Category Archives: Bankruptcy and Appeals

What Can I Do If A Frivolous Appeal Was Filed Against Me After I Won?

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It is not uncommon for daily news channels to report on the Supreme Court of the United States holdings or decisions on cases they choose to hear and rule on. Of course SCOTUS holdings effect all of the United States of America. In the lower district courts throughout the United States and bankruptcy appellate panels there are many appeals each heard and decided each month. These decisions do not always get a lot of attention. Appeals of decisions, judgments or orders issued by lower courts are absolutely a necessary part of our legal system and in bankruptcy law under the Federal Rules of Procedure. It is how laws are interpreted under immense scrutiny and appeals provide all us a better understanding about when and what laws apply to. But are all appeals necessary or well intentioned? No, they certainly are not. Appealing a lower court’s final order or judgment should be considered very carefully. Some appeals are frivolous and are only designed to delay the inevitable or try and inflict one last punch to the gut to incur additional attorneys’ fees and costs. What can I do if a frivolous appeal is filed after I won?

First, discuss with your bankruptcy lawyers whether the appeal is frivolous or if there truly is a reason to file a motion to award damages. Federal Rule of Appellate Procedure 38 provides: If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee. 28 U.S. Code § 1912 is a little different, it provides for damages and costs on affirmance where a judgment is affirmed by the Supreme Court or a court of appeals, the court in its discretion may adjudge to the prevailing party just damages for his delay, and single or double costs. FRAP 38 can provide damages without the showing of delay, just frivolousness.

So what is a frivolous appeal that warrants damages and attorneys’ fees and costs? What is delay that warrants damages and attorneys’ fees and costs?

A court of appeals has the discretion to impose damages against litigants as a sanction for bringing a frivolous appeal. See Maisano v. United States, 908 F.2d 408, 411 (9th Cir. 1990). Okay, so what is a frivolous appeal? According to the Maison case, an appeal is frivolous if the results are obvious, or the arguments of error are wholly without merit. More or less you did not have a short of overturning the lower court’s decision and you should have known it from the start. To receive damages for the filing of a frivolous appeal a motion or notice from the court with a reasonable amount of time to respond must be provided. See Gabor v. Frazer, 78 F.3d 459, 459-60 (9th Cir.1996).

A court of appeals may on its own accord issue an order to show cause why the court should not award attorneys’ fees and double costs if the arguments in the appeal are without merit. Moreover, the court of appeals can impose the award of damages jointly and severally against the client and their attorney. See Int’l Union of Bricklayers Local 20 v. Martin Jaska, Inc., 752 F.2d 1401, 1407 & n. 8 (9th Cir.1985). Joint and several liability means the party that is awarded damages may collect the full amount of the damages from either party no matter what their share of the liability for the damages is. Damages for frivolous appeals can be imposed joint and severally given that the client and attorney are in the best position to determine who caused the appeal to be filed and fairly apportion who is at fault.

In a published opinion from the Ninth Circuit Court of Appeals on July 13, 2010, In Re: THOMAS V. GIRARDI, Esq.; WALTER J. LACK, Esq.; PAUL A. TRAINA, Esq., et al., Nos. 08-80090. These Los Angeles attorneys were significantly sanctioned for a frivolous appeal. The sanctions were imposed as follows:

– Respondents Thomas V. Girardi and the Girardi Firm shall reimburse Defendants Dow Chemical Company, Dole Food Company, and Shell Chemical Company (collectively, “Defendants”) their attorneys’ fees and costs, but not to exceed the aggregate sum of $125,000.00.

– Respondents Walter J. Lack and the Lack Firm shall reimburse Defendants their attorneys’ fees and costs, but Lack’s individual liability shall not exceed the aggregate sum of $250,000.00.

– Respondent Paul A. Traina shall reimburse Defendants their attorneys’ fees and costs, but not to exceed the aggregate sum of $10,000.00

– Respondent [the young associate] shall reimburse Defendants their attorneys’ fees and costs, but not to exceed the aggregate sum of $5,000.00.

– Respondent the Lack Firm shall be jointly and severally liable for the sanctions imposed on Respondents Traina and the young associate so that its aggregate liability shall not exceed $265,000.00.

– Respondents aggregate liability to each Defendant shall not exceed $130,000.00, or said Defendants’ actual attorneys’ fees and costs, whichever is less.

Is it Okay to File Multiple Bankruptcy Petitions Over and Over Again and What are the Possible Repercussions?

