ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 13TH CIRCUIT | THE 200, Study notes of World Religions

Download ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 13TH CIRCUIT | THE 200 and more Study notes World Religions in PDF only on Docsity! No. 06-628 IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 2006 PAUL HAGE, Esq., PETITIONER, v. MEGHAN CANNELLA, RESPONDENT. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRTEENTH CIRCUIT BRIEF FOR PETITIONER Team Number P45 COUNSEL FOR PETITIONER ORAL ARGUMENT REQUESTED P45 ` i QUESTIONS PRESENTED 1. WHETHER THE RESTRICTIONS ON ATTORNEY ADVICE IN SECTION 526(A)(4) OF THE BANKRUPTCY CODE VIOLATE THE FIRST AMENDMENT OF THE CONSTITUTION. 2. WHETHER THE SECTION 362 AUTOMATIC STAY PREVENTS A CHAPTER 7 DEBTOR’S ATTORNEY FROM COLLECTING FEES INCURRED FOR POST-PETITION SERVICES PURSUANT TO A PREPETITION RETENTION AGREEMENT. P45 ` iv 2. Debtors’ attorneys are entitled to attorneys’ fees for services rendered post-petition under a prepetition retention agreement pursuant to the doctrine of quantum meruit used in conjunction with section 105(a) of the Bankruptcy Code. . . . . . . . . . . . . . . . . . . . . . . 27 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 P45 ` v TABLE OF AUTHORITIES CASES: UNITED STATES SUPREME COURT 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996) ………………………………………………………………7, 11, 15 Citizens Bank of Maryland v. Strumpf, 516 U.S. 16 (1995) ………………………………………………………………………19 Dep’t of Revenue of Or. v. ACF Indus., Inc., 510 U.S. 332 (1994) ……..……..……..……..…………………………………………..19 Dewsnup v. Timm, 502 U.S. 410 (1992) ……..……..……..……..……..……..……..……..………………..22 Gentile v. State Bar of Nevada, 501 U.S. 1030 (1991) ……..……..……..……..……..……..……………..8, 10, 14, 15, 16 Green v. Bock Laundry Mach. Co., 490 U.S. 504 (1989) ……..……..……..……..……..……………………………………20 Lamie v. U.S. Trustee, 540 U.S. 526 (2004) ……..……..……..……..……..……..……..………………………25 Landreth Timber Co. v. Landreth, 471 U.S. 681 (1985) ……..……..……..……..……..……………………………………19 Legal Services Corporation v. Velasquez, 531 U.S. 533 (2001) ……..……..……..……..………………………………………..7, 13 NAACP v. Button, 371 U.S. 415 (1963) ……..……..……..……..……..……..……..……..…………..8, 9, 14 Oharalik v. Ohio State Bar Ass’n, 436 U.S. 447 (1978) ……..……..……..……..……..……………………………………13 Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552 (1990) ……..……..……………………………………………………19, 20 R.A.V. v. City of St. Paul, 505 U.S. 377 (1992) ……..……..……..……..……..……..……..………………………..6 In re R.M.J., 455 U.S. 191 (1982) ……..……..……..……..……..……..……..……..………..6, 8, 9, 15 P45 ` vi Sable Commc’ns of Cal., Inc. v. FCC, 492 U.S. 115 (1989) ……..……..……..……..……..…………………………………6, 11 U.S. v. Playboy Entm’t Group, Inc., 529 U.S. 803 (2000) ……..……..……..……..……..…………………………………………..5, 7 CASES: FEDERAL CIRCUIT COURTS Bellini Imports, Ltd. v. Mason & Dixon Lines, Inc., 944 F.2d 199 (4th Cir. 1991) ……..……………………………………………………..23 In re Bethea, 352 F.3d 1125 (7th Cir. 2003) ……..……..……..……..……..……..……………....21, 22 In re Continental Airlines, 125 F.3d 120 (3d Cir. 1997) ……..……..……..……..……..……………………………24 In re Falk, 30 F.2d 607 (2d Cir. 1929) ……..……..……..……..……..……..……..………………..21 In re Flicking, 351 F.3d 172 (2d Cir. 2004) ……..……..……..……..……..……..……………………..20 Grady v. A.H. Robins Co., 839 F.2d 198 (4th Cir.1988) …..……..……..……..……..………………………….......24 In re Hines, 147 F.3d 1185 (9th Cir. 1998) ……..……..……..……..……..……..……..……….passim In re Jastrem, 253 F.3d 438 (9th Cir. 2001) ……..……..……..……..……..……..……..……………..24 In re M. Frenville Co., Inc., 744 F.2d 332 (3d Cir. 1984) ……..……..……..……..……..……………………………24 In re Turner, 156 F.3d 713 (7th Cir. 1998) ……..……..……..……..……..……..……..……………..26 CASES: FEDERAL DISTRICT COURTS Hersh v. United States, 347 B.R. 19 (N.D. Tex. 2006) ……..……..……..……..…………………………….12, 17 Milavetz, Gallop & Milavetz P.A. v. United States, 2006 WL 3524399 (D. Minn. Dec. 7, 2006) ……..……..……..……..……..…………...13 P45 ` 1 OPINIONS BELOW The unreported opinion of the United States Bankruptcy Court for the Northern District of Bliss was issued on June 12, 2006. The unreported opinion of the United States Court of Appeals for the Thirteenth Circuit was issued on October 10, 2006, and is set forth in the record at pages 2-17. STATEMENT OF JURISDICTION The Fifteenth Annual Judge Conrad B. Duberstein National Bankruptcy Moot Court Competition Rules waives a formal statement of jurisdiction. STATEMENT OF THE CASE In late October 2005, Respondent Meghan Cannella, faced with several financial set- backs, sought the guidance and advice of legal counsel. She approached Petitioner Paul Hage to discuss all of her available options. From that meeting, Hage learned that Cannella had recently been laid-off from her job as a ticket agent with Northwest Airlines, did not own a home or have substantial non-exempt assets, owned an unreliable nine year-old Ford Taurus, and her unsecured debts greatly exceeded her ability to pay. Cannella’s lack of reliable transportation caused her to