The Lawyer Made Me Do It Ethical and Liability Issues for Attorneys for Petitioning Creditors in Involuntary Bankruptcies Part II

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Oct 2002

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Welcome to the second of Straight & Narrow's three-part series on ethical issues in
involuntary bankruptcy proceedings. As noted in the previous installment in the series,
"Involuntary Fee Slaughter: The Perils of Professional Fees for Representing a Debtor
During the Gap Period,"<a href="#1" name="1a">1</a> April 2002, there was a trend of creditors using
involuntary bankruptcy filings to resolve their disputes with debtors. This installment
addresses ethical issues faced by counsel for petitioning creditors in involuntary
bankruptcy proceedings.

Unlike the ethical problems facing counsel for the alleged debtor, which primarily
could lead to the disqualification of the debtor's counsel or disallowance of fees,
the ethical problems that petitioning creditor's counsel face involve the small but
genuine risk<a href="#2" name="2a">2</a> of the imposition of significant monetary sanctions under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C.
§303(i)</a>, Bankruptcy Rule of Procedure 9011 and/or state court lawsuits related
to the involuntary petition.

Under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303,</a><a href="#3" name="3a">3</a> there are two separate grounds under which a
debtor, against whom an involuntary bankruptcy petition has been dismissed, can be
awarded sanctions.<a href="#4" name="4a">4</a>

Under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)(1)</a>, a court may grant a judgment against
petitioning creditors<a href="#5" name="5a">5</a> for costs or reasonable attorney's fees if the involuntary petition
is dismissed. Courts have broad discretion in determining whether such costs and attorneys'
fees should be awarded under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a>.<a href="#6" name="6a">6</a> Awards of attorneys' fees
and costs under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a> are generally calculated under the same
lodestar standards as are used in calculating the debtor's and unsecured creditors'
committee's attorneys' fees in bankruptcy cases.<a href="#7" name="7a">7</a> No actual finding of bad faith is
required for a bankruptcy court to award costs and attorneys' fees under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C.
§303(i)(1)</a>.

However, if a court determines that the petitioners acted in "bad faith," then
the bankruptcy court may, in its discretion, award not only attorney's fees and
costs,<a href="#8" name="8a">8</a> but any damages "proximately caused by such filing, and punitive damages."<a href="#9" name="9a">9</a>
The term "bad faith" as used in <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303</a> is not defined in the
Bankruptcy Code, but it is an issue that must be determined on a case-by-case
basis. There are also a wide range of tests and standards that the court can use
to determine whether an involuntary petition has been filed in bad faith.<a href="#10" name="10a">10</a> Examples
of cases where attorneys have been found liable for some or all of the damages arising
from a bad faith involuntary filing include (1) an attorney who filed an involuntary
petition in an attempt to relitigate disallowed partnership claims arising from the
dissolution of a law partnership she had with her former husband,<a href="#11" name="11a">11</a> (2) an
attorney who filed an involuntary bankruptcy to prevent the foreclosure of property rented
by the petitioning creditor tenants, who had failed to pay rent for several
months,<a href="#12" name="12a">12</a> and (3) an attorney who orchestrated an involuntary bankruptcy against
his former clients using confidential information he obtained from them during his course
of representation.<a href="#13" name="13a">13</a>

In the event bad faith is found in the filing of an involuntary bankruptcy, an
award of compensatory and punitive damages can be quite substantial. In one of the
most famous involuntary petition damage cases, In re Landmark Distributors Inc.,<a href="#14" name="14a">14</a>
the bankruptcy court, after finding that the petitioners filed an involuntary petition
in bad faith and caused the destruction of the debtors' business, awarded the debtors'
attorney's fees, which were estimated at $1.5 million; compensatory damages in the
amount of $3.2 million; and punitive damages of $500,000.<a href="#15" name="15a">15</a> While the
facts of this case are particularly egregious, they do illustrate a court's willingness
to sanction parties who improperly use involuntary bankruptcy proceedings for their own
purposes.<a href="#16" name="16a">16</a>

<h3>But I Am Not a Petitioner, Right?</h3>

The initial issue facing a petitioner's counsel, should a court determine it is
appropriate to award sanctions under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a>, is whether counsel
for a petitioning creditor is a party against whom <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a> sanctions
can be awarded. As noted above, the precise language of §303(i) does not
directly permit an award of damages against the petitioner's counsel.<a href="#17" name="17a">17</a> However,
several courts, including three published decisions from Colorado,<a href="#18" name="18a">18</a> have held that
counsel for petitioners can be sanctioned under §303(i) if their conduct is
sufficiently egregious to otherwise support liability under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a>.
These courts note that there is no express prohibition against awarding §303(i)
damages against counsel for petitioners and have held that §303(i) damages can be
awarded against attorneys for petitioners in appropriate circumstances. These courts have
held that under their inherent judicial powers, they may award sanctions under
§303(i) cases without the need for the express statutory language authorizing such
awards.

