Five Emory University law students have achieved something most lawyers never do: They persuaded the U.S. Supreme Court to take a case.
Last month, the nation’s highest court granted a petition for a writ of certiorari for the students’ client, an Alabama man who has run into trouble with his bankruptcy case. The justices pluck only a handful of cases for full consideration each year, and the writ is a first for Emory’s three-year-old, student-run Supreme Court project.
The students spotted the case after the U.S. Court of Appeals for the Eleventh Circuit ruled against the man, Randy Curtis Bullock, and contacted his original appellate lawyer, James Engelthaler of Florence, Ala. They also were helped by professor Sarah Shalf, who advises the clinic and directs Emory’s field placement and professionalism programs, as well as Atlanta lawyer Thomas Byrne, a Sutherland Asbill & Brennan litigation partner with plenty of bankruptcy experience.
“The Emory students really should get full credit,” said Byrne, who is expected to handle the Supreme Court argument early next year. He said they were the ones to pick up on the case, identify a split among the federal courts of appeal and contact Bullock’s Eleventh Circuit attorney.
Second-year law student Michael Wiseman, one of the students who has been working on the case, said the students have been allowed to sink their teeth into the case and see it through, even now that certiorari has been granted. He said professors and other lawyers have been interested in getting involved but respected the students’ desire to do the bulk of the work.
“I think that’s very, very special—that the students have that type of responsibility,” Wiseman said.
Louis Laverone, a third-year student who is executive director of the Emory Supreme Court Advocacy Project, has acted as team leader on Bullock’s case. He explained that the project, founded by classmate Kedar Bhatia, always has been a student-run organization, akin to a moot court or law journal. Now involving 33 students, the group works with three Atlanta law firms—Sutherland, Alston & Bird and Bondurant Mixson & Elmore—whose lawyers act as team coaches.
The trouble for the Emory team’s client centers on how his bankruptcy case will be affected by a dispute he lost to other family members over three loans made from a trust created by his father. According to the Eleventh Circuit opinion in the case, Bullock became trustee in 1978, and he and his four siblings were named as beneficiaries.
The loans, totaling a little more than $264,000, were taken against the cash value of the insurance policy between 1981 and 1990. One, made at the request of Bullock’s father (who died in 2008), went to Bullock’s mother to repay a debt she owed to Bullock’s father’s business. The other two went to both Bullock and his mother, ultimately for purchasing a garage fabrication mill in Ohio and other real estate, according to the Eleventh Circuit ruling.
Bullock and his mother made payments over the years, but in 1998 some of Bullock’s siblings asked him to resign as trustee. According to his cert petition, Bullock complied and paid off the remaining balance on the loans, plus interest, within a few months of resigning. In all, Bullock and his mother paid more than $455,000 on the loans, according to the cert petition.
BankChampaign took over as trustee.
In 1999, two of Bullock’s brothers filed a lawsuit against Bullock in Illinois, where, according to Laverone, several family businesses were located. The suit alleged that, in borrowing the money, Bullock breached his fiduciary duty as trustee. The brothers wanted Bullock to pay to the trust any profits he and his mother had earned as a result of the loans. In 2002, an Illinois judge said that, although Bullock did not appear to have had a “malicious motive” in borrowing the money, the loans amounted to self-dealing considered breaches of fiduciary duty. Saying it was difficult to determine the monetary benefit Bullock received from the loans, the judge awarded the trust damages of $250,000, plus $35,000 in attorney fees.
In 2009, Bullock filed for bankruptcy protection in Alabama, and the bank that had taken over as trustee asked the bankruptcy court not to relieve Bullock from his obligations under the Illinois judgment.
The bank argued that Bullock’s actions in taking the loans from the trust amounted to “defalcation.” Black’s Law Dictionary defines the term as “embezzlement” or, loosely, “the failure to meet an obligation” or “a nonfraudulent default.” How the U.S. Supreme Court defines it will determine Bullock’s fate, because the federal bankruptcy code says debts caused by the defalcation of someone acting in a fiduciary capacity can’t be discharged.
Representing himself, Bullock lost the fight with the bank before a bankruptcy judge and again at the federal district court. Bullock got a lawyer and took the case to the Eleventh Circuit but lost there, too.
The panel of Eleventh Circuit Judges Rosemary Barkett and William Pryor and a visiting district court judge said the federal circuits didn’t agree on a definition of defalcation under the bankruptcy code but said Bullock’s actions amounted to “objectively reckless” self-dealing and thus qualified as defalcation.
According to Laverone, a clinic committee led by 2L David Jerger that monitors cases coming out of circuits around the country noticed the case. Laverone said the students contacted Bullock’s attorney, who was glad for the help, and talked to the client via phone and video chat.
“Mr. Bullock was thrust into a situation that he wasn’t prepared to handle, acted as best he could in the interest of the trust beneficiaries—his family—and had to appeal all the way to the Supreme Court because a family squabble escalated to perverse heights,” said Laverone. He said the other students who have worked on the case with him and Wiseman are 3Ls Ed Philpot and Scott Forbes and 2L Rachel Erdman.
Sutherland’s Byrne said he was connected to the students by Judith O’Brien, the firm’s pro bono partner. “I looked at [the case], and I thought Mr. Bullock was getting a raw deal here,” Byrne said.
Although nearly all Supreme Court cert petitions are a long shot, Byrne said he thought this one had a chance of being granted.
According to Wisemen, the final version of the cert petition was edited by Byrne using material provided by the students. It emphasized division among the circuits on the proper definition of defalcation, arguing that while the Eleventh Circuit had adopted a less-rigorous recklessness standard similar to that used by the Fifth, Sixth and Seventh Circuits, the better interpretation was that of the First and Second Circuits, which have adopted a standard requiring an intent to defraud.
Asked by the high court for a response to the cert petition, the bank argued that the case wasn’t a good one for the court to hear because, regardless of which standard is used, Bullock shouldn’t be relieved of his debt.
In his brief for the bank, Bill Bensinger of Baker Donelson Bearman Caldwell & Berkowitz’s Birmingham office wrote that, by any standard, his client should win because Bullock had borrowed from the trust against the express terms of the trust. The high court on Oct. 29 granted the students’ cert petition.
This will be Byrne’s first stint arguing at the nation’s highest court, and he said there has been no shortage of volunteers offering to hold moot-court sessions. “I have a new hobby now,” he added. “It’s reading old Supreme Court cases.”
Prepping for argument will come later, he said. “Our major project right now, frankly, is the brief.” That’s to be submitted next month.
Meanwhile, the Emory students say their group has another cert petition pending—this one in a patent case.