Perryman v. Kiem (In re Micron Devices, Inc.)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 6 months 2 days ago
- Case Type:
- Business
- Case Status:
- Reversed and Remanded
- Citation:
- No. 24-11215 (11th Circuit, Aug 26,2025) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Eleventh Circuit reversed a bankruptcy court's award of monetary sanctions under 28 U.S.C. § 1927 against Appellant, a non-attorney pro se litigant. Appellant "did not gain approval to appear in the bankruptcy court in any capacity. While she had a right to represent herself pro se, she was not 'admitted to conduct cases in any court.'" And while the bankruptcy court could have imposed sanctions under its inherent authority, it "exclusively grounded its award of monetary sanctions on section 1927[,]" thereby abusing its discretion.
- Procedural context:
- Appellant did not argue the bankruptcy court lacked authority to issue sanctions under 28 U.S.C. § 1927 and the Eleventh Circuit did not raise the issue sua sponte. There is a circuit split concerning whether a bankruptcy court is a "court of the United States." The Eleventh Circuit previously has held that a bankruptcy court is not a "court of the United States" as it is not an Article III court. See Internal Revenue Serv. v. Brickell Inv. Corp. (In re Brickell Inv. Corp.), 922 F.2d 696, 699-701 (11th Cir. 1991) (finding bankruptcy court lacked authority to award fees under the definition of "courts of the United States" in 26 U.S.C. § 7430).
- Facts:
- Appellant Laura Perryman filed a chapter 11, subchapter V bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of Florida on behalf of Debtor Micron Devices, LLC. Appellant, who co-founded the company and was its majority interest-holder, is not an attorney. Not long into the case, Debtor was removed as the debtor in possession given “'serious concerns regarding the corporate governance of the [d]ebtor, . . . disputes as to who [was] in charge of the [d]ebtor,' and 'concerns regarding alleged interference by the co-founder/majority shareholder . . . [and] about the majority shareholder taking action ultra vires.'” The trustee appointed to act for the estate moved for sanctions against Appellant under 28 U.S.C. § 1927, contending Appellant "had made 'numerous[] frivolous filings' in the bankruptcy proceeding and 'unnecessarily caused [the] estate to incur substantial administrative professional fees.'" After a hearing and two pro se written submissions from Appellant, the bankruptcy court awarded monetary (and other) sanctions against Appellant under § 1927. Appellant took an appeal to the U.S. District Court for the Southern District of Florida, which affirmed the bankruptcy court's order in full. Appellant then took an appeal to the Eleventh Circuit.
- Judge(s):
- ROSENBAUM, LUCK, and ABUDU
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