Robocall Defendant's Lawyers Await OK to Be Named Special Counsel

Lawyers for defendant Michael Smith in the seven-state robocalling litigation in U.S. District Court for Southern Texas in Houston are in limbo as they await approval from the U.S. Bankruptcy Court for Southern Florida to be appointed special counsel to represent him, they said in a status report dated Feb. 16 and posted Wednesday (docket 4:20-cv-02021). The attorneys are helpless to defend Smith as the litigation against him proceeds toward trial until the bankruptcy court gives them its OK, they said.

Smith filed a voluntary Chapter 11 bankruptcy petition Jan. 18, asserting in a filing the next day to U.S. District Judge George Hanks in Houston that he qualified under Section 362 of the Bankruptcy Code for an automatic stay of the robocall allegations against him (see 2301200027). But the plaintiff states persuaded Hanks during a Jan. 31 status hearing that the automatic stay doesn’t apply under an “explicit exception” in the bankruptcy code for “police power proceedings,” such as the robocalling litigation (see 2302010027).

Hanks, during the hearing, ordered Smith’s attorney, Dominick Lanzito of Peterson Johnson, to consult with Smith’s bankruptcy lawyer, and to file a motion by Feb. 17 to stay the litigation or, if he was unable to do so, advise the court of the status of his special counsel appointment. Robert Benjamin of Golan Christie, Smith’s bankruptcy lawyer, submitted the special counsel application to the bankruptcy court Feb. 15.

Benjamin seeks authorization to hire Lanzito and two of his Peterson Johnson colleagues, Paul O’Grady and Patrick Walsh, to defend Smith against the robocall allegations in Houston, said the status report. The application also asks the bankruptcy court to authorize a $15,000 “advance payment retainer” for the lawyers’ services, it said.

The Peterson Johnson attorneys haven't been appointed by the bankruptcy court, “and thus, cannot file a substantive response regarding the stay of these proceedings until appointed as special counsel,” said the status report. Based on communications with bankruptcy counsel Benjamin, bankruptcy court approval of the special counsel application can take up to three weeks, said the report. If Hanks were to allow the litigation to “proceed at this juncture” as he indicated he would at the Jan. 31 status hearing, defendant Smith “would be prejudiced and could not provide an adequate defense with counsel,” it said.