Rex Montis Silver Co., In re

• Decision Date: 27 June 1996
• Docket Number: No. 95-4017,95-4017
• Citation: 87 F.3d 435
• Parties: , 13 Colo. Bankr. Ct. Rep. 241 In re REX MONTIS SILVER COMPANY, Debtor. Dr. Harold MASUNAGA; Yukio Ayabe; The Estate of Marian Harada; Resource Concepts, Inc.; Telegraph Gold Corporation, in its own capacity and as the Assignee of Claims of Dr. George Pingree; Interphase Corporation; Cascade Energy & Metals Corporation; Scott Broadhead; Delano S. Findlay, and Richard N. Bigelow, Appellant, v. Herbert W. STOLTENBERG, H.E. Moses, Edwin Stoltenberg, Chris Waugh, Sam Harmatz, Bernard Hodowski, Patricia Stoltenberg, Delford R. Ashley, Sam Hambarian, Alyce Hambarian, Lionel Ascher, A.C. Nejedly, Grace V. Duncan, Elliot Weinberg, Rosalie Donahey, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 435

87 F.3d 435

29 Bankr.Ct.Dec. 350, 13 Colo. Bankr. Ct. Rep. 241

In re REX MONTIS SILVER COMPANY, Debtor.

Dr. Harold MASUNAGA; Yukio Ayabe; The Estate of Marian

Harada; Resource Concepts, Inc.; Telegraph Gold

Corporation, in its own capacity and as the Assignee of

Claims of Dr. George Pingree; Interphase Corporation;

Cascade Energy & Metals Corporation; Scott Broadhead;

Delano S. Findlay, and Richard N. Bigelow, Appellant, v. Herbert W. STOLTENBERG, H.E. Moses, Edwin Stoltenberg, Chris

Waugh, Sam Harmatz, Bernard Hodowski, Patricia Stoltenberg,

Delford R. Ashley, Sam Hambarian, Alyce Hambarian, Lionel

Ascher, A.C. Nejedly, Grace V. Duncan, Elliot Weinberg,

Rosalie Donahey, Appellees.

No. 95-4017.

United States Court of Appeals, Tenth Circuit.

June 27, 1996.

Delano S. Findlay, Salt Lake City, Utah, for Appellant.

Gerald H. Suniville (Eric C. Olson, with him on the brief), Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, for Appellees.

Before SEYMOUR, Chief Judge, and BARRETT and LIVELY ¹, Circuit Judges.

LIVELY, Circuit Judge.

An attorney appeals from the district court's affirmance of the bankruptcy court's imposition of sanctions on the appellant for violation of Bankruptcy Rule 9011. The bankruptcy court found that attorney Bigelow violated Rule 9011 by proposing a nominee for permanent trustee in a Chapter 7 bankruptcy proceeding and voting on behalf of his clients for that person. The court found that Bigelow knew or reasonably should have known that his clients were not eligible to participate in the selection of the trustee because they did not meet the statutory requirements for voting.

I.

This case arose out of a long-running and bitterly-contested dispute involving W. David Weston (and affiliated entities) and investors in a gold mine promoted by Weston. See Cascade Energy and Metals Corp. v. Banks, 896 F.2d 1557 (10th Cir.), cert. denied, sub nom. Weston v. Banks, 498 U.S. 849, 111 S.Ct. 138, 112 L.Ed.2d 105 (1990). The present bankruptcy proceedings involve a Weston entity, Rex Montis Silver Company. Representing a group called "surety creditors" in the Rex Montis proceedings, attorney Bigelow signed and filed a request at the first meeting of creditors for election of Kevin R. Huntington as permanent trustee. (Bigelow first appeared in the proceedings on behalf of Rex Montis and when the bankruptcy court disqualified him as attorney for the bankrupt debtor on grounds of a conflict of interest, he then appeared as attorney for the surety creditors). Also, on the day of the first meeting of creditors, attorney Bigelow signed and filed a statement to accompany the proofs of claim of the "surety creditors."

The bankruptcy court found that attorney Bigelow violated Rule 9011 by filing these proofs of claim with the accompanying statement and filing pleadings in connection with the election process. The court further found that these activities "were for improper purposes such as recited in the rule to harass, cause unnecessary delay, or needless increase of costs of litigation and administration of the case." Id. The court imposed a sanction of $10,000 on attorney Bigelow in favor of the objecting creditors.

On appeal the district court held in an order entered on March 9, 1994 that the bankruptcy court did not abuse its discretion in imposing sanctions. More specifically, the district court found that the bankruptcy court had not "based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Aplee. Supp. App. at 436 (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2460-61, 110 L.Ed.2d 359 (1990)). The district court found, however, that the bankruptcy court had failed to consider expressly the factors delineated in White v. General Motors Corp., Inc., 908 F.2d 675, 685 (10th Cir.1990), cert. denied, 498 U.S. 1069, 111 S.Ct. 788, 112 L.Ed.2d 850 (1991), in determining the amount of the sanctions.

