Attorney Wendy Alison Nora appeals a decision requiring her and her client to pay damages and costs related to this bankruptcy litigation, as well as an order suspending her from the practice of law in the Western District of Wisconsin. These appeals, unfortunately, are not Nora's first encounter with attorney discipline. See, e.g. , In re Disciplinary Action against Nora ,
I. Background
Proceedings in multiple venues are relevant to these appeals, including each level of the Wisconsin state court system, two Chapter 13 petitions in federal bankruptcy court, and two bankruptcy appeals in the district court. Because the procedural history is pertinent to resolving Nora's appeals, we detail it below.
A. Wisconsin Foreclosure Action
Steven and Sondra Lisse refinanced their home in 2006, taking out a new mortgage and signing a corresponding note. The Lisses fell behind on their payments, and an entity controlled by HSBC Bank USA, N.A. filed a foreclosure action in Dane County Circuit Court in 2010.
Four years later, HSBC moved for summary judgment. In response, the Lisses asked the court for additional discovery that they hoped would demonstrate HSBC could not enforce its note. The court denied the Lisses' request and awarded HSBC summary judgment on its foreclosure claim. The Wisconsin Court of Appeals affirmed that decision. HSBC Bank USA v. Lisse ,
B. Chapter 13 Bankruptcy Petitions
Approximately six weeks after the Wisconsin Court of Appeals' affirmance, Steven Lisse (by attorney Nora) filed a Chapter 13 bankruptcy petition in the Western District of Wisconsin. As a result, the Wisconsin Supreme Court extended the Lisses' deadline to petition for review of the foreclosure judgment. Order, HSBC Bank USA v. Lisse , No. 2015AP273 (Wis. Apr. 7, 2016).
Nora submitted a Chapter 13 plan for Steven Lisse that proposed the Lisses would make their monthly mortgage payments to Nora's trust account while the bankruptcy court conducted an adversary proceeding to identify the entity entitled to the money. HSBC objected, noting it already litigated its claim to judgment in the Wisconsin courts.
After the bankruptcy court held a confirmation hearing, it rejected Nora's proposed plan and sua sponte dismissed the case without leave to amend. The bankruptcy court concluded, "[T]his clearly is an opportunity or this plan shows all the earmarks of being an effort to continue a fight, which could be made and was made in the state foreclosure action, in the Bankruptcy Court." Transcript of Final Hearing on Chapter 13 Plan at 51-52, In re Steven Robert Lisse , No. 3:16-10935 (Bankr. W.D. Wis. July 18, 2016), ECF No. 84. The bankruptcy judge found the plan improper, citing In re Schaitz ,
Five days after the bankruptcy court dismissed Steven Lisse's petition, Nora filed a separate Chapter 13 petition on behalf of his wife, Sondra Lisse. This again extended the Lisses' deadline in the Wisconsin Supreme Court. Order, HSBC Bank USA v. Lisse , No. 2015AP273 (Wis. July 28, 2016). Nora's proposed Chapter 13 plan for Sondra Lisse was similar to the one the bankruptcy court had just rejected in Steven Lisse's case. HSBC moved to dismiss the petition for lack of good faith, arguing Nora filed it with the sole intent to delay the final disposition of the Wisconsin foreclosure action. HSBC also sought relief from the automatic stay.
Nora responded by moving for sanctions, claiming HSBC's Rooker-Feldman and preclusion arguments were frivolous and accusing HSBC's counsel of "completely desecrating the integrity of these proceedings." Motion for Noncompliance with Discovery at 10, No. 3:16-12556-cjf (Bankr. W.D. Wis. Dec. 7, 2016), ECF No. 59. The bankruptcy court rejected Nora's sanctions arguments entirely. In re Sondra Kay Lisse ,
After these procedural rulings, Nora filed three appeals to the district court and moved to voluntarily dismiss Sondra Lisse's petition pending resolution of the appeals, which the district court granted. With both bankruptcy cases dismissed (although on appeal), the Lisses filed their petition for review with the Wisconsin Supreme Court-13 months after the Wisconsin Court of Appeals affirmed the foreclosure judgment. Petition for Review, HSBC Bank USA v. Lisse , No. 2015AP273 (Wis. Mar. 23, 2017).
