In Re Schivo

462 B.R. 765, 2011 Bankr. LEXIS 3989, 2011 WL 4899940
CourtUnited States Bankruptcy Court, D. Nevada
DecidedOctober 13, 2011
Docket19-10585
StatusPublished
Cited by2 cases

This text of 462 B.R. 765 (In Re Schivo) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Nevada primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Schivo, 462 B.R. 765, 2011 Bankr. LEXIS 3989, 2011 WL 4899940 (Nev. 2011).

Opinion

Opinion

BRUCE A. MARKELL, Bankruptcy Judge.

Table of Contents

I.Facts.767

A. BAPCPA and the Dismissal of Twenty-Five Bankruptcy Cases.768

B. The April Fool’s Day Press Release.769

G. Proceedings Related to Mr. Huntsman’s Motion to Re-Open.770

D. Mr. Huntsman’s Motion to Redact and Related Proceedings.772

II.Analysis of Mr. Huntsman’s Violations of Rule 9011 776

A. The Press Release Was Obviously Fake. 776

B. The Requirements of Rule 9011 . 776

C. Mr. Huntsman’s Violations of Rule 9011. 778

1. Violation of Rule 9011(b)(2). 778

a. The Motion to Re-Open. 778

b. The Motion to Redact . 779

2. Violation of Rule 9011(b)(3). 779

a. The Motion to Re-Open. 779

b. The Motion to Redact . 780

III. Sanctions Imposed.781

IV. Conclusion.783

Appendix I — Letter to Senator Reid.783

Rule 9011 1 requires evidentiary support and a basis in law for any factual allegations attorneys make in their motions. In this case, attorney Rulon Huntsman saw a press release describing a new federal law. The press release’s summary lead him to believe that he could use this new law to exonerate him from sanctions this court imposed upon him over five years ago. After unsuccessfully trying to confirm the press release’s and the law’s authenticity, Mr. Huntsman sought to set aside the earlier sanctions based solely upon the law described in the press release. He also asked the court to issue a public apology for previously sanctioning him and to pay damages for the injury to his reputation that the earlier sanctions may have caused.

The press release and the law it described, however, were bogus, and transparently so. When the court asked Mr. Hunstman to justify his motion in light of this revelation, he responded by improperly demanding changes to findings of fact made five years earlier which had been made in connection with the sanctions then imposed.

The court hereby sanctions Mr. Huntsman for this conduct.

I. Facts

Mr. Huntsman’s current conduct can only be understood in light to the facts surrounding the earlier sanctions. For this reason, the court starts there.

*768 A. BAPCPA and the Dismissal of Twenty-Five Bankruptcy Cases

President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act into law on April 20, 2005. Bankruptcy Abuse and Consumer Protection Act of 2005, Pub.L. No. 109-8, 119 Stat. 23, 23 (2005) (“BAPCPA”). BAPCPA became effective on October 17, 2005, a Sunday. Pub.L. No. 109-8, § 1501(a), 119 Stat. 23, 216 (2005) (“[T]his act and the amendments made by this Act shall take effect 180 days after the date of enactment of this Act ”). Thus, cases filed after 11:59 p.m. on October 16, 2005 had to comply with the requirements imposed by BAPCPA.

At that time, many bankruptcy attorneys faced an unprecedented surge in clients wanting to file bankruptcy under the “old law.” Mr. Huntsman was one such attorney, and he attempted to file over thirty petitions around the time BAPCPA became effective. A number of Mr. Huntsman’s petitions, however, were not filed before BAPCPA’s midnight deadline. These petitions were thus subject to BAPCPA. They did not, however, comply with the new law: They lacked evidence of prepetition credit counseling, a requirement newly imposed by BAPCPA. See 11 U.S.C. § 109(h) (added by Pub.L. No. 109-8, § 106,119 Stat. 23, 37 (2005)).

The court dismissed twenty-five cases filed by Mr. Huntsman due to the lack of credit counseling. It then issued an order to show cause to determine whether the dismissals resulted from Mr. Huntsman’s failure to properly or timely file the cases. 2 The court held hearings on December 6, 2005 and December 12, 2005 on its order to show cause. At these hearings, Mr. Huntsman offered a number of theories as to why the petitions were filed late, and why the old law should nonetheless apply.

Mr. Huntsman’s primary defense at the time was that an undetermined system-wide problem with the court’s Case Management/Electronic Case Filing (“ECF”) system prevented him from timely filing the petitions. Several members of the court’s technical and operations staff, however, testified that there were no material gaps. 3

Mr. Huntsman then offered the testimony of his paralegal who had attempted to file the cases before BAPCPA became effective. She testified as to an inability to log into the court’s ECF system. Because of this, she brought the original petitions to the clerk’s office on Monday, October 17, 2005, and attempted to file them over the counter. As these petitions did not have the manual signature of each client (as they were intended to be filed electronically), the clerk’s office did not accept the petitions for filing. The petitions were ultimately filed around October 21, 2005.

After examining the testimony, the court found that the problem lay not with the court’s ECF system, but with Mr. Huntsman. He apparently had not kept his ECF account current, so that it “locked him out” of the system. Compounding this problem, he had given his client files *769 to a paralegal and then left town without giving the paralegal instructions on how to reach him in an emergency. As a result, none of the twenty-five petitions were filed before BAPCPA’s deadline, and all of the cases were governed by the revised law.

The court found that Mr. Huntsman’s lack of care caused the dismissal of the twenty-five cases. It then issued an order to show cause as to why Mr. Huntsman should not be required to disgorge all fees he accepted in those cases pursuant to Section 329. After a hearing in February of 2006, the court determined that the services rendered by Mr. Huntsman in each of the twenty-five cases had no value. 4 The court then ordered Mr. Huntsman to disgorge all compensation received, pursuant to Section 329. 5

B. The April Fool’s Day Press Release

After Mr. Huntsman disgorged fees, the court considered the matter concluded. Mr. Huntsman did not. Almost five years later, on October 13, 2010, Mr. Huntsman filed a “Motion to Re-open Case, to Consolidate Case(s) and/or to Reconsider and Motion to Vacate Judgement(s) [sic ]” (the “Motion to Re-Open”).

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Cite This Page — Counsel Stack

Bluebook (online)
462 B.R. 765, 2011 Bankr. LEXIS 3989, 2011 WL 4899940, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-schivo-nvb-2011.