Wright v. Kite Bros., L.L.C.

Case Type:
Case Status:
No. 17-30450 (5th Circuit, Jan 12,2018) Not Published
The judgment of the district court is AFFIRMED and Appellees’ Motion for Sanctions is GRANTED IN PART.
Procedural context:
Appellant raises three issues on appeal: (1) the district court did not follow the procedural prerequisites to imposing sanctions under Rule 9011; (2) the sanction imposed was not the least restrictive means available to deter the wrongful conduct; and (3) the appeal to the district court was not frivolous be- cause Rule 8002 is not jurisdictional. It cannot be disputed that Appellant raised neither the first nor second issue before the district court, so we decline to ad- dress them, “keeping with our precedent that arguments not raised before the district court are waived and cannot be raised for the first time on appeal.” Freeh v. Lake Eugenie Land & Dev., Inc. (In re Deepwater Horizon), 857 F.3d 246, 251 (5th Cir. 2017) (quoting LeMaire v. La. Dep’t of Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2007)). Turning then to the third issue, an appeal is frivolous “‘if the result is 4 Case: 17-30450 Document: 00514306259 Page: 5 Date Filed: 01/12/2018 No. 17-30450 obvious or the arguments of error are wholly without merit’ and the appeal is taken ‘in the face of clear, unambiguous, dispositive holdings of this and other appellate courts.’” Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 463 n.12 (5th Cir. 2017) (quoting Coghlan v. Starkey, 852 F.2d 806, 811–12 (5th Cir. 1988) (per curiam)); see also Reynolds v. Boyle, 679 F. App’x 372, 373 (5th Cir. 2017) (per curiam) (“An appeal is frivolous if it ‘lacks an arguable basis in law or fact.’” (quoting Taylor v. Johnson, 257 F.3d 470, 472 (5th Cir. 2001))).
In February 2014, Appellees timely filed a $1 million–plus proof of claim in the bankruptcy pro- ceedings of Debtor R. Alan Kite, now deceased, based on a December 2013 Lou- isiana state court judgment. In September 2016, Appellant, in its capacity as an unsecured creditor of the Debtor, objected to Appellees’ proof of claim and collaterally attacked the state court judgment by asserting a removal argument that had previously been rejected by both the state court and a federal district court. At a hearing held on November 17, 2016, the bankruptcy court denied Appellant’s objection to the proof of claim under the Rooker–Feldman doc- trine.1 The court entered a written order on the docket eleven days later, November 28th, memorializing the denial of Appellant’s objection. Per Federal Rule of Bankruptcy Procedure 8002(a)(1), Appellant had fourteen 1 This doctrine, named for Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), bars federal claims raised in state court and claims “inextricably intertwined” with a state court’s prior judgment. See Feldman, 460 U.S. at 486–87. 2 Case: 17-30450 Document: 00514306259 Page: 3 Date Filed: 01/12/2018 No. 17-30450 days from the November 28th entry of judgment to file a notice of appeal, i.e., until December 12, 2016. But Appellant did not file its notice of appeal until one day after the deadline, i.e., December 13th. Appellees moved in the district court to dismiss the appeal as untimely under Rule 8002(a)(1), citing our decision in Smith v. Gartley (In re Berman- Smith), 737 F.3d 997 (5th Cir. 2013), in which we held unequivocally that [s]ince the statute defining jurisdiction over bankruptcy appeals, 28 U.S.C. § 158, expressly requires that the notice of appeal be filed under the time limit in Rule 8002, . . . the time limit is jurisdictional. Accordingly, . . . the failure to file a timely notice of appeal in the district court leaves the district court, and this court, without juris- diction to hear the appeal. Id. at 1003. Appellees also sought sanctions against Appellant under Fed. R. Bankr. P. 8020(a) and 9011, 28 U.S.C. § 1927, and the court’s inherent authority on the ground that Appellant’s appeal was untimely and frivolous. Appellant raised only two arguments in response: Rule 8002 is not jurisdictional, and the removal argument was not frivolous because it had been litigated before several Louisiana circuit court panels. Appellant challenged In re Berman-Smith by arguing that “[i]t clearly appears that the Fifth Circuit has not followed the Supreme Court analysis and the argument that the Court lacks jurisdiction is not valid because the Bankruptcy Rules are not Congressional Acts.” Appellant raised no procedural, safe-harbor objections and it did not object to Appellees’ evidence supporting the imposition of sanctions. The district court granted Appellees’ motions. It rejected Appellant’s claim that In re Berman-Smith had not followed Supreme Court jurisprudence: “The Fifth Circuit, and every other circuit court that has addressed whether Bank- ruptcy Rule 8002’s deadline is jurisdictional, determined that the deadline is jurisdictional and based on a statute . . . .” The court concluded that it lacked jurisdiction to hear the appeal because the appeal was untimely, given that Appellant filed its notice of appeal one day after the deadline. The district court 3 Case: 17-30450 Document: 00514306259 Page: 4 Date Filed: 01/12/2018 No. 17-30450 then imposed sanctions under Rules 9011 and 8020(a) based on Appellant’s “frivolous appeal that rehashe[d] an argument that has already been considered and denied by the district court and the Louisiana court system.” The court en- tered a judgment awarding Appellees “reasonable costs and attorney fees for the defense of the appeal” and giving Appellees until April 17, 2017, to submit a fee application. Appellees timely filed their application, but Appellant missed its response deadline by more than a week before filing an out-of-time motion for extension of time. The district court denied the motion, citing Appellant’s “bla- tant disregard of the court’s order.” On May 4th, the district court found Appel- lees’ fee application for $21,571.50 to be reasonable and imposed the award, explaining that “[t]here is no doubt that the motion to dismiss and motion for sanctions involved complex issues as well as having to deal with the convoluted relevant findings.” Appellant timely appealed the order awarding sanctions. We have juris- diction to consider the appeal under 28 U.S.C. § 158(d).
REAVLEY, PRADO, and GRAVES, Circuit Judges

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