Hansbrough v. Birdsell

387 F.3d 1024
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 29, 2004
DocketNo. 02-16958
StatusPublished
Cited by1 cases

This text of 387 F.3d 1024 (Hansbrough v. Birdsell) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hansbrough v. Birdsell, 387 F.3d 1024 (9th Cir. 2004).

Opinion

LEIGHTON, District Judge.

I.

James Hansbrough appeals the district court’s judgment affirming the bankruptcy court’s award of sanctions against him for contempt of court, and its determination that the sanction would not be dischargea-ble in any personal bankruptcy filing Hansbrough might make in the future.

The bankruptcy court had the authority to sanction Mr. Hansbrough, the corporate debtor’s principal, for his repeated failure to comply with the court’s orders. A bankruptcy court cannot, however, adjudicate the subsequent dischargeability of a sanction properly imposed on a non-debt- or. While the court can impose a sanction that generally will not be dischargeable under 11 U.S.C. § 523(a)(7) in a future bankruptcy, the determination of dis-chargeability ultimately remains the province of the bankruptcy court presiding over that debtor’s bankruptcy ease. The district court’s order affirming the bankruptcy court’s determination of non-dis-chargeability is therefore vacated.

II.

James Hansbrough is the sole owner of a corporation known as Hercules, Inc., the debtor in this case, which operated a gymnasium and health club in Phoenix. In a dispute with its landlord over the failure to pay rent, Hansbrough filed on Hercules’ behalf for protection under Chapter 7 of the Bankruptcy Code. A subsequent inspection of the gym revealed that it contained a variety of exercise equipment. At the landlord’s request the automatic stay was lifted, and the eviction proceedings resumed. Hansbrough interfered with the eviction process, and was ultimately sanctioned.

Hansbrough also removed the exercise equipment from the gym. The Trustee, Appellee Birdsell, moved the bankruptcy court to compel its return. At a March 1, 2000, hearing on that motion, Hansbrough told the bankruptcy court that the equipment was in a storage locker. He was ordered to accompany Birdsell to the storage facility and to show the equipment to him. Hansbrough did so, and the locker contained a wholly different, and lesser, collection of exercise equipment.

At the ensuing Bankruptcy Rule 2004 examination to determine the equipment’s whereabouts, Hansbrough asserted his Fifth Amendment right against self-incrimination, and refused to disclose the equipment’s location. On June 12, 2000, the bankruptcy court ordered Hansbrough to turn over the equipment under pain of contempt of court.

Hansbrough continued to ignore the court’s order. At yet another hearing on January 11, 2001, Hansbrough was ordered to produce the equipment or face incarceration for contempt of court. Hansbrough appealed the coercive order of incarceration. The district court reversed and remanded, ruling that Hansbrough could not be civilly, coercively incarcerated [1027]*1027for failing to turn over equipment he no longer possessed.

Hansbrough’s recalcitrance continued. The bankruptcy court held hearings in June, August, and September, 2001, in an attempt to convince Mr. Hansbrough to produce the equipment (or to inform the Trustee of its whereabouts), and to address the imposition of punitive sanctions for Hansbrough’s continued contempt of court. Hansbrough refused to cooperate.

As punishment for his contempt, on September 12, 2001 the bankruptcy court ordered Hansbrough to pay to the Trustee $20,883.00, an amount approximating the fees and costs incurred by him as the result of Hansbrough’s misconduct. The bankruptcy court also ordered that the sanction would be non-dischargeable in any personal bankruptcy filing Mr. Hans-brough might make in the future.

The district court affirmed both aspects of the bankruptcy court’s order on August 30, 2002, and Hansbrough timely appealed to this court. We review the district court’s decision de novo. In a bankruptcy appeal, this means that “[w]e independently review the. bankruptcy court’s decision and do not give deference to the district court’s determinations.” Saxman v. Educ. Credit Mgmt. Corp. (In re Saxman), 325 F.3d 1168, 1172 (9th Cir. 2003) (citation and internal quotation marks omitted).

III.

Hansbrough raises two primary issues on appeal. First, he challenges the bankruptcy court’s authority to sanction him for contempt for failing to comply with the court’s orders absent an “evidentiary hearing.” • ■

Second, Hansbrough claims that the district court erred in affirming that'portion of the bankruptcy court’s order that purported to make the sanction non-dis-chargeable if Hansbrough subsequently filed a bankruptcy petition on his own behalf. He argues that because he was not the 'debtor or otherwise a party to the bankruptcy proceeding, the bankruptcy court did not have jurisdiction over him to make such a determination.

A. Bankruptcy court’s civil contempt power.

We review the bankruptcy court’s award of sanctions, including an award of attorneys’ fees, for an abuse of discretion. Kord Enters. II v. California Commerce Bank (In re Kord Enters. II), 139 F.3d 684, 686 (9th Cir.1998); Caldwell v. Unified Capital Corp. (In re Rainbow Magazine), 77 F.3d 278, 283 (9th Cir.1996).

Mr. Hansbrough claims that the bankruptcy court abused its discretion in sanctioning him without an- evidentiary hearing. Hansbrough appeared before the bankruptcy court numerous times, and was repeatedly told to comply with the “Turnover Order” or else be sanctioned. He provides;no authority for the position that yet another hearing was required, and we are. aware of none.

To the contrary, it is well established that a bankruptcy court is authorized to exercise civil contempt power:

The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.

11 U.S.C. § 105(a); see also In re Rainbow Magazine, 77 F.3d 278 at 284.

In fact,, the prior version of Bankruptcy Rule- 9020 provided' express authority for [1028]*1028the imposition of sanctions for civil contempt of court. While this language has subsequently been deleted, the Advisory Committee Notes to the current Rule explain that the amendment was not intended to curtail a bankruptcy court’s ability to impose sanctions for civil contempt:

This rule, as amended, does not address a contempt proceeding initiated by the court sua sponte.

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387 F.3d 1024, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hansbrough-v-birdsell-ca9-2004.