Int'l Christian Broad., Inc. v. Koper (In re Koper)
| Decision Date | 25 August 2020 |
| Docket Number | Adv. Pro. No.: 8-13-08169-las,Case No: 8-13-74213-las |
| Parties | In re: MICHAEL W. KOPER, Debtor. INTERNATIONAL CHRISTIAN BROADCASTING, INC., and TRINITY CHRISTIAN CENTER OF SANTA ANA, INC., Plaintiffs, v. MICHAEL W. KOPER, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
Before the Court is the motion of plaintiffs International Christian Broadcasting, Inc. ("ICB") and Trinity Christian Center of Santa Ana, Inc. ("TCCSA") to impose sanctions on David R. Keesling, Esq. ("Keesling"), former counsel for defendant Michael Koper ("Koper") [Adv. Pro. No. 13-8169, dkt. no. 140]. Specifically, plaintiffs seek, pursuant to Rule 11 of the Federal Rules of Civil Procedure ("Fed. R. Civ. P."), the imposition of sanctions in the form of an award of attorneys' fees incurred in opposing defendant's motion under Fed. R. Civ. P. 60(b) which sought to vacate certain orders and a judgment entered by the Court on consent of defendant. Keesling opposed plaintiffs' motion to impose sanctions [Adv. Pro. No. 13-8169, dkt. no. 151], and plaintiffs replied [Adv. Pro. No. 13-8169, dkt. nos. 153, 154].
The Court has jurisdiction over this matter under 28 U.S.C. § 1334(b) and the Standing Order of Reference entered by the United States District Court for the Eastern District of New York pursuant to 28 U.S.C. § 157(a), dated August 28, 1986, as amended by Order dated December 5, 2012. The matter has been fully briefed and the Court has carefully considered the parties' submissions, the relevant law and the record in this case. For the following reasons, plaintiffs' motion to impose sanctions is granted.
The Court presumes familiarity with this case. The facts and procedural history are discussed in the Court's prior decision in the related adversary proceeding commenced by ICB against Koper, Adv. Pro. No. 13-08167 ("ICB Proceeding"). See Decision and Order Denying Motion Under Fed. R. Civ. P. 60(b) dated May 23, 2016 [dkt. no. 293].1 Accordingly, the Court provides background only to the extent necessary to decide plaintiffs' motion to impose sanctions.
Koper, the debtor in this chapter 7 case, is an attorney. He and his former spouse, Brittany Koper (n/k/a Brittany Davidson) ("Brittany"), were both previously employed by plaintiffs. Their employment terminated in September of 2011. Since then, plaintiffs, Koper and Brittany have been engaged in long and contentious litigation in various jurisdictions both at the federal and state court level. On August 14, 2013, Koper filed for relief under chapter 7 of the Bankruptcy Code, thus staying all litigation pending against him pursuant to 11 U.S.C. § 362(a).
On October 14, 2013, plaintiffs commenced the following adversary proceedings against Koper seeking a determination of dischargeability of debt under 11 U.S.C. § 523(a)(2), (a)(4) and (a)(6): (i) the ICB Proceeding, (ii) a related adversary proceeding commenced by TCCSA, Adv. Pro. No. 13-08168 ("TCCSA Proceeding"), and (iii) this adversary proceeding brought by both ICB and TCCSA, Adv. Pro. No. 13-08169. The three adversary proceedingswere jointly administered for purposes of trial, with the ICB Proceeding serving as the lead adversary proceeding for docketing purposes [dkt. no. 137].
On April 1, 2015, plaintiffs filed a Motion for Sanctions Concerning Defendant's Fabrication of Evidence and Perpetration of Fraud on the Court ("Sanctions Motion") [dkt. no. 172]. Opposition to the Sanctions Motion was filed on May 5, 2015 [dkt. nos. 193, 194, & 195]. Plaintiffs filed a reply on May 12, 2015 [dkt. no. 199].
An evidentiary hearing on plaintiffs' Sanctions Motion, with a trial on the issue of dischargeability of debt to commence immediately thereafter, was scheduled for the week of October 26, 2015. On the morning of October 26, 2015, prior to commencement of the hearing on the Sanctions Motion, the parties requested additional time to continue their discussions to resolve the pending dispute. Later that morning, the parties presented the Court with a Stipulation of Resolution of Sanctions Motion and Stipulation to Judgment in Adversary Proceeding ("Stipulation") [dkt. no. 262-1]. Pursuant to the Stipulation, Koper acknowledged as true: (i) the allegations set forth in the Sanctions Motion and in the papers, pleadings and recordings submitted by plaintiffs in support thereof and (ii) the allegations and debts set forth in the complaint filed in each of the three adversary proceedings and that the debt owed to plaintiffs is not dischargeable under 11 U.S.C. § 523. Koper also "waive[d] all rights to appeal or otherwise challenge [the] [S]tipulation". See Stipulation, at 2. The Stipulation was signed by the parties and by their counsel, which included Keesling as Koper's counsel.
