12 B 50628, 13 A 00688
In this Chapter 7 proceeding, Plaintiff, the Estate of Stanley Cora, filed an amended adversary proceeding against the Debtor, John C. Jahrling, under sections 523(a)(4), 523(a)(6), 727(a)(3) and 727(a)(5) of the Bankruptcy Code asking that a debt be held nondischargeable and that the debtor be denied a discharge of all debts. Under the 523(a)(4) claim, Plaintiff sought to except from debtor’s discharge a $26,000 debt incurred while the debtor, a licensed attorney, served in a fiduciary capacity as Stanley Cora’s attorney at a real estate transaction. Jahrling was hired to represent Cora, then 90 years of age, in the sale of his home.
Cora’s home was sold for $35,000, about one-third of its value, and the transaction did not provide for the retention a life estate promised to Stanley Cora. After the home was sold, Cora was evicted.
A judgment for $26,000 was entered in state court against the debtor in 2007 on a legal malpractice claim.
The Court entered judgment in favor of the Plaintiff on Count I, and determined that Jahrling’s conduct in representing Cora in the sale of his home without talking to him to discern what Cora wanted and how to accomplish his goal, was a gross deviation from the standard of conduct that a law-abiding person as well as any Illinois attorney would observe in Jahrling’s situation. The court also found that Jahrling acted recklessly and in brazen disregard of his fiduciary duty when he ignored his basic duty to communicate with the client, to prepare for the engagement and to pursue his client’s interests diligently.
The Court entered Judgment in favor of the debtor-defendant on the remaining counts, finding that Plaintiff failed to meet its burden of proof on claims under section 523(a)(6) for wilful and malicious injury and section 727 for failure to maintain records and to account for a deficiency or loss of assets.