In re Warren
| Decision Date | 22 August 2019 |
| Docket Number | Case No. 17-22544 |
| Parties | In re: Anita K. Warren, Debtor. |
| Court | U.S. Bankruptcy Court — District of Maryland |
Before the Court are the Order Requiring Matthew August LeFande, Esq. to Show Cause why Sanctions Should not be Imposed for his Failure to Comply with Fed. R. Bankr. P. 9011(b), Mr. LeFande's response thereto, the response filed by District Title, a subsequent Order requiring Mr. LeFande to Show Cause for his failure to attend a hearing held on February 25, 2019, and the responses thereto. The Court held a hearing to consider the two Show Cause Orders and related filings on April 8, 2019, at which the Court took all matters under advisement. For the following reasons, the Court imposes monetary sanctions against Mr. LeFande, payable to the Court's Registry, and will also require him to attend two ethics courses. The amount of monetary sanctions will be determined after a hearing to be set by separate Order entered contemporaneously herewith.
The following facts are relevant to the issues at hand and are either uncontroverted or are supported by the evidence in this case.1 Although the following is a lengthy recitation of events going back to 2014, the Court finds it relevant and necessary to provide a complete picture of Mr. LeFande's course of conduct since that time.
On September 2, 2014, District Title filed a complaint in the Superior Court for the District of Columbia against Anita Warren and her son, Timothy Day, to recover funds mistakenly paid to her by District Title as part of a real estate closing (the "D.C. Lawsuit"). Defendants Warren and Day removed the D.C. Lawsuit to the United States District Court for the District of Columbia (the "District Court") on October 29, 2014. After the filing of various dispositive motions, summary judgment was ultimately entered in the D.C. Lawsuit on November 13, 2015, against Defendant Warren for breach of contract, and against Defendants Warren and Day for unjust enrichment (the "D.C. Judgment").2 The United States Court of Appeals for the District of Columbia Circuit affirmed the D.C. Judgment on May 4, 2016. See Ex. 1 to District Title's Response to Matthew A. LeFande's Response to Order to Show Cause, Docket Entry No. 79.
On March 22, 2016, District Title filed a motion to conduct post-judgment discovery in aid of execution of its judgment in the D.C. Lawsuit. The post-judgment motion sought to depose Defendant Day and requested authorization to serve a subpoena on Mr. LeFande seekingboth documents and testimony from Mr. LeFande based on his involvement in an alleged fraudulent conveyance of property owned by Defendant Day. Mr. LeFande moved for a protective order regarding his examination based on the attorney-client privilege and his Fifth Amendment privilege. In a Memorandum Opinion and Order entered on June 2, 2017, the District Court denied Mr. LeFande's Request for Protective Order holding that his assertions of privilege were premature and would need to be asserted on a question-by-question basis.3 On June 16, 2017, Mr. LeFande filed objections to the June 2, 2017 Memorandum Opinion and Order and renewed his request for a protective order. Mr. LeFande's objections to the June 2, 2017 Memorandum Opinion and Order were overruled by a Memorandum Opinion and Order entered by the District Court on July 14, 2017.4
At a status hearing held on September 15, 2017, the District Court scheduled Mr. LeFande's deposition for September 21, 2017, in Courtroom 4 of the United States Courthouse. On September 18, 2017, three days before his scheduled deposition, the attorney representing Mr. LeFande in the D.C. Lawsuit filed a Motion to Dismiss Day from the D.C. Lawsuit because Defendant Day had passed away earlier in 2017 (the "Motion to Dismiss"). The Motion to Dismiss argued that District Title failed to take steps to substitute Defendant Day's estate as a party defendant in the D.C. Lawsuit within 90 days, therefore, Fed. R. Civ. P. 25(a) required that Defendant Day be dismissed from the litigation. In a Minute Order entered on September 18, 2017, in response to the Motion to Dismiss (the "Minute Order"), the District Court stated thatDistrict Title shall respond to the Motion to Dismiss in the time required by the Court's local rules and the Court will rule on the Motion to Dismiss in due course. Nevertheless, due to the ongoing post-judgment discovery efforts related to Defendants Day and Warren, and the fact that Defendant Warren was "still a proper defendant in this case," the Court determined that the Order entered on September 15, 2017, remained in effect and Mr. LeFande was required to appear for his scheduled deposition on September 21, 2017.5 The Minute Order further provided that Mr. LeFande could not use the pendency of the Motion to Dismiss as a basis to refuse to answer questions about Defendant Day or the Defendants' assets.
