Vickers Associates, Ltd. v. Urice

151 F.3d 93, 41 Fed. R. Serv. 3d 499, 1998 U.S. App. LEXIS 16432
CourtCourt of Appeals for the Third Circuit
DecidedJuly 20, 1998
DocketNos. 97-7225, 97-7226
StatusPublished
Cited by2 cases

This text of 151 F.3d 93 (Vickers Associates, Ltd. v. Urice) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vickers Associates, Ltd. v. Urice, 151 F.3d 93, 41 Fed. R. Serv. 3d 499, 1998 U.S. App. LEXIS 16432 (3d Cir. 1998).

Opinions

OPINION OF THE COURT

STAPLETON, Circuit Judge:

We are here asked to review a decision of the District Court of the Virgin Islands in an appeal from an order of a bankruptcy judge sitting in the Virgin Islands by designation of the Third Circuit Judicial Council under 28 U.S.C. § 155. The district court held that section 155 does not authorize the Council to transfer bankruptcy judges temporarily to the Virgin Islands. It concluded that the order appealed from was thus entered without authority and was invalid. We will reverse and remand for further proceedings.

I.

Section 155 of Title 28 of the United States Code provides, in relevant part:

(a) A bankruptcy judge may be transferred to serve temporarily as a bankruptcy judge in any judicial district other than the judicial district for which such bankruptcy judge was appointed upon the approval of the judicial council of each of the circuits involved.
(b) A bankruptcy judge who has retired may, upon consent, be recalled to serve as a bankruptcy judge in any judicial district by the judicial council of the circuit within which such district is located.

The Honorable Joseph L. Cosetti is a retired bankruptcy judge of the United States District Court for the Western District of Pennsylvania. On August 13, 1996, an order was entered by the Judicial Council of the Third Circuit memorializing its determination that there was an unmet need for the services of a bankruptcy judge in the Virgin Islands and recalling Judge Cosetti, pursuant to § 155(b), to meet that need.1

Jaritz Industries, Ltd. (“Jaritz”), a printing and copying business, filed for Chapter 11 bankruptcy in the District Court of the Virgin Islands. The case was referred to Judge Cosetti pursuant to the district court’s standing order of reference. Joel Urice, the owner of Jaritz, had purchased the business from Vickers Associates, Ltd. (“Vickers”) in return [96]*96for an 8-year note that called for two large balloon payments at the end of the term. Jaritz sought bankruptcy protection primarily due to its inability to make the first of these balloon payments to Vickers.

Several months after the bankruptcy proceedings began, A. Jeffrey Weiss entered an appearance as counsel for Vickers. Over the next few months, Weiss filed numerous frivolous and duplicitous motions and appeals, and his unprofessional conduct ultimately resulted in the entry of a sanction order by Judge Cosetti. On appeal, the district court sustained Judge Cosetti’s order sanctioning Weiss and Vickers, and then directed Weiss and Vickers to show cause why the district court should not invoke its inherent power to impose additional sanctions for their conduct during the appeal.

Prior to the return date of the order to show cause, the district court sua sponte raised and requested briefing on the issue of its jurisdiction to hear appeals from orders of a U.S. bankruptcy judge under 28 U.S.C. § 158(a). The court ultimately concluded that it had “jurisdiction to review the order of a bankruptcy judge who would be properly authorized by statute to act as a judicial officer of the District Court of the Virgin Islands.” In re Jaritz Indus., 207 B.R. 451, 453 (D.Vi.1997). The court held, however, that section 155 authorizes temporary transferring of bankruptcy judges only to Article III district courts, that Judge Cosetti accordingly lacked authority to sit on the District Court of the Virgin Islands, an Article IV court, and that “there simply [was] no such valid order to review in this case.” Id. The district court viewed Judge Cosetti’s lack of authority as depriving it of subject matter jurisdiction and dismissed the appeal. Shortly thereafter, the court entered an order withdrawing its standing order of reference. Jaritz timely appealed, and we have jurisdiction pursuant to 28 U.S.C. §§ 1291 and 1294(3). The issue in this appeal is a question of law over which this court exercises plenary review. Louis W. Epstein Family Partnership v. Kmart Corp., 13 F.3d 762, 765-66 (3d Cir.1994).

II.

Bankruptcy Judge Cosetti imposed sanctions on Vickers and Weiss pursuant to Fed. R. Bankr.P. 9011, which provides for sanctions parallel to those specified in Fed. R.Civ.P. 11. In Willy v. Coastal Corp., 503 U.S. 131, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992), the Supreme Court held that a district court has jurisdiction to impose Rule 11 sanctions on litigants and attorneys appearing before it even if the court is subsequently determined to lack subject matter jurisdiction over the case in which the sanctionable conduct occurred. While acknowledging that “[a] final determination of lack of subject-matter jurisdiction of a case in a federal court, of course, precludes further adjudication of it,” the Court nonetheless clarified that “such a determination does not automatically wipe out all proceedings had in the district court at a time when the district court operated under the misapprehension that it had jurisdiction.” Id. at 137, 112 S.Ct. 1076.

The Court explained that “maintenance of orderly procedure” provided sufficient grounds to justify an imposition of non-case dispositive sanctions “even in the wake of a jurisdiction ruling later found to be mistaken.” Id. Although parties may eventually seek appellate review of a court’s invocation of jurisdiction over their dispute, they are required to demean themselves appropriately before that court while awaiting that appeal:

The interest in having rules of procedure obeyed ... does not disappear upon a subsequent determination that the court was without subject-matter jurisdiction. Courts do make mistakes_ But ... there is no constitutional infirmity under Article III in requiring those practicing before the courts to conduct themselves in compliance with the applicable procedural rules in the interim, and to allow the courts to impose Rule 11 sanctions in the event of their failure to do so.

Id. at 139,112 S.Ct. 1076.

We recognize that the validity of Judge Cosetti’s sanction orders poses a somewhat different issue than that posed in Willy. The authority of the sanctioning judge to sit in his district was not challenged in Willy. [97]*97Nevertheless, we believe that the principles found controlling in Willy must control here. Judge Cosetti was a duly appointed judge with the authority to exercise the judicial power of the United States in bankruptcy matters.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Hodge
77 F. Supp. 2d 674 (Virgin Islands, 1999)
In Re Jaritz Industries, Ltd.
151 F.3d 93 (Third Circuit, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
151 F.3d 93, 41 Fed. R. Serv. 3d 499, 1998 U.S. App. LEXIS 16432, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vickers-associates-ltd-v-urice-ca3-1998.