In re Silver, Civ. A. No. 84-Z-963

• Decision Date: 21 February 1985
• Docket Number: Bankruptcy No. 83 B 4317 G.,Civ. A. No. 84-Z-963
• Citation: 46 BR 772
• Parties: In re Joe SILVER, d/b/a Joe Silver Investments, Debtor.
• Court: U.S. District Court — District of Colorado

46 B.R. 772 (1985)

In re Joe SILVER, d/b/a Joe Silver Investments, Debtor.

Civ. A. No. 84-Z-963, Bankruptcy No. 83 B 4317 G.

United States District Court, D. Colorado.

February 21, 1985.

Joe Silver, Denver, Colo., pro se.

Kenneth S. Canfield, A. Bruce Campbell, Denver, Colo., for John and Beverly Soneff.

ORDER AFFIRMING BANKRUPTCY COURT

WEINSHIENK, District Judge.

This matter is before the Court for review of orders awarding attorney's fees entered by the United States Bankruptcy Court for the District of Colorado. On appeal, appellant alleges that the bankruptcy court lacked jurisdiction to award attorney's fees. If jurisdiction did exist, appellant alleges that the bankruptcy court committed error in awarding fees in this case. Finally, appellant contends that excessive fees were granted. The Court has reviewed the case file, the parties' briefs, the record on appeal and applicable statutory and case law, and is now prepared to rule.

A brief review of the facts is helpful in reviewing the bankruptcy judge's decision to award attorney's fees. In November, 1982, the Soneffs, creditors, obtained a judgment against Mr. Silver in Denver District Court. While the Soneffs proceeded with collection activities by scheduling sheriff's sales of some of appellant's properties, appellant sought to stay execution of the judgment pending appeal. These requests to stay were denied by the Denver District Court, as were requests to post property as security in lieu of a surety bond. Immediately prior to the first sheriff's sale Mr. Silver filed a petition under Chapter 11. The Soneffs then moved to dismiss the petition. Similarly, the United States Trustee's Office moved to dismiss the petition for Mr. Silver's failure to file schedules of his affairs as required by law. Shortly before a hearing on the motions Mr. Silver confessed the motions and the Court ordered the case dismissed.

On the day the bankruptcy proceeding was dismissed, January 26, 1984, the creditors filed a Motion for Attorney's Fees alleging that Mr. Silver had abused the integrity of the bankruptcy court. On January 31, 1984, the bankruptcy judge, sua sponte, ordered that the case be reopened for the purpose of conducting a hearing on the Motion. After conducting a lengthy hearing on the Motion, the court issued its Order. The bankruptcy judge stated:

The question in this case is whether the filing of the bankruptcy, by the Debtor, the alleged Debtor in this matter, which has since been dismissed, was an abuse of the bankruptcy proceedings, and was, in essence, a filing that constitutes an act in bad faith or vexatiously, wantonly, or for inappropriate and oppressive reasons. And I find in this case, that the filing of bankruptcy by Mr. Silver was indeed for—it was indeed in bad faith and for inappropriate reason.

Citing In Re Willey, 6 B.R. 235 (Bankr. Colo.1980),¹ the bankruptcy judge determined that he possessed inherent authority to determine whether attorney's fees should be awarded where the proceedings in bankruptcy were abused, and thus granted creditors' Motion and awarded attorney's fees and costs of $15,030.13.

Appellant's contention that, pursuant to Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), the bankruptcy court lacked jurisdiction to award fees is without merit. In a recent opinion, Matter of Colorado Energy Supply, Inc., 728 F.2d 1283, 1285 (10th Cir. 1984), the Tenth Circuit Court of Appeals described the Marathon holding as "quite limited." Quoting from the Chief Justice's dissent, the Court stated:

It pertains only to the proposition that a "traditional state common-law action, not made subject to a federal rule of decision, and related only peripherally to an adjudication of bankruptcy under federal law, must, absent the consent of the litigants, be heard by an Article III court if it is to be heard by any court or agency of the United States."

(Cite omitted.)

The Court finds that the determination of whether fees should be awarded, albeit collateral to the issue of whether appellant properly filed his petition, is not a related proceeding within the meaning of Marathon. While it may have been preferable to cite specific statutory provisions to support its determination, see generally 28 U.S.C. § 1927 and Bankruptcy Rule 9011, the bankruptcy judge was not without authority to award fees. A holding to the contrary would ignore the bankruptcy court's inherent authority to assess attorney's fees and expenses against those who willfully abuse the judicial process. See In Re Perez, 43...