However, even if a court follows the majority view that <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C.
§303(i)</a> does not directly permit the imposition of sanctions against counsel for
a petitioning creditor, this does not prevent a court from finding another way to
indirectly assess those sanctions against a petitioning creditor's counsel. In the case
of In re Grossinger,<a href="#19" name="19a">19</a> the court found that it could sanction an attorney, who
filed what it characterized as "sham" involuntary petitions, under the provisions of
<a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i) through 11</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…. §105(a)</a>.<a href="#20" name="20a">20</a> The Grossinger

court held that it had the power under its general authority to prevent abuse of
process before the court to apply <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a> sanctions against the
petitioner's counsel.

<h3>But I Was Only Following Orders: Rule 9011 As a Tool to Sanction Counsel for Petitioning Creditors Who File Improper Involuntary Bankruptcy Petitions</h3>

By far, the most common tool used by courts in sanctioning attorneys for their
participation in the filing of improper bankruptcy petitions comes from Rule 9011
and <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §1927</a>.<a href="#21" name="21a">21</a>

While there are numerous factors that courts consider in determining whether an
attorney has violated Bankruptcy Rule of Procedure 9011<a href="#22" name="22a">22</a> or run afoul of the
provisions of <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §1927</a>,<a href="#23" name="23a">23</a> in cases where bankruptcy courts have found
that where there was a bad faith filing of an involuntary bankruptcy, the requirements
for sanctions under either Rule 9011 or <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §1927</a> are generally
met.

While there is a variety of factual situations that may lead to the imposition of
sanctions under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… Rule of Procedure 9011 and 28 U.S.C. §1927</a>,
sanctions are most generally imposed on petitioning creditors' counsel where (1)
counsel for the petitioning creditors does no or a totally inadequate investigation of
the facts prior to filing an involuntary bankruptcy petition;<a href="#24" name="24a">24</a> (2) counsel for
the petitioning creditors files the involuntary bankruptcy petition for an improper
purpose;<a href="#25" name="25a">25</a> and (3) counsel for the petitioning creditor engages in improper actions
during litigation of the involuntary bankruptcy petition.<a href="#26" name="26a">26</a> A bad-faith involuntary
filing that unfortunately combines all three of these typical grounds for imposition of
sanctions under Rule 9011 is the case of In re Computer Dynamics Inc.<a href="#27" name="27a">27</a> from
the Eastern District of Virginia.

In Computer Dynamics, counsel for the petitioning creditors filed an involuntary
bankruptcy proceeding in an effort to have his primary client regain control of the
company he once owned and operated as CEO.<a href="#28" name="28a">28</a> Counsel for the petitioners gained
additional petitioning creditors by using his primary client, the primary petitioning
creditor, to "recruit" additional petitioning creditors, who were told by counsel that
they have no chance of collecting their debts from the debtor unless an involuntary
bankruptcy was filed against the debtor corporation and a trustee was appointed to
operate the debtor's affairs. In developing the factual allegations in support of his
trustee motion in this involuntary case, counsel for the debtor almost exclusively
relied on the investigations done by his primary client concerning the affairs of the
debtor. The court found that the attorney for the petitioning creditors in this case
had failed to make a reasonable investigation prior to the filing of the involuntary
bankruptcy petition and accompanying trustee motion, and therefore was subject to Rule
9011 sanctions.

Further, the court found that the involuntary bankruptcy and the accompanying
motion for the appointment of the trustee were filed for improper purposes because they
constituted a bad-faith attempt by the attorney's primary client to regain control of
Computer Dynamics and to continue a vendetta against the current operator of Computer
Dynamics. Not surprisingly, the court found that these objectives constituted a
bad-faith use of the involuntary bankruptcy process and a violation of Rule 9011.

Finally, the bankruptcy court found that the attorney's use of improper, defamatory
and irrelevant evidence in his pleadings and the presentation of evidence at the hearing
on the trustee motion constituted improper actions by the attorney pursuing the
involuntary bankruptcy filing. Particularly, the bankruptcy court found that counsel's
attempt to interject unsubstantiated allegations of sexual harassment against the debtor's
current CEO, which the court found had no relevance to the involuntary bankruptcy
filing or the accompanying motion for a trustee, constituted a violation of the
Virginia Code of Professional Responsibility, as well as a violation of Rule 9011.
In light of all these various violations of Rule 9011, the court awarded sanctions
of $20,000 against counsel for the petitioning creditors due to his actions in
this case.

