IN RE: LARISA IVANOVNA MARKUS
Docket No. 21-2238
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term 2022
(Argued: September 28, 2022 Decided: August 30, 2023)
VICTOR A. WORMS, Appellant, v. YURI VLADIMIROVICH ROZHKOV, Appellee.
Before: JACOBS, CHIN, AND ROBINSON, Circuit Judges.
Appeal from two orders of the United States District Court for the Southern District of New York (Liman, J.), entered April 3, 2020, and September 9, 2021, affirming in relevant part orders of the United States Bankruptcy Court for the Southern District of New York (Glenn, J.) imposing civil contempt sanctions and awarding attorneys’ fees against the debtor‘s attorney in a Chapter 15 proceeding. The district court held that the bankruptcy court has inherent authority to issue civil contempt sanctions, including per diem sanctions and attorneys’ fees, arising out of a contemnor‘s failure to comply with the bankruptcy court‘s orders.
AFFIRMED.
VICTOR A. WORMS, Law Offices of Victor A. Worms, New York, NY, for Appellant.
CHIN, Circuit Judge:
In this case, appellant Victor A. Worms, an attorney, represented the debtor Larisa Ivanovna Markus in proceedings before the United States Bankruptcy Court for the Southern District of New York (Glenn, J.). After Worms failed to comply with a series of discovery orders, the bankruptcy court imposed sanctions of, inter alia, $55,000 for 55 days of non-compliance and $36,600 in attorneys’ fees. The orders were affirmed by the United States District Court for the Southern District of New York (Liman, J.). Worms now appeals to this Court, arguing that, first, the bankruptcy court lacked inherent authority to issue civil contempt sanctions, and second, as a matter of due process, he was not provided with sufficient notice of the basis for the sanctions imposed against him. We affirm.
STATEMENT OF THE CASE
I. Background
Markus is a Russian citizen who was the founder of Vneshprombank, Ltd. (“Vneshprombank“), one of Russia‘s largest banks. She served as its president from 1995 through 2016. On March 11, 2016, the Moscow Arbitration Court declared Vneshprombank insolvent and commenced bankruptcy proceedings against it. See In re Foreign Econ. Indus. Bank Ltd., 607 B.R. 160, 163 (Bankr. S.D.N.Y. 2019). Thereafter, on April 19, 2016, one of Markus‘s creditors applied to the Moscow Arbitration Court for commencement of bankruptcy proceedings against Markus personally. Id. The application was granted on April 22, 2016, and the Moscow Arbitration Court appointed appellee Yuri Vladimirovich Rozhkov to preside over the liquidation of Markus‘s assets. Id. at 163-64. Under Russian bankruptcy law, Rozhkov is responsible for pursuing actions against persons or entities that contributed to Markus‘s insolvency.
On May 12, 2017, Markus was convicted in a Russian tribunal for embezzling approximately $2 billion from Vneshprombank. According to the judgment of conviction, Markus “creat[ed] an organized criminal group from the Bank‘s employees and other persons” “to steal a significant amount of funds from [Vneshprombank] . . . for purposes of personal enrichment.” BK-Dkt. No. 5-4 at 7.1 On August 15, 2017, Markus was sentenced to eight and a half years of imprisonment.
II. Proceedings Below
A. Commencement of the Chapter 15 Bankruptcy Proceeding
On January 10, 2019, Rozhkov, acting as Markus‘s Foreign Representative (the “FR“), filed a Verified Petition Under Chapter 15 for Recognition of a Foreign Main Proceeding in the bankruptcy court below.2 The Chapter 15 action was intended, inter alia, to “seek discovery concerning Ms. Markus’ assets which might be located in the United States.” BK-Dkt. No. 6 at 6. The FR supported its petition with declarations representing that Markus had substantial property in the United States; one declaration reported that Markus had formed at least ten companies in New
On April 1, 2019, the bankruptcy court granted Chapter 15 recognition of the Russian insolvency proceeding against Markus (the “Recognition Order“). See generally
B. Discovery Disputes
Discovery disputes arose almost immediately. Upon request from the FR, the bankruptcy court scheduled a discovery conference for May 29, 2019. Worms appeared on Markus‘s behalf on May 28, 2019, and he advised that he intended to file a motion to vacate the Recognition Order and requested a stay of all proceedings pending a ruling on that motion. The conference, nonetheless, proceeded the next day. The bankruptcy court recognized that, on the part of certain Markus-related entities, “there is clearly, clearly a pattern of not complying with . . . discovery obligations and of stonewalling that has to come to an end.” BK-Dkt. No. 59 at 29.3 The bankruptcy court also advised Worms that it would consider his arguments to vacate the Recognition Order so long as Worms brought “a proper motion,” id. at 12, which Worms later filed on June 18, 2019.