miss work often, making the prospect of future employment even more uncertain. Hage determined that Cannella was an unfortunate but honest debtor. Based on her circumstances, he concluded that Cannella had only a small chance of completing a Chapter 13 repayment plan successfully because her unsecured debts greatly exceeded her ability to pay and her income was not steady. He informed Cannella that a Chapter 7 bankruptcy could provide her with a “fresh start,” but also warned her about the following consequences of bankruptcy: (1) She might not be able to purchase a car on credit after filing bankruptcy, and (2) She might be charged a much higher interest rate, should her old vehicle need to be replaced in the near future. P45 ` 2 He told her if she was not planning on filing for bankruptcy, she should not take on additional debt by purchasing a new car on credit because the financial stress would probably become too great and if she missed any car loan payments then her car would more than likely be repossessed and she would be left with no car at all. However, Hage offered a different opinion if Cannella was in fact planning to file bankruptcy. In an effort to maximize her success for a “fresh start”, Hage offered the following advice. He advised Cannella to trade-in her Taurus and purchase a reliable and affordable new car on credit. He told her this would make her employment situation more certain because she would gain reliable transportation. He said a steady employment situation was important because even after the bankruptcy discharge she would be obligated to pay the automobile loan pursuant to a reaffirmation agreement. When Cannella decided to file for bankruptcy, she entered into a retention agreement with Hage on November 10, 2005. Cannella was unable to pay Hage’s $1,000 fee before the bankruptcy, so the contract allocated the fee between prepetition and post-petition services. Pursuant to the retention agreement, Cannella paid $600 to cover the fees incurred prepetition. The remaining $400 in fees, which was for work to be performed post-petition, was paid with four post-dated checks of $100 each. The post-dated checks were drawn on Cannella’s checking account and dated December 1, 2005, January 1, 2006, February 1, 2006, and March 1, 2006. Hage and Canella agreed that Hage would cash the checks on their respective dates for his post- petition representation of Canella during those time periods. After Cannella entered into the retention agreement, she traded in her old and unreliable car for a new reliable and affordable 2005 Nissan Sentra on credit. Hage filed a Chapter 7 bankruptcy petition on the behalf of Cannella in November 2005. He also represented her at the P45 ` 3 section 341 meeting of creditors. He then followed up with the trustee to answer questions about Cannella’s petition. He also assisted with Cannella’s reaffirmation agreement for the car loan on her reliable and affordable 2005 Nissan Sentra. The relationship between Hage and Cannella turned sour when Cannella told Hage she wanted to reaffirm the debt on her wide-screen HDTV. Hage did not believe that she would have a successful “fresh start” if the loan was reaffirmed because he did not think Cannella had the ability to make the payments. He thought the additional payments would impose an undue hardship on Cannella’s financial situation. Therefore, he refused to sign the declaration required by section 524(c)(3) of the bankruptcy code. At this point, Hage had cashed the December and January checks as agreed. Cannella became angry and retained new counsel, Jon Finelli. Although the trustee didn’t move to dismiss the case for abuse, Finelli filed suit on the behalf of Cannella claiming that Hage improperly advised her to buy a reliable and affordable new car on credit. The claim was based on section 526(a)(4) or the Bankruptcy Code, a new provision which went into effect in October 2005. That section prevents an attorney from advising a client to incur additional debt when contemplating bankruptcy. This section applies even when incurring additional debt is lawful. In addition, Cannella seeks to recover the $200 collected by Hage when he cashed the post-dated checks. Cannella contends that Hage willfully violated the automatic stay by cashing the checks. Cannella seeks the recovery of the $200, plus punitive damages, costs, and attorneys’ fees for Hage’s alleged willful violation of the stay. P45 ` 6 provision of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), provides that, “a debt relief agency shall not . . . advise an assisted person or prospective assisted person to incur more debt in contemplation of such person filing a case under this title or to pay an attorney or bankruptcy petition preparer fee or charge for services performed as part of preparing for or representing a debtor in a case under this title.” In testing the constitutionality of this section, a strict scrutiny standard must be used for three reasons. First the type of speech at issue is content-based professional speech. Second, the speech restriction is more than a mere ethical restriction. Finally, using a lenient standard is not appropriate because this case is distinguished from cases which have used a lower standard of review. 