Vizconde v. Burchard (In Re Vizconde)
715 F. App'x 630
| 9th Cir. | 2017Background
- Timothy L. McCandless, an attorney, filed bankruptcy petitions on behalf of Trisha Ainne Vizconde and Rosario M. Carrera.
- The bankruptcy court found the petitions were filed to invoke the automatic stay and delay imminent foreclosures and that required disclosures and documents were omitted.
- The bankruptcy court concluded McCandless knowingly and willfully facilitated abuse and bad-faith manipulation of the bankruptcy process.
- The court issued show-cause orders and held hearings before imposing monetary sanctions of $2,000 in each case, payable to the court.
- The Bankruptcy Appellate Panel affirmed; the Ninth Circuit reviews the sanctions award for abuse of discretion and affirms the BAP judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 9011 authorized sanctions for filing the petitions | McCandless argued sanctions were improper or unsupported | Bankruptcy court/BAP: filings were for improper purpose and Rule 9011 applies | Court: Rule 9011 applies and supports sanctions |
| Proper legal standard when sanctions follow filings (sua sponte vs. motion) | McCandless suggested greater protections/heightened standard because sanctions were punitive | BAP: sanctions addressed filing abuse; even if higher “akin to contempt” standard applied, findings suffice | Court: findings meet even the higher “akin to contempt” standard |
| Adequacy of procedural protections before imposing sanctions | McCandless contended he was entitled to greater procedural safeguards because sanctions were penalties | BAP/court: Rule 9011 requires notice and opportunity to be heard, which occurred | Court: Notice via show-cause orders, written responses, and hearings satisfied Rule 9011 |
| Appropriateness and amount of monetary sanctions | McCandless argued the sanctions were excessive or punitive | BAP/court: sanctions aimed at deterrence and limited to what is sufficient | Court: $2,000 per case was a reasonable, nondisproportionate deterrent |
Key Cases Cited
- Primus Automotive Fin. Servs., Inc. v. Batarse, 115 F.3d 644 (9th Cir. 1997) (can deduce source of court’s sanction power when not specified)
- Miller v. Cardinale (In re DeVille), 361 F.3d 539 (9th Cir. 2004) (Rule 9011 standard and procedural requirements)
- United Nat. Ins. Co. v. R&D Latex Corp., 242 F.3d 1102 (9th Cir. 2001) (“akin to contempt” standard for sua sponte sanctions)
- Zaldivar v. City of Los Angeles, 780 F.2d 823 (9th Cir. 1986) (reasonableness standard for Rule 11-derived sanctions)
- Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (discussion of Rule 11 standards)