On June 25, 2019, after Worms rejected the FR‘s proposal to meet and confer regarding discovery, the FR served a subpoena, pursuant to
at 91. Worms made no effort to obtain responsive documents and instead moved to quash the subpoena on July 9, 2019, arguing that the subpoena is “predicated upon a Recognition Order which is null and void.” Id. at 74.
The FR thereafter requested a discovery conference on the motion to quash, which the bankruptcy court held on July 23, 2019. At the conference, Worms maintained the position that discovery should be delayed until the court ruled on his motion to vacate the Recognition Order. The bankruptcy court overruled Worms‘s objection, and ordered that Worms meet and confer with the FR regarding the subpoena and produce all non-privileged documents requested therein. See Supp. App‘x at 35 (“Unless you have a good-faith basis to assert privilege, attorney-client privilege, you‘re going to produce the documents.“). Worms represented to the bankruptcy court that he would comply, but he ultimately made no production, asserting that he had no responsive documents in his possession.
By order dated July 30, 2019 (the “Production Order“), the bankruptcy court denied Worms‘s motion to quash the subpoena and ordered him to “immediately communicate with Markus and her agents, including attorneys, to obtain and produce responsive documents . . . to [the] extent the documents are in Markus’ possession, custody, or control.” Sp. App‘x at 59. The bankruptcy court also required Markus and Worms to complete production of all responsive documents “to the
Worms produced no documents by the deadline. On September 4, 2019, in a written response to the subpoena, Worms objected to Request No. 1 “as exceeding the limited scope of discovery provided for under Chapter 15,” and stated that “[t]here are no documents responsive to” the remaining twenty requests. App‘x at 118-24. At a hearing on September 9, 2019, the FR explained to the bankruptcy court that Worms claimed that Markus had no responsive documents in her possession “because she‘s in jail,” and that Worms believed neither he nor Markus had “a duty to” obtain and produce responsive documents in the possession of Markus‘s agents. Id. at 147. Worms also argued, for the first time, that he understood the scope of the subpoena to be “territorially limited” to documents within the United States. Id. at 207. Although the Production Order had directed Worms to “immediately communicate with Markus and her agents, including attorneys, to obtain and produce responsive documents,” Sp. App‘x at 59, it was apparent that Worms had not done so, as he did not know -- “one way or the other” -- whether they had any responsive documents, App‘x at 208-09. The bankruptcy court rejected Worms‘s arguments as inconsistent with the Production Order‘s clear mandate “to obtain and produce responsive documents . . . in Markus’ possession, custody, or control,” id. at 208, and concluded that Worms was “stonewall[ing]” discovery, id. at 209. After confirming that Worms had not complied, to any degree, with its Production Order, the bankruptcy court advised the FR to “[b]ring a motion for contempt.” Id.
