Rochelle's Daily Wire

The Eleventh Circuit didn’t cut any slack for an attorney acting as his own lawyer who had been hit with sanctions for misconduct in bankruptcy court. Upholding the sanctions for conduct in bankruptcy court under 28 U.S.C. § 1927, the Atlanta-based appeals court imposed additional sanctions for a frivolous appeal.

The December 15 per curiam opinion would make amusing reading did it not recount a bitter, long-running intra-family dispute. One brother was suing his sibling for mishandling their deceased mother’s estate. 

After much travail, the brother won a judgment from the bankruptcy court declaring that the debt owing by the sibling-debtor was nondischargeable for fraud while acting in a fiduciary duty and for willful and malicious injury. The debtor said he was a bankruptcy lawyer who had practiced in Florida.

After the nondischargeability decision, the bankruptcy court imposed almost $10,000 in sanctions on the debtor under 28 U.S.C. § 1927. The section provides that an attorney “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.”

In the Eleventh Circuit, sanctions may be imposed for unreasonable and vexatious conduct that multiplies proceedings. The amount of the sanction must have a “financial nexus” to the excess proceedings.

The courts are split on whether a bankruptcy court may impose sanctions under Section 1927. On appeal, the district court took the bankruptcy judge’s decision as a report and recommendation and adopted the report in full. The debtor appealed to the circuit.

In the circuit, the debtor contended that Section 1927 cannot be applied to conduct in bankruptcy court because it’s not an Article III court. The appeals court dispensed with the idea, noting that bankruptcy jurisdiction lodges in the district court.

On the merits, the circuit court had grounds for upholding sanctions. The appeals court said the debtor was “rude and unprofessional at depositions and at trial; he asked repetitive and hostile questions in examining witnesses, and he ignored the judge’s rulings at trial. He also filed voluminous and irrelevant motions — including one that challenged the bankruptcy court’s subject-matter jurisdiction to determine the dischargeability of a debt in bankruptcy, and another that contained a haiku.”

The circuit court said that the conduct was “egregious enough to rise to the level of bad faith, . . . dragged out proceedings, and caused [his brother] to incur excess costs.” Claiming that the bankruptcy court lacked subject-matter jurisdiction over a dischargeability action was “frivolous,” the circuit said, because the bankruptcy court “obviously had subject-matter jurisdiction.”

After upholding the award of sanctions for conduct in bankruptcy court under Section 1927, the appeals court turned to the brother’s request for the imposition of sanctions for a frivolous appeal under Rule 38 of the Federal Rules of Appellate Procedure.

Again, the circuit court had ammunition. The appeals court said that the debtor, “a self-proclaimed bankruptcy attorney, filed an 88-page opening brief littered with exclamation points and rants about what he views as a grave miscarriage of justice. He fails to coherently cite case law, though he cites Bugs Bunny. The brief is difficult to follow, and deciphering and reorganizing his arguments wasted taxpayer resources that otherwise could have been spent on cases ‘worthy of consideration.’”

The circuit court imposed costs of about $3,400 on the debtor and granted the brother’s motion for appellate attorneys’ fees. The appeals court stopped short of awarding attorneys’ fees for the proceedings in district court because a separate motion for that relief is pending below.

Observations

The debtor represented himself in both the district and circuit courts. He may have succeeded in doubling or tripling the sanctions imposed by the bankruptcy court.

Prof. Nancy Rapoport said that attorneys can “go nuts (figuratively speaking) when they’re involved in proceedings as litigants.” The Garman Turner Gordon Professor of Law at the Univ. of Nevada at Las Vegas William S. Boyd School of Law told ABI that she had “seen it numerous times.”

Prof. Rapoport is an expert on ethics who is often appointed as fee examiner in major reorganizations.