1. Section 526(a)(4) regulates content-based professional speech which is afforded the highest level of scrutiny. Not all speech is afforded the highest level of protection. For example, in Sable Commc’ns of Cal., Inc. v. FCC, this Court held “that the protection of the First Amendment does not extend to obscene speech.” 492 U.S. 115 (1989). Likewise, attorney advertising is a form of commercial speech which may be regulated “no more extensive than reasonably necessary to further substantial interest.” In re R.M.J., 455 U.S. 191, 207 (1982). Also, content-neutral restrictions, or those regulating the time, place, and manner of speech, are not always afforded the highest level of scrutiny. Id. at 201. These cases and examples show that obscene, commercial, or content-neutral speech is not afforded the highest level of scrutiny. However, none of these exceptions apply to the case at hand. Instead, the speech at issue here is content- based professional speech and the highest level of scrutiny should be used. This Court has declared that “[c]ontent-based regulations are presumptively invalid.” R.A.V. v. City of St. Paul, 505 U.S. 377, 383 (1992). In the instant manner, section 526(a)(4) is content-based because it specifically prohibits an attorney from speaking on the subject of P45 ` 7 incurring additional debt. See Playboy Entm’t Group., 529 U.S. at 811-812 (Content-based speech “focuses only on the content of the speech and the direct impact that speech has on its listeners.”). Here, the legislators are not simply regulating the time, place, or manner of the speech. Instead, section 526(a)(4) distorts speech because legislators are saying what messages are and are not allowed. In 44 Liquormart, Inc. v. Rhode Island, this Court found that the First Amendment required strictly scrutinizing content-based restriction. This Court emphasized that “complete speech bans, unlike content-neutral restrictions on the time, place, or manner of expression, are particularly dangerous because they all but foreclose alternative means of disseminating certain information.” 517 U.S. 484 (1996). Thus, legislators may not silence attorney speech just because they personally do not approve of it. Section 526(a)(4) is not only a content-based restriction, but it also restricts professional speech. In Legal Services Corporation v. Velasquez, a case similar to the instant case, attorney advice was defined as professional speech, and not as governmental or commercial speech. 531 U.S. 533, 542 (2001). In that case, Congress attempted to limit the advice attorneys may offer by funding legal representation of indigent clients as long as the attorneys did not challenge existing welfare laws. The attorneys affected by this constraint brought suit claiming that their First Amendment right to private speech was violated. This Court agreed with the attorneys and found that the legislation was unconstitutional under the First Amendment. Id. at 537. This Court rejected the proposition that restricting attorney advice is anything but private speech and said “[t]he advice from the attorney to the client and the advocacy by the attorney to the courts cannot be classified as governmental speech even under a generous understanding of the concept.” Id. at 542-43. Also, the type at speech at hand is not commercial because it does not P45 ` 8 involve attorney advertising or solicitation. Thus, restrictions on attorney advice are restriction on private, professional speech, not restrictions on commercial speech. The Thirteenth Circuit erroneously relies on the case In re R.M.J. for the proposition that an intermediate scrutiny standard should be used here. 455 U.S. 191. In In re R.M.J., the regulation of attorney advertisement, or commercial speech, was at issue. The court stated that the attorney’s “sole purpose was to encourage members of the public to engage him for personal profit.” Id. at 204, n.17. Here, the regulation of commercial speech is not at issue. Instead, Hage’s purpose was to vigorously advocate on behalf of his client and to inform his client of all the options available to her. Mr. Hage was not engaged “in solicitation of clients or advertising for his practice,” thus, using “a standard of diminished First Amendment protection” is inappropriate. See Gentile v. State Bar of Nevada, 501 U.S. 1030 (1991). Strict scrutiny must be used in this case because the type of speech at issue is content-based professional speech which is entitled to the highest level of scrutiny. See NAACP v. Button, 371 U.S. 415, 429 (1963). 