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I found the all-time record holder for the most bankruptcy petitions filed I have ever witnessed. I have redacted the person’s name even though it is technically a public record. This individual has filed 14 Chapter 13 bankruptcy petitions and 1 Chapter 7 petition since 2009. Yes, 15 total separate bankruptcy petitions for relief and they all have been dismissed for one reason or another except the most recent filing. Please see the cases and dates filed at the end of this article. I cannot think of a reason why someone would file this many petitions for relief and actually obtain some sort of value for it. So is it okay to file 15 petitions for relief in five years under the Bankruptcy Code? I cannot specifically answer that question for this person given I do not know the bankruptcy filers circumstances or facts surrounding the many filings. What I do know is this person may have spent a lot of money on filing fees (possibly exceeding $4,000.00, unless a fee waiver or installment payment was made for the filing fee) and used a lot of the Chapter 13 trustee and courts time to administer these cases before dismissal. This article will discuss the effect on the automatic stay regarding multiple bankruptcy filings and the possible repercussions against someone that files this many petitions for relief in such a short period of time.

Multiple Filings and the Automatic Stay

One of the most powerful bars to filing multiple bankruptcy petitions is the limitations of the automatic stay past the first case that is filed. In the first bankruptcy case filed the debtor will get an unlimited automatic stay stopping any and all collection activity as to all creditors. If the same debtor files another case within a year of the first case and the first case was dismissed due to not filing the required paperwork, not paying the fees on time, not showing up for the mandatory meeting of creditors and other reasons, then the automatic stay only lasts for 30 days. If the same debtor files a third case within a year of the first two cases then there is no automatic stay at all. In the second filed case the automatic stay can be extended past the 30 days if an order extending the stay is entered prior to the 30 day stay expiring. In the third case the automatic stay can be imposed by filing a motion with the bankruptcy court.

Possible Repercussions for Filing Multiple Bankruptcy Petitions – Vexatious Litigants

Section 109(g) of the Bankruptcy Code provides: (g) Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if— (1) the case was dismissed by the court for willful failure of the debtor to abide by orders of the court, or to appear before the court in proper prosecution of the case; or (2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title.

I mostly practice bankruptcy law in the Northern District of California. We actually have a published opinion on this subject. In re Walker, No. C-98-20966-JW. In the Walker case the debtors filed ten petitions total. Their ninth bankruptcy case was dismissed with prejudice and the Bankruptcy Judge, the Honorable James R. Grube, barred the Walkers from filing another petition for 180 days and seeking a discharge of their existing debts for two years. Judge Grube also did not continue a hearing to dismiss with the case with prejudice so the Walkers could retain counsel. The Walkers appealed and lost.

In the Walkers’ case they testified that they filed three of the cases to stop the garnishment of Mrs. Walker’s wages. The rest of the cases appear to have been filed to stop the collection of utilities by the City of Santa Clara and not make pre/post-petition mortgage payments on their home. Focusing on the ninth bankruptcy petition filed, this case was dismissed for the Walkers’ failure to complete the petition schedules and they also did not appear at the 341 Meeting of the Creditors.

So what is a willful failure to abide by the bankruptcy courts order under Section 109(g)? Unfortunately the Bankruptcy Code does not define the word or term willful. Courts have interpreted “willful” to mean deliberate or intentional. In re Herrera, 194 B.R. 178, 188 (N.D. Ill 1996). To determine is willful conduct took place a court can consider repeated failure to appear or lack of diligence as willful conduct. A court can infer from multiple dismissals and re-filing of bankruptcy petitions without a change in circumstances willful failure to comply with order of the bankruptcy court. In re Nelkovski, 46 B.R. 542, 545 (N.D.Ill. 1985).

In the Walker case the debtors filed nine petitions for relief and never completed the petitions or fully prosecuted the cases. Interestingly enough, there is no absolute bar against filing nine successive bankruptcy petitions or serial filings. Tsafaroff v. Taylor, 884 F.2d 478 (9th Cir. 1989). On appeal the Court agreed with Judge Grube and affirmed the dismissal for the Walkers’ repeated willful failures to follow the Court’s orders under Section 109(g)(1).

Dismissal of the Walkers’ Case With Prejudice

Section 349 of the Bankruptcy Code provides (a) unless the court, for cause, orders otherwise, the dismissal of a case under this title does not bar the discharge, in a later case under this title, of debts that were dischargeable in the case dismissed; nor does the dismissal of a case under this title prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in section 109(g) of this title. So there you go. A court can for cause bar a debtor from filing an additional bankruptcy for a period of time or seeking a discharge of their debts listed in the dismissed case. In re Leavitt, 209 B.R. 935 (9th Cir. 1997). In order to have cause, the debtors conduct must have been “egregious;” a finding of bad faith constitutes egregious behavior. Leavitt 209 B.R. at 939. A Bankruptcy Court may dismiss a case with prejudice in order “to punish abusive or bad faith filing.” In re Leavitt, 209 B.R. at 939.