C. The FR‘s Motion for Sanctions
On September 11, 2019, the FR accordingly filed a motion for sanctions against Worms and Markus pursuant to
On October 3, 2019, the bankruptcy court held a hearing on the contempt motion. Worms still had not produced any documents in response to the subpoena. Although Worms claimed that he had written to Markus‘s attorneys outside the United States and that they had refused to turn documents over to him, he provided no detail and presented no evidence showing that he had indeed taken any steps to comply with the subpoena. Worms also raised new grounds for his refusal to comply with the subpoena, including that the bankruptcy court lacked personal jurisdiction over Markus and that Markus lacked authority over her agents to require them to turn over responsive documents. After hearing from both parties, the bankruptcy
The bankruptcy court issued an order (the “Sanctions Order“) five days later, on October 8, 2019, imposing sanctions “based on Mr. Worms’ failure to comply with discovery orders issued by this Court,” in the amount of $1,000 per day since his noncompliance with the September 4 discovery deadline, for a total of $34,000, plus $1,000 per day going forward if Worms continued to fail to comply. Sp. App‘x at 62. The bankruptcy court followed the Sanctions Order with a memorandum opinion, which summarized Worms‘s failure to comply with the Court‘s July 30 Production Order and its oral order on August 7, 2019, to produce “all non-privileged documents responsive to the Subpoena.” See In re Markus, 607 B.R. 379, 388 (Bankr. S.D.N.Y. 2019) (”In re Markus I“), aff‘d in part, vacated in part, remanded sub nom. Markus v. Rozhkov, 615 B.R. 679 (S.D.N.Y. 2020). The bankruptcy court found Worms‘s violations of these discovery orders to be knowing, willful, and intentional. See id. at 384. The court rejected Worms‘s contention that
On motion by the FR, the bankruptcy court subsequently awarded $60,000 in attorneys’ fees “against Worms personally in connection with the [FR‘s] preparation of the Sanctions Motion, reply and argument of that motion” (the “Fees Order“). Sp. App‘x at 89. The Fees Order did not identify the authority pursuant to which the fees were awarded, although it referenced the bankruptcy court‘s opinion issued in connection with the Sanctions Order, which discussed at length the court‘s inherent contempt power as an applicable source of authority. On November 12, 2019, Worms appealed the Fees Order to the district court.
D. Worms‘s Appeals to the District Court
In the district court, Worms argued that the bankruptcy court lacked authority to impose the sanctions against him; he also challenged the amounts set by the bankruptcy court. On April 3, 2020, the district court issued a decision affirming in part, vacating in part, and remanding for limited reconsideration of both orders. See Markus v. Rozhkov, 615 B.R. 679, 715, 717 (S.D.N.Y. 2020) (”Rozhkov I“). As to the Sanctions Order, the district court affirmed the bankruptcy court‘s factual findings that Worms failed to comply with its discovery orders “without justification” and held that the imposition of sanctions was proper pursuant to the bankruptcy court‘s inherent authority. Id. at 707, 710-11. Indeed, the district court found that (1) Worms was on notice that the bankruptcy court might impose sanctions pursuant to its inherent authority; (2) Worms admitted that the bankruptcy court had such inherent authority; and (3) the record supported imposition of civil contempt sanctions pursuant to this authority. Accordingly, the district court affirmed the imposition of prospective per diem sanctions for Worms‘s continued noncompliance since the Sanctions Order (but remanded for consideration of the appropriate amount)
With respect to the Fees Order, the district court recognized that the bankruptcy court did not specify whether it imposed the award as an exercise of discretion pursuant to its inherent authority, or to comply with
On remand, the bankruptcy court held that Worms was no longer in contempt as of November 27, 2019, when Ilya Bykov, an agent of Markus based in the United States, contacted Markus‘s agents and requested that they produce all documents, information, and communications responsive to the subpoena. See In re Markus, 619 B.R. 552, 571-72 (Bankr. S.D.N.Y. 2020) (”In re Markus II“), order vacated in part sub nom. Worms v. Rozhkov, 2021 WL 4124662 (S.D.N.Y. Sept. 9, 2021). Accordingly, the bankruptcy court counted 55 days of contempt -- from October 3, 2019, when the bankruptcy court determined that it would impose civil contempt sanctions against Worms, until November 27, 2019, when Bykov requested documents from Markus‘s agents -- and ordered per diem sanctions in the amount of $1,000 per day, for a total of $55,000. Id. at 572. Bykov‘s communication with Markus‘s agents ultimately resulted in the production of 8,666 pages of documents to the FR on January 6, 2020.
