bankruptcy court found that Hill had, through a trustee, successfully completed her payments under the plan and granted her a discharge, according to Agresti. But that same month, Countrywide performed a discharge audit on Hill's loan and incorrectly determined that she had missed several months' payments, Agresti said. Countrywide immediately re-initiated the foreclosure of Hill's home that had been paused by her bankruptcy proceedings, according to Agresti. In April 2007, Steidl sent a letter to Countrywide informing the company that Hill's mortgage was current but the foreclosure process continued, Agresti said. In June 2007, Hill moved to reopen her bankruptcy case by filing a motion to enforce and the parties engaged in efforts to settle the matter in October of that year, according to Agresti. It was around this time that McKeever and his firm's other principal shareholder, Gary E. McCafferty, became directly involved in the Hill matter, corresponding with Puida and Countrywide employees throughout the litigation. During the settlement negotiations, Puida forwarded to Steidl copies of the payment change letters that were purported to have been sent years earlier, Agresti said.

A Countrywide employee later testified at trial that she discovered in October 2007 that those letters were never actually sent and informed Puida almost immediately, according to Agresti. The case did not settle that month and in November 2007 Countrywide responded with a motion to quash Hill's motion to reopen her bankruptcy case, according to Agresti. But just before the start of a status conference on Dec. 20, 2007, Hill's counsel, Julie Steidl — Kenneth Steidl's law partner at Steidl & Steinberg and wife — discovered that one of the purported payment change letters listed Steidl & Steinberg's current address despite the fact that the letter predated the firm's move to that location by several years, according to Agresti. In the hall outside the courtroom before the hearing, Julie Steidl asked Puida about the letters and Puida said they had never been sent, Agresti said. During the hearing, Steidl informed the court about what Puida had told her, but when questioned by the court, Puida testified that she had already told Kenneth Steidl in a conversation during settlement negotiations that the letters had never been sent, according to Agresti. During the December 2009 trial on the Hill matter, however, Puida testified that there had actually been two separate conversations: One in which Kenneth Steidl told Puida that he did not have the letters and a later one where Puida contacted Steidl to inform him that the letters had never been sent, Agresti said. Puida said at trial that she "should have been more precise" in her answer at the Dec. 20 hearing, according to Agresti. "In other words, it appears that Puida seeks a conclusion that she may have acted carelessly, but innocently, in responding to the court, with no intent to deceive," Agresti said. "After careful consideration the court rejects such a conclusion." McKeever was the only witness to corroborate Puida's testimony at trial but was "very vague" about when the conversation between Puida and Kenneth Steidl supposedly took place, according to Agresti. Agresti said in his Oct. 5 order that he was skeptical either of Hill's attorneys had been informed prior to Dec. 20 that the letters had never been sent. "A bombshell going off during settlement negotiations to the effect that the letters were actually 'phonies' would be expected to leave some evidence behind — an expression of outrage from debtor's counsel at having been misled, a sudden change in settlement posture — but the court sees none in this record, "Agresti said. "The most logical explanation for the absence of any such evidence is that the bombshell never went off." Neither Puida nor her attorney, Robert E.J. Curran of Media, Pa., were available for comment at press time. Jeffrey A. Lutsky, managing partner of Stradley Ronon Stevens & Young in Philadelphia, was also listed as Puida's and Golbeck McCafferty's attorney, but could not be reached. McCafferty and McKeever were also unavailable for comment at press time.