Wizenberg v. Wizenberg

• Decision Date: 03 February 2020
• Docket Number: CASE NO. 19-61338-CIV-ALTMAN
• Citation: 612 B.R. 454
• Parties: Peter Allan WIZENBERG, Appellant, v. Howard WIZENBERG, Appellee.
• Court: U.S. District Court — Southern District of Florida

612 B.R. 454

Peter Allan WIZENBERG, Appellant,

v.Howard WIZENBERG, Appellee.

CASE NO. 19-61338-CIV-ALTMAN

United States District Court, S.D. Florida.

February 3, 2020

Peter Wizenberg, Pembroke Pines, FL, for Appellant.

Mark Stuart Roher, Law Office of Mark S. Roher, P.A., Plantation, FL, for Appellee.

ORDER

ROY K. ALTMAN, UNITED STATES DISTRICT JUDGE

The Appellant¹ appeals the bankruptcy court's order (the "Bankruptcy Order"), which sanctioned him under 28 U.S.C. § 1927 and ordered him to pay $9,850.00 of the Appellee's² attorneys' fees. See Bankruptcy Record in Case Number 18-01019-JKO ("Record") Part IV [ECF No. 6-5] at 634–99.³ Having carefully examined the briefs and the record, the Court finds, pursuant to Federal Rule of Bankruptcy Procedure 8019(b)(3), that the parties have adequately presented the facts and legal arguments in their papers—and that, as such, oral argument is unnecessary. This appeal, in short, is ripe for resolution. The Court presumes the parties' familiarity with the facts of this case—which, in any event, are undisputed. For the reasons set out below, the Court hereby construes the Bankruptcy Order as a Report and Recommendation and ADOPTS its recommendations in full.

THE LAW

"In reviewing bankruptcy court judgments, a district court functions as an appellate court. It reviews the bankruptcy court's legal conclusions de novo , but must accept the bankruptcy court's factual findings unless they are clearly erroneous." In re JLJ Inc. , 988 F.2d 1112, 1116 (11th Cir. 1993) (citation omitted). "A bankruptcy court's imposition of sanctions is reviewed for an abuse of discretion." In re Hood , 727 F.3d 1360, 1363 (11th Cir. 2013).

Before a court may award sanctions under 28 U.S.C. § 1927, it must find that "three essential requirements" are present:

First, the attorney must engage in unreasonable and vexatious conduct. Second, that unreasonable and vexatious conduct must be conduct that multiplies the proceedings. Finally, the dollar amount of the sanction must bear a financial nexus to the excess proceedings, i.e. , the sanction may not exceed the costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

Amlong & Amlong, P.A. v. Denny's, Inc. , 500 F.3d 1230, 1239 (11th Cir. 2007) (internal quotation marks omitted). An attorney multiplies proceedings unreasonably and vexatiously "only when the attorney's conduct is so egregious that it is tantamount to bad faith." Id. (internal quotation marks omitted). And the question of bad faith "turns not on the attorney's subjective intent, but on the attorney's objective conduct." Id.

ANALYSIS

I. Standard of Review

Relying primarily on In re Evergreen Sec., Ltd. , 381 B.R. 407 (Bankr. M.D. Fla. 2007), the Appellant asks this Court to treat the Bankruptcy Order as a Report and Recommendation— containing mere proposed findings of fact and conclusions of law—and to review the entirety of the Bankruptcy Order de novo. Appellant's Br. at 6–8, 43–44; see also S.D. FLA. L.R. 87.2(c) ("The District Court may treat any order of the Bankruptcy Court as proposed findings of fact and conclusions of law if the District Court concludes that the Bankruptcy Judge could not have entered a final order or judgment consistent with Article III of the United States Constitution."). The Appellant's argument turns on whether a bankruptcy court is a "court of the United States" within the meaning of 28 U.S.C. § 1927. See 28 U.S.C. § 1927 ("Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.") (emphasis added). The bankruptcy court here took the view that it is a "court of the United States." Record Part IV at 657. But the Eleventh Circuit has said otherwise.

For purposes of Title 28:

The term ‘court of the United States’ includes the Supreme Court of the United States, courts of appeals, district courts constituted by chapter 5 of this title, including the Court of International Trade and any court created by Act of Congress the judges of which are entitled to hold office during good behavior.