In evaluating a debtor’s history of filings and dismissals, it is useful to consider five factors: “(1) the time between the prior case and the present one; (2) whether the second case was filed to obtain the favorable treatment afforded by the automatic stay; (3) the effort made to comply with the prior case plan; (4) the fact that Congress intended the debtor to achieve its goals in a single case; (5) any other facts the court finds relevant.” In re Hureta, 137 B.R. 356, 367 (B.R. CD Cal.1992).

In the Walker appeal the court noted that the Walkers filed case after case over a six year period with nine of the petition within a four year period and the petition subject to appeal was filed only 24 days after the previous bankruptcy petition was dismissed. On appeal the court noted that the Walkers petitions were dismissed as follows: 3 for failure to appear at the meeting of creditors or appearing at a hearing regarding the chapter 13 plan; 3 were dismissed for failure to appear the 341 meeting of creditors; 1 for failure to make the Chapter 13 Plan payments; and for failure to comply with court orders to file appropriate papers and confirm chapter 13 plans. The
Walkers were determined to have filed the ninth bankruptcy petition in bad faith and were abusing the bankruptcy process.

Vexatious Litigant Determination

A little known area of the law is the All Writs Act, 28 U.S.C. Section 1651(a). Section 1651(a) provides: The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.

I suppose this is the like the necessary and proper clause of Article I, Section 8 of the United States Constitution or Section 105(a) of the Bankruptcy Code. They potentially can allow the entity they refer to make any law, order or holding that is deemed proper. 28 U.S.C. Section 1651(a) is no different. It has been determined that Section 1651(a) allows the district court to enjoin litigants that abuse the court system. Tripati v. Beaman, 878 F.2d 351 (10th Cir. 1989); In re Oliver, 682 F.2d 443, 445 (3rd Cir. 1982). However, the conditions cannot be so burdensome as to deny a litigant meaningful access to the courts. Tripati, 878 F.2d at 352.

So the Walkers filing nine bankruptcy petitions in four years was an abuse and the number of dismissals for failure to prosecute the cases provides evidence and supports the conclusion that the Walkers’ were abusing the bankruptcy court system. There are six factors the court identified to help determine if a debtor is a vexatious litigant:
(1) the litigant’s history of litigation and in particular whether it entailed vexatious, harassing or duplicative lawsuits;
(2) the litigant’s motive in pursuing the litigation;
(3) whether the litigant is represented by counsel;
(4) whether the litigant has caused needless expense to other parties . . . or has posed an unnecessary burden on the courts and their personnel; and
(5) whether other sanctions would be adequate to protect the courts and other parties.

The ultimate consideration is “whether the litigant who has a history of vexatious litigation is likely to continue to abuse the judicial process . . . “ See Safir v. United States Lines, Inc., et. al., 792 F.2d 19, 23 (2nd Cir. 1986). The court of appeal wasted no time in determining the Walkers were in fact vexatious litigants and their access to filing more petitions should be restricted by applying the factors listed above. The Walkers’ petitions were duplicative, failed to prosecute all nine cases, they were not represented by counsel, caused needless expense to creditors and burdened the courts. Finally the court determined if the Walkers’ access was not restricted they would continue to file bankruptcy petitions. So the court of appeals ordered the Walkers be limited as follows: (1) the Walkers have to notify the clerk of the Bankruptcy Court if they desire to file a petition and they are vexatious litigants; (2) before the Walkers can file a petition the clerk shall lodge it with the General Duty Bankruptcy Judge and be granted leave to file; (3) once the petition is accepted for filing, the Walkers must obtain leave of the Bankruptcy Court to voluntarily dismiss the petition and (4) the order will remain in effect for 10 years without further order of the court.