At the October 26, 2015 hearing, Koper testified under oath that he had an opportunity to read and discuss the Stipulation with his counsel and that he understood the terms and conditions to which he had agreed. [Oct. 26, 2015 Hr'g Tr. 11:13-24; 12:1-3; 12:14-24; 13:11-17; 17:1-7]. In addition, Keesling confirmed to the Court that he had an opportunity to review the terms and conditions of the Stipulation and to discuss them with Koper. [Oct. 26, 2015 Hr'g Tr. 17:8-13]. The Court observed at the hearing that the Stipulation did notcontain any conditions precedent nor did it provide that the terms and conditions were subject to the occurrence of any other event. [Oct. 26, 2015 Hr'g Tr. 21:12-13, 22-15; 22:1-13]. Neither Koper nor Keesling informed the Court otherwise.
The parties spent the remainder of the day and the next day negotiating the language of the proposed order resolving the Sanctions Motion and the form of the consent judgment. In the afternoon of October 27, 2015, the parties submitted a proposed "Order Granting Sanctions Motion on Consent" and "Judgment on Consent", which contained the proposed findings of fact and conclusions of law agreed upon by the parties.
On October 30, 2015, after careful review and consideration of the proposed findings of fact and conclusions of law submitted by the parties, the Court entered, on Koper's consent, (i) an Order approving the Stipulation [dkt. no. 262], (ii) an Order Granting Sanctions Motion on Consent ("Sanctions Order") [dkt. no. 263], and (iii) a Judgment on Consent ("Consent Judgment") [dkt. no. 264] in each of the three adversary proceedings. Koper also conceded the factual allegations and conclusions of law set forth in the Sanctions Order. The Sanctions Order (a) provided that defendant's answer and counterclaim filed in each of the adversary proceedings are stricken, (b) directed plaintiffs to file with the Court and serve on defendant and his counsel supplemental pleadings in support of their request for monetary sanctions within 21 days of the entry of the Sanctions Order, and (c) directed defendant to file any reply to such supplemental pleadings within 14 days thereafter.
Unable to resolve the issue on monetary damages, plaintiffs filed their supplemental memorandum of law in support of their request for attorneys' fees and costs relating to the Sanctions Motion on November 20, 2015. Koper did not file a reply within the fourteen-day time frame mandated by the Sanctions Order. Rather, more than 45 days later, on January 19, 2016, Koper filed a motion under Fed. R. Civ. P. 60(b)(3) and (6) ("Rule 60(b) Motion")[dkt. no. 272] seeking to set aside (i) the Order approving the Stipulation, (ii) the Sanctions Order and (iii) the Consent Judgment.
The Court held a hearing on March 3, 2016 and, for the reasons set forth on the record, denied the Rule 60(b) Motion. On May 2, 2016, Keesling, on behalf of Koper, filed a notice of appeal ("Notice of Appeal") [dkt. no. 282] of this Court's denial of the Rule 60(b) Motion (the "Appeal") and a motion for a stay pending appeal [dkt. no. 284].
On May 4, 2016, plaintiffs filed a motion for sanctions against Koper and Keesling on the basis that the Rule 60(b) Motion was brought in violation of Fed. R. Civ. P. 11 because it lacked evidentiary and legal support and was brought for an improper purpose to delay the hearing on damages in the pending adversary proceedings ("First Rule 11 Motion") [dkt. no. 291]. Attached to the First Rule 11 Motion is a memorandum of law in support of plaintiffs' request to impose sanctions along with a cover letter dated February 2, 2016 requesting that Koper and Keesling withdraw the Rule 60(b) Motion within the 21-day safe harbor period under Fed. R. Civ. P. 11(c)(2) on the grounds that the Rule 60(b) Motion (i) was frivolous and in violation of Fed. R. Civ. P. 11(b) as it is without evidentiary or legal support, (ii) was filed for an improper purpose to delay the proceedings, and (iii) was contrary to both Koper's and Keesling's prior representations to the Court. Plaintiffs did not include an affidavit of service or other evidence as to when the cover letter and memorandum of law were served upon Koper and Keesling. However, the February 2, 2016 cover letter indicated the letter and the memorandum of law were served via electronic mail and certified mail that day. Keesling does not deny receiving the letter and accompanying memorandum of law on or around February 2, 2016.
On May 23, 2016, the Court issued the Decision and Order Denying Motion Under Fed. R. Civ. P. 60(b), which memorialized the Court's prior oral ruling on March 3 andexplained further the bases for the ruling [dkt. no. 293]. On June 24, 2016, plaintiffs filed opposition to defendant's motion requesting a stay pending appeal.
By letter filed with the Court on July 13, 2016, plaintiffs withdrew the First Rule 11 Motion, without prejudice, "given the jurisdictional questions raised by the appeal" and stated their intention "to re-file the Motion with the District Court in due course." See Letter dated July 13, 2016 [dkt. no. 297]. Plaintiffs did not "re-file" the motion or otherwise move for...
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