The White decision requires express consideration of a non-exclusive list of three factors when determining the amount of sanctions to be imposed for violation of FED.R.CIV.P. 11. Rulings under FED.R.CIV.P. 11 are authoritative in cases involving Bankruptcy Rule 9011. On remand, the bankruptcy court considered "the White factors" and again imposed sanctions in the amount of $10,000. The district court affirmed in an order entered on December 30, 1994, and Bigelow now appeals.

II.

The appellees have raised a jurisdictional issue that we must resolve before reaching the merits of Bigelow's appeal. The appellees argue that Bigelow waived his right to appeal the imposition of sanctions by failing to appeal from the district court's March 9, 1994 memorandum opinion and order affirming the bankruptcy court's imposition of sanctions. In support of this claim, the appellees point to Bigelow's notice of appeal, in which he only purports to appeal the district court's memorandum and order entered on December 30, 1994, and the fact that no notice of appeal was filed regarding the prior decision of the district court on the imposition of sanctions.

This court has considered the question of finality of district court orders when acting as an appellate court in bankruptcy matters and adopted the traditional view of finality. In re Commercial Contractors, Inc., 771 F.2d 1373, 1375 (10th Cir.1985). Under this view, "a decision of the district court on appeal from a bankruptcy judge's final order is not itself final if the decision remands the case to the bankruptcy judge for significant further proceedings...." Id. (quoting In re Riggsby, 745 F.2d 1153, 1156 (7th Cir.1984)). Although one holding of the court in Commercial Contractors was undercut by the Supreme Court in Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992), this court has held that Commercial Contractors "continues to provide the test for the finality of district court decisions in bankruptcy proceedings." Temex Energy, Inc. v. Underwood, Wilson, Berry, Stein & Johnson, 968 F.2d 1003, 1005 (10th Cir.1992).

Thus, we must determine whether the district court's order of March 9 remanded to the bankruptcy judge for "significant further proceedings." As the court noted in In re Bucyrus Grain Co., Inc., 905 F.2d 1362 (10th Cir.1990), there is no single test for determining the nature of a remand. Nevertheless, the district court's order of remand is not final when it requires the bankruptcy court to perform "more than a mere 'ministerial' duty," or if it involves the "exercise of considerable judicial discretion." Id. at 1366 (citations omitted). On the other hand, if matters on remand are " 'unlikely either to generate a new appeal or to affect the issue that the disappointed party wants to raise on appeal from the order of remand,' the district court's order is considered final." (citation omitted).

More recently, in In re Wiston XXIV Limited Partnership, 988 F.2d 1012 (10th Cir.1993), this court summarized its holdings on finality as follows:

This court has held that a remand to the bankruptcy court for de novo hearings constitutes significant further proceedings, see Commercial Contractors, 771 F.2d at 1374-75, as does a remand for additional findings of fact concerning the dispositive issue in a case, see Coats State Bank v. Grey (In re Grey ), 902 F.2d 1479, 1481 (10th Cir.1990), and a remand for a determination of the amount of a claim, see State Bank of Spring Hill v. Anderson (In re Bucyrus Grain Co.), 905 F.2d 1362, 1366 (10th Cir.1990).

However, if the purpose of the remand is to effectuate a ministerial task, or conduct additional proceedings involving little judicial discretion, the district court's order will be considered final. State Bank of Spring Hill v. Anderson (In re Bucyrus Grain Co.), 905 F.2d 1362, 1366 (10th Cir.1990). If the remanded matter is unlikely to spawn another appeal or affect the issue on appeal, a district court's remand order may be considered final. Id.

Id. at 1013.

Applying these criteria, we conclude that the district court's order of March 9 remanding the case to the bankruptcy court for consideration of the White factors was not a final order that was immediately appealable to this court. The remand was likely to, and did lead to an evidentiary hearing before the bankruptcy court. As with all proceedings in this case, the hearing on remand was lengthy, with the transcript running to almost 200 pages. Furthermore, predictably, there was another appeal to the district court following the order on remand.

This court has jurisdiction over the issue of the imposition of the sanctions as well as the amount.

III.

A.

We now consider the merits of Bigelow's appeal. FED.R.BANKR.P. 9011, which is derived from FED.R.CIV.P. 11, provides in pertinent part The signature of an attorney or a party constitutes a certificate that the attorney or party has read the document; that to the best of the attorney's or party's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation or administration of the case. If a document is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the person whose signature is required. If a document is signed in violation of this rule, the court on motion or on its own initiative shall impose on the person who signed it, the represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the document, including a reasonable attorney's fee.

The Supreme Court prescribed the standard...