C. Bankruptcy Appeals to the District Court
Nora began Steven Lisse's bankruptcy appeal by filing a document accusing HSBC and its counsel (by name) of federal crimes, including bankruptcy fraud under
Following this initial burst of activity, Steven Lisse's appeal lay dormant for almost a year. Finally, on August 23, 2017, HSBC requested dismissal for failure to prosecute. This prompted the district court to set an October 2, 2017 deadline for Nora's opening brief on the merits.
Nora filed a motion to stay the appeal ten days later, citing the Americans with Disabilities Act of 1990,
The day after the district court stayed Steven Lisse's bankruptcy appeal, the Wisconsin Supreme Court denied the Lisses' petition to review the foreclosure judgment. HSBCBank USA v. Lisse ,
With respect to Sondra Lisse's appeal, on December 5, 2017, the district court affirmed the bankruptcy court's rulings. Lisse v. Select Portfolio Serv., Inc. , No. 17-cv-206-jdp,
After the stay expired in Steven Lisse's appeal-and on the eve of Nora's deadline to file an opening brief-the Lisses returned to Dane County Circuit Court to file a flurry of motions seeking to postpone the foreclosure sale.
The following day, instead of filing an opening brief, Nora moved to voluntarily dismiss Steven Lisse's appeal-more than 16 months after she filed it.
D. Sanctions in the District Court
The district court dismissed Steven Lisse's appeal, but it did not stop there. Due to her "pattern of sharp practice," the district court ordered Nora to show cause "why she should not be sanctioned for her frivolous, or at best vexatious, appeal." Order, Lisse v. HSBC Bank USA , No. 3:16-cv-00617-wmc (W.D. Wis. Jan. 22, 2018), ECF No. 49. A week later, Nora asked the district court to vacate its show cause order, alleging that the order violated due process and that the district court had pre-judged the merits of imposing sanctions. The district court scheduled an evidentiary hearing before a three-judge panel consisting of Chief District Judge Peterson, District Judge Conley, and Chief Bankruptcy Judge Furay.
Nora, now represented by her own counsel, filed an answer seeking to "quash" the show cause order, alleging a lack of notice of the "charges" against her, objecting to Judge Conley's participation at the hearing, and challenging the constitutional authority of Chief Bankruptcy Judge Furay to participate. The district court provided Nora with a 13-page "supplemental notice" identifying the bases for the order to show cause. Nora's lawyer followed up with a "rejoinder," objecting to the lack of separate "counts" and arguing the court could not conduct its own attorney discipline proceedings.
The district court held a 90-minute hearing on the show cause order and issued its opinion on March 20, 2018. It grouped Nora's misconduct into three categories: "(1) inappropriately pursuing relief in federal court; (2) dilatory litigation conduct, including numerous, last-minute requests for lengthy extensions; and (3) filing multiple cases or appeals then failing to consolidate or join them." Opinion and Order at 8, Lisse v. HSBC Bank USA , No. 3:16-cv-00617-wmc (W.D. Wis. Mar. 20, 2018), ECF No. 88. The court decided, "Nora's advocacy has crossed the line of professional conduct too many times to be tolerated or ignored any longer." Id. at 11. The district court fined Nora $2,500 and suspended her from appearing in new matters in the Western District for six months, although it stayed those sanctions if and until Nora submitted another improper filing. Id.
Meanwhile, HSBC had filed a motion for $3,675 in costs and attorneys' fees under both FED. R. BANKR. P. 8020 and
About a week later, the Wisconsin Supreme Court issued a decision in disciplinary proceedings against Nora-for conduct not connected with this litigation-revoking her law license for at least one year. In re Disciplinary Proceedings against Nora ,
E. Appeals in this Court
Nora now appeals the district court's decisions in her individual capacity.
