Isaacson v. Manty (In re Isaacson)

Isaacson v. Manty (In re Isaacson) No. 12-2384 (8th Cir. Court of Appeals., July 19, 2013)
The 8th Cir. Court of Appeals upheld the District Court's affirmation of the Bankruptcy Courts imposition of sanctions against the plaintiff (Isaacson), for making factually unsupported, inflammatory and harassing statements against the bankruptcy judge, the bankruptcy trustee, the bankruptcy court and the United States Trustee's Office, in documents filed with the court.
Procedural context:
United States Bankruptcy Court for the District of Minnesota imposed sanctions on plaintiff for failure to to comply with the order to turnover material, failure to attend the hearing on motion for contempt and order to show cause. Plaintiff's appeal of the sanctions to the United States District Court was denied. Plaintiff appealed the District Court affirmation of sanctions to the United States Court of Appeal for the 8th Circuit on three (3) grounds: 1) that the sanctions were ordered payable to the court which made the sanctions a criminal penalty, 2) The court did not use the proper procedure in imposing the penalty and 3) the court abused its discretion in imposing sanctions.
Plaintiff (Isaacson) filed a chapter 11 petition on behalf of the Yehud-Monosson Corporation in the Southern District of New York. The case was transferred to the United States Bankruptcy Court for the District of Minnesota and was converted to a chapter 7. The Chapter 7 trustee filed and won the motion for turnover of materials against the plaintiff. Plaintiff (Isaacson) failed to comply with the courts order to turnover materials. The Chapter 7 trustee filed an affidavit of noncompliance with the court order. The judge who issued the initial turnover order recused himself, and the case was reassigned to a new judge. The Chapter 7 trustee filed a motion for contempt for failing to comply with the motion to turnover material. A hearing on that motion was set for December 6, 2011. On November 17, 2011 a new judge was assigned to the case and he issued an order for plaintiff (Isaacson) to personally appear at the December 6th hearing. On November 25, 2011, plaintiff (Isaacson) filed a motion to vacate the order. In the memorandum supporting this motion, plaintiff (Isaacson) leveled several inflamatory accusations. The bankruptcy court held a hearing on the motion to vacate on November 29, 2011 and denied the motion. The plaintiff (Isaacson) did not appear at the December 6, 2011 contempt hearing. At that December 6th, 2011 hearing, the court issued a civil contempt order for her failure to turnover documents and failure to appear. Plaintiff could purge her contempt by turning over the requested documents and appearing at the hearing on January 4, 2012. The court, sua sponte, issued an order to show cause and set the hearing for January 4, 2012, as to why sanctions should not be imposed pursuant to rule 9011 for Isaacson's statements in her November 25th memorandum. The court identified 10 "unsupported and outrageous" statements. The court took umbrage with statements that referred to the bankruptcy judge as a "black-robed bigot" and a "Catholic Knight Witch Hunter". The plaintiff in her response to the order to show cause defended the veracity of her statements and made similar statements anew. The plaintiff Isaacson did not attend the contempt or the order to show cause hearing on January 4th, 2012. The court imposed a $500 sanction per outrageous statement made in the plaintiffs' memorandum pursuant to Rule 9011 (b) for a total fine of $5000.
Ciruit Court Judges: Loken, Melloy and Colloton

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