What should you do when opposing counsel is acting like a jerk? Unless the conduct or action is egregious, in bad faith, and demonstrably harmful to your client, you generally should do nothing. Grow thicker skin. This is because most conduct endured by courts and litigants is not covered by a specific sanctions statute or rule,[1] and most judges dislike sanctions motions as much if not more than discovery motions. They don’t relate to the merits; they don't move the case forward, and they usually make both attorneys look like disgruntled children.
In re Brizinova is a perfect example. In Brizinova[2] a Chapter 7 Trustee filed and settled one avoidance action against the Debtors' sons, and then filed a second avoidance action a year later against the Debtors themselves. Debtors' counsel filed a motion to dismiss the second adversary for failure to state a claim, in which motion counsel made several statements in essence asserting that the second action amounted to "extortionist" behavior by the Trustee to improperly extract more money from the Debtors' family. In response to the motion to dismiss, the Trustee filed a motion for contempt sanctions against Debtors' counsel for making the "extortion" statements in the brief, and for disclosing in the brief an allegedly confidential statement made during mediation of a separate, unrelated, adversary proceeding,[3] allegedly in violation of an injunction in that separate Ng proceeding. Debtors' counsel argued that the Brizinova Court did not have the inherent power to sanction him under Bankruptcy Code Section 105(a) or any other statute or rule.
Brizinova held that only the Ng court was the proper forum to enforce its own injunction, denying the motion without prejudice to the Trustee seeking sanctions in the Ng court. Citing Chambers v. Nasco, Inc.[4], Brizinova reminds attorneys that a court’s inherent authority is all the power it needs, when necessary or appropriate, to impose contempt sanctions on litigants and/or attorneys. Whereas rules-based sanctions “reach only certain individuals or conduct, the inherent power extends to a full range of litigation abuses” to fill in the gaps. Chambers, at 46. However, despite the breadth of the inherent power, Brizinova followed the conservative course of “restraint and discretion” and declined to hold that counsel’s "extortion" comments rose to the high level of bad faith required to impose sanctions, reasoning that the statements are “more accurately viewed as rhetorical flourishes” and “zealous advocacy” than as impermissible and sanctionable expressions of personal opinion in violation of New York’s Rules of Professional Conduct[5].
The Brizinova Trustee took a risk requesting sanctions in a Chapter 7 case that’s been open for more than five (5) years after Debtors’ discharge, especially when the procedural posture still hovers in the pleading stage.[6] We should remember the glass houses in which we work, and the systemic cost of not knowing when to pull the plug on a failing course of action.[7] This should serve as reminder to all practitioners. If and when we think sanctions are necessary and appropriate to address extremely egregious (and not just impolite) conduct, we should make sure your own conduct is beyond reproach before firing off a contempt motion.
[1] Fed. R. Civ. P. Rules 26(g), 30(d), and 37 of the Federal Rules of Civil Procedure, incorporated into Bankruptcy adversaries by Bankruptcy Rules 7026(g), 7030(d), and 7037, and into Bankruptcy motion practice by Bankruptcy Rule 9014, only apply to discovery abuses. Fed. R. Civ. P. Rule 11, incorporated by Bankruptcy Rules 7011 and 9014, only covers papers presented to the court. Rule 11 imposes two basic duties: when presenting a paper to court, the presenter certifies (1) the paper is not presented for an improper purpose; and (2) reasonable inquiry was made into the factual and legal contentions made. These are not high hurdles. Rule 11 does not cover letters exchanged between counsel, frivolous oral motions, misrepresentations in settlement communications, or misconduct during trial. Opposing counsel can outright lie about the law and the facts during oral argument, and Rule 11 does not apply unless counsel is advocating / repeating a position taken in a previously filed paper. Bankruptcy Rule 9020 specifically governs Contempt Proceedings.
[2] No. 12-42935, Adv. Proc. No. 15-1073 (Bankr. E.D.N.Y. March 3, 2017) (on appeal to the District Court for the Eastern District of New York, No. 17-1465)
[3] Geltzer v. Ng (In re Ng), No. 12-1343
[4] Chambers v. Nasco, Inc., 501 U.S. 32 (1991)
[5] 22 NY CRR §§ 1200 et seq
[6] The Brizinova court granted, in part, Debtors’ motion to dismiss the Trustee’s complaint on July 20, 2016, for failing to plead sufficient facts to put Debtors on reasonable notice of the conduct for which they were being sued. The Trustee recently sought and obtained an order extending his time to file the designation of record and statement of issues for the Brizinova appeal, until 30 days after his second motion for contempt sanctions is brought and decided in the separate Ng proceeding, Adv. Proc. No. 12-01343 (Bankr. E.D.N.Y). As of this writing, the Ng proceeding has been reopened (in April 2017), but no sanctions motion has yet been filed therein.
[7] The Brizinova docket reads like a broken record of obstreperous filings by both sides, including serial requests for extensions of time by both parties, the Trustee’s objections to time extensions and multiple letters to the court by the Trustee stridently criticizing it for granting time extensions. As of the date of this writing, there are eighty-four (84) docket items in the Brizinova proceeding, and the only progress to date relates to the Debtors’ motion to dismiss and the Trustee’s sanctions motion, both filed over two years ago. At some point, one might wonder how long a lawyer can drag his or her feet before running afoul of both 28 U.S.C. § 1927 and/or his or her State’s version of MPC Rule 3.2 (“A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.”), which is applicable in most if not all federal District Courts and Bankruptcy Courts by local rule.