Maurice, Matter of

• Decision Date: 31 May 1994
• Docket Number: No. 92-3775,92-3775
• Citation: 21 F.3d 767
• Parties: , Bankr. L. Rep. P 75,825 In the MATTER OF John A. MAURICE, Debtor-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 767

21 F.3d 767

28 Fed.R.Serv.3d 799, Bankr. L. Rep. P 75,825

In the MATTER OF John A. MAURICE, Debtor-Appellant.

No. 92-3775.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 2, 1993.

Decided April 13, 1994.

Rehearing and Suggestion for Rehearing

En Banc Denied May 31, 1994.

Gerald M. Hunter, Oglesby, IL (argued), for John F. Dornik.

Kenneth A. Kozel, LaSalle, IL (argued), for John A. Maurice.

Before WOOD, JR., ESCHBACH, and ROVNER, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

This appeal concerns a $20,000 debt owed by debtor-appellant John A. Maurice to appellee John F. Dornik. The bankruptcy court held that the debt was nondischargeable in bankruptcy under 11 U.S.C. Secs. 523(a)(2)(A) and (a)(6). The district court affirmed the bankruptcy court's decision and the debtor appealed. We find no merit to Maurice's claims that the bankruptcy court committed many procedural and substantive errors, and affirm the judgment of the district court.

I. BACKGROUND

Back in 1978, Dornik purchased an interest in Maurice's automobile body-shop business for $20,000. This partnership survived for four years until August, 1982, when Dornik sued Maurice in the Circuit Court of LaSalle County, Illinois for dissolution of a partnership and to recover money paid into the partnership. In 1987 the state trial court awarded a judgment against Maurice and in favor of Dornik. The court found in relevant part that Maurice deposited Dornik's $20,000 capital contribution in his personal bank account and used the money to pay personal expenses. The circuit court also ordered a reduction in the judgment by reason of a capital contribution to the partnership made by Maurice. Both parties appealed. In November 1988, the Illinois Appellate Court for the Third District affirmed most of the circuit court's ruling, but reversed the reduction, thereby imposing a $20,000 judgment against Maurice. The Illinois Supreme Court denied Maurice's petition for leave to appeal. Maurice then declared bankruptcy under Chapter 13 on July 20, 1989, although later converted to Chapter 7, forcing Dornik to become involved in bankruptcy proceedings to try and recover the judgment amount.

In the course of the Chapter 7 bankruptcy proceedings, the bankruptcy judge set February 26, 1990, as the last date for filing dischargeability complaints under 11 U.S.C. Sec. 523. Dornik filed a timely adversary proceeding against Maurice on February 15, 1990. As part of his claim, Dornik argued that the $20,000 debt was not dischargeable because Maurice was guilty of fraudulent misrepresentation under 11 U.S.C. Sec. 523(a)(2)(A) and willful and malicious conversion under 11 U.S.C. Sec. 523(a)(6).

On January 17, 1991, Judge Coar entered a pre-hearing order and scheduled a hearing in the case for May 6, 1991. This hearing was rescheduled for May 13, 1991, and a second but identical pre-hearing order was entered on April 1, 1991. Maurice later moved the bankruptcy court for a continuance, Dornik did not object, and Judge Coar reset the hearing for August 26, 1991. On August 13, 1991, Maurice again asked the bankruptcy court for a continuance, but Judge Coar denied this motion.

The next day Dornik served Maurice with documents and exhibits that included the motion for a continuance and a motion for summary judgment. When the date for the hearing eventually arrived, Dornik filed his motion for summary judgment, and Maurice responded by filing a motion for sanctions based on Dornik's failure to comply with the pre-hearing order of April 1, 1991. Judge Coar denied both motions and postponed the hearing until December 9, 1991, later rescheduled for December 16, 1991. When Maurice did not appear on December 16, the hearing was rescheduled for March 6, 1992.

By the time 1992 arrived, the case had been reassigned to Judge John H. Squires. As his first order of business, Judge Squires held a hearing on February 14 at which time he confirmed the March 6 trial date and in open court advised that Judge Coar's pre-hearing order would apply. This statement, however, was not reduced to writing and neither Maurice nor his attorney were present at the hearing.

When the time for the hearing arrived, Maurice had not complied with the terms of Judge Coar's April 1, 1991 pre-hearing order and Dornik moved the court for sanctions. Judge Squires granted this motion and refused to allow Maurice to admit exhibits or introduce witnesses that should have been previously identified under terms of the pre-hearing order. After conducting a brief hearing and allowing the parties to submit post-hearing memoranda, the bankruptcy court determined that the $20,000 debt was nondischargeable and awarded prejudgment and post-judgment interest. The district court later affirmed the bankruptcy court's decision.

