Matter Of Lisse
| Decision Date | 01 April 2019 |
| Docket Number | Nos. 18-1866 & 18-1889,s. 18-1866 & 18-1889 |
| Citation | 921 F.3d 629 |
| Parties | In the MATTER OF: Steven Robert LISSE, Debtor. Appeals of: Wendy Alison Nora |
| Court | U.S. Court of Appeals — Seventh Circuit |
Reed Peterson, REED PETERSON & ASSOCIATES, LLC, Madison, WI, for Debtor.
Wayne Michael Pressel, Attorney, PRESSEL LAW OFFICE LLC, Carson City, NV, for Appellant.
Kenneth W. Bach, Attorney, JOHNSON, BLUMBERG & ASSOCIATES, LLC, Chicago, IL, for Appellee.
Before Wood, Chief Judge, and Brennan and St. Eve, Circuit Judges.
Attorney Wendy Alison Nora appeals a decision requiring her and her client to pay damages and costs related to this bankruptcy litigation, as well as an order suspending her from the practice of law in the Western District of Wisconsin. These appeals, unfortunately, are not Nora's first encounter with attorney discipline. See, e.g. , In re Disciplinary Action against Nora , 450 N.W.2d 328 (Minn. 1990) ; In re Disciplinary Proceedings against Nora , 173 Wis.2d 660, 495 N.W.2d 99 (1993) ; In re Rinaldi , 778 F.3d 672 (7th Cir. 2015) ; In re Nora , 778 F.3d 662 (7th Cir. 2015) ; In re Disciplinary Proceedings against Nora , 380 Wis.2d 311, 909 N.W.2d 155 (2018). While we hope this will be her last such encounter, her serial dilatory, vexatious, and unprofessional litigation practices lead us to affirm the district court's orders. In addition, Nora's frivolous motion practice and legal arguments in these appeals lead us to lift the suspension of our previous monetary sanction against Nora.
Proceedings in multiple venues are relevant to these appeals, including each level of the Wisconsin state court system, two Chapter 13 petitions in federal bankruptcy court, and two bankruptcy appeals in the district court. Because the procedural history is pertinent to resolving Nora's appeals, we detail it below.
Steven and Sondra Lisse refinanced their home in 2006, taking out a new mortgage and signing a corresponding note. The Lisses fell behind on their payments, and an entity controlled by HSBC Bank USA, N.A. filed a foreclosure action in Dane County Circuit Court in 2010.1
Four years later, HSBC moved for summary judgment. In response, the Lisses asked the court for additional discovery that they hoped would demonstrate HSBC could not enforce its note. The court denied the Lisses' request and awarded HSBC summary judgment on its foreclosure claim. The Wisconsin Court of Appeals affirmed that decision. HSBC Bank USA v. Lisse , 367 Wis.2d 749, 877 N.W.2d 650 (Wis. Ct. App. 2016) (unpublished table decision).
Approximately six weeks after the Wisconsin Court of Appeals' affirmance, Steven Lisse (by attorney Nora) filed a Chapter 13 bankruptcy petition in the Western District of Wisconsin. As a result, the Wisconsin Supreme Court extended the Lisses' deadline to petition for review of the foreclosure judgment. Order, HSBC Bank USA v. Lisse , No. 2015AP273 (Wis. Apr. 7, 2016).2 The practical effect was to postpone HSBC's foreclosure on the Lisses' home as long as bankruptcy proceedings remained pending in federal court.
Nora submitted a Chapter 13 plan for Steven Lisse that proposed the Lisses would make their monthly mortgage payments to Nora's trust account while the bankruptcy court conducted an adversary proceeding to identify the entity entitled to the money. HSBC objected, noting it already litigated its claim to judgment in the Wisconsin courts.
After the bankruptcy court held a confirmation hearing, it rejected Nora's proposed plan and sua sponte dismissed the case without leave to amend. The bankruptcy court concluded, "[T]his clearly is an opportunity or this plan shows all the earmarks of being an effort to continue a fight, which could be made and was made in the state foreclosure action, in the Bankruptcy Court." Transcript of Final Hearing on Chapter 13 Plan at 51–52, In re Steven Robert Lisse , No. 3:16-10935 (Bankr. W.D. Wis. July 18, 2016), ECF No. 84. The bankruptcy judge found the plan improper, citing In re Schaitz , 913 F.2d 452 (7th Cir. 1990), "because the purpose for filing the plan is not to pay the creditor but to thwart paying the creditor." Id . at 52. Nora filed an appeal to the district court on behalf of Steven Lisse, challenging HSBC's standing, arguing HSBC's note was a forgery, and accusing HSBC's counsel of fraud on the court.
Five days after the bankruptcy court dismissed Steven Lisse's petition, Nora filed a separate Chapter 13 petition on behalf of his wife, Sondra Lisse. This again extended the Lisses' deadline in the Wisconsin Supreme Court. Order, HSBC Bank USA v. Lisse , No. 2015AP273 (Wis. July 28, 2016). Nora's proposed Chapter 13 plan for Sondra Lisse was similar to the one the bankruptcy court had just rejected in Steven Lisse's case. HSBC moved to dismiss the petition for lack of good faith, arguing Nora filed it with the sole intent to delay the final disposition of the Wisconsin foreclosure action. HSBC also sought relief from the automatic stay.