So, 15 petitions filed since 2009 and the debtor listed below is still going strong. An interesting part of the history below is the time between the filing of the petitions. The debtors 13th case was dismissed in 2012, then the debtor comes back and files two cases in 2014, the 14th and 15th cases. So without spending too much time the debtor listed below has intermittently fallen within Section 109(g) and arguably depending upon the facts is not a vexatious litigant given the length of time between some of the filings. The debtor also properly received the benefit of the automatic stay in a number of the cases given the timing of filing. The bottom line is this debtor has not been barred from continuing to file bankruptcy petitions and there is probably a good reason why.
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“Notice of Debtor’s Prior Filings for debtor XXXX XX Case Number 09-61041, Chapter 13 filed in California Northern Bankruptcy Court on 12/17/2009 , Dismissed for Failure to File Information on 01/06/2010; Case Number 11-58863, Chapter 13 filed in California Northern Bankruptcy Court on 09/23/2011 , Dismissed for Failure to File Information on 10/14/2011; Case Number 11-60087, Chapter 13 filed in California Northern Bankruptcy Court on 10/31/2011 , Dismissed for Other Reason on 11/16/2011; Case Number 14-54381, Chapter 13 filed in California Northern Bankruptcy Court on 10/28/2014; Case Number 09-59783, Chapter 13 filed in California Northern Bankruptcy Court on 11/09/2009 , Dismissed for Failure to File Information on 12/01/2009; Case Number 10-54170, Chapter 7 filed in California Northern Bankruptcy Court on 04/23/2010 , Dismissed for Failure to File Information on 06/08/2010; Case Number 10-59424, Chapter 13 filed in California Northern Bankruptcy Court on 09/10/2010 , Dismissed for Failure to File Information on 09/29/2010; Case Number 11-56990, Chapter 13 filed in California Northern Bankruptcy Court on 07/27/2011 , Dismissed for Failure to File Information on 08/12/2011; Case Number 10-57982, Chapter 13 filed in California Northern Bankruptcy Court on 08/02/2010 , Dismissed for Failure to File Information on 08/18/2010; Case Number 11-54700, Chapter 13 filed in California Northern Bankruptcy Court on 05/17/2011 , Dismissed for Failure to File Information on 06/02/2011; Case Number 12-50023, Chapter 13 filed in California Northern Bankruptcy Court on 01/03/2012 , Dismissed for Other Reason on 01/19/2012; Case Number 10-52271, Chapter 13 filed in California Northern Bankruptcy Court on 03/09/2010 , Dismissed for Failure to File Information on 03/24/2010; Case Number 11-55983, Chapter 13 filed in California Northern Bankruptcy Court on 06/27/2011 , Dismissed for Failure to File Information on 07/13/2011; Case Number 10-56584, Chapter 13 filed in California Northern Bankruptcy Court on 06/25/2010 , Dismissed for Failure to File Information on 07/14/2010.(Admin) (Entered: 11/26/2014)”

Bankruptcy Appeals – Yes, If You Do Not Agree With Bankruptcy Courts Order or Judgment You May Appeal to the Bankruptcy Appellate Panel

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Yes, if you do not agree with a bankruptcy court’s order or judgment you may appeal it. Bankruptcy appeals are the process of having a bankruptcy court’s order or judgment reviewed for error by the bankruptcy appellate panel or the district court for the district of the federal bankruptcy court your case is pending. Some district courts in the United States do not have appellate panels of sitting bankruptcy judges for the district to review appeals. If that is the case there is only the district court to appeal to. The decision to appeal should not be taken lightly given the time and expenses involved. Appealing an order or judgment to stop the order or judgment from becoming effective is risky business and arguably unethical for bankruptcy attorneys to be part of. If you believe an order or judgment was appealed to stop the order of judgment from becoming effective pending appeal you should hire a bankruptcy lawyer to file a motion for the order or judgment to become effective notwithstanding the appeal and seek sanctions.

Yes, if you do not agree with a bankruptcy court’s order or judgment you may appeal it.

Yes, if you do not agree with a bankruptcy court’s order or judgment you may appeal it.

To start the process you must file a notice of appeal with 14 days of lower bankruptcy court’s entry of the judgment or order. Please see Fed.R.Bankr.P 8002(a). See Key Bar Invs., Inc. v. Cahn (In re Cahn), 188 B.R. 627, 630 (9th Cir. BAP 1995) (citing Browder v. Dir., Dep’t of Corr. of Ill., 434 U.S. 257, 264 (1978) and Slimick v. Silva (In re Slimick), 928 F.2d 304, 306 (9th Cir.1990)). If the notice of appeal is not timely filed the appellate court has no jurisdiction to hear the appeal. See Preblich v. Battley, 181 F.3d 1048, 1056 (9th Cir. 1999).

The time to file a bankruptcy appeal can be extended by filing a motion with the court. The motion to extend the time must be filed before the time for filing a notice of appeal has expired. A motion to extend the time to file an appeal can also be filed within 21 days of the expiration of the 14 day period to file notice upon a showing of excusable neglect pursuant to Fed.R.Civ.P. 60. Be careful though. A party can seek to have the district court or bankruptcy appellate panel hold that the appeal was frivolous. Depending upon how frivolous just damages can be awarded and single or double costs against the party frivolously appealing.

Normally when an order or judgment is appealed a stay takes effect stopping the order or judgment from becoming effective until the district court or bankruptcy appellate panel rules. The bankruptcy judge can order the continuation of other proceedings while the appeal is pending. A motion for relief can be made also directly to the district court or bankruptcy appellate panel, but an explanation as to why relief was not sought and obtained from the bankruptcy court must be included. Likewise, if a judgment is appealed to the court of appeals from the district court or bankruptcy appellate panel the judgment is stayed pending the appeal to the court of appeals.