Judicial Code §1927 authorizes a court to sanction counsel that engages in vexatious litigation practices. Judicial Code §1927 states:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses and attorneys' fees reasonably incurred because of such conduct.¹

One bankruptcy court explained the purpose of the section as follows:

However, pursuant to 28 U.S.C. §1927, costs, expenses and attorneys' fees may be assessed personally against an attorney for engaging in frivolous litigation. This section imposes sanctions so as to discourage dilatory litigation practices and advocacy designed to burden an opponent without chilling aggressive litigation and good faith assertions of colorable claims. (Citations omitted).²

In order to impose sanctions under §1927 the court must find that the attorney's conduct was motivated by an improper purpose.³ Chief Bankruptcy Judge Tina Brozman (S.D.N.Y.) wrote:

Imposition of sanctions under this section requires a clear showing of bad faith. The court must find both that an attorney's conduct was motivated by an improper purpose, such as harassment or delay, and is entirely without color.⁴

As Judge Dorothy Eisenberg (E.D.N.Y.) explained in a subsequent case:

Bad faith may be inferred "when the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay. By its terms, §1927 looks to unreasonable and vexatious multiplications of proceedings, and it imposes on attorneys through the entire litigation to avoid dilatory tactics."⁵

The purpose of §1927 is to protect the judicial process from abuse, to punish those who have offended the judicial process, and to provide relief for the party who has had to contend with vexatious litigation practices.⁶ A court may only use §1927 to sanction counsel; it is inapplicable to clients.⁷

Bankruptcy courts have utilized §1927 to sanction counsel who have engaged in bad faith litigation practices.⁸ In Chaudhry v. Usoskin (In re Usoskin),⁹ the plaintiffs filed a complaint objecting to the debtor's chapter 7 discharge. The complaint was filed solely to hinder the debtor. The court held that the plaintiffs' attorney should be sanctioned pursuant §1927. The court declared:

Plaintiffs' complaint was not brought in good faith, but solely to hinder and delay the discharge to which Usoskin is entitled. The complaint and other documents signed by plaintiffs' attorney were not well grounded in fact which was necessarily known to plaintiffs' attorney when he signed them. Judgment will be entered in favor of Usoskin, overruling plaintiffs' objections to her discharge. Sanctions are hereby imposed on plaintiffs and their attorney pursuant to Bankruptcy Rule 9011, 28 U.S.C. §1927 and the general equitable powers of the court, including but not limited to an award of reasonable attorneys' fees, payable by plaintiffs and their attorney who are jointly and severally liable therefore.¹⁰

Another case in which a court imposed sanctions pursuant to §1927 is In re Eatman.¹¹ There, the debtor and his wife had filed several chapter 13 cases in an attempt to forestall a foreclosure proceeding by the condominium in which they occupied a unit. The debtor had failed to pay the common area charges for several years. The court held that the case was filed with sole intent of thwarting the foreclosure, and therefore, it was filed in bad faith. The court, pursuant to §1927, imposed sanctions against debtor's counsel. The court stated:

The findings of bad faith justifying sanctions against the debtor under Rule 9011 also justify the imposition of sanctions against the debtor's attorney. Although the debtor's present counsel did not file the prior cases, he never stated, in response to the motion, that he was not familiar with the history of Eatman's' cases. In any event, he participated in the preparation and drafting of bankruptcy papers which listed the condominium's foreclosure proceeding—thereby conceding the existence of a secured claim—but failed to schedule the secured claim or deal with it under the plan. Mr. Rolle therefore knew or should have known that he was participating with the debtor in filing a case designed to forestall the condominium but that could not be confirmed under the proposed plan or any other plan.¹²

Bad faith is found when the action taken by the attorney is baseless. The burden of proof to find a violation of §1927 is more rigorous than the burden of proof under Federal Rule of Bankruptcy Procedure 9011(a). One court has made the following observations regarding the certification requirement of F.R.B.P. 9011:

Simply, a party's signature on a pleading, motion or other paper constitutes an affirmative certification that:

1. there was a "reasonable inquiry" of the relevant facts and law;
2. that the signer believed its filing was "well grounded in fact";
3. that the legal theory behind the claims for relief were objectively "warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law"; and
4. that the filing was "not interposed for any improper purpose" such as harassment, delay, or an unnecessary increase in cost.¹³

Another important distinction between §1927 and F.R.B.P. 9011(a) is that the former is only applicable to attorneys while the latter is applicable to both attorneys and clients.

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Footnotes

¹28 U.S.C. §1927 Back to article

²In re Capitol-York Construction Corp., 52 B.R. 317, 321 (Bankr. S.D.N.Y. 1985). Back to article

³In re Cohoes Indus. Terminal Inc., 931 F.2d 222, 230 (2d Cir. 1991). Back to article

⁴In re French Bourekas Inc. 175 B.R. 517, 523-24 (Bankr. S.D.N.Y. 1994) aff'd, 195 B.R. 19 (S.D.N.Y. 1996)(citation omitted). Back to article

⁵Estate of Perlbinder v. Dubrowsky (In re Dubrowsky), 206 B.R. 30, 36 (Bankr. E.D.N.Y. 1997)(citations omitted). Back to article

⁶In re LJAK Associates, Inc., 165 B.R. 9, 12 (Bankr. E.D.N.Y. 1994). Back to article

⁷Wood v. Brosse U.S.A. Inc., 149 F.R.D. 44, 49 (S.D.N.Y. 1993). Back to article

⁸E.g., Estate of Perlbinder v. Dubrowsky (In re Dubrowsky), 206 B.R. 30, 36 (Bankr. E.D.N.Y.); In re Bauman, 201 B.R. 202 (Bankr. W.D. Tenn. 1996); In re Spectee Group Inc., 185 B.R. 146 (S.D.N.Y. 1995); In re Eatman, 182 B.R. 386 (Bankr. S.D.N.Y. 1995); In re French Bourekas Inc., 175 B.R. 517 (Bankr. S.D.N.Y. 1994) aff'd 1`95 B.R. 19 (S.D.N.Y. 1996). Back to article

⁹56 B.R. 805 (Bankr. E.D.N.Y. 1985). Back to article

¹⁰Id. at 819. Back to article

¹¹182 B.R. 386 (Bankr. S.D.N.Y. 1995). Back to article

¹²Id. at 396. Back to article

¹³ In re KTMA Acquisition Corp., 153 B.R. 238, 247 (Bankr. D. Minn. 1993). Back to article