Nora also repeatedly filed documents styled as "Requests for Judicial Notice," asking this court to take judicial notice of various documents filed in other cases (affidavits, deposition transcripts, court orders). After two orders denying Nora's requests, on Nora's third attempt Judge Easterbrook (as motions judge) published an opinion explaining why the requests were procedurally improper. In re Appeals of Nora ,
When HSBC submitted its response, Nora moved to strike portions of its brief and supplemental appendix. Nora argued HSBC's citation of documents from the Wisconsin foreclosure action and Sondra Lisse's bankruptcy case-some of which had been filed by Nora as exhibits in Steven Lisse's bankruptcy appeal-made it "unreasonably difficult, if not impossible," for her to file a timely reply. Nora also asked this court to stay the appeal until we ruled on her motions to strike. The court denied Nora's motions as "frivolous," sanctioning her by docking 2,000 words from the limit for her reply. Although our order stated-in no uncertain terms-that "no motion for further time (or additional words) will be entertained," the next day Nora filed a motion for reconsideration asking the court "to restore her full word count limitation ... and to allow [Nora] sufficient time to file her Reply Brief...." Motion for Reconsideration of November 20, 2018 Procedural Order at 11. We denied that motion too.
After the completion of merits briefing, HSBC moved for damages and costs under FED. R. APP. P. 38, arguing Nora's appeals are frivolous. We ordered Nora to respond to the motion, and she (not to be outdone) requested sanctions against HSBC. Finally, failing to heed this court's earlier directives, Nora filed yet another request for judicial notice, which this court denied again.
Nora appeals two separate rulings by the district court, although her briefs meld them together. First, Nora challenges the district court's March 22, 2018 sanctions order holding her and Steven Lisse jointly and severally liable to HSBC for $1,837.50 under FED. R. BANKR. P. 8020 and
A. March 22, 2018 Sanctions Order
A district court may "award just damages and single or double costs" if it determines a bankruptcy appeal is frivolous. FED. R. BANKR. P. 8020(a) ; see also Hill v. Norfolk & Western Ry. Co. ,
Likewise, a court may hold an attorney personally liable for "excess costs, expenses, and attorneys' fees reasonably incurred because of" her unreasonable and vexatious litigation conduct.
Under both FED. R. BANKR. P. 8020 and
1. Sanctions were appropriate under FED. R. BANKR. P. 8020(a) because the bankruptcy appeal was frivolous.
The bankruptcy court found Nora filed Steven Lisse's Chapter 13 bankruptcy petition for the improper purpose of thwarting the Lisses' creditors, rather than paying them. That conclusion was not clearly erroneous. In re Wiese ,
Unlike a Chapter 7 petition, which focuses on liquidating the debtor's assets to satisfy his creditors, Chapter 13 allows a debtor to voluntarily propose a plan to reorganize his debts for repayment out of his future income. RICHARD I. AARON, BANKRUPTCY LAW FUNDAMENTALS 777 (2013 ed.) ("The central thesis of Chapter 13 is that an individual debtor can dedicate future
A bankruptcy court may dismiss a Chapter 13 petition for cause if it finds the petition was filed in bad faith.
Using a Chapter 13 petition to stave off an impending home foreclosure sale is not necessarily improper. Although Chapter 13 generally prohibits a plan from modifying mortgage lenders' underlying rights,
But this is not what Nora proposed for the Lisses. As the bankruptcy court recognized, the object of Nora's plan was not to pay the Lisses' creditors in an orderly fashion but, instead, to relitigate HSBC's foreclosure judgment. Nora suggested directing the Lisses' mortgage payments to her trust account (not to the Chapter 13 trustee) "during the pendency [of an] adversary proceeding to be commenced, in part, for the determination of the identity of the real party in interest entitled to the payment or proceeds...." Such an effort to relitigate a creditor's rights-already established in state-court proceedings-is an improper, bad faith use of a Chapter 13 petition. See In re Love ,
In the district court, Nora never presented any argument about why the bankruptcy court's good-faith determination was clearly erroneous. Indeed, Nora never even filed a brief on the merits of the appeal, despite the fact it was pending in the district court for 16 months. Cf. Klein v. O'Brien ,
Throughout the federal proceedings, Nora has repeatedly attacked HSBC's "standing" to oppose Steven Lisse's Chapter 13 plan on the theory that HSBC's note is a forgery. She similarly contends the district court lacked jurisdiction to sanction her due to this alleged Article III defect. Nora is wrong on both counts. The Wisconsin foreclosure judgment established HSBC as the Lisses' judgment creditor. It is the foreclosure judgment, not the note, that gives HSBC standing at this point to object to Steven Lisse's Chapter 13 plan.