2. Section 526(a)(4) is a legal, not ethical, restriction on speech and strict scrutiny must be applied to find the section unconstitutional. This Court has ruled that ethical restrictions on the legal profession may be afforded less scrutiny in certain circumstances. See Gentile, 501 U.S. 1030. However, the restriction must in fact be ethical and not merely a false label used to reach a different constitutional reading. Labeling section 526(a)(4) as an ethical restriction is a misclassification which produces unconstitutional consequences. The decision of the lower court erroneously classified section 526(a)(4) of the Code as an ethical rule. Three reasons exist as to why section 526(a)(4) is not an ethical restriction. First, the rule is not provided for in an ethical publication, but rather enacted as a rule of law in the Code. The Thirteenth Circuit was wrong to rely on cases which involved actual ethical publications. See Gentile, 501 U.S. at 1033 (issue involved the “violation of P45 ` 11 526(a)(4) was merely an ethical standard that regulated commercial speech. However, as stated in the preceding section, section 526(a)(4) is not an ethical rule nor does it regulate commercial speech so the strict scrutiny standard must be used to determine the constitutionality of section 526(a)(4). Strict scrutiny requires the government to show (1) a compelling governmental interest and (2) the law must use the least restrictive means available. Sable Commc’ns, 492 U.S. at 126. Section 526(a)(4) fails to meet either requirement of the strict scrutiny test. Also, as a matter of policy, enforcing section 526(a)(4) would strain the relationship between attorneys and clients. For these reasons, sections 526(a)(4) must be struck down. 1. Section 526(a)(4) must be struck down because there is no compelling governmental interest. The court below found that the government’s interest in legislating section 526(a)(4) was to preserve the integrity of the judicial system. The court found that, “incurring debt that is fraudulent or that is abusive because it is intended to undermine the bankruptcy process in impermissible.” (R. at 11). However, even before section 526(a)(4) was enacted, attorneys were not allowed to assist a client in fraudulent activities. See Catherine E. Vance & Corinne Cooper, Nine Traps and One Slap: Attorney Liability under the New Bankruptcy Law, 79 Am. Bankr. L.J. 283, 330 (2005). Thus, section 526(a)(4) does not serve any new governmental interest, so the interest is not compelling. Even if the there was a compelling governmental interest, “the First Amendment directs that government may not suppress speech as easily as it may suppress conduct, and that speech restrictions cannot be treated as simply another means that the government may use to achieve its ends.” 44 Liquormart, 517 U.S. at 512. Thus, the government should regulate the conduct of incurring additional debt instead of regulating the advising of incurring additional debt. P45 ` 12 2. Section 526(a)(4) must be struck down because the law does not use the least restrictive means available. Section 526(a)(4) goes far beyond prohibiting an attorney from advising a client to incur additional debt unlawfully. Instead, section 526(a)(4) prohibits an attorney from advising a client to incur additional debt lawfully as well. See Zelotes v. Martini, 352 B.R. 17, 24 (D. Conn. 2006) (“[I]t is clear that the prohibition in § 526(a)(4), while addressing opportunistic abuses, could also ensnare lawful, financially prudent actions.”) For example, it is not unlawful for a client to borrow money to pay for his bankruptcy. Id. at 24. However, under section 526(a)(4) “[t]he attorney can’t even tell the client, whose financial distress has become so dire that he sought out the attorney’s help, that it’s okay to borrow the money needed to pay the legal expenses of the bankruptcy.” Vance & Cooper, Nine Traps and One Slap: Attorney Liability under the New Bankruptcy Law, 79 Am. Bankr. L.J. at 291. There are an abundance of lawful actions that are prohibited by section 526(a)(4), including (1) “refinancing at a lower rate to reduce payments and forestall or even prevent entering bankruptcy,” and (2) “taking on secured debt such as loan on an automobile that would survive bankruptcy and also enable the debtor to continue to get to work and make payments.” Hersh v. United States, 347 B.R. 19, 24 (N.D. Tex. 2006). Because the law prohibits many more instances beyond any compelling governmental interest it might have, this Court should strike down the law for not using the least restrictive means available. In fact, other means are already available for protecting the bankruptcy process from fraud. In a section 341 meeting the bankruptcy trustee has the opportunity to question and inspect the debtor’s petition. If the trustee believes that any fraud is present, he can move to dismiss the case for abuse under section 707(b). In the instant case, “[n]o party moved to dismiss the case for abuse under section 707(b).” (R. at 5). Section 707(b)’s protective measures P45 ` 13 are the least restrictive