- Case Type:
- Case Status:
- 16-30996 (5th Circuit, Mar 13,2017) Published
- The Fifth Circuit noted the Bankruptcy Court's ability to sanction the conduct of individuals under both its inherent powers as well as under 28 U.S.C. § 1651 and 11 U.S.C. § 105. Looking first at the Bankruptcy Court's pre-filing injunction, the Fifth Circuit ruled that the Bankruptcy Court had meticulously followed the four-part test enunciated in Baum v. Blue Moon Ventures, LLC, 513 F.3d 181, 189 (5th Cir. 2008). Turning to the Court's imposition of attorney fees, the Fifth Circuit found that the Estate should not be required to bear the cost of the Appellants' vexatious behavior.
- Procedural context:
- After recounting the bad faith conduct of Appellants, the bankruptcy court determined that “the [Debtors’] true motives [were] to harass the trustee and thereby delay the proper administration of the estate in the hope that they would be able to retain their assets, or make pursuit of the assets so unappealing that the trustee would be compelled to settle on terms favorable to the [appellants].” The court specifically found that Appellants were bad faith filers and noted that Appellants’ failure to pay previous contempt sanctions ordered against them “demonstrates that monetary sanctions alone will not deter them.” Accordingly, the bankruptcy court “enjoin[ed] them and anyone acting on their behalf from filing any pleading or document in this case or its associated cases or adversary proceedings, and from filing any future cases in [the Bankruptcy Court for the Middle District of Louisiana], without first obtaining bankruptcy court permission.” The bankruptcy court then assessed monetary sanctions, under 11 U.S.C. § 105, in the amount of $49,432 against the Debtors. This figure represented the attorneys’ fees incurred “in defending the trustee removal motions and the injunction complaint, along with the Debtors’ motion for stay pending appeal.”
- Trustee sought relief against the Debtors and their daughters ("Appellants") due to their conduct in the bankruptcy cases. In granting Trustee’s motion in part, the bankruptcy court carefully laid out the troublesome conduct of Appellants in a thorough, twenty-two-page opinion. The bankruptcy court detailed a series of notable actions by Appellants that demonstrated their pattern of harassment, which included: seeking to frustrate the sale of a five acre tract of land, filings related to a movables adversary brought by the daughters, orders of contempt entered against Appellants, attempts to frustrate the sale of the Debtors’ residence and movables, and two attempts to remove the Trustee that were wholly unsupported by evidence.
- Before HIGGINBOTHAM, PRADO, and HAYNES, Circuit Judges.
In re Lisa Gay Mellem
Summarizing by Laura Coordes
3217 in the system
2 Being Processed