Blagg v. Miller (In Re Blagg)

223 B.R. 795, 15 Colo. Bankr. Ct. Rep. 386, 1998 Bankr. LEXIS 1145, 1998 WL 612703
CourtBankruptcy Appellate Panel of the Tenth Circuit
DecidedSeptember 14, 1998
DocketBAP Nos. NO-97-092, NO-98-006, Bankruptcy No. 97-03510-R
StatusPublished
Cited by20 cases

This text of 223 B.R. 795 (Blagg v. Miller (In Re Blagg)) is published on Counsel Stack Legal Research, covering Bankruptcy Appellate Panel of the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blagg v. Miller (In Re Blagg), 223 B.R. 795, 15 Colo. Bankr. Ct. Rep. 386, 1998 Bankr. LEXIS 1145, 1998 WL 612703 (bap10 1998).

Opinions

[800]*800OPINION

ROBINSON, Bankruptcy Judge.

This Court has before it for review: (1) the order granting the trustee’s motion to dismiss for improper venue and for sanctions and imposing further sanctions sua sponte under Bankruptcy Rule 9011; (2) the order awarding the Trustee fees and expenses; and (3) the order denying in part the motion for stay pending appeal.1 For the reasons set forth below, we affirm the order of the bankruptcy court dismissing the case for improper venue and imposing sanctions. The order awarding the Trustee fees and expenses is remanded for further proceedings.

I. Background.

On July 30, 1997, Jesse and Leasa Blagg filed a joint petition for relief under Chapter 7 of the Bankruptcy Code. Their petition identified their residence as the Eastern District of Oklahoma, but they filed their case in the Northern District of Oklahoma. Debtors asserted venue in the Northern District as their “principal place of employment.” Mr. Blagg worked for a company in Tulsa, which is in the Northern District.

After conducting the meeting of creditors, the interim Bankruptcy Trustee, Gerald R. Miller (“the Trustee”), filed a motion to transfer on the basis that the case was filed in an improper district. After the Debtors responded to the motion and requested a hearing, the Trustee amended his motion to request transfer or dismissal of the case, as well as sanctions pursuant to Fed.R.Bankr.P. 9011 and 28 U.S.C. § 1927.

A hearing was held on October 30, 1997. At the hearing, Debtors’ counsel, Ty Stites, represented to the court that the Advisory Committee Notes to Fed.R.Bankr.P. 1014(a) indicated that the court had the power to retain an improperly venued case. After the hearing, Debtors filed a supplemental response to the Trustee’s motion, further addressing the issue of venue and again citing the Advisory Committee Note to Rule 1014(a).

On November 10, 1997, the bankruptcy court issued an order to show cause why Ty Stites should not be sanctioned pursuant to Bankruptcy Rule 9011. The order stated that the court found Stites’ misrepresentation of law regarding retention of an improperly venued bankruptcy ease violated Bankruptcy Rule 9011. The order gave Stites until November 13 to file a response, and set the hearing on November 14. Stites was in Mexico on vacation and did not return to his office until November 13, at which time he prepared and filed a written response. Stites also appeared at the hearing the next day.

On December 1, 1997, the court issued an order granting the Trustee’s motion to dismiss for improper venue and granting the motion for sanctions. The court also imposed sanctions sua sponte under Bankruptcy Rule 9011. The court rejected Debtors’ argument that the Trustee’s motion was not timely. The motion was filed nineteen days after the meeting of creditors, where the Trustee had learned that the Debtors had no basis for venue in the Northern District. The court found that neither party would be prejudiced by the timing of the motion since nothing had happened in those nineteen days. The court further found that Debtors presented no authority that venue lies in the district where a debtor is employed, and that it is well settled that a debtor’s place of employment is not relevant to the question of venue. The court found that it is equally clear that if a debtor files in the wrong district, the court may do one of two things: dismiss or transfer the case. The court may not, as Debtors urged, retain the case. The court then dismissed the case without prejudice to filing in the proper district. The court found dismissal more appropriate than transfer. Dismissal and refiling would result in the case “starting over” and would afford creditors in the Eastern District an opportunity to attend the meeting of creditors and fully participate in the case in the proper and more convenient venue.

[801]*801The court further held that Stites committed sanctionable offenses pursuant to Bankruptcy Rule 9011.2 The court found that Stites signed not only the petition for relief, but also signed the response to motion to transfer, alleging venue on the basis of place of employment without any authority or good faith argument for modification of the existing law on venue. Further, Stites signed and submitted the supplemental response, and orally argued at hearing, that the Advisory Committee Notes to Bankruptcy Rule 1014 indicated that the court had the power to retain the case. This misrepresented the law. In fact, the Advisory Committee Notes advise that Rule 1014 was amended in 1987 to specifically delete the option of retaining a case filed in an improper venue.

As a sanction for knowingly and deliberately filing this case in the improper district, the court ordered Stites to refrain from charging Debtors any additional fees or expenses, including the new filing fee, for any additional work in filing the petition and representing the Debtors in the proper district. The court also ordered Stites to pay the fees and expenses incurred by the Trustee. Lastly, Stites was ordered to pay a monetary sanction of $500.00 for misrepresenting the state of the law to the court by quoting and citing superseded comments based upon repealed statutes. The court found it necessary to impose such a sanction to deter future misrepresentation to the court and to encourage a more careful approach in advising the court of the state of the law. The Trustee filed an affidavit itemizing his fees and expenses in the amount of $831.40. The court reduced this amount to $777.40 and ordered Stites to pay. Stites was not given the opportunity to respond or object to the Trustee’s itemization.

II. Jurisdiction and Standard of Review.

A Bankruptcy Appellate Panel, with the consent of the parties, has jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy judges in this circuit. 28 U.S.C. § 158(a), (b)(1), (c)(1). As neither party has opted to have this appeal heard by the District Court for the Northern District of Oklahoma, they are deemed to have consented to jurisdiction. 10th Cir. BAP L.R. 8001-1(d);

In reviewing an order of the bankruptcy court, an appellate court “reviews the factual determinations of the bankruptcy court under the clearly erroneous standard, and reviews the bankruptcy court’s construction of [a statute] de novo.” Taylor v. IRS, 69 F.3d 411, 415 (10th Cir.1995) (citations omitted).

A finding of fact is clearly erroneous only if the court has “the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948).

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Bluebook (online)
223 B.R. 795, 15 Colo. Bankr. Ct. Rep. 386, 1998 Bankr. LEXIS 1145, 1998 WL 612703, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blagg-v-miller-in-re-blagg-bap10-1998.