On September 19, 2017 - one day after filing the Motion to Dismiss - Defendant Warren (through Mr. LeFande) filed a Chapter 7 Voluntary Petition in this Court thereby commencing the above-captioned bankruptcy case. The "Disclosure of Compensation of Attorney for Debtor" filed by Mr. LeFande in this case indicates that he received $0.00 for legal services rendered to the Debtor in connection with the Debtor's bankruptcy filing. The Debtor's bankruptcy schedules, which were filed with her Petition, reflect that she owns no real property, has no secured debt, and has $314,888.44 in unsecured debt, $312,208.44 of which is attributable to District Title's judgments against the Debtor that have since been deemed nondischargeable. The Debtor's Schedules I and J reflect that she has monthly income of $903.00 available to pay her creditors after payment of her expenses.
By Order entered September 20, 2017 (the "September 20th Order"), one day after the bankruptcy filing, the District Court recognized that Mr. LeFande had filed a suggestion of bankruptcy as to Defendant Warren in the D.C. Lawsuit and stated: "The filing of the bankruptcyoperates as an automatic stay of any attempt to enforce the judgment against Defendant Warren."6 The District Court further stated that because the circumstances underlying the Minute Order have changed "in light of LeFande's actions," the District Court was compelled to resolve the Motion to Dismiss Defendant Day notwithstanding the fact that District Title had not had an opportunity to respond. The District Court determined that "because the motion lacks merit, the motion to dismiss will be denied, and LeFande remains subject to court orders to attend the deposition scheduled for tomorrow at 1:00 p.m." Relying on controlling case law from the United States Court of Appeals for the District of Columbia Circuit and provisions of the D.C. Code, the District Court analyzed and rejected the arguments in the Motion to Dismiss, including Mr. LeFande's assertions that District Title's failure to timely substitute Defendant Day's estate as a defendant in the D.C. Lawsuit mandated that Defendant Day be dismissed from the suit and that District Title was prohibited from proceeding against a deceased person in execution of a judgment. Lastly, the District Court ordered that "all attempts to execute the judgment against defendant Warren are STAYED pursuant to 11 U.S.C. § 362(a), unless plaintiff is granted relief from the bankruptcy court from the automatic stay provision."
Mr. LeFande appeared for his deposition on September 21, 2017, but refused to take the designated seat and to be sworn despite multiple orders to do so by the presiding judge. Consequently, United States Magistrate Judge Deborah A. Robinson entered an Order on September 27, 2017, fining Mr. LeFande $5,000.00 for obstructing the administration of justice (the "Criminal Contempt Order").7 That same day, Mr. LeFande filed the Motion for Contemptagainst District Title and its attorneys in this Court in which he asserted the same arguments made in the Motion to Dismiss Defendant Day filed in the D.C. Lawsuit. This Court held a hearing to consider the Motion for Contempt and District Title's Opposition thereto as well as other related filings on February 21, 2018. At the conclusion of the hearing, the Court denied the Motion for Contempt and stated its intention to issue an Order to Show Cause to Mr. LeFande for his filing of the Motion for Contempt. An Order Denying the Motion for Contempt was entered on February 23, 2018.8
On March 13, 2018, this Court entered an Order requiring Mr. LeFande to show cause why sanctions should not be imposed for his violation of Federal Rule of Bankruptcy Procedure 9011(b) (the "First Order to Show Cause"). The First Order to Show Cause found that the claims and contentions contained in the Motion for Contempt were frivolous and were presented to harass District Title and to cause unnecessary delay in these proceedings and in proceedings in other courts. The First Order to Show Cause further found that the legal contentions contained in the Motion for Contempt were expressly rejected by the District Court in the September 20th Order entered one week prior to the filing of the Motion for Contempt. Lastly, the First Order to Show Cause explained that this Court does not have appellate jurisdiction over orders entered by other federal courts and the same arguments rejected by the District Court could not be relitigated in this Court.
Mr. LeFande filed a Response to the First Order to Show Cause on March 27, 2018, and District Title filed a Response on April 9, 2018. The opening paragraph of Mr. LeFande's Response contained the following soliloquy - typical of the tone of his filings:
Other than shouting over the attorney's argument at the motion hearing, the Court has done nothing to demonstrate that any of the Debtor's argument is incorrect, let alone unfounded. Respondents Cox, Thompson and Sushner remain in violation of the automatic...
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