In summary, the Computer Dynamics opinion sets forth an "excellent" primer of the
various issues and causes of action that can be raised against counsel for petitioning
creditors under the provisions of Bankruptcy Rule 9011 if the attorney participates
knowingly in the filing of a bad-faith involuntary bankruptcy petition.

<h3>State Courts? What Do State Courts Have to Do with Involuntary Bankruptcies?</h3>

Finally, even if a petitioning creditor's attorney in a bad-faith involuntary case
somehow escapes the sanctioning power of the federal courts, there still remains the
possibility that the debtor or the attorney's own petitioning creditor clients may take
action against him in state court proceedings.

Currently, there is a serious split of authority as to whether the provisions of
<a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i), 28</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…. §1927</a> and Bankruptcy Rule of Procedure
9011 "pre-empt" state court jurisdiction over malicious prosecution and other actions
brought by a debtor subject to an involuntary bankruptcy proceeding against counsel for
the petitioning creditors.

One line of cases, typified by Koffman v. Osteoimplant Technology Inc.,<a href="#29" name="29a">29</a>

holds that, given that bankruptcy law and bankruptcy petitions are matters of exclusive
federal jurisdiction, permitting state courts to develop standards as to when parties
can seek relief in the federal court for claims based on alleged abuse of the
Bankruptcy Code would violate both the Supremacy Clause of the U.S. Constitution
and the constitutional preemption doctrine.<a href="#30" name="30a">30</a> These courts hold that the only
appropriate forum where sanctions for an improper involuntary bankruptcy case may be
brought is the bankruptcy court where the underlying bankruptcy action was filed.<a href="#31" name="31a">31</a>

However, decisions finding a pre-emption of state law remedies are by no means
universal. There is a very strong minority position that holds that there is no
federal preemption over state law-based causes of action under theories of civil
conspiracy, abuse of process and malicious prosecution.<a href="#32" name="32a">32</a> These courts have held that
since causes of actions being filed against petitioners and their counsel are based on
state common law theories and not Bankruptcy Code remedies, that federal bankruptcy
law therefore does not preempt these causes of action. The courts that adopt the "no
preemption" line of reasoning generally stress that there is no conflict with bankruptcy
liquidation and/or reorganization proceedings by allowing state courts to punish people
who abuse the Bankruptcy Code under state law causes of action.

Further, there is an additional form of state law action that should concern
counsel for petitioners in involuntary bankruptcy proceedings: the ever-popular legal
malpractice suit.<a href="#33" name="33a">33</a> This possibility is illustrated by the twin cases of In re
Better Care Ltd.,<a href="#34" name="34a">34</a> decided by the Bankruptcy Court for the Northern District
of Illinois, and Sarno v. Akkeron,<a href="#35" name="35a">35</a> the Better Care malpractice case, decided
by the Illinois appellate court. In the Better Care case, the bankruptcy court
determined that the involuntary bankruptcy proceeding was filed in bad faith and that
the advice of counsel defense offered by the petitioning accounting firm did not excuse
them from liability; the bankruptcy court also noted that this faulty advice of counsel
could give rise to a malpractice suit in the state courts.<a href="#36" name="36a">36</a> As part of determining
that the involuntary bankruptcy petition was filed in bad faith, the bankruptcy court
awarded the debtor compensatory and punitive damages of more than $55,000 against
their former accounting firm, which was one of the petitioning creditors in the case,
and also sanctioned the accounting firm's law firm for gross violations of Bankruptcy
Rule 9011.

Shortly after the bankruptcy court awarded these damages to the debtor, the debtor
and its principal owner filed suit against their petitioning creditors, including their
former accounting firm, under state law, asserting various causes of action related to
the petitioning creditor's attempt to destroy the debtor. The defendant accounting firm
filed a "counterclaim"<a href="#37" name="37a">37</a> against its law firm, alleging legal malpractice in this
action. The law firm moved to dismiss the counterclaim, alleging the bad faith of
its client in relation to its filing the bankruptcy petition. The trial court accepted
the law firm's argument, holding that the accounting firm was collaterally estopped from
suing its attorneys for malpractice by virtue of the bankruptcy court's findings in the
involuntary bankruptcy proceeding and, in the alternative, the accounting firm was barred
by the doctrine of "unclean hands" from maintaining a suit against its counsel for
malpractice. On appeal, the Illinois appellate court reversed the decision of the
trial court, holding that the accounting firm did not have a full and fair opportunity
to litigate its claims against its law firm in the bankruptcy proceeding and that the
"unclean hands" doctrine could not be used to dismiss the accounting firm's claim
against the law firm. In overruling the trial court's unclean-hands decision, the
appellate court found that the law firm's actions in representing the accounting firm
in the involuntary bankruptcy petition may have given rise to the "bad-faith finding"
on which the trial court based its decision and that the law firm should not be
excused from possible liability due to its own malpractice in allowing an unfavorable
judgment to be rendered against its client.<a href="#38" name="38a">38</a> The Illinois appellate court remanded
the case for further findings by the trial level court on the issues of the possible
malpractice of the law firm and the alleged bad faith of the petitioning creditor.

