Judges of the Court
Rule 11 and Other Sanctions
In re Stasz, 387 B.R. 271 (9th Cir. BAP 2008)
Failure to comply with repeated orders to appear at a Rule 2004 exam justified order of contempt and award of attorney fees as sanctions.
Hale v. United States Trustee, 509 F.3d 1139 (9th Cir. 2007)
Bankruptcy court did not abuse discretion in sanctioning counsel for repeatedly assisting pro se debtors without appearing as counsel and without performing critical and necessary services.
In re Brooks-Hamilton, 329 B.R. 270 (9th Cir. BAP 2005), aff’d in part, rev’d in part, remanded, 271 Fed.Appx. 654 (2008).
Bankruptcy court did not abuse discretion in imposing a six-month suspension from practice.
In re Hercules Enterprises, Inc., 387 F.3d 1024 (9th Cir. 2004)
In order to find civil contempt, “the bankruptcy court had to find that he violated a specific and definite order and that he had sufficient notice of its terms and the fact that he would be sanctioned if he did not comply.” Bankruptcy court had power to sanction for civil contempt, but not to make such sanction nondischargeable in future bankruptcies.
In re DeVille, 361 F.3d 539 (9th Cir. 2004)
Bankruptcy court properly sanctioned attorneys pursuant to its inherent power, but the B.A.P. was correct that neither that power nor B.R. 9011 authorized punitive sanctions.
In re Silberkraus, 336 F.3d 864 (9th Cir. 2003)
Fact that the debtor filed a bankruptcy petition only two days before a state court was to schedule a trial date on a creditor’s claims for specific performance; the admissions by the debtor and his counsel that reorganization was impossible over the objections of creditors; and the fact that bankruptcy could not have provided more value to the debtor than proceeding with the state court action support bankruptcy court’s finding that filing was frivolous and for an improper purpose. Rule 9011(c)(1)(A)’s safe harbor provision does not apply to the filing of the initial petition.
In re Dyer, 322 F.3d 1178 (9th Cir. 2003)
“Serious” punitive damages may not be awarded under § 105 for civil contempt of the automatic stay by entities who are not individuals. Only compensatory sanctions, attorney fees and compliance with the stay may be awarded. The bad faith required to find a violation of the automatic stay is something less than what’s required to impose Chambers sanctions. Nor can punitive sanctions be awarded under the court’s inherent power to sanction.
Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. (1991)
In re Larry’s Apartment, L.L.C., 249 F.3d 832 (9th Cir. 2001)
Bankruptcy court must apply federal law in determining what sanctions are to be imposed for conduct by attorney or party in bankruptcy court litigation.
Estrada v. Speno and Cohen, 244 F.3d 1050 (9th Cir. 2001)
District court may order a default judgment without considering alternative sanctions when a party willfully, repeatedly, and persistently disobeys court orders to attend court proceedings.
Primus Automotive Financial Services, Inc. v. Batarse, 115 F.3d 644 (9th Cir. 1997)
Court must make finding of bad faith as a condition to awarding sanctions under Nasco
In re Rainbow Magazine, Inc., 77 F.3d 278 (9th Cir. 1996)
Chambers sanctions may be imposed by bankruptcy court even on a nonparty. Sequoia legislatively overruled
Trulis v. Barton, 67 F.3d 779 (9th Cir. 1995)
Rule 11 - Nasco and § 1927 sanctions for continuing lawsuit without client authority, etc.
Ortega v. O’Connor, 50 F.3d 778 (9th Cir. 1995)
There is no dispute that, in a proper case, a trial court may exclude a party’s witness as a sanction for failure to comply with a pretrial order. See FRCP 16(f); Ackley v. Western Conf. Of Teamsters, 958 F.2d 1463, 1471 (9th Cir. 1992); United States v. Valencia, 656 F.2d 412, 415 (9th Cir. 1981).
In re Marsch, 36 F.3d 825 (9th Cir. 1994)
Distinguishing Townsend, court finds that a filing may be filed for an improper purpose, even if it isn’t frivolous. A restitutionary award compensating the opposing party for unnecessary litigation expenses - as opposed to a punitive fine paid to the court - is a particularly appropriate sanction in cases involving manipulative petition filed principally for purposes of delay and harassment
Hedges v. RTC, 32 F.3d 1360 (9th Cir. 1994), cert. denied, 514 U.S. 1082 (1995)
Rule 9011 was amended from “bankruptcy court” to “judicial officer” so District Courts may now impose sanctions in bankruptcy appeals
Gaskell v. Weir, 10 F.3d 626 (9th Cir. 1993)
1. Burden of proof is on sanctionee to prove inability to pay
2. The district court did not abuse its discretion in basing the sanctions on the attorney fees reasonably incurred by the defendants in defending the lawsuit. In a case like this, where the original complaint is the improper pleading, all attorney fees reasonably incurred in defending against the claims asserted I the complaint form the proper basis for sanctions. See Lockary v. Kayfetz, 974 f.2d 1166, 1176-77 (9th Cir. 1992) (approving a Rule 11 sanction based on the attorney fees incurred to combat the improper pleading).
Combs v. Rockwell Int’l Corp., 927 F.2d 486 (9th Cir. 1991), cert. denied, 502 U.S. 859 (1991)
Falsifying deposition transcripts is good cause for dismissal.