As to the Fees Order, the bankruptcy court held explicitly that the award was based on its inherent authority but reduced its amount from $60,000 to $36,600 to discount for the unsuccessful arguments that the FR proffered in his sanctions motion. Id. at 574, 578-79. The bankruptcy court also awarded the FR, as he had requested, an additional $63,500 for the legal fees incurred when defending the contempt sanctions on appeal before the district court. Id. at 579.
Worms thereafter appealed to the district court for a second time, arguing only that the bankruptcy court abused its discretion in awarding the additional $63,500 in attorneys’ fees. On September 9, 2021, the district court affirmed the bankruptcy court‘s inherent authority to award attorneys’ fees as sanctions to enforce compliance with its orders but vacated this fees award as beyond the scope of this authority. See Worms v. Rozhkov, 2021 WL 4124662, at *5 (S.D.N.Y. Sept. 9, 2021) (”Rozhkov II“). The district court reasoned that the bankruptcy court could not award attorneys’ fees against Worms with respect to his first appeal because “[a] bankruptcy court generally does not have the power, under its inherent sanctioning authority, to award fees for the conduct of a party on appeal before another court.” Id. at *3.
Worms filed a notice of appeal to this Court on September 16, 2021, challenging the imposition of $55,000 in contempt sanctions and $36,600 in fees.4
DISCUSSION
“A district court‘s order in a bankruptcy case is subject to plenary review, meaning that this Court undertakes an independent examination of the factual findings and legal conclusions of the bankruptcy
Worms advances two main arguments on appeal to support vacatur of the Sanctions Order and the Fees Order. First, Worms argues that a bankruptcy court does not have inherent authority to impose civil contempt sanctions. Second, Worms argues that even assuming a bankruptcy court has inherent sanctioning authority, the bankruptcy court here violated his due process rights because it failed to provide sufficient notice as to the authority under which sanctions were imposed. For the reasons set forth below, we are not persuaded by either argument. We conclude that the civil contempt sanctions imposed against Worms were within the scope of the bankruptcy court‘s discretion and that he had ample notice of the basis and reasons for the imposition of sanctions.
I. A Bankruptcy Court‘s Inherent Contempt Authority
The issue of whether a bankruptcy court has inherent authority to impose sanctions in the context presented here -- non-nominal civil contempt sanctions -- is one of first impression in our Circuit. But “we do not write on a blank slate.” Rosellini v. U.S. Bankr. Ct. (In re Sanchez), 941 F.3d 625, 627 (2d Cir. 2019) (per curiam) (”Sanchez“). Indeed, as explained below, a bankruptcy court‘s inherent civil contempt authority is well-supported by existing precedent in analogous contexts, and, in this case, the bankruptcy court made the requisite findings to warrant the imposition of civil contempt sanctions pursuant to its inherent authority.5
A. Applicable Law
Bankruptcy courts possess multiple sources of sanctions authority -- this Worms does not dispute. Rather, Worms argues that inherent authority allows only for the imposition of non-contempt sanctions, as opposed to the contempt sanctions at issue in this case, because a bankruptcy court‘s contempt authority is derived from
Although Chambers involved an Article III court, its pronouncements of law were not so limited. Accordingly, in Sanchez, we followed our sister circuits and interpreted Chambers to stand for the proposition that “inherent sanctioning powers are not contingent on Article III, but rather are, as their name suggests, inherent in the nature of federal courts as institutions charged with judicial functions.” Sanchez, 941 F.3d at 627. We held in Sanchez, therefore, that “bankruptcy courts, like Article III courts, possess inherent sanctioning powers.” Id. at 628; see also Law v. Siegel, 571 U.S. 415, 420-21 (2014) (“A bankruptcy court . . . may also possess ‘inherent power . . . to sanction abusive litigation practices.‘” (quoting Marrama v. Citizens Bank of Mass., 549 U.S. 365, 376 (2007))); 2 Collier on Bankruptcy P. ¶ 105.02 (16th ed. 2020) (“The majority of cases conclude that all courts, whether created pursuant to Article I or Article III of the Constitution, have inherent civil contempt power to enforce compliance with their lawful judicial orders, and no specific statute is required to invest a court with civil contempt power.“). And, in Kalikow, we made clear that a bankruptcy court has inherent contempt authority outside of