Nora manages to flag one potentially legitimate basis to challenge the bankruptcy court's decision: that the court decided sua sponte to not only deny confirmation but to dismiss the petition without leave to amend the plan. Compare In re Terry ,
Nora's attempt to relitigate HSBC's foreclosure judgment in bankruptcy court was frivolous. Nora's repeated fraud accusations do not change the calculus. Mains v. Citibank ,
2. Nora's litigation tactics warranted sanctions under
Courts may also impose sanctions against a lawyer who "multiplies the proceedings in any case unreasonably and vexatiously."
Nora's stall tactics are blatant when one looks back at how this litigation unfolded. Although Nora denies intentionally delaying proceedings, the record before us belies her position. Nora herself openly acknowledged the purpose of Steven Lisse's bankruptcy petition was to extend the deadline to petition the Wisconsin Supreme Court. And, as Nora now boasts in her brief, her strategy worked:
The March 22, 2018 Order [by the district court] concludes that attorneys' fees should be awarded based on "dilatoryconduct" whereby the Lisses have maintained possession of their home for six (6) years. Actually, the Lisses have remained in possession of their home for over eight (8) years since the fraudulent foreclosure began and they are still in possession of their home, contrary to Judge Peterson's conclusion that the foreclosure of the Lisses' home is "inevitable."
Appellant's Response to Motion for Sanctions at 16-17, ECF No. 24.
Using the automatic stay in
The conclusion of intentional delay is supported, not only by the obvious motive, but also by the lack of any substantive merit to the Chapter 13 proceedings. As discussed above, the plan Nora filed on behalf of Steven Lisse (and then again for Sondra Lisse) improperly attempted to use an adversarial proceeding to relitigate the merits of a foreclosure judgment HSBC had already obtained in Wisconsin state court (with HSBC receiving no payments in the interim). Any reasonably careful attorney-let alone an attorney with Nora's familiarity with bankruptcy court-would have known that this type of conduct would not be tolerated. Bell ,
Nora then compounded the delays caused by these meritless bankruptcy petitions by filing numerous, last-minute motions for lengthy stays or deadline extensions. For example, in Steven Lisse's appeal in the district court, Nora filed three motions to stay the proceedings. This strategy produced a 16-month delay before the district court refused any further extensions, at which point Nora moved to voluntarily dismiss the appeal without filing an opening brief. Such litigation behavior-even if one assumes pure motives-constitutes objective bad faith warranting sanctions under § 1927. The district court did not abuse its discretion.
B. Nora's Suspension from Law Practice
In addition to awarding HSBC damages and costs against both Nora and Steven Lisse as a monetary sanction, two district court orders imposed professional discipline on Nora. First, on March 20, 2018, the district court fined Nora $2,500 and suspended her right to practice in the Western District for six months, although it stayed the penalties until Nora committed another violation.