means available to carry out any compelling interest Congress may have had. 3. Enforcing section 526(a)(4) would harm the important relationship between attorneys and their clients and provide debtors with less than a fresh start. “[A]ttorneys have a First Amendment right—let alone an established professional ethical duty—to advise and zealously represent their clients.” Milavetz, Gallop & Milavetz P.A. v. United States, 2006 WL 3524399 at *4 (D. Minn. Dec. 7, 2006). Section 526(a)(4) deprives clients of full representation. “By prohibiting lawyers from advising clients to take a course of action that is lawful and in the client's best financial interest, albeit a counterintuitive one, § 526(a)(4) prevents lawyers from giving clients the best and most complete advice.” Zelotes, 352 B.R. at 19. Although the Respondent argues that a governmental “interest in regulating lawyers is especially great since lawyers are essential to the primary governmental function of administering justice,” lawyers are also guardians of fundamental liberties which are at risk of being abridged by governmental and law-making bodies. See Oharalik v. Ohio State Bar Ass’n, 436 U.S. 447, 460 (1978). Thus, if a government chooses to regulate attorneys, it must do so within the boundaries of the Constitution. Here, the government has chosen to regulate attorneys in a why which impinges their freedom of speech. Such regulation is unacceptable because “[t]he courts and the public would come to question the adequacy and fairness of professional representations when the attorney, either consciously to comply with this statute or unconsciously to continue the representation despite the statute, avoided all reference to questions of statutory validity and constitutional authority.” Legal Servs. Corp., 531 U.S. at 546. P45 ` 16 so the regulation of speech must be strongly criticized. For these reasons, this Court should find that the government overstepped its limitations in regulating commercial speech when it enacted section 526(a)(4). 2. There is no legitimate government interest in limiting attorney advice in section 526(a)(4) and the limitations are not narrow and necessary. The Gentile balancing test requires a legitimate governmental interest in regulating attorney advice. For example, in Gentile the legitimate government interest was prohibiting speech that would create a substantial likelihood of material prejudice to criminal judicial proceedings. There is no such interest in the case at hand. Not only does section 526(a)(4) fail under the Gentile standard for a lack of legitimate governmental interest, but section 526(a)(4) also fails the test because its provisions are not narrow and necessary. Section 526(a)(4) is both under-inclusive and over-inclusive. It is under- inclusive because non-for-profits can advise debtors to take on more debt because section 526(a)(4) only applies to debt relief agencies. Section 526(a)(4) is over-inclusive because “it prevents lawyers from advising their clients to take lawful actions” and “it extends beyond abuse to prevent advise to take prudent and often necessary action.” (R. at 23). The argument countering section 526(a)(4)’s over-inclusiveness is weak at best. The argument differentiates advice in advance of bankruptcy with advice “in contemplation of bankruptcy.” As the Thirteenth Circuit below stated, “[b]y restricting the provision to situations where the planned bankruptcy filing is the reason for the advice, the section is appropriately tailored.” (R. at 11). In practice, this distinction will be nearly impossible to make and can create absurd results. For example, if a client approaches an attorney in contemplation of bankruptcy, the P45 ` 17 attorney may not be able to offer alternatives to bankruptcy. The attorney would not be able to advise the client to consolidate their loans or take out additional new debt at a lower interest rate to pay off the old debt. Such advise would be in violation of section 526(a)(4), even though it might provide the client with alternative options to bankruptcy. To date, every court that has analyzed section 526(a)(4), with the exception of the Thirteenth Circuit below, has found section 526(a)(4) unconstitutional. See Zelotes, 352 B.R. at 24; In re Reyes, 2007 WL 136934 (Bankr. S.D. Fla. January 17, 2007); Olsen v. Gonzales, 350 B.R. 906, 916 (D. Or. 2006); Hersh, 347 B.R. at 25. The findings were reached even under the more lenient Gentile standard. See Zelotes, 352 B.R. at 24 (“[R]egardless of whether strict scrutiny or the Gentile standard is applied, 11 U.S.C. § 526(a)(4) is facially unconstitutional.”). The circumstances of this case demand inquiry under the strictest standards. Because section 526(a)(4) does not pass constitutional muster under the strictest standards, this Court should find section 526(a)(4) unconstitutional. To do so will acknowledge this Court’s precedent finding that professional content-based speech merits a high level