United States District Court, D. Columbia.
In re: W.A.R. LLP, Bankruptcy Debtor
For TY CLEVENGER, Appellant: Ty Clevenger, LEAD ATTORNEY, YOUNGKIN & BURNS, PLLC, Bryan, TX.
ROYCE C. LAMBERTH, United States District Judge.
Appellant Ty Clevenger seeks review of Bankruptcy Judge S. Martin Teel, Jr.'s imposition of $5,000 in Rule 9011 sanctions against him in Bankruptcy Case No. 11-44. See Am. Brief for Appellant, ECF No. 12; Order and Judgment, Sept. 25, 2012, Bankr. Case No. 11-44, Doc. No. 370. Judge Teel found that Clevenger had repeatedly made frivolous legal arguments to the court on behalf of his client and had done so for an improper purpose.
Clevenger raises three bases for reversing Judge Teel's order and judgment. First, he contends that the sanctions are akin to a finding of criminal contempt and, therefore, that he should have been afforded the procedural protections that attend a criminal contempt proceeding. Second, he argues that the amount of the sanctions imposed was excessive. Finally, he argues that there was insufficient evidence that he had an improper purpose. All of Clevenger's arguments fail.
A. Standard of Review
District courts have jurisdiction to hear appeals from final judgments, orders, and decrees issued by bankruptcy
judges. 28 U.S.C. § 158(a). The bankruptcy court's legal conclusions are subject to de novo review. In re Hope 7 Monroe Street Ltd. P'ship, 743 F.3d 867, 873, 408 U.S.App.D.C. 347 (D.C. Cir. 2014). Its findings of fact, however, may only be reversed for clear error. Id.
B. Bankruptcy Court Need Not Have Applied Criminal Due Process
The procedure used by Judge Teel was valid and he was not required to afford Clevenger with the type of process given those subject to criminal contempt proceedings. The sanctions were ordered pursuant to Federal Rule of Bankruptcy Procedure 9011. That rule provides that a court may order sanctions on its own motion if it enters " an order describing the specific conduct that appears to violate subdivision (b) and directing an attorney, law firm, or party to show cause why it has not violated subdivision (b) with respect thereto." Fed. R. Bankr. P. 9011(c)(1)(B). The record indicates that this is precisely what Judge Teel did and Clevenger does not contest that Judge Teel adhered to this standard. See Order Directing Wade A. Robertson and Ty Clevenger to Show Cause, July 11, 2011, Bankr. Case No. 11-44, Doc. No. 212.
Instead, Clevenger contends that four factors indicate that the sanctions ordered are punitive and, therefore, criminal in nature: (1) the amount of the sanctions, (2) the fact that the sanctions are to be paid to the court, (3) the fact that the
sanctions are concerned with past conduct, not future compliance, and (4) the fact that there is no opportunity to purge the sanctions by better behavior. Am. Brief for Appellant at 2. In support of the utility of these factors, Clevenger cites Mackler Productions, Inc. v. Cohen, 146 F.3d 126 (2d Cir. 1998), which described the analytical framework that should be used in determining whether sanctions " should be considered punishment for criminal contempt, rather than remedies for civil contempt." See id at 129. Clevenger also cites decisions from other courts of appeals holding that Rule 11 sanctions ordered on the court's own motion are only authorized if the conduct is " akin to a contempt of court." See Kaplan v. DaimlerChrysler, A.G., 331 F.3d 1251, 1255-56 (11th Cir. 2003); In re Pennie & Edmonds LLP, 323 F.3d 86, 90 (2d Cir. 2003).
Clevenger's arguments along this line are unavailing. Judge Teel was not required to afford Clevenger with the procedures used in criminal contempt proceedings because the sanctions were rendered in accord with the terms of Rule 9011 and ...