CHARLESTON – Records show a Mason County attorney has failed to list on his bankruptcy petition judgments in two civil suits against former clients for non-payment of legal services.
The issue may be a moot point, however, as his petition may be dismissed for, ironically, delinquent payments.
Despite a 2002 warning by the State Bar to avoid suing his clients to collect on unpaid legal bills unless first communicating clearly payment arrangement and fee schedules, Raymond G. Musgrave brought suit against two former clients in 2005. Records show he sued James Watterson and Okey Stanley in Mason Magistrate Court.
According to court records, Musgrave sued Watterson on Jan. 11, 2005 for $3,861.08, and Stanley on Jan. 26 for $1,724.22. On March 21, he received default judgment in both cases.
Over six months later on Oct. 13, 2005, Musgrave and his wife, Twila, filed for Chapter 13 bankruptcy. According to their petition, the Musgraves owe $286,170.25 to 39 individuals, businesses or governmental agencies with secured and unsecured claims.
Chapter 13 allows for individuals to reorganize their debts, and begin repayment approved by bankruptcy court. A debtor gets to keep his or her property under Chapter 13 provided regular payments are made to the bankruptcy trustee under a court-approved plan.
Typically, repayments take between three to five years with unpaid and eligible debts discharged upon conclusion of the repayment period.
According to their petition, the Musgraves list $42,996 as personal property. Among their personal property, all of which they claim as exempt, is $3,400 in accounts receivable from Raymond's law practice.
No where on the petition is the $5,585.30 for the unsatisfied judgments he has against Watterson and Stanley. That includes the part where the debtor is asked to list all suits in which he or she was involved in the year proceeding the bankruptcy filing.
Brink of dismissal
In a related matter, on March 13, Morris petitioned the court to dismiss the Musgrave's bankruptcy for being delinquent in paying into their plan. According to her motion, the Musgraves were in arrears $1,025.
"The debtors have a deficiency in plan payments in the amount of $1,025 including the March 2008 payment," Morris said in her motion.
Records show this is not the first time the Musgraves became delinquent in paying the trustee. On April 4, 2006 and April 27, 2007, Morris file motions to dismiss the plan because they were in arrears $750 each time.
U.S. Bankruptcy Judge Ronald Pearson scheduled an April 16 hearing on Morris' motion. On that day, the Musgrave's attorney Andrew Nason, with the Charleston law firm of Pepper, Nason and Hayes, asked that the hearing be continued so that the Musgraves could file a "Motion to sell Real Estate which would result in funds for the trustee."
Records show on April 28, Pearson granted Nason's motion.
Attempts to reach both Morris and Nason were unsuccessful as Morris did not return repeated telephone calls, and Nason was not immediately available for comment.
U.S. Bankruptcy Court of the Southern District of West Virginia, Case No. 05-31246