of protection. Furthermore, the Court would be protecting the important relationship between attorneys and clients. A reversal of the court of appeals’ decision provides the only just result. II. THE PETITIONER DID NOT VIOLATE THE AUTOMATIC STAY BY COLLECTING FEES INCURRED FOR POST-PETITION SERVICES PROVIDED PURSUANT TO A PREPETITION RETENTION AGREEMENT. Petitioner, Paul Hage, respectfully requests this Court reverse the lower court’s decision, finding that Hage willfully violated the automatic stay by attempting to collect attorney’s fees earned post-petition pursuant to a prepetition employment agreement after the petition date. The Court of Appeals for the Thirteenth Circuit erroneously overruled the summary judgment order entered in favor the Petitioner. This Court should find that the Petitioner did not violate the P45 ` 18 automatic stay for three reasons. First, the automatic stay does not apply to attorneys’ fees owed to chapter 7 debtors’ attorneys for services rendered post-petition. Second, and in the alternative, the Petitioner’s action for post-petition fees should be viewed as a post-petition debt that is collectable without violating the automatic stay. Third, Bankruptcy courts should use their equitable power to ensure that chapter 7 debtors’ attorneys receive payment for services rendered post-petition. We ask that this Court reverse the decision of the Thirteenth Circuit Court of Appeals and reinstate the order of summary judgment in favor of the Petitioner. A. The automatic stay does not apply to attorney’s fees owed to a chapter 7 debtor’s attorney for services rendered post-petition. Debtors’ attorneys must have a legally enforceable right to collect fees for their post- petition services. A ruling to the contrary will lead to a collapse of the bankruptcy system, leaving bankruptcy attorneys no incentive to represent chapter 7 debtors, and, will in essence, mandate that unsophisticated chapter 7 debtors navigate the bankruptcy process pro se. See generally In re Hines, 147 F.3d 1185 (9th Cir. 1998). 1. Section 329 of the Bankruptcy Code insulates attorney’s fees from the automatic stay and the discharge provision. Section 329 of the Code, aptly titled “Debtor’s transactions with attorneys,” governs the fee relationship between a debtor and his attorney. Specifically, section 329 provides that attorneys representing debtors must provide the court with “a statement of the compensation paid or agreed to be paid . . . for services rendered or to be rendered in contemplation of or in connection with the case by such attorney . . . .” 11 U.S.C. § 329(a) (emphasis supplied). In drafting section 329, Congress recognized that a debtor may not have paid all the fees related to his bankruptcy case before a petition is filed. In these instances, section 329 allows the debtor to agree to pay some part of the attorney’s fees after the petition date. P45 ` 21 fashioned section 329 to, inter alia, assist debtors who cannot pay their attorney in full prior to the petition date. Thus, section 329(a) requires a debtor’s attorney to file “a statement of the compensation . . . agreed to be paid.” If the court determines that such payment exceeds the “reasonable value” of the attorney’s service, it has the authority to “cancel . . . or return any . . . payment” made by the debtor to his attorney. 11 U.S.C. § 329(b). Accordingly, the only question becomes whether the compensation paid to the Debtor’s attorney exceeds the reasonable value of the services he provided or will provide. In the case at bar, the parties have stipulated that the Petitioner’s compensation did not exceed the reasonable value of the services he provided. (R. at 28). Thus, the Respondent has failed to state a cause of action in Count II of her complaint. 3. Congress fashioned section 329 of the Bankruptcy Code to enable the poorest debtors to obtain representation throughout the bankruptcy process. Prior to the implementation of the Code, section 60(d) of the Bankruptcy Act of 1898 (the predecessor of section 329), “Congress did not intend that pre-petition attorneys’ fees be discharged.” In re Bethea, 352 F.3d 1125, 1130 (7th Cir. 2003) (Cudahy, J., dissenting). The legislative history makes it clear that section 329 of the Code was “derived in large part from current Bankruptcy Act § 60(d) . . . .” S. Rep. No. 989, 95th Cong., at 39 (2d Sess. 1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5285. The rationale behind “section 60(d) was to afford the bankrupt representation by counsel, who would not have to take chances as a general creditor, but might know that a reasonable fee was assured, and hence would be zealous to render active service in what is often a difficult situation.” In re Falk, 30 F.2d 607, 609 (2d Cir. 1929) (emphasis supplied). In In re Wood, this Court “characterized § 60(d) as ‘recogniz[ing] the right of . . . a debtor to have the aid of counsel, P45 ` 22 and in contemplation of bankruptcy proceedings which