Lockary v. Kayfetz, 974 F.2d 1166 (9th Cir. 1992), cert. denied, 508 U.S. 931 (1993)
Nasco sanctions reviewed
Ferdik v. Bonzelet, 963 F.2d 1258 (9th Cir. 1992), cert. denied, 506 U.S. 915 (1992)
In determining whether to dismiss a case for failure to comply with a court order, the district court must weigh five factors including
(1) the public’s interest in expeditious resolution of litigation;
(2) the court’s need to manage its docket;
(3) the risk of prejudice to the defendants
(4) the public policy favoring disposition of cases on their merits and
(5) the availability of less drastic alternatives
Thompson, 782 F.2d at 831; Henderson, 779 F.2d at 1423-24.
Although it is preferred, it is not required that the district court make explicit findings in order to show that it has considered these factors and we may review the record independently to determine if the district court has abused its discretion Malone, 833 F.2d at 130. Henderson at 1424.
Business Guides, Inc. v. Chromatic Commun. Enterprises, Inc., 111 S.Ct. 922 (1991)
Party held to reasonable inquiry standard, even though it did not sign pleading
Business Guides - 892 F.2d 802 (9th Cir. 1989), aff’d, 498 U.S. 533, 111 S.Ct 922 (1991) - reasonable inquiry - objective standard applied (complete review)
Cooter & Gell v. Hartmarx Corp. 496 U.S. 384 (1990)
1. Rule 41 (a)(1) dismissal does not deprive court of jurisdiction to decide Rule 11 issue
2. Abuse of discretion standard of review applies to all aspects of Rule 11 award.
3. Rule 11 does not authorize District Court to impose attorney fee incurred on appeal
U.S. v. Stringfellow, 911 F.2d 225 (9th Cir. 1990)
Failure to cite relevant authority does not alone justify imposition of sanctions.
Townsend v. Holman Consulting Corp., en banc, 929 F2d 1358 (9th Cir. 1990)
Sanctions may be imposed for failure to conduct reasonable investigation before filing complaint, Murphy overruled - complete review of Rule 11 9th Cir. Cases
In re Fitzsimmons, 920 F.2d 1468 (9th Cir. 1990)
Failure to request transcript and post fee for 8 months = bad faith. No need ton consider alternative sanctions when bad faith involved.
Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406 (9th Cir. 1990), cert. denied, Lewis & Co. v. Thoeren, 498 U.S. 1109 (1991)
Dismissal appropriate for outrageous conduct
Bank of Maui v. Estate Analysis, Inc., 904 F.2d 470 (9th Cir. 1990)
Uncertainty of B.A.P. decision’s binding effect on circuit precludes sanctioning party seeking contrary result. Issue: whether creditor can sue for fraudulent conveyances
Maisonville v. F2 America, Inc., 902 F.2d 746 (9th Cir. 1990), cert. denied, Dombroski v. F2America, Inc., 498 U.S. 1025 (1991)
FRCP 11 sanction proper for attorney’s failure to make reasonable inquiry before filing factually frivolous motion for reconsideration
In re Donovan, 871 F.2d 807 (9th Cir. 1989)
Failure to prosecute B.A.P. appeal - dismissed as sanction; failure to consider alternatives
West Coast Theater Corp. v. City of Portland, 897 F.2d 1519 (9th Cir. 1990)
Party cannot avoid dismissal by arguing that her attorney is to blame - complete non-cooperation justified dismissal under Rule 41
Hamilton Copper & Steel Corp. v. Primary Steel, Inc., 898 F.2d 1428 (9th Cir. 1990)
When is dismissal appropriate for failing to abide by court instructions
In re Villa Madrid, 110 B.R. 919 (9th Cir. B.A.P. 1990)
Sanctions on attorney for filing client’s bad faith bankruptcy petition
Hudson v. Moore Business Forms, Inc. 898 F.2d 684 (9th 1990)
Lack of opportunity to respond orally before Rule 11 sanctions imposed does not violate due process if attorney had full opportunity to respond in writing - duty to mitigate
In re Karelin, 109 B.R. 943 (9th Cir. B.A.P. 1990)
FRCP 16(f) - no abuse is excluding evidence not exchanged with the other side
Zambrano v. City of Tustin, 885 F.2d 1473 (9th Cir. 1989)
Court may impose sanctions for violation of local rules only upon showing of bad faith, willful disobedience, or gross negligence or recklessness
In re Balboa Improvements, Ltd., 99 B.R. 966 (9th Cir. B.A.P. 1989)
Court may award sanctions even if it lacks subject matter jurisdiction
Greco v. Stubenberg, 859 F.2d 1401 (9th Cir. 1988)
District court properly dismissed appeal for failure to meet deadlines
In re Bersher Investment, 95 B.R. 126 (9th Cir. B.A.P. 1988)
Failure of debtor’s counsel to notify movant that he would not opposed motion justifies sanctions
King v. Idaho Funeral Service Assoc, 862 F.2d 744 (9th Cir. 1988)
In re Asher Film Ventures Int’l., Inc., 89 B.R. 80 (9th Cir. B.A.P. 1988)
Sanctions against attorney for pleadings upheld
In re Akridge, 89 B.R. 66 (9th Cir. B.A.P. 1988)
Union’s prosecution of 523(a)(6) case against a strike breaker was for purposes of harassment only
In re Webre, 88 B.R. 242 (9th Cir. B.A.P. 1988)
Relitigation of issues decided solely for harassment
Zaldivar, v. City of L.A. , 780 F.2d 823, 828 (9th Cir. 1986)