II. ANALYSIS

Using the "everything but the kitchen sink" philosophy, Maurice alleges numerous errors made by the bankruptcy court. Many of these arguments are meritless and we discuss only the most substantive claims.

A. Admission to Federal Trial Bar

Maurice first contends that the bankruptcy court erred by allowing Dornik's attorney to try this case when he had not been admitted to the federal trial bar in the Northern District of Illinois. The bankruptcy court for the Northern District of Illinois has adopted Rule 3.10 of the General Rules and Civil Rules of the United States District Court for the Northern District of Illinois. Rule 3.10 states:

only members in good standing of the bar of this Court may enter appearance of parties, file pleadings, motions or other documents, sign stipulations or receive payments upon judgments, decrees or orders. Attorneys admitted to the trial bar may appear alone in all matters. Attorneys admitted to the bar, but not the trial bar, may appear in association with a member of the trial bar in all matters and may appear alone except as otherwise provided by this rule.

Maurice argues that because Dornik's attorney was not a member of the trial bar, the judgment should be reversed as a sanction for disregarding the rule even though he has not demonstrated any prejudice against him. We disagree.

The District Court for the Northern District of Illinois created the trial bar and its requirements, as stated in local Rules 3.00 and 3.10, in order to improve the quality of advocacy in our trial courts by ensuring that trial attorneys have a certain amount of trial experience. ¹ See Brown v. McGarr, 774 F.2d 777, 781 (7th Cir.1985). Membership, however, is not always required for Rule 3.10D allows a judge to waive the requirement. ²

Here Dornik's attorney, Mr. Hunter, was a member of the bar of the Northern District, but not a member of the trial bar. The record is unclear as to whether Mr. Hunter possessed enough trial experience to become a member of the trial bar. Maurice raised this issue in a brief filed after the March 6 hearing but before judgment. Raising the issue after the judge has conducted the hearing and received all of the evidence is too late; failing to timely object to the alleged error waives any right to later appeal the issue. See In re BNT Terminals, 125 B.R. 963, 977 (Bankr.N.D.Ill.1991). Had the issue been raised in the beginning of trial, the requirement could have been waived or the hearing postponed until Mr. Hunter could obtain membership in the trial bar. To allow such a late objection to result in reversal of the judgment would unnecessarily waste valuable judicial time and resources.

B. Sanctions

Maurice presents several different arguments regarding the sanctions imposed by Judge Squires when the case finally was tried in the bankruptcy court on March 6, 1992. The bankruptcy court granted Dornik's motion for sanctions for Maurice's failure to comply with Judge Coar's April 1, 1991 pre-hearing order. Judge Squires barred Maurice from objecting to Dornik's exhibits, calling Dornik as a witness, and from introducing exhibits of his own. We review the lower court's imposition of sanctions for an abuse of discretion. Parker v. Freightliner Corp., 940 F.2d 1019, 1024 (7th Cir.1991); Tamari v. Bache & Co. (Lebanon) S.A.L., 729 F.2d 469, 472 (7th Cir.1984).

1. Were Sanctions Justified?

First, Maurice complains that he did not receive notice that Judge Squires was enforcing the pre-hearing order entered by Judge Coar on April 1, 1991. After the case was transferred to Judge Squires in the beginning of 1992, Judge Squires set the case for a February 14, 1992 hearing on Dornik's motion for judgment on the pleadings. Mr. Kozel failed to attend this hearing, although he did file a written motion for a continuance. Judge Squires denied both motions. During the hearing Judge Squires stated that Judge Coar's April 1, 1991 pre-hearing order would apply to the trial to be held on March 6. A minute order was issued indicating the trial date, but the order did not mention the pre-hearing order. Mr. Kozel ordered the transcript from these proceedings, but did not receive it until the day of trial. Thus he complains that he had no notice that Judge Coar's pre-hearing order applied and his lack of compliance therewith was substantially justified under Fed.R.Civ.P. 16(b).

Examining this case and its entire procedural history leads us to conclude that Mr. Kozel should have known that Judge Coar's pretrial order still applied in the case for, as far as he knew, no other pretrial order had been entered in the case. Initially this case was set for trial on May 6, 1991. Judge Coar later reset the trial for May 13, 1991, and issued the April 1, 1991 pre-hearing order. Maurice then requested and received a continuance in the matter and the trial was reset for August 26, 1991. When that date approached, Maurice again moved the court to continue the case to a later date. Initially the court refused to grant this motion. When August 26 arrived, Dornik filed a motion for summary judgment, and in the alternative, a motion for leave to...