Now Updating
In re Artem Koshkalda

Summarizing by Lars Fuller

Wheeler v. Collier (In the Matter of Wheeler)

Citation:
Case No. 14-30961 (5th Cir. Mar. 4, 2005)
Tag(s):
Ruling:
Fifth Circuit VACATED district court order insofar as it issued criminal sanctions and enjoined law firm because the minute entry was not sufficient notice that the hearing was being held for purpose of issuing criminal contempt sanctions or injunction. The minute entry only referenced contempt pursuant to 11 U.S.C. 105, it did not provide sufficient notice of a criminal contempt proceeding. The Fifth Circuit also held that a sanction is criminal if its purpose is to punish the contemnor (such as a fine that punishes past conduct). A sanction is civil if the purpose is to coerce the contemnor into compliance or to compensate another party or the contemnor's conduct.
Procedural context:
On July 12, 2014, the Court held a status conference which had a minute entry status stating that counsel shall be prepared to present evidence and argue whether McBride and Collier violated 11 U.S.C. 528 and should be held in contempt under section 105 for violating the discharge injunction under 11 U.S.C. 524(a)(2). After hearing evidence at the July 14, 2014 hearing, the court awarded Ms. Wheeler $1,300 in disgorgement, $10,000 in damages under Court's equity power of Section 105, $30,000 in punitive damages and attorneys fees. The court also ordered $10,000 for sanctions for contempt and entered a cease and desist order with the No Money Down bankruptcies and related advertising. Collier and McBride and the law firm appealed the $10,000 sanction and the injunctions.
Facts:
Collier and McBride were partners at McBride & Collier and advertised and performed "No Money Down" bankruptcies where Collier would pay court costs upfront. Collier represented Ms. Wheeler and after filing the Chapter 7 bankruptcy for Ms. Wheeler, Collier debited her bank account and she filed an adversary alleging violation of 11 USC 362 and 524. She also alleged that Collier and McBride acted as a debt relief agency and violated 11 USC 526(c) and 528(a) because there was no clear fee agreement. On July 12, 2014, the Court held a status conference which had a minute entry status stating that counsel shall be prepared to present evidence and argue whether McBride and Collier violated 11 U.S.C. 528 and should be held in contempt under section 105 for violating the discharge injunction under 11 U.S.C. 524(a)(2). After hearing evidence at the July 14, 2014 hearing, the court awarded Ms. Wheeler $1,300 in disgorgement, $10,000 in damages under Court's equity power of Section 105, $30,000 in punitive damages and attorneys fees. The court also ordered $10,000 for sanctions for contempt and entered a cease and desist order with the No Money Down bankruptcies and related advertising. The $10,000 sanction was payable to the Clerk of the Court.
Judge(s):
Smith, Prado and Owen, Circuit Judges

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