Winterton v. Humitech of Northern California, LLC (In Re Blue Pine Group, Inc.), 457 B.R. 64

Blue Pine Group, Inc. formed to operate Gaskets-N'-More; Pink (Humitech partner) and Grose (M&G) were initial directors/shareholders.
Disputes arose; California Litigation accused Grose and M&G of converting Blue Pine assets to compete against Humitech.
Blue Pine filed a chapter 7 bankruptcy in March 2009; petition filed without a corporate resolution authorizing the filing.
Winterton signed the petition and SOFA/Schedules; he claimed a clerical upload error caused the March 10 date to appear as March 17 filing, and he certified no incorrect information after inquiry.
Humitech notified Winterton there was no proper authorization and urged dismissal; March 13 letter contradicted by later minutes.
Bankruptcy court later found removal/authorization flaws under Nevada law, concluded the bankruptcy was filed without proper corporate authorization, and dismissed the case; sanctions were subsequently awarded to Humitech for Winterton’s Rule 9011 violations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did the court err in imposing Rule 9011 sanctions on Winterton?	Winterton relied on others' representations but failed to conduct reasonable inquiry.	Winterton reasonably relied on assurances and minutes; sanctions were unwarranted.	No; court did not abuse discretion; Winterton failed to conduct reasonable inquiry.
Was $109,528 a proper sanction amount under Rule 9011?	Sanctions should compensate Humitech for fees from the improper filing and defense.	Amount excessive/punitive beyond necessary deterrence.	Yes; amount reasonable as compensatory sanctions under Rule 9011(c).

Dressler v. The Seeley Co. (In re Silberkraus), 336 F.3d 864 (9th Cir. 2003) (sliding-scale analysis of frivolousness and improper purpose under Rule 9011)
In re Marsch, 36 F.3d 825 (9th Cir. 1994) (standard for frivolousness and improper purpose in sanctions)
Townsend v. Holman Consulting Corp., 929 F.2d 1358 (9th Cir. 1990) (frivolous filing requires reasonable inquiry into facts)
Valley Nat'l Bank of Ariz. v. Needler (In re Grantham Bros.), 922 F.2d 1438 (9th Cir. 1991) (objective reasonableness standard for attorney inquiry)
G.C. & K.B. Inv., Inc. v. Wilson, 326 F.3d 1096 (9th Cir. 2003) (objective standard for improper purpose and inquiry)
In re Nguyen, 447 B.R. 268 (9th Cir. BAP 2011) (standard for determining reasonableness of sanctions; en banc context)
In re DeVille, 361 F.3d 539 (9th Cir. BAP 2004) (sanctions amounting to deterrence and compensatory recovery)
In re Fjeldsted, 293 B.R. 12 (9th Cir. BAP 2003) (limitations on deterrence penalties under Rule 9011)
In re Brooks-Hamilton, 400 B.R. 238 (9th Cir. BAP 2009) (ABA standards as guidance in sanctions analysis)
Chapman v. U.S. Trustee (In re Aston-Nevada Ltd. P'ship), unpublished (9th Cir.) (distinction between negligence and bad faith sanctions)