In Re Shahara Khan, 593 F. App'x 83

Appellants Karamvir Dahiya and Dahiya Law Offices, LLC appealed the district court s affirmance of sanctions imposed by the bankruptcy court against Dahiya for filing frivolous counterclaims in a Chapter 7 proceeding.
Dahiya had filed counterclaims alleging abuse of process and a vague "constitutional tort" against the Chapter 7 trustee, Debra Kramer; the bankruptcy court found the claims frivolous and imposed sanctions under 28 U.S.C. § 1927.
The district court affirmed the bankruptcy court s sanctions; this appeal challenges that affirmation and seeks to contest the bankruptcy court s authority to sanction and the constitutionality of bankruptcy courts under the Appointments Clause.
The Second Circuit reviewed legal conclusions de novo and factual findings for clear error, and reviewed the bankruptcy court s sanctions decision for abuse of discretion.
The bankruptcy court found Dahiya s counterclaims were entirely without color and that they were filed in bad faith, citing a pattern of groundless litigation and delay caused by the filings.
The Second Circuit affirmed the sanctions but denied the trustee s request to impose additional appellate sanctions against Dahiya, finding some appellate arguments were non-frivolous.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Authority to sanction	Bankruptcy court lacked authority under § 1927 and inherent power	Section 1927 authorizes sanctions; inherent authority need not be decided	§ 1927 independently authorized sanctions; no need to resolve inherent-power question
Appointments Clause challenge to bankruptcy courts	Bankruptcy courts are unconstitutional under Appointments Clause	Bankruptcy courts are inferior officers supervised per Edmond	Challenge rejected; existence of bankruptcy courts does not violate Appointments Clause
Whether counterclaims were colorable	Dahiya argued claims had merit (abuse of process; constitutional tort)	Trustee argued claims were meritless and obstructive	Counterclaims were entirely without color; abuse of process and constitutional-tort claims lacked merit
Bad faith requirement for § 1927 sanctions	Dahiya contended no bad faith; filings were legitimate litigation	Trustee showed pattern of frivolous filings and delay	Court found clear evidence of bad faith and no abuse of discretion in imposing sanctions

D.A.N. Joint Venture v. Cacioli, 463 F.3d 229 (2d Cir.) (standard for appellate review of bankruptcy orders)
Superintendent of Ins. v. Ochs (In re First Cent. Fin. Corp.), 377 F.3d 209 (2d Cir.) (de novo review of legal conclusions, clear error for facts)
Law v. Siegel, 134 S. Ct. 1188 (U.S.) (recognition that bankruptcy courts may possess inherent sanctioning power)
Baker v. Latham Sparrowbush Assocs. (In re Cohoes Indus. Terminal, Inc.), 931 F.2d 222 (2d Cir.) (bankruptcy courts may impose sanctions under § 1927)
Oliveri v. Thompson, 803 F.2d 1265 (2d Cir.) (definition of sanctions-worthy conduct and bad faith in litigation)
Eisemann v. Greene, 204 F.3d 393 (2d Cir.) (elements for § 1927 sanctions: entirely without color and brought in bad faith)
Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323 (2d Cir.) (discussing bad-faith requirement and standards)
Savino v. City of New York, 331 F.3d 63 (2d Cir.) (elements of abuse of process)
Simmons v. Abruzzo, 49 F.3d 83 (2d Cir.) (standards for dismissing vague or unintelligible constitutional claims)
Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory Ltd., 682 F.3d 170 (2d Cir.) (§ 1927 requires unreasonable and vexatious multiplication of proceedings)