shall strip him of his property, to make provisions for reasonable compensation to his counsel.’” In re Bethea, 352 F.3d at 1130 (Cudahy, J., dissenting) (quoting In re Wood, 210 U.S. 246, 253 (1908)). “When Congress amends the bankruptcy laws, it does not write on a clean slate . . . Furthermore, this Court has been reluctant to accept arguments that would interpret the Code, however vague the particular language under consideration might be, to effect a change in pre- Code practice that is not the subject of at least some discussion in the legislative history.” Dewsnup v. Timm, 502 U.S. 410, 419 (1992) (emphasis supplied) (internal citations and quotations omitted). Here, the legislative history does not reflect any such discussion. See S. Rep. No. 989, 95th Cong., at 39 (2d Sess. 1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5285. Therefore, attorney’s fees should not be subject to the automatic stay, nor should they be subject to the discharge provisions of the Code. In the instant matter, the Respondent exercised her statutory right to counsel by hiring the Petitioner. Like many individuals contemplating bankruptcy, the Respondent was unable to pay the entire fee prepetition. Consequently, the Petitioner allowed the Respondent to pay his $1,000 fee in installments. Specifically, the contract allocated the fee between prepetition and post- petition services and required an advance payment of $600 to cover the fees incurred in prepetition consultation and the preparation and filing of the petition. The Respondent paid the Petitioner $600 in cash for prepetition services, and provided him with four post-dated checks of $100 each. The Parties agreed that the Petitioner would cash the checks for his post-petition representation. Because of the debtor’s precarious financial position, the fee arrangement at issue was the only way to (1) ensure that the Respondent was represented, and (2) ensure that the Petitioner was paid the reasonable value for his services. P45 ` 23 Fee arrangements, like the one at issue in the case at bar, were authorized by the Bankruptcy Act for more than 75 years, and more significantly, section 329 was not the subject of any significant Congressional discussion changing the pre-Code practice. Accordingly, the court of appeals erred in its interpretation of the Bankruptcy Code. This Court should reverse the court of appeals and find that the automatic stay does not apply to attorney’s fees owed to a chapter 7 debtor’s attorney for services rendered post-petition. B. In the alternative, attorneys’ fees derived from services rendered post-petition pursuant to a prepetition retention agreement are a post-petition debt that can be collected without violating the automatic stay. A petition filed under the Code “operates as a stay, applicable to all entities, of . . . the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the [bankruptcy] case.” 11 U.S.C. § 362(a)(1). The stay is a statutory injunction, and is “one of the fundamental debtor protections provided by the bankruptcy laws.” H.R.Rep. No. 95-595, at 340 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6297. It takes effect immediately, and without further action, when a petition is filed. In re Best Payphones, Inc., 279 B.R. 92, 97 (Bankr. S.D.N.Y. 2002). The stay and is limited to actions that could have been brought before the petition was filed, or that are based on claims that arose before the petition was filed. See Bellini Imports, Ltd. v. Mason & Dixon Lines, Inc., 944 F.2d 199, 201 (4th Cir.1991) (citing Collier on Bankruptcy § 362.04(1) (L. King 15th ed. 1989)). Significantly, the stay does not apply to actions arising post-petition. Bellini Imports, 944 F.2d at 201. P45 ` 26 Many jurisdictions prohibit an attorney who files a petition on behalf of his client from withdrawing from the representation without leave of court.3 A debtor’s attorney should not be forced to perform essential post-petition services on behalf of the debtor without compensation. The absence of a legally enforceable right to payment for post-petition legal services would bring about “a massive breakdown” of the bankruptcy system. In re Hines, 147 F.3d at 1191. The Respondent’s view effectively precludes a chapter 7 debtor’s attorney from receiving payment for any services performed post-petition. 