Empresas Omajede Inc. v. Bennazar-Zequeira

• Decision Date: 07 March 2000
• Docket Number: BENNAZAR-ZEQUEIRA,VIDAL-CARVAJAL,RIOS-GAUTIER,HERNANDEZ-RODRIGUEZ,No. 99-1242,COLON-PEREZ,99-1242
• Citation: 213 F.3d 6
• Parties: (1st Cir. 2000) EMPRESAS OMAJEDE, INC., Plaintiff, Appellant, v. A.J.; LA ELECTRONICA, INC.; WILLIAM; ANTONIO I.; ISMAEL; CARLOS R.; CARLOS JUAN POU; Defendants, Appellees. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 6

213 F.3d 6 (1st Cir. 2000)

EMPRESAS OMAJEDE, INC., Plaintiff, Appellant, v. A.J. BENNAZAR-ZEQUEIRA; LA ELECTRONICA, INC.; WILLIAM VIDAL-CARVAJAL; ANTONIO I. HERNANDEZ-RODRIGUEZ; ISMAEL COLON-PEREZ; CARLOS R. RIOS-GAUTIER; CARLOS JUAN POU; Defendants, Appellees.

No. 99-1242

United States Court of Appeals For the First Circuit

Heard March 7, 2000

Decided May 24, 2000

Antonio Betancourt for appellant.

Jose R. Garca-Perez, with whom Bufete Bennazar, C.S.P. was on brief, for appellee A.J. Bennazar-Zequeira.

William M. Vidal-Carvajal, with whom Antonio I. Hernandez-Rodrguez was on brief, for appellees Antonio I. Hernandez-Rodrguez, William M. Vidal-Carvajal and Ismael R. Colon-Perez.

Juan Carlos Pou with whom Juan Carlos Pou Law Offices was on brief, for appellees Juan Carlos Pou and Carlos R. Ros-Gautier.

Before: Torruella, Chief Judge, Coffin, Senior Circuit Judge, and Lipez, Circuit Judge.

TORRUELLA, Chief Judge.

This appeal presents a particularly ugly set of facts, in which a divorce and division of conjugal property have given rise to some five bankruptcy proceedings and thirteen adversary proceedings, which together have burdened the bankruptcy court, the district court, and now this Court. We need not reach the merits of the current sanctions dispute, however, because we do not have jurisdiction to consider the present appeal at this time. Furthermore, because we find this appeal to have been frivolously and vexatiously filed, we award costs to the appellees and grant appellee Bennazar's motion for attorney's fees.

I. Factual Background

We give only a very brief factual background, omitting the details of the underlying domestic squabbles and related bankruptcy proceedings, although we do not doubt their relevancy to the sanctions issue.

Following the divorce of Reinaldo Betancourt-Viera and Olga Capo-Roman, the ensuing division of conjugal property resulted in, inter alia, (1) Ms. Capo-Roman and her two children, Antonio Betancourt and Delfina Betancourt, acquiring equity securities in a company called Empresas Omajede, Inc. and (2) Mr. Betancourt Viera and his daughter from another marriage, Mara Luisa Betancourt, becoming the principals of La Electronica, Inc., an affiliate of Empresas Omajede. For reasons not explained to this Court, La Electronica filed a petition for bankruptcy on June 28, 1989, and Empresas Omajede filed a petition for reorganization on July 13, 1990. That litigation somehow blossomed to include a total of five bankruptcy and thirteen adversary proceedings before the bankruptcy court, several of which have been appealed to the district court, and at least one aspect of which now concerns this Court.

On February 24, 1994, Antonio Betancourt, Delfina Betancourt, and Olga Capo-Roman filed a motion requesting that the bankruptcy court impose sanctions pursuant to Federal Rule of Civil Procedure 11 on A.J. Bennazar-Zequeira, Antonio Hernandez-Rodrguez, William Vidal-Carvajal, Ismael Colon-Perez, Carlos Ros-Gautier, Juan Carlos Pou, Mara Luisa Betancourt,¹ and La Electronica. Bennazar, Hernandez, Vidal, Colon, Ros, and Pou are all attorneys who at some time during these proceedings represented La Electronica, but who have since withdrawn their appearances. The motion alleged that the attorneys, La Electronica, Mr. Betancourt-Viera and Mara Luisa Betancourt engaged in a "persistent pattern of clearly abusive litigation activity" warranting sanctions under Rule 11.