Nonetheless, while this Court has recognized that a bankruptcy court‘s “inherent sanctioning powers . . . include the power to impose relatively minor non-compensatory sanctions on attorneys appearing before the court in appropriate circumstances,” it has not opined “on the outermost bounds of [these] powers, including the[ ] power to impose more substantial punitive sanctions.” Sanchez, 941 F.3d at 626, 628 (affirming the bankruptcy court‘s exercise of its inherent authority to impose “relatively minor non-compensatory sanctions,” amounting to $1,000, for an attorney‘s repeated failure to appear and to comply with the court‘s orders to show cause).6 In a more recent decision,
We acknowledge that “relatively minor non-compensatory sanctions,” Sanchez, 941 F.3d at 628, are not the same as the substantial, compensatory, and coercive sanctions imposed against Worms here. But nothing in Sanchez prohibits bankruptcy courts from imposing non-nominal civil contempt sanctions pursuant to their inherent authority. Nowhere in Sanchez did the Court say, as Worms argues, that a bankruptcy court‘s inherent sanctioning authority was limited to non-contempt sanctions. In fact, Sanchez suggests that the opposite is true by recognizing that bankruptcy courts, like Article III courts, possess inherent sanctioning powers, and it is beyond dispute that Article III courts have inherent contempt authority. Id.; see also Chambers, 501 U.S. at 44; Anderson, 19 U.S. at 227. Just like an Article III court, a bankruptcy court must have the authority, inherently, to address contemptuous conduct that occurs before it.
Although we conclude that a bankruptcy court‘s inherent authority extends beyond the sanctions imposed in Sanchez, this power is by no means unlimited. See Gravel, 6 F.4th at 516 (“Inherent power is constrained: it requires ‘caution’ and notice before use[.]” (quoting Chambers, 501 U.S. at 50)). For example, a bankruptcy court‘s exercise of its inherent sanctioning authority “is a last resort for when an express authority is not ‘up to the task,‘” id., and in so doing, a bankruptcy court may not contravene valid statutory directives and prohibitions, see Siegel, 571 U.S. at 421; see also Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988) (“[W]hatever equitable powers remain in the bankruptcy courts must and can only be exercised within the confines of the Bankruptcy Code.“). Nor can the exercise of a bankruptcy court‘s inherent sanctioning powers be upheld without the court‘s specific invocation of its inherent authority as the basis for the sanctions. See Kalikow, 602 F.3d at 96 (“The Bankruptcy Court‘s discretion to award sanctions may be exercised only on the basis of the specific authority invoked by that court.“). And, as applicable to all courts when invoking their inherent powers, “[a] court must . . . comply with the mandates of due process.” Chambers, 501 U.S. at 50.
Moreover, the imposition of sanctions under a bankruptcy court‘s inherent powers may “require[ ] a specific finding that an attorney acted in bad faith,” supported by “clear evidence that the conduct at issue is (1) entirely without color and (2) motivated by improper purposes.” Wolters Kluwer Fin. Servs., Inc. v. Scivantage, 564 F.3d 110, 114 (2d Cir. 2009) (citations omitted). But a court need not always find bad faith before sanctioning pursuant to its inherent powers. See United States v. Seltzer, 227 F.3d 36, 41-42 (2d Cir. 2000) (“When a district court invokes its inherent power to impose attorney‘s fees or to punish behavior by an attorney in ‘the . . . conduct of the litigation,’
Finally, when a bankruptcy court imposes civil contempt sanctions specifically, it must also comply with certain other legal principles. For one, “a civil contempt sanction must only be compensatory or coercive, and may not be punitive.” Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 144 (2d Cir. 2014) (reversing imposition of a $75,000 civil contempt sanction where the sanction was “for past noncompliance[,] provided no compensatory relief,” and therefore, was impermissibly punitive). Moreover, “[a] contempt order is warranted only where the moving party establishes by clear and convincing evidence that the alleged contemnor violated the district court‘s edict.” King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir. 1995); see also Taggart v. Lorenzen, 139 S. Ct. 1795, 1799 (2019) (“[A] court may hold a creditor in civil contempt for violating a [bankruptcy court‘s] order if there is no fair ground of doubt as to whether the order barred the creditor‘s conduct.“). Therefore, to demonstrate contempt, “a movant must establish that (1) the order the contemnor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner.” King, 65 F.3d at 1058.
