Matter Of Lisse
921 F.3d 629
7th Cir.2019Background
- Attorney Wendy A. Nora filed successive, nearly identical Chapter 13 petitions for husband and wife debtors (Steven and Sondra Lisse) after a Wisconsin foreclosure judgment in favor of HSBC, effectively prolonging the state-court foreclosure timetable.
- Nora proposed plans that would route mortgage payments to her trust account while initiating adversary proceedings to relitigate HSBC's entitlement to the debt; bankruptcy court found the filings were in bad faith and dismissed the petitions.
- Nora repeatedly advanced claims that HSBC’s loan note was forged and accused opposing counsel and courts of fraud; federal courts held Rooker–Feldman barred relitigation of the state foreclosure judgment.
- The district court found Nora’s appeals and motion practice dilatory and frivolous, imposed monetary sanctions on Nora and the debtor ($1,837.50 jointly and severally), fined Nora $2,500 (stayed), and suspended her from practicing in the Western District of Wisconsin (reciprocal to a Wisconsin suspension).
- This court affirmed the sanctions and suspension, granted HSBC’s Rule 38 motion for fees and costs (directing HSBC to submit an accounting), and lifted a prior suspended $2,500 appellate sanction ordering Nora to pay it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Chapter 13 appeal was frivolous under Fed. R. Bankr. P. 8020 | Nora: appeal not frivolous because HSBC's note was a forgery and merits federal review | HSBC: appeal sought to relitigate state foreclosure; Rooker–Feldman bars federal review; appeal frivolous | Appeal was frivolous; sanctions under Rule 8020 appropriate and affirmed |
| Whether Nora may be personally liable under 28 U.S.C. § 1927 for multiplying proceedings | Nora: actions reasonable and aimed to preserve clients' rights | HSBC: Nora objectively and subjectively acted in bad faith to delay foreclosure | § 1927 sanctions appropriate; district court did not abuse discretion |
| Whether district court should suspend Nora from practice in W.D. Wis. | Nora: challenges to suspension and process; contends federal jurisdiction issues | District Court/HSBC: suspension warranted by conduct and by reciprocal state-court discipline | Suspension affirmed; reciprocal discipline based on Wisconsin Supreme Court revocation upheld |
| Whether this Court should impose appellate Rule 38 sanctions | Nora: opposes sanctions; seeks fees for defending against sanctions | HSBC: Nora’s appellate filings are frivolous and dilatory, justifying Rule 38 relief | Rule 38 sanctions granted; HSBC to submit itemized accounting; prior suspended $2,500 sanction reinstated |
Key Cases Cited
- In re Schaitz, 913 F.2d 452 (7th Cir.) (Chapter 13 cannot be used to thwart payment to creditor)
- In re Love, 957 F.2d 1350 (7th Cir.) (bad-faith filing standard for Chapter 13)
- Rimgale v. 669 F.2d 426 (7th Cir.) (creditors may be heard under §1324; context re: standing)
- Hill v. Norfolk & Western Ry. Co., 814 F.2d 1192 (7th Cir.) (authority to sanction frivolous bankruptcy appeals)
- Goyal v. Gas Technology Institute, 732 F.3d 821 (7th Cir.) (definition of frivolous appeal)
- Bell v. Vacuforce, LLC, 908 F.3d 1075 (7th Cir.) (§1927 sanctions and objective bad faith standard)
- Mains v. Citibank, 852 F.3d 669 (7th Cir.) (Rooker–Feldman bars federal review of state foreclosure judgments)
- Hilgeford v. The Peoples Bank, 776 F.2d 176 (7th Cir.) (using bankruptcy stay for delay can be vexatious)
- Snyder v. Massachusetts, 472 U.S. 634 (U.S. 1985) (federal courts’ authority to discipline attorneys)
- Selling v. Radford, 243 U.S. 46 (U.S. 1917) (federal courts may give weight to state disciplinary proceedings)