The bankruptcy court denied the motion for sanctions without reasons in a margin order. On appeal, the district court remanded to the bankruptcy court for a statement of reasons. SeeEmpresas Omajede, Inc. v. Bennazar-Zequeira, Civ. No. 98-1374 (D.P.R. Jan. 31, 1997). On remand to the bankruptcy court, another motion for sanctions pursuant to Federal Rule of Bankruptcy Procedure 9011 was filed December 30, 1997, alleging further abuses by attorneys Hernandez, Vidal, and Colon. The bankruptcy court reaffirmed its prior decision on the Rule 11 motion and denied the Rule 9011 motion in a written opinion issued January 26, 1998. See In re Empresas Omajede, Inc., B90-03612 (Bankr. P.R. filed Feb. 5, 1998) (hereinafter "Bankr. Op."). The court made specific findings as to the allegations against each responding attorney and held that none had engaged in sanctionable conduct. The court added the following:

This court's denial of the motion [for sanctions] was based in part upon a finding that the conduct complained of did not constitute a violation of Fed. R. Civ. P. 11. However, and perhaps more importantly, it reflected this court's impression that the litigation tactics objected to are not unknown to the debtor corporation and the various attorneys who have represented it. In so stating, the court does not mean to impugn any of the respected professionals who have been involved in this case and related matters; rather it is a reflection upon the parties themselves, who have allowed and encouraged what began as a domestic matter between Don Reinaldo Betancourt Viera and Dona Olga Capo Roman to balloon into an all-out war which has lasted nearly nine years, encompassed (to date) five bankruptcy proceedings and thirteen adversary proceedings, and cost hundreds of thousands of dollars in attorney's fees and untold hours of the bankruptcy and district courts spent resolving these matters, only to have the parties renew their arguments in a different manner, in a different proceeding, or in a different forum.

Bankr. Op. at 9.

The district court, on December 22, 1998, upheld the bankruptcy court's denial of the motion for sanctions.² The district court noted that the bankruptcy court was "steeped in the facts and sensitive to the interplay amongst the protagonists" and deferred to the bankruptcy court's determination that sanctions were inappropriate. See In re Empresas Omajede, Inc., 227 B.R. 767, 769 (D.P.R. 1998).

True to form, Antonio Betancourt, Delfina Betancourt, and Olga Capo-Roman brought this appeal,³ renewing their allegations of outrageous tactics by the former attorneys for La Electronica. At oral argument, it was disclosed that some part of the underlying bankruptcy litigation between the parties was still ongoing before the bankruptcy court. The Court requested that the parties submit supplemental briefs on the issue of whether the Court had jurisdiction to entertain the present appeal. The Court has received those supplemental briefs, and it now appears that judgment has been entered by the bankruptcy court in all but one of the underlying proceedings, but several of those decisions are pending appeal before the district court. Furthermore, at the time of the district court's December 22, 1998 decision affirming the denial of sanctions, judgment had not been rendered in Omajede's bankruptcy proceeding. Given that procedural history, the first question we must reach today is whether the bankruptcy court's order denying sanctions was immediately appealable despite its interlocutory nature. We hold that it was not.

II. Law and Application

A. Jurisdiction

Even if an award of sanctions were appealable by a sanctioned attorney prior to the entry of judgment,⁴ the denial of a sanctions motion is not subject to interlocutory appeal. See, e.g, McWright v. Santoki, 976 F.2d 568 (9th Cir. 1992); Haskell v. Washington Township, 891 F.2d 132 (6th Cir. 1989). This is consistent with the general rule that the denial of a motion is not immediately appealable, and we agree with our sister circuits that Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949), does not provide for interlocutory review of a denial of sanctions. The district court, therefore, was without jurisdiction to hear appellants' appeal before final judgment was granted in the underlying bankruptcy proceedings, and we are likewise without jurisdiction to consider the sanctions issue until the bankruptcy court and the district court have entered final judgments in this case. The appeal will be dismissed.

B. Attorney's Fees and Costs

Although we do not have jurisdiction to review the denial of sanctions, there are two matters over which we do have jurisdiction: a motion filed by appellee Bennazar requesting attorney's fees and costs, and the requests of other appellees seeking costs. These matters are properly before us because they concern the nature of the present appeal, rather than the merits of the decisions rendered below. Furthermore, although we presently have no jurisdiction to determine whether sanctions should have been granted below, we are not bound to ignore the background information provided by the parties' briefs and by the written opinions of the lower courts, insofar as that information establishes the frivolous and vexatious nature of the present appeal, which we feel it does.

1. Motion for Fees and Costs

Appellee A.J. Bennazar-Zequeira filed a Surreply And/Or Motion Under 28 U.S.C. § 1927 seeking attorneys fees and costs against appellants for filing this appeal against him. As...