Ten days later, however, the Wisconsin Supreme Court suspended Nora's law license for one year. In re Disciplinary Proceedings against Nora ,
Although Nora appeals the district court's April 13, 2018 disciplinary order separately from its March 22, 2018 order awarding HSBC its damages and costs
District courts are permitted to rely on state-court disciplinary proceedings to suspend attorneys practicing before them. Selling v. Radford ,
Even setting aside the discipline imposed by the Wisconsin Supreme Court, Nora's litigation activity in federal court warrants a suspension itself. Federal courts' inherent authority to disbar or suspend lawyers for misconduct is longstanding and well established. In re Snyder ,
Again, Nora used tag-team Chapter 13 bankruptcy filings by a husband and wife-each lacking a good faith basis-to postpone the orderly resolution of state-court proceedings. Nora's behavior in this litigation unfortunately is not an aberration for her. See, e.g. , PNC Bank v. Spencer ,
Not only are Nora's litigation tactics inappropriate, her treatment of opposing
Flippant, unfounded accusations of misconduct and fraud by opposing counsel and court officials demean the profession and impair the orderly operation of the judicial system. In re Palmisano ,
Following Nora's repeated abuse of the judicial process through frivolous filings and dilatory tactics, her unprofessional conduct toward opposing counsel, and the suspension of her Wisconsin law license, "the district court certainly was entitled to say, 'enough is enough.' " Salmeron v. Enter. Recovery Sys., Inc. ,
C. Further Appellate Sanctions
We must also resolve HSBC's appellate motion for additional sanctions. This court may "award just damages and single or double costs to the appellee" when it deems an appeal frivolous. FED. R. APP. P. 38. Such sanctions are discretionary and appropriate where an appellant simply repeats previously rejected, frivolous arguments or pursues an appeal to harass their adversary. Arnold v. Villarreal ,
Nora's arguments almost entirely regurgitate points she pressed before the bankruptcy court, which the district court concluded were frivolous. As we have explained to Nora previously, "Sanctions are warranted under Rule 38 when a litigant or attorney presents appellate arguments with no reasonable expectation of success for the purposes of delay, harassment, or sheer obstinacy." In re Nora ,
Not only were Nora's arguments on the merits frivolous, she also engaged in meritless and dilatory motion practice before this court. She moved to stay these appeals pending our ruling on a frivolous motion to strike that she filed. When we
We find Nora's appeals to have been frivolous and grant HSBC's motion for attorneys' fees and costs. HSBC requested $2,150.00 for attorneys' fees and $446.00 for costs in its motion. Although such figures appear reasonable, HSBC has not submitted an affidavit or other evidentiary record to support them. See Arnold ,
For numerous reasons, including her failure to present "a separately filed motion" in compliance with FED. R. APP. P. 38, we deny Nora's request for attorneys' fees.
Finally, we must revisit our previous sanctions against Nora. Due to "frivolous and needlessly antagonistic filings" by Nora in an appeal back in 2015, we fined her $2,500 but suspended the sanction "until the time, if ever, that Nora submits further inappropriate filings." In re Nora ,
III. Conclusion
Lawyers must represent their clients' interests responsibly, not only zealously. Kapco Mfg. Co. v. C&O Enter., Inc. ,
For these reasons, we order as follows:
1) On appeal number 18-1866, the district court's March 22, 2018 order holding Steven Lisse and Wendy Alison Nora jointly and severally liable for $1,837.50 is AFFIRMED ;
2) On appeal number 18-1889, the district court's March 20, 2018 and April 13, 2018 orders suspending Wendy Alison Nora's ability to practice in the Bankruptcy and District Courts for the Western District of Wisconsin (and staying an additional $2,500 fine) are AFFIRMED ;
3) HSBC's motion for damages and costs under FED. R. APP. P. 38 is GRANTED , and HSBC is directed to provide an accounting of its costs and attorneys' fees incurred in these appeals within 15 days;
4) Nora's "Request for Appellant's Attorneys Fees and Costs of Defending against the Motion for Sanctions" is DENIED ; and
5) We lift the suspension of the monetary sanction imposed in appeal number 13-2676 and order Nora to tender a check payable to the clerk of this court for $2,500 within 60 days of the date of this opinion.
The district court's decisions are AFFIRMED WITH SANCTIONS .
Notes
The prolix name of the entity is HSBC Bank USA, National Association for the Benefit of Ace Securities Corp. Home Equity Loan Trust, Series 2006-NC3, Asset Backed Pass-Through Certificates. For simplicity, this opinion refers to appellee as HSBC.