<h3>Conclusion</h3>

While petitioning creditors' counsel do not face the myriad of technical and
conflict-ridden ethical considerations that a debtor's counsel has in an involuntary
bankruptcy proceeding, they do face very real and very significant ethical issues
related to undertaking high-risk litigation. Courts have made it generally clear that
improper use of an involuntary bankruptcy petition is something to be strongly discouraged
and, in appropriate cases, severely sanctioned. Given the highly contentious nature
of an involuntary bankruptcy petition to begin with, counsel for petitioning creditors
should take care in making sure they properly investigate the underlying facts of their
involuntary petitions so that they will not be blamed either by their clients or the
debtors should an involuntary bankruptcy petition go awry.

Author's Note: Update—My Card Was Right. For that small but hardy band of regular
readers of this column, I am here to give you an important update on my article,
"But It Says on My Card...Unauthorized Practice of Law Issues in Bankruptcy,"
which was published in the March 2001 ABI Journal.<a href="#39" name="39a">39</a> In that article, I
discussed the issues that were raised by the bankruptcy court and district court's
decisions in the case of In Re Desilets.<a href="#40" name="40a">40</a> Recently, on June 3, 2002, the
Sixth Circuit reversed the two lower-court Desilets decisions,<a href="#41" name="41a">41</a> holding that Allen
Rittenhouse, the attorney whose fees were at issue, was properly admitted to the
federal bar and did not engage in the unauthorized practice of law.<a href="#42" name="42a">42</a>

In Desilets, the Sixth Circuit adopted the Ninth Circuit's reasoning in the case
of In re Poole,<a href="#43" name="43a">43</a> where the Ninth Circuit ruled that admission to a federal bar
was solely governed by federal law, not state-law consideration. In its decision,
the Sixth Circuit disagreed with the lower courts' rulings in two critical respects.
First, the Sixth Circuit found that the local rules of the U.S. District Court
for the Western District of Michigan expressly permitted the type of activities in
which Rittenhouse was engaged in representing his clients before a bankruptcy court and
that state bar "approval" of his activities was not required.<a href="#44" name="44a">44</a>

Further, the Sixth Circuit found, unlike the lower courts, that Rittenhouse did
have a valid state source of authority to practice law—his Texas law license. The
Sixth Circuit noted that the Western District of Michigan rules only required that
an attorney be licensed to practice law in any state in order to practice for the
Western District of Michigan, not that they had to be licensed in the state of
Michigan.<a href="#45" name="45a">45</a>

Finally, and most importantly for many readers of this argument, the Sixth Circuit
further supported its decision in this matter, noting that:

<blockquote>
The bankruptcy court's analysis also suffers from a practical failing; it did
not realistically distinguish between Rittenhouse and those attorneys who have
their offices across the border, but do all of their work before the Michigan
federal courts. (footnote omitted). The bankruptcy court's analysis would
equally extend to lawyers working for large New York firms who happened to do
most of their legal work in Michigan for Michigan (or multistate, or
multinational) clients. We do not believe that the <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… District of Michigan
Local Rules and 11 U.S.C. §101(4)</a> can be read to prohibit
Rittenhouse's practice, while permitting these other quotidian forms of practice.
</blockquote>

This statement represents perhaps the highest level of judicial "approval" for the
national type of chapter 11 practice that has been permitted by bankruptcy courts for
the past several years. Not only is this a statement regarding general Sixth Circuit
policy, but it is also a statement that indicates that in the Sixth Circuit, at
least, federal courts would probably defend any out-of-state practitioner from charges
of unauthorized practice of law arising from their representation of parties in bankruptcy
proceedings.

However, it is important to note that there was a spirited dissent to the
Desilets case, which stated that the majority opinion represented a rejection of the
concept of state and federal comity, and that under the majority's reasoning, admission
to federal practice was now practically governed by the bar rules of the state with
the easiest requirement for passing the bar.

