Jeffery Watson Potter and Associated Case in US District Court

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
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06/10/06
Jeffery Watson Potter
05-14071
Order Denying [105-1] Motion To Intervene on Behalf of Debtor in Opposition to
[54-1] Motion For Relief From Stay As To 53 La Vista, Santa Fe, NM by Bank of
America, N.A. by Martin S. Friedlander .
Received on: 2006-02-16 13:40:46.000
2006-02-16 00:00:00.000
2006-02-16 00:00:00.000
Ellen Snyder
Case 05-14071-trc7 Doc 131 Filed 02/16/06 Entered 02/16/06 14:17:00 Page 1 of 5

1 The foreclosure action is in the First Judicial District Court, Santa Fe County, New Mexico,
No. D0101 CV 2004 00254.
1
UNITES STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re:
Jeffery Watson Potter,
Debtor. No. 11-05-14071 MS
ORDER DENYING MARTIN S. FRIEDLANDER’S MOTION TO INTERVENE
THIS MATTER is before the Court on Martin Friedlander’s Motion to Intervene on Behalf of
the Debtor in Opposition to Bank of America’s Relief From Stay Motion (the “Motion to Intervene”).
On September 29, 2005 creditor Bank of America, N.A. (the “Bank”) filed a Motion For Relief From
Stay (the “Stay Motion”) to allow the Bank to proceed with a foreclosure action pending in state
court.1 Friedlander filed a Memorandum on February 7, 2006 in support of the Motion to Intervene.
The Bank and La Vista Homeowners Association filed Responses to the Motion to Intervene
(collectively, the “Responses”). Having reviewed the Motion to Intervene, the Memorandum and the
Responses, and being otherwise fully informed, the Court finds:
Friedlander asserts an attorney’s lien against the property that is the subject of the foreclosure
action, which allegedly secures attorney’s fees and costs owed by the debtor, Jeffrey W. Potter
(“Potter”) to Friedlander for legal services in several pre-petition lawsuits. Friedlander asserts that he
has the right to intervene in the stay proceeding pursuant to Rule 24(a)(2), Fed. R. Civ. P., made
applicable to bankruptcy proceedings by Rule 7024, Fed. R. Bankr. P., but Rule 7024 only applies to
intervention in adversary proceedings. The Stay Motion proceedings are contested and subject to
several of the rules governing adversary proceedings, but not Rule 7024. See Rule 9014, Fed. R.
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2
Bankr. P. (regarding contested matters). Intervention in a stay proceeding is governed by Rule 2018,
Fed. R. Bankr. P., which states,
(a) Permissive Intervention
In a case under the Code, after hearing on such notice as the court directs and for
cause shown, the court may permit any interested entity to intervene generally or with
respect to any specified matter.
As a creditor in this bankruptcy proceeding, Friedlander may raise and may appear and be heard in a
case under Chapter 11. 11 U.S.C. § 1109 (b); In re Addison Community Hosp. Authority, 175
B.R. 646, 650 (Bankr. E.D. Mich. 1994)(stating that under § 1109 creditors have an automatic
statutory right to be heard on any issue in the bankruptcy proceeding and do not need to move to
intervene under Rule 2018). The Stay Motion was sent to Friedlander along with the Notice of
Deadline for Filing Objections to Motion for Relief From Stay, which notified Friedlander of the
opportunity to object and take part in the Stay Motion proceedings. Therefore, Friedlander’s Motion
to Intervene as a party is unnecessary as he was made a party by virtue of his creditor status. Id.
A careful reading of the Motion to Intervene reveals that Friedlander also seeks to intervene as
an attorney for Potter, to “oppose the Bank of America’s Motion to be relieved of the Automatic
Stay.” Motion to Intervene at p. 23. Friedlander argues that he and Potter have many causes of action
against the Bank which could yield a damage award exceeding the amount of the Bank’s debt, and that
the offset would extinguish the Bank’s claim against Potter. Friedlander asserts that Potter is affected
by the Bank’s tortious actions and breaches of contract; therefore, Potter is entitled to a preliminary
injunction prohibiting the Bank from proceeding to foreclose its lien. Friedlander claims that his
interests in this matter are identical to Potter’s interests in opposing the Stay Motion and preventing
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2 See Debtor’s Motion to Employ Attorneys (Doc. No. 5); Affidavit of Chris W. Pierce and
Disclosure of Compensation Pursuant to Rules 2014 and 2016 (Doc. No. 6) and Order Granting
Debtor’s Motion to Employ Davis & Pierce, P.C. as Attorneys (Doc. No. 23).
3
foreclosure. Friedlander asserts that Potter will be unrepresented by counsel because his current
special counsel, Samuel Bregman, has moved to withdraw. Potter is represented by bankruptcy
counsel, Davis & Pierce, P.C. (Chris W. Pierce).2 Friedlander argues that he can better represent both
his and Potter’s interests in the stay proceeding.
The Bank argues that since Potter is represented by bankruptcy counsel, he does not need
representation by Friedlander by way of Friedlander’s intervention. In a bankruptcy proceeding, it is
the Debtor-In-Possession who must file an application to hire counsel, and the attorney must file a
disclosure of compensation under § 329 of the Bankruptcy Code and Rule 2017(b), Fed. R. Bankr. P.
Moreover, the Bank correctly asserts that Friedlander, by virtue of his attorney’s lien against Potter’s
property, is adverse to Potter and could not represent him under Bankruptcy Code § 327, requiring
that professionals hired by the Debtor-In-Possession must not hold or represent an interest adverse to
the estate, and must be disinterested. Friedlander, as a creditor, holds an interest adverse to the estate;
it necessarily follows that he is not a disinterested party. Therefore, he cannot be retained to represent
Potter. Intervention by a creditor, who is already a party to the bankruptcy proceeding, to act on
behalf of the debtor is not permitted by the Code. Moreover, even if Friedlander has a lien on the
property that is subject to the Stay Motion, his interest in the property can be adequately protected by
his appearance in the foreclosure proceeding.
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For the foregoing reasons, the Court DENIES Friedlander’s Motion to Intervene.
MARK B. McFEELEY
UNITED STATES BANKRUPTCY JUDGE
I certify that on the date shown on the attached document verification, a true and correct copy of
the foregoing was either electronically transmitted, faxed, delivered or mailed to the listed counsel
and/or parties.
Martin S. Friedlander, Esq.
Movant
10350 Wilshire Blvd.
Suite 603
Los Angeles, CA 90024
Chris W. Pierce
Attorney for Debtor
P.O. Box 6
Albuquerque, NM 87103
Alice N. Page
U.S. Trustee
P.O. Box 608
Albuquerque, NM 87103
James R. Jurgens
Attorney for Plaintiff
100 LaSalle Circle, Suite A
Santa Fe, NM 87505
Paula Cook and Grey Handy
Attorneys for Richard Cook
and El Llano Co.
PO Box 669
Santa Fe, NM 87504 -669
Sharon Hankla
Attorney for Bank of America, N.A.
13725 Struthers Rd Ste 201
Colorado Springs, CO 80921
James T. Reist
Attorney for Robert A. Engel
6400 Uptown Blvd. NE, Ste. 200-West
Albuquerque, NM 87110
Samuel H. Bregman, Jr.
111 Lomas Blvd. #230
Albuquerque, NM 87102 -2307
George M. Moore
Attorney for Valley National Bank
PO Box 216
Albuquerque, NM 87103
I certify that on the date shown on the attached
document verification, a true and correct copy
of the foregoing was either electronically
transmitted, faxed, delivered or mailed to the
listed counsel and/or parties.
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