1. A reaffirmation agreement between attorney and debtor violates the attorney’s role as a fiduciary. Section 524 of the Code enables a chapter 7 debtor “to reaffirm a pre-petition debt that is otherwise dischargeable by agreeing to pay all or part of that debt.” See In re Turner, 156 F.3d 713, 714 (7th Cir. 1998); 11 U.S.C. § 524(c). Reaffirmation “permits [a] debtor who cannot pay off [a] debt immediately to continue making periodic payments . . . [and] keep the property for which the debt was incurred.” In re Turner, 156 F.3d at 715. Debtors frequently seek to reaffirm prepetition debts because the creditor is permitted to repossess any collateral securing the debt if that debt has been discharged. Section 524(f) of the Code does not preclude a debtor from voluntarily repaying any debt, however, nothing in the reaffirmation provision permits an attorney to compel a debtor to reaffirm an agreement for services to be performed post-petition. See 11 U.S.C. § 524. The Respondent suggests that the Petitioner could avoid the inherent catch-22 created by these types of pre-filing arrangements by “initially contracting only to provide pre-bankruptcy services and by initially accepting payment only for those prepetition services.” In re Hines, 147 F.3d at 1189-90. The attorney could “later enter into a separate postpetition agreement to 3 Indeed, the Local Rules of the Northern District of Bliss preclude an attorney from withdrawing from representation without leave of court. P45 ` 27 provide any necessary postpetition services.” Id. at 1190. This arrangement is flawed for three reasons. First, the debtor’s attorney has an ethical obligation to continue representing the debtor with or without payment, leaving little incentive for the debtor to reaffirm the prepetition fee arrangement. Id. Second, the “fiduciary obligation of the attorney to provide full disclosure would . . . call for recommending against reaffirmation.” Id. Finally, and assuming arguendo that a debtor actually agrees to enter into a reaffirmation agreement, section 524(c)(4) of the Code allows a debtor to “rescind[] such agreement at any time prior to discharge or within sixty days after such agreement is filed with the court, whichever occurs later.” 11 U.S.C. § 524(c)(4). Moreover, the debtor’s bankruptcy would be substantially completed before the end of the sixty day rescission period prescribed by section 524(c), leaving the attorney with an action for quantum meruit that would almost certainly not be worth bringing. In re Hines, 147 F.3d at 1190-91. Following as the Respondent’s “plain language” interpretation of the Code produces an absurd result. “Chapter 7 debtors must have a legally enforceable right for their postpetition services that were contracted for before the filing of the petition.” Hines, 147 F.3d at 1191. If debts created by prepetition retention agreements to pay attorneys’ fees are dischargeable, no attorney would agree to represent a chapter 7 petitioner without payment in full before filing a petition. Ironically, the position advanced by the Respondent leaves the poorest debtors, like the Respondent, without representation, forcing them to navigate a bankruptcy alone. 2. Debtors’ attorneys are entitled to attorneys’ fees for services rendered post-petition under a prepetition retention agreement pursuant to the doctrine of quantum meruit used in conjunction with section 105(a) of the Bankruptcy Code. Assuming arguendo that the automatic stay precludes a chapter 7 debtor’s attorney from receiving payment for services performed post-petition because of a Congressional oversight or P45 ` 28 scrivener’s error, section 105(a) of the Code provides the judiciary with the authority to respond so as to accomplish a fundamental objective of the case, i.e. ensuring that a chapter 7 debtor’s attorney is paid for the service he performs. Similarly, the doctrine of necessity “permits the use of certain provisions of the Code or common law ostensibly in contradiction to other law in order to accomplish a vital objective in a bankruptcy case.” See Russell A. Eisenberg & Frances F. Gecker, The Doctrine of Necessity and Its Parameters, 73 MARQ. L. REV. 1, 2 (1989) (noting that the doctrine exists “simply because it works”). Under the doctrine of necessity, a bankruptcy court may exercise its equitable power to permit a debtor to pay certain prepetition claims, although such payment is not explicitly sanctioned under the Code. See In re Columbia Gas System, 136 B.R. 930, 939 (Bankr. D. Del. 1992) (citing In re Lehigh & New England Rwy Co., 657 F.2d 570, 581 (3d Cir. 1981). In In re Hines, the court extended the doctrine of necessity to the chapter 7 context to ensure the debtor’s attorney was paid in full for his services. The court reasoned that “a doctrine of necessity” requires a finding that chapter 7 debtors attorneys’ have a legally enforceable right to payment for these services” stemming from post-petition services agreed to pursuant to a prepetition retention agreement. In re Hines, 147 F.3d at 1191. Similarly, section 105(a) of the Code provides that “[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of [Bankruptcy Code] . . . shall be construed to preclude the court from, sua sponte, taking any action . . . to enforce or implement court orders or rules . . . .” 11 U.S.C. § 105(a). Section 105(a) was created to ensure that the bankruptcy courts have the “power to take whatever action is appropriate or necessary in aid of the exercise of their jurisdiction.” 2-105 Collier Bankruptcy Manual, P 105.01 (15d. Ed. Rev.) (citing In re Zale Corp., 62 F.3d 746, 760