This recent Desilets decision in the Sixth Circuit is critically important to the
issue of unauthorized practice of law in federal bankruptcy cases and should provide
great comfort to all attorneys who enter bankruptcy courts in states located other than
where they have managed to pass the bar.

<hr>

<h3>Footnotes</h3>

<a name="1">1</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… Am. Bankr. Inst. J. 24 (April 2002)</a>. <a href="#1a">Return to article</a>

<a name="2">2</a> 2 Collier on Bankruptcy ?303.15[1] (noting the increased <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… under 11</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…. §303(i)</a> seeking damages for improper
involuntary filings). <a href="#2a">Return to article</a>

<a name="3">3</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a> provides: If the court dismisses a petition under this section other than on consent of all petitioners and
the debtor, and if the debtor does not waive the right to judgment under this submission, the court may grant judgment (1) against the
petitions and in favor of the debtor for (A) costs or (B) a reasonable attorney's fee, or (2) against any petitioner that filed the
petition in bad faith for (A) any damages proximately caused by such filing or (B) punitive damages. <a href="#3a">Return to article</a>

<a name="4">4</a> For purposes of this article, we will assume there is no issue of debtor consent or waiver under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a>. <a href="#4a">Return to article</a>

<a name="5">5</a> Although not directly covered in the statute, creditors that intervene in an involuntary bankruptcy petition may also be subject to damages
under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)</a>. See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Osteoimplant Technology Inc., 182 B.R. 115 (D. Md. 1995)</a>. <a href="#5a">Return to article</a>

<a name="6">6</a> See, generally, <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Bayshore Wire Products Corp., 209 F.3d 100 (2nd Cir. 2000)</a>; <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Squillante, 259 B.R.
548 (Bankr. D. Conn. 2001)</a> (discussing factors to be considered in awarding attorney's fees). <a href="#6a">Return to article</a>

<a name="7">7</a> See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Atlas Mechanical Iron Works Inc., 190 B.R. 796 (Bankr. E.D. Va. 1995)</a> (discussing attorney's fees that
can be awarded under 11 U.S.C. §303(i)). <a href="#7a">Return to article</a>

<a name="8">8</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C. §303(i)(1)</a> and 303(i)(2) damages are cumulative. See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re K.P. Enter.,</a><a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…; 135 B.R. 174 (Bankr.
D. Maine 1992)</a>; 2 Collier on Bankruptcy. <a href="#8a">Return to article</a>

<a name="9">9</a> See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Landmark Distributors Inc., 189 B.R. 290 (Bankr. D. N.J. 1995)</a> (awarding the debtor attorney's fees which
were estimated at $1.5 million, compensatory damages of $3.2 million and punitive damages of $500,000). <a href="#9a">Return to article</a>

<a name="10">10</a> See 2 Collier on Bankruptcy, ?303.06 (15th Ed. 1999) (discussing various ways to determine bad faith under <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… U.S.C.
§303(i)</a>). <a href="#10a">Return to article</a>

<a name="11">11</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Law Center, 261 B.R. 607 (Bankr. M.D. Pa. 2001)</a>; aff'd., Shinko v. Miele, 29 Fed. Appx. 890 (3rd Cir. 2002) (unpublished decision). <a href="#11a">Return to article</a>

<a name="12">12</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… v. Stracka, 192 B.R. 150 (S.D. Tx. 1996)</a>. <a href="#12a">Return to article</a>

<a name="13">13</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Kujawa, 270 F.3d 578 (8th Cir. 2001)</a>. <a href="#13a">Return to article</a>

<a name="14">14</a> <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… B.R. 290 (Bankr. D. N.J. 1995)</a>. <a href="#14a">Return to article</a>

<a name="15">15</a> In the Landmark decision, the petitioner's bankruptcy counsel was not sanctioned due to the fact that the court found the petitioning
creditors withheld important facts from their bankruptcy counsel. <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… B.R. at 318</a>. <a href="#15a">Return to article</a>

<a name="16">16</a> See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=…; 189 B.R. at 319</a>. The court noted the ancient wisdom of Robert Burton in his 1621 book, The Anatomy of
Melancholy, where Burton stated "He that goes to law holds a wolf by the ear," in explaining its award of compensatory and punitive damages. <a href="#16a">Return to article</a>

<a name="17">17</a> See <a href="http://www.westlaw.com/find/default.asp?rs=CLWP2.1&vr=1.0&cite=… re Walden, 787 F.2d 174 (5th Cir. 1986)</a> (sanctions not awardable against counsel for a petitioning creditor);
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Journal Authors

C. R. Bowles

Journal Date

Tuesday, October 1, 2002 - 12:00

Bankruptcy Rule

2002