Saturday, September 25, 2021

Sens. Warren and Cornyn Tackle Bankruptcy Venue Again

 The bipartisan duo of Sen. John Cornyn from Texas and Sen. Elizabeth Warren from Massachusetts have introduced a new bill tackling bankruptcy venue. The Bankruptcy Venue Reform Act of 2021, which can be found here, is the latest attempt by the Senators to level the bankruptcy playing field. The new bill, which is supported by the Commercial Law League of America and a national network of insolvency professionals, expands upon the Senators prior work.

A Renewed Sense of Purpose

The bill contains a new set of findings and statement of purpose.

Tuesday, September 21, 2021

Sanctions in the Michigan Election Case and in Bankruptcy Court (Pt. 4)

This is the final installment of our investigation into the Michigan elections case and the three forms of sanctions awarded as well as how the same principles apply in Bankruptcy Court. This installment discusses sanctions under the court's inherent authority.

The Court’s Inherent Authority

The final type of sanction available arises under the Court’s inherent authority. In Chambers v. NASCO, Inc., 501 U.S. 32, 49-50 (1991), the Supreme Court held that courts have an inherent authority to sanction bad faith conduct in litigation. In the Sixth Circuit (where the Michigan elections case was pending), the test is: (i) the claims advanced were meritless; (ii) counsel knew or should have known this; and (iii) the motive for filing the suit was for an improper purpose such as harassment. Opinion, p. 42.

Monday, September 20, 2021

Sanctions in the Michigan Elections Case and in Bankruptcy Court (Pt. 3)

This is part 3 of our discussion of sanctions in the Michigan elections case and in Bankruptcy Court. This installment examines 28 U.S.C. §1927.

Introduction to Section 1927

A second basis for sanctions is found in 28 U.S.C. §1927, which provides that:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.

Section 1927 is different than Rule 11 in several important respects. First, it only applies to attorneys or any “other person admitted to conduct cases.” Next, the conduct covered is limited to vexatiously and unreasonably multiplying proceedings, although this may be accomplished by submitting frivolous pleadings. Additionally, there is no safe harbor letter required. Lastly, the remedy is limited to satisfying excess costs and fees incurred.

Thursday, September 16, 2021

Sanctions in the Michigan Election Case and in Bankruptcy Court (Pt. 2)

Yesterday I introduced King v. Whitmer (E.D. Mich. 8/25/21), the case in which Judge Linda Parker wrote a 110-page opinion awarding sanctions under three separate legal grounds. Today we look at sanctions under Fed.R.Civ.P. 11, the longest section of the opinion, as well as a case where sanctions were assessed under Fed.R.Bankr.P. 9011, its bankruptcy counterpart.

Introduction to Rule 11

Fed.R.Civ.P. 11(b) and (c) and its bankruptcy counterpart, Fed.R.Bankr.P. 9011(b) and (c) each state that:

Wednesday, September 15, 2021

Sanctions in the Michigan Election Case and in Bankruptcy Court (Pt. 1)

Bankruptcy can be a raucous forum sometimes. The ongoing Boy Scouts case is filled with instances of sexual abuse, giving rise to deep emotions. The National Rifle Association case had allegations of forum shopping, mismanagement, and bad faith. That being said, no one has ever accused one of my restaurant clients of operating a child sex-trafficking ring in its basement, nor has anyone accused the U.S. Trustee of being a lizard man being controlled by George Soros. Bankruptcy doesn’t often see the ridiculous antics which characterize partisan politics and the darker corners of the internet. This is for two important reasons: one is self-respect - most of us practice before the same judges, time and time again, and reputation, once tarnished, is hard to repair. The other is the regime of sanctions which can make bad behavior an expensive proposition. While sanctions are the exception rather than the norm, there are some cases where bad behavior by litigants pushes judges to the point of writing a long and scathing opinion finding that sanctions should be awarded.

On August 25, 2021, U.S. District Judge Linda Parker released a 110-page opinion granting sanctions in Case No. 20-13134, King v. Whitmer (E.D. Mich. 8/25/21), a case arising out of the failed attempt to decertify the 2020 election results in Michigan. The case is not a bankruptcy opinion, but the same legal grounds apply in all federal litigation, including bankruptcy. There have been numerous cases in which the same doctrines were applied in the bankruptcy setting, a few of which we’ll discuss here. As of this writing, the amount of sanctions to be awarded has not yet been determined.

In discussing the Michigan elections case and the bankruptcy cases to follow, I don't want to seem as though I am mocking the attorneys involved. While these are particularly egregious cases, I hope that my attorney readers will view them as an object lesson that could apply to any of us (albeit on a smaller and less public scale) if we allow passion and busyness to overcome our professional judgment.

Monday, September 13, 2021

Mazzara v. Provencher Illustrates Dischargeability in the Era of Social Media

Written by:
Liara Aurelia Silva
Barron & Newburger, P.C.
Austin, Texas

             In a pair of decisions, the Bankruptcy Court for the Western District of Texas took on two big issues arising in a dischargeability case concerning allegations of sexual misconduct: whether defamation findings in state court are binding in bankruptcy as well as whether messages in “private” Facebook groups are discoverable.  Joseph Mazzara v. Donna Shute Provencher, Adv. No. 19-05026-cag (Bankr. W.D. Tex. Dec. 4, 2020); Joseph Mazzara v. Donna Shute Provencher, Adv. No. 19-05026-cag (Bankr. W.D. Tex. Apr. 7, 2021). The opinions can be found here and here.

 The decisions stem from a lawsuit filed by Joseph Mazzara against Donna Shute Provencher in Virginia State court.  Mazzara alleged that Provencher posted on a Christendom College Alumni Facebook page where she accused him of sexual assault and of having been investigated for it while he was a student at Christendom College.  Mazzara claimed that Provencher’s allegations were false and defamatory.  Shortly before trial, Provencher filed for relief under Chapter 7 of the Bankruptcy Code and Mazzara, in turn, initiated an adversary proceeding against Provencher to determine the dischargeability of the debt.