Nora acknowledged the purpose of Steven Lisse's bankruptcy petition was to extend the Lisses' deadline to appeal in state court: "Mr. Lisse's emergency Petition was necessary to preserve his right to file a Petition for Review to the Wisconsin Supreme Court from the decision of the Wisconsin Court of Appeals entered on March 8, 2016 which denied his Motion for Reconsideration." Motion for Extension of Time to File Schedules at ¶5, In re Steven Robert Lisse , No. 3:16-109235-cjf (Bankr. W.D. Wis. Apr. 3, 2016), ECF No. 9.
Nora's invocation of the ADA is noteworthy, given that she previously sued a Wisconsin circuit judge in federal court for alleged ADA violations in depriving her of medical accommodations by not granting her deadline extensions. Complaint, Nora v. Colas , No. 10-cv-709-bbc (W.D. Wis. Nov. 15, 2010), ECF No. 1. In its decision suspending Nora's Wisconsin law license (discussed later in this opinion), the Wisconsin Supreme Court found that lawsuit "was clearly pursued in an attempt to harass or maliciously injure" the judge. In re Disciplinary Proceedings against Nora ,
Nora has previously engaged in similar inconsistent behavior. See, e.g. , In re Nora ,
It denied HSBC's request for damages and costs under Fed. R. Bankr. P. 8020 because HSBC did not file a separate motion for such relief.
These motions were filed by another attorney. They included a motion to hold HSBC and its counsel in contempt for "falsely represent[ing]" the Lisses' note to be an original and a sanctions motion against HSBC for "fraud on the court." The state court denied the Lisses' motions and confirmed the foreclosure sale. The Lisses appealed, and the case remains pending. HSBC Bank USA v. Lisse , No. 2018AP000557 (Wis. Ct. App.).
As the district court noted, it created the three-judge panel "in a good-faith attempt to bend over backwards to accommodate and assuage Nora's concerns about a lack of impartiality." Opinion and Order at 6 n.3, Lisse v. HSBC Bank USA , No. 3:16-cv-00617-wmc (W.D. Wis. Mar. 20, 2018), ECF No. 88.
Nora, as an attorney sanctioned for professional misconduct, possesses standing to appeal the district court's decisions in her own name. Martinez v. City of Chicago ,
The rule requires, in part, that a motion for a deadline extension "shall be filed at least seven days before the brief is due, unless it is made to appear in the motion that the facts which are the basis of the motion did not exist earlier or were not, or with due diligence could not have been, known earlier to the movant's counsel." 7th Cir. R. 26 (computing and extending time).
Nora's second extension motion asked for three additional days, and before the court could rule on it, she filed a third motion asking for two more days.
The district court's April 13, 2018 order incorporates its March 20, 2018 disciplinary order, specifying the earlier order will remain in force should Nora be reinstated to practice in the Western District.
The advisory committee notes to Fed. R. Bankr. P. 8020 make clear that district courts possess the same authority to sanction frivolous bankruptcy appeals that Fed. R. App. P. 38 provides to this court. Fed. R. Bankr. P. 8020 advisory committee's note to 1997 amendment ("[T]his rule recognizes that the authority to award damages and costs in connection with frivolous appeals is the same for district courts sitting as appellate courts, bankruptcy appellate panels, and courts of appeals.").
At oral argument, Nora's counsel contended Judge Conley misunderstood Chapter 13 bankruptcy law, citing his passing reference to Steven Lisse's bankruptcy petition as an "appeal" of the Wisconsin foreclosure judgment. But, read in context, Judge Conley's statement was noting that Nora's arguments were only appropriate in a state-court appeal (such that Nora was, as a practical matter, attempting to bring an improper "appeal" in federal court). Judge Conley's thorough and careful opinions in this case dispel any concerns of the type Nora's counsel postulates.
The district court's April 13, 2018 order, however, does state that its March 20, 2018 disciplinary order (holding sanctions for Nora's conduct in this litigation in abeyance until further misconduct) will remain in effect should Nora be reinstated.
This court's rules take a similar procedural approach. 7th Cir. R. 46(d). Based on the suspension of Nora's Wisconsin law license in 2018, this court ordered Nora removed from its roll of attorneys after she failed to demonstrate why this court should not do so. Order, In re Nora , No. D-18-07 (7th Cir. May 23, 2018).