28 U.S.C. § 451. The Eleventh Circuit has held that a bankruptcy court lacks jurisdiction—unless the parties consent pursuant to 28 U.S.C. § 157(c)(2)⁴ —to award attorneys' fees under the Equal Access to Justice Act, 28 U.S.C. § 2412, because "Bankruptcy courts are not listed in section 451, and it is indisputable that, as presently constituted, they are not Article III courts." In re Davis , 899 F.2d 1136, 1138–42 (11th Cir. 1990) ; accord In re Brickell Inv. Corp. , 922 F.2d 696, 701–02 (11th Cir. 1991) (applying Davis to find that bankruptcy court lacked jurisdiction to award attorneys' fees under 26 U.S.C. § 7430 ).⁵

And this conclusion flows naturally from the text of § 451 itself. See Antonin Scalia & Bryan A. Garner, READING LAW : THE INTERPRETATION OF LEGAL TEXTS 69–73 (2012) (discussing the "fundamental" rule that words must be given their plain and ordinary meaning). After all, bankruptcy courts are not "the Supreme Court of the United States, courts of appeals, [or] district courts constituted by chapter 5 of this title." And while the word "including" might suggest that the general phrase "district courts constituted by chapter 5" encompasses more than just the two examples listed in the statute, the set of included courts must "be of the same kind" as the courts described in the rest of the statutory definition. See id. at 199 ("Where general words follow an enumeration of two or more things, they apply only to persons or things of the same general kind or class specifically mentioned"); see also id. at 195 (describing noscitur a socii canon as requiring that words "associated in a context suggesting that [they] have something in common[ ]...should be assigned a permissible meaning that makes them similar"). And what all of the courts enumerated in § 451 have in common—and, indeed, the one thing that distinguishes each of them from, say, bankruptcy or magistrate or immigration courts—is that the judges of these courts "hold," as the statute unambiguously requires, "office during good behavior." A bankruptcy court, in sum, is not a "court of the United States" within the meaning of § 451.

To be sure, some bankruptcy courts within this Circuit have reached the opposite conclusion—at least with respect to sanctions under § 1927.⁶ See In re Ocean 4660 LLC , 569 B.R. 850, 874–76 (Bankr. S.D. Fla. 2017) ; In re Lawrence , No. 97-14687-BKC-AJC, 2000 WL 33950028, at *2–3 (Bankr. S.D. Fla. June 2, 2000) ; In re Brooks , 175 B.R. 409, 412 (Bankr. S.D. Ala. 1994). In doing so, however, these bankruptcy courts have found certain non-binding precedents more persuasive than Davis and Brickell . But the Eleventh Circuit has never abrogated either Davis or Brickell —and, as such, this Court is bound to follow them. Moreover, although neither Davis nor Brickell involved § 1927 specifically, they did answer the critical question of whether a bankruptcy court is a "court of the United States" under § 451. And the Court finds nothing unique about § 1927 that would exclude its provisions from the generally applicable rule those cases pronounced. Put another way, there is nothing in § 1927 to suggest that its use of the phrase "courts of the United States" differs in any salient way from the "courts of the United States" defined in § 451.

To wrap up, then, this Court will apply Local Rule 87.2(c) and treat the Bankruptcy Order as a Report and Recommendation containing proposed findings of fact and conclusions of law. When a bankruptcy court submits proposed findings of fact and conclusions of law to the district court, "any final order or judgment shall be entered by the district judge after considering the bankruptcy judge's proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c)(1).⁷

II. Waiver

As a preliminary matter, the Appellee contends that many of the Appellant's arguments are raised for the first time in this appeal, see Appellee's Br. at 22–24—a contention the record plainly supports.

The Appellee's Sanctions Motion before the bankruptcy court included a set of detailed invoices itemizing the $24,880.00 in attorneys' fees for which the Appellee sought recompense. See Record Part IV [ECF No. 6-5] at 268–73, 324–32. After carefully deleting the fees—or portions of fees—that the Appellee would have incurred irrespective of the Appellant's behavior, the bankruptcy court awarded the Appellee a sum of $9,850.00. Id. at 662–65.

The Appellant now seeks to challenge the 22 time-entries upon which the bankruptcy court's award was premised. In support, he proffers a long litany of factual assertions that, in his view, conclusively undermines each of those time entries. See Appellant's Br. at 28–44. He also argues that the bankruptcy court could not lawfully impose sanctions without first holding an evidentiary hearing, Id. at 18, 22— which, admittedly, the bankruptcy court did not do.

But, with one exception—a challenge to the bankruptcy court's finding that the Appellant had filed a frivolous motion to dismiss for lack of subject matter jurisdiction (the "Motion to Dismiss"), see Record Part II [ECF No. 6-3] at 40–49—the Appellant did not present any of these arguments to the bankruptcy court in opposition to the Sanctions Motion. Indeed, aside from defending his failed Motion to Dismiss, the Appellant's response to the Sanctions Motion argued only generally that (1) the Appellee had "prosecuted a thoroughly false and malicious, meritless case," and that (2) none of the Appellee's fees were traceable to the Appellant's conduct. Record Part IV at 371–74. The Appellant's response, in short, did not contain...