B. Analysis
Applying these principles here, we find no abuse of discretion in the bankruptcy court‘s resort to its inherent sanctioning powers in the circumstances of this case.
At threshold, Worms‘s conduct in this case seems beyond the reach of any express sanctioning authority. See Gravel, 6 F.4th at 516 (“Inherent power . . . is a last resort for when an express authority is not ‘up to the task.‘” (quoting Chambers, 501 U.S. at 50)). Worms‘s conduct did not violate a provision of the Bankruptcy Code; instead, the sanctions imposed against Worms were intended to coerce compliance with a subpoena issued pursuant to
Nor was the bankruptcy court‘s exercise of its inherent contempt authority contrary to any provision of the Bankruptcy Code, including
Most importantly, the bankruptcy court found all the necessary elements -- that is, a finding of bad faith and satisfaction of the King factors -- to order contempt sanctions in the circumstances here, where Worms was acting as an advocate. See Seltzer, 227 F.3d at 40 (“[B]ad faith is required when a court imposes attorney‘s fees as a sanction, or when the court sanctions an attorney for conduct that is integrally related to the attorney‘s role as an advocate for his or her client.“); see also King, 65 F.3d at 1058. We address each requirement in turn.
“‘Whether a litigant was at fault or acted willfully or in bad faith are questions of fact’ and thus are reviewed for clear error.” Liebowitz v. Bandshell Artist Mgmt., 6 F.4th 267, 281 (2d Cir. 2021) (alteration adopted and citation omitted). Worms has failed to show any error in the bankruptcy court‘s conclusion that Worms willfully -- “indeed brazenly” -- disregarded the court‘s discovery orders. In re Markus I, 607 B.R. at 388, 393. Worms‘s efforts to evade the turnover of documents responsive to the subpoena went far beyond the sort of conduct “that is normally part of the attorney‘s legitimate efforts at zealous advocacy for the client.” Seltzer, 227 F.3d at 40. Not only did Worms fail to take any steps to comply with the subpoena‘s deadline, but he also ignored two court-imposed deadlines without justification, and despite warnings of the risk of sanctions. Even after the bankruptcy court issued a lengthy decision detailing Worms‘s bad faith conduct and holding him in contempt, Worms took no action to purge his contempt. It was not until a third party finally contacted Markus‘s agents that the bankruptcy court stopped holding Worms in contempt. Moreover, the fact that this third-party communication ultimately led to a production of 8,666 pages of documents to the FR on January 6, 2020 -- nearly six months after the subpoena‘s initial deadline -- proves the baselessness of Worms‘s assertion before the bankruptcy court that “[t]here are no documents responsive to” the subpoena. App‘x at 119-24. Accordingly, this record firmly supports the bankruptcy court‘s finding that Worms “knowingly and intentionally” engaged in a “continuous pattern of obstructing legitimate discovery,” In re Markus I, 607 B.R. at 388, in satisfaction of the bad faith requirement, see DLC Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 136 (2d Cir. 1998) (holding that defendants’ “conscious disregard of their discovery obligations . . . amount[s] to the bad faith required to impose sanctions“).
Nor did the bankruptcy court err in finding that the King factors were satisfied. See 65 F.3d at 1058 (“[A] movant must establish that (1) the order the contemnor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner.“). The Production Order clearly and unambiguously required Worms to “immediately communicate with Markus and her agents . . . to obtain and produce responsive documents,” Sp. App‘x at 59, and yet, Worms
II. Due Process
Worms argues that the bankruptcy court violated his due process rights by failing to provide notice that civil contempt sanctions would be imposed against him pursuant to the court‘s inherent authority. This argument, we conclude, is without merit.
