In Re Spickelmier
469 B.R. 903
Bankr. D. Nev.2012Background
- Debtors James and Katherin Spickelmier filed Chapter 13 on Jan 3, 2011; their counsel was Barry Levinson & Associates.
- Bank of Nevada moved to dismiss or convert; the court granted the motion on May 6, 2011, requiring the Debtors to convert or dismiss within 30 days.
- On Jun 1, 2011, a stipulation with the Chapter 13 Trustee required conversion to Chapter 7 or dismissal by Jun 9; Debtors did not comply and the Chapter 13 case was dismissed on Jun 27, 2011.
- Levinson’s office filed an Amended Motion to Vacate Order of Dismissal (First Amended Motion) on Aug 3, 2011; hearing Sept 1; motion denied Sep 13 for lack of proper analysis.
- Levinson’s office filed an Amended Motion to Vacate on Sept 20, 2011 (OST Motion); the court denied it on Sept 23 for Rule 9006(a) noncompliance and lack of justification.
- The court issued an Order to Show Cause regarding Rule 9011 violations; at Oct 12, 2011 hearing, counsel appeared late and unprepared, offering minimal responsive evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the OST Motion violated Rule 9011(b)(2). | Levinson argued the motion complied with 9011(b)(2). | Court held the filing had no legal basis or reasonable inquiry. | Yes; violations found for both Levinson and Mondejar. |
| Whether the Levinson Affidavit and conduct violated Rule 9011(b)(3). | Affidavit alleged prejudice but lacked evidentiary support. | No adequate evidence of prejudice; responses were inadequate. | Yes; violations found for both Levinson and Mondejar. |
| Whether disgorgement of fees under § 329 is warranted and appropriate sanctions. | Fees should be disgorged due to frivolous filings. | Sanctions requested, including full disgorgement, were excessive. | Disgorgement of all fees ordered; fees valued at $0 for reasonableness; sanctions imposed. |
Key Cases Cited
- In re Blue Pine, Inc., 457 B.R. 64 (9th Cir. BAP 2011) (frivolous filing standard; reasonable inquiry required; sanctions authority under 9011)
- In re Grantham Bros., 922 F.2d 1438 (9th Cir. 1991) (reasonably competent attorney standard for 9011 analysis)
- Townsend v. Holman Consulting Corp., 929 F.2d 1358 (9th Cir. 1990) (frivolousness and need for reasonable inquiry under 9011)
- Zaldivar v. City of Los Angeles, 780 F.2d 823 (9th Cir. 1986) (standard of reasonableness in 9011 sanctions)
- In re Kayne, 453 B.R. 372 (9th Cir. BAP 2011) (objective standard for 9011 violation; need for competent attorney conduct)
- Hale v. U.S. Trustee, 509 F.3d 1139 (9th Cir. 2007) (basis for § 329 disgorgement as sanction for excessive fees)
- In re Schivo, 462 B.R. 765 (Bankr. D. Nev. 2011) (applies 9011 standards; Nevada bankruptcy practice)
- In re Brooks-Hamilton, 329 B.R. 270 (9th Cir. BAP 2005) (guidance on 9011 sanctions and proper inquiry)