In re: Earl Blasingame, 14-8046

Debtors (Earl and Margaret Blasingame) filed Chapter 7; their initial petition, schedules, and SOFA omitted several trusts and a pre‑petition assignment to attorney Grusin. Local bankruptcy counsel Fullen signed and filed the petition. Grusin was not counsel of record but advised Debtors and other non‑debtor entities.
Trustee and creditors (Church Joint Venture and Farmers & Merchants Bank) sued in an adversary proceeding seeking denial of discharge, avoidance of transfers, and related relief; plaintiffs moved for partial summary judgment to deny discharge.
Grusin co‑signed a response and affidavits defending that the trusts were not estate property and asserting an advice‑of‑counsel defense; later filings and testimony showed conflicting explanations of Grusin’s role.
Plaintiffs moved for sanctions against Fullen and Grusin under Fed. R. Bankr. P. 9011, 28 U.S.C. § 1927, and the court’s inherent powers, arguing the bankruptcy case and subsequent litigation were unreasonably multiplied and improperly prosecuted.
The bankruptcy court sanctioned both attorneys under Rule 9011 and § 1927 (but declined to use inherent power), ordering disgorgement, CLE, and fee awards; Fullen did not appeal. Grusin appealed the imposition of sanctions against him.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 9011 sanctions may be imposed without complying with the 21‑day safe harbor when the movant failed to comply	Church JV argued safe harbor exception applies because Grusin effectively caused filing omissions and later advocated them, so Rule 9011 sanctions are proper	Grusin argued the safe harbor applies because he did not file or sign the petition; Rule 9011(c)(1)(A) exception applies only to the act of filing the petition	Vacated as to Grusin: exception to safe harbor is limited to filing the petition; Grusin neither signed nor filed the petition, so Rule 9011 sanctions cannot be sustained against him for "later advocating" the petition/schedules
Whether § 1927 sanctions were warranted because Grusin vexatiously multiplied the proceedings	Plaintiffs contended Grusin’s "shadow representation" and filings (response to PSJ and motion to alter) unreasonably multiplied litigation and caused extra fees	Grusin asserted his conduct was zealous advocacy, not objectively vexatious or in bad faith; he did not file the petition and did not unreasonably multiply proceedings	Vacated as to Grusin: court’s findings do not support objective bad‑faith or knowing frivolity required for § 1927; limited filings at issue were not frivolous or shown to have unreasonably multiplied proceedings

Corzin v. Fordu, 201 F.3d 693 (6th Cir. 1999) (abuse‑of‑discretion review of sanctions)
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (U.S. 1990) (Rule 11 certification requirements and sanctions)
Ridder v. City of Springfield, 109 F.3d 288 (6th Cir. 1997) (§ 1927 standard: sanctions for unreasonable and vexatious multiplication)
Jones v. Continental Corp., 789 F.2d 1225 (6th Cir. 1986) (distinguishing zealous advocacy from conduct warranting § 1927 sanctions)
In re Ruben, 825 F.2d 977 (6th Cir. 1987) (§ 1927 requires more than negligence; conduct must fall short of obligations owed to the court)
In re Schaefer Salt Recovery, Inc., 542 F.3d 90 (3d Cir. 2008) (Rule 9011 safe harbor exception applies to filing petitions)