A. Applicable Law
“[D]ue process requires that courts provide notice and opportunity to be heard before imposing any kind of sanctions.” In re Ames Dep‘t Stores, Inc., 76 F.3d 66, 70 (2d Cir. 1996). “[T]he notice requirement mandates that the subject of a sanctions motion be informed of: (1) the source of authority for the sanctions being considered; and (2) the specific conduct or omission for which the sanctions are being considered so that the subject of the sanctions motion can prepare a defense.” Jeffrey Sapir v. 60 E. 80th St. Equities, Inc. (In re 60 E. 80th St. Equities, Inc.), 218 F.3d 109, 117 (2d Cir. 2000); see also Kalikow, 602 F.3d at 96 (“[W]e have found it ‘imperative that the court explain its sanctions order with care, specificity, and attention to the sources of its power.‘” (quoting Sakon v. Andreo, 119 F.3d 109, 113 (2d Cir. 1997))).
B. Analysis
There is no question that Worms had sufficient -- indeed, abundant -- notice of the “specific conduct” for which sanctions would be considered. Even before the FR filed its sanctions motion on September 11, 2019, Worms received repeated warnings from the bankruptcy court that he was at risk of being sanctioned for failing to comply with the court‘s discovery orders.7
Worms was also on notice that sanctions could be imposed against him pursuant to the bankruptcy court‘s inherent authority. Worms argues that the FR‘s motion for sanctions relied almost entirely on the bankruptcy court‘s authority under
The purpose of the notice requirement is to allow “the subject of the sanctions motion [to] prepare a defense.” Id. Here, Worms defended himself against the exercise of the bankruptcy court‘s inherent authority in two separate appeals to the district court, on remand before the bankruptcy court, and on appeal before this Court. This record of briefings and proceedings proves that Worms‘s lack-of-notice claim is empty. See Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 526-27 (2d Cir. 1990) (holding that it “stretches the imagination” to argue that the sanctioned party did not have notice following multiple rounds of briefing and two appeals to the district court); see also Fed. Trade Comm‘n v. Rensin, 687 F. App‘x 3, 7 (2d Cir. 2017) (summary order) (holding that sanctioned party “received the process that he was due” where the record showed that he “briefed and argued his position before the district court, this Court, and then again before the district court on remand“).8
When issuing the Sanctions Order, the bankruptcy court analyzed, at length, the standards for imposing civil contempt sanctions against Worms, see In re Markus I, 607 B.R. at 394-97, and made clear that sanctions were appropriate against him pursuant to the “court‘s inherent power to hold a party in civil contempt,” id. at 395. Although the Fees Order did not “specify” whether the bankruptcy court relied on its inherent authority or
The entirety of Worms‘s defense against sanctions, at all stages of this case, rested on his claim that bankruptcy courts lack inherent contempt authority -- an argument that was not well-supported by prior case law and that we now explicitly reject. But this was of Worms‘s own doing. Before three separate courts, Worms had the opportunity to challenge the factual and legal basis for the sanctions imposed against him. Each time, Worms made the decision not to challenge the bankruptcy court‘s finding on willfulness, resorting instead
***
In sum, we hold that a bankruptcy court‘s inherent sanctioning authority includes the power to impose civil contempt sanctions in non-nominal amounts to compensate an injured party and coerce future compliance with the court‘s orders. We also hold that when, as here, a bankruptcy court imposes civil contempt sanctions pursuant to its inherent authority for the misconduct of an attorney acting on behalf of a litigant (that is, in his role as an advocate), the court must find that the attorney acted willfully or in bad faith and that the King factors have been established. The bankruptcy court must also provide notice and an opportunity to be heard. Because the bankruptcy court made these requisite findings and complied with the mandates of due process when imposing $55,000 in per diem sanctions and $36,600 in attorneys’ fees pursuant to its inherent authority, Worms has failed to show anything close to an abuse of discretion.
CONCLUSION
For the reasons set forth above, the bankruptcy court‘s imposition of civil contempt sanctions against Worms in the amounts of $55,000 (for 55 days of noncompliance with the court‘s discovery orders) and $36,600 (for attorneys’ fees the FR incurred in connection with its sanctions motion before the bankruptcy court) were proper. Accordingly, we AFFIRM the orders of the district court.