Nora responded by moving for sanctions, claiming HSBC's Rooker-Feldman and preclusion arguments were frivolous and accusing HSBC's counsel of "completely desecrating the integrity of these proceedings." Motion for Noncompliance with Discovery at 10, No. 3:16-12556-cjf (Bankr. W.D. Wis. Dec. 7, 2016), ECF No. 59. The bankruptcy court rejected Nora's sanctions arguments entirely. In re Sondra Kay Lisse , 567 B.R. 813, 819 (Bankr. W.D. Wis. 2017) (). It also lifted the automatic stay, noting the Wisconsin foreclosure judgment precluded Nora's arguments that HSBC's note was forged.
After these procedural rulings, Nora filed three appeals to the district court and moved to voluntarily dismiss Sondra Lisse's petition pending resolution of the appeals, which the district court granted. With both bankruptcy cases dismissed (although on appeal), the Lisses filed their petition for review with the Wisconsin Supreme Court—13 months after the Wisconsin Court of Appeals affirmed the foreclosure judgment. Petition for Review, HSBC Bank USA v. Lisse , No. 2015AP273 (Wis. Mar. 23, 2017).
Nora began Steven Lisse's bankruptcy appeal by filing a document accusing HSBC and its counsel (by name) of federal crimes, including bankruptcy fraud under 18 U.S.C. § 157. Next, she asked the district court to order HSBC to "conventionally file" its original note with the clerk of court, as evidence of "criminal misconduct." Shortly thereafter, Nora moved to stay the deadline for Steven Lisse's merits brief, citing HSBC's purportedly "ambiguous and contradictory" record designations. Then, in a motion requesting summary reversal, Nora again accused HSBC and its counsel of perpetrating a fraud on the courts by presenting forged documents.
Following this initial burst of activity, Steven Lisse's appeal lay dormant for almost a year. Finally, on August 23, 2017, HSBC requested dismissal for failure to prosecute. This prompted the district court to set an October 2, 2017 deadline for Nora's opening brief on the merits.
Nora filed a motion to stay the appeal ten days later, citing the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101, et seq .,3 and a physician's recommendation that Nora take a leave from practicing law. Despite expressing some skepticism as to Nora's motives—noting her "history of frivolous and dilatory tactics" and efforts to "drag[ ] out the briefing on the merits by satellite skirmishes"—the district court granted a three-month stay. Order, Lisse v. HSBC Bank USA , No. 3:16-00617-wmc (W.D. Wis. Sept. 21, 2017), ECF No. 42. It did, however, stress that "[n]o further extensions will be granted to Attorney Nora absent new, extraordinary circumstances." Id. Nora later testified that she continued to practice law for other clients in other matters during the three-month stay.4
The day after the district court stayed Steven Lisse's bankruptcy appeal, the Wisconsin Supreme Court denied the Lisses' petition to review the foreclosure judgment. HSBCBank USA v. Lisse , 378 Wis.2d 25, 904 N.W.2d 124 (2017) (unpublished table decision). As a result, in December 2017, HSBC began moving forward with a foreclosure sale in Dane County Circuit Court.
With respect to Sondra Lisse's appeal, on December 5, 2017, the district court affirmed the bankruptcy court's rulings. Lisse v. Select Portfolio Serv., Inc. , No. 17-cv-206-jdp, 2017 WL 6021316 (W.D. Wis. Dec. 5, 2017). It held that the preclusive effect of the Wisconsin foreclosure judgment defeated Nora's challenges to the note's authenticity and provided HSBC with standing to object to Sondra Lisse's proposed Chapter 13 plan. Id. at *7. Also, the district court concluded the "appeal, like the bankruptcy litigation, plainly lacks merit and was wastefully presented." Id. at *8.5 Nora asked the district court to reconsider, but the district court declined. Lisse v. Select Portfolio Serv., Inc. , No. 17-cv-206-jdp, 2018 WL 840157, at *3 (W.D. Wis. Feb. 12, 2018) (). Sondra Lisse did not appeal the district court's rulings to this court.
After the stay expired in Steven Lisse's appeal—and on the eve of Nora's deadline to file an opening brief—the Lisses returned to Dane County Circuit Court to file a flurry of motions seeking to postpone the foreclosure sale.6 The day before her opening brief was due, Nora moved for another stay pending resolution of her clients' state-court motions. The district court denied Nora's eleventh-hour request, finding "the debtor's sole purpose appears to be to delay an inevitable foreclosure through every legal artifice available both in state and federal court." Order, Lisse v. HSBC Bank USA , No. 3:16-cv-00617-wmc (W.D. Wis. Jan. 18, 2018), ECF No. 46. Characterizing Nora's...
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