Padgett Wins in Federal Court
- By: ALFN
- On: 08/17/2022 16:25:45
- In: Member Update
Seth J. Greenhill, Esq., with Padgett Law Group Obtains Sanctions Against Pro Se Litigant in Bankrputcy CasePadgett Law Group (“PLG”) through its attorney, Seth J. Greenhill, Esq., successfully obtained a rare win for creditors in Federal Court by obtaining sanctions against a pro se litigant who filed a frivolous appeal. This aggressive advocacy on behalf of PLG's client was necessary to put an end to this vexatious litigation and contributes to building case law that will assist other creditors' rights attorneys in defense of their clients.
“The key takeaway is that it is critical to establish the record in the original litigation. This provides notice to the pro se appellant,” said Mr. Greenhill. He continued, “This is a requirement in order to have sanctions imposed. In addition, it is vital to review the appellant brief in order to determine if the issues have already been disposed of.”
On July 29, 2022, the District Court for the Northern District of Georgia (acting in its capacity as a bankruptcy appellate court) granted Creditor's Amended Motion for Sanctions against a pro se Appellant for filing a frivolous appeal. Claire Dees v. NewRez LLC, 1:21-CV-3475-JPB.
The Debtor, along with her non-filing husband, had filed a total of 14 bankruptcy cases in order to prevent NewRez LLC (“Creditor”) from proceeding with its lawful foreclosure. The most recent case was filed May 23, 2019 in the Bankruptcy Court for the Northern District of Florida. In fact, the Bankruptcy Court for the Northern District of Florida found that the Debtor was engaging in an obvious attempt at “forum shopping” by filing in Florida. That is because the Debtor and her non-filing husband had no nexus to Florida. Rather, they stated on the record that they felt they would have a better chance of succeeding in Florida as opposed to Georgia. Nonetheless, the case was transferred back to the Bankruptcy Court for the Northern District of Georgia.
After years of lengthy litigation, including three evidentiary hearings and two appeals—enough was finally enough. Even though Creditor obtained in rem stay relief (i.e. prospective stay relief) which imposed a two year bar on the Debtor, her non-filing spouse, or anyone claiming an interest in the property, the Debtor still continued to litigate.
The Debtor's first appeal was filed on December 10, 2019. On March 3, 2021, the District Court for the Northern District of Georgia found that the Bankruptcy Court was well within its discretion to decide that Debtor's fourteen bankruptcy filings within the past nine years evidenced an intent to delay and hinder any attempts to enforce the security interest on her home. However, the Court REMANDED the matter in order to clarify whether Creditor had standing. More specifically, the Court stated “On remand, Appellee need only show that it is a representative of the Bank of New York Mellon or the loan servicer—nothing more.”
After another evidentiary hearing, the Georgia Bankruptcy Court found that Creditor had a “colorable claim” and thus, had standing to obtain prospective stay relief. Debtor appealed. Creditor immediately moved for sanctions by arguing that the appeal is frivolous. This was mainly due to the fact that the Appellant raised the same arguments that had already been disposed of in the prior appeal. The District Court for the Northern District of Georgia agreed and GRANTED the motion.
Under Rule 38 of the Federal Rules of Civil Procedure, which is the equivalent of Bankruptcy Rule 8020, the Court may impose sanctions when a party ignored governing law and relied on clearly frivolous arguments. In re Wizenberg, 838 F. App'x 406, 415 (11th Cir. 2020). To determine whether an appeal is so “utterly devoid of merit” as to warrant sanctions, courts consider whether the appellant exhibited bad faith and “whether appellant's argument: addresses the issues on appeal properly; fails to support the issues on appeal; fails to cite any authority; cites inapplicable authority; makes unsubstantiated factual assertions; makes bare legal conclusions; or misrepresents the record. West v. Chrisman, 518 B.R. 655, 667 (M.D. Fla. 2014).
Pro Se parties are subject to the same procedural rules as attorneys, including sanctions for misconduct and for failure to comply with court orders. Maus v. Ennis, 513 F. Appx'x 872, 878 (11th Cir. 2013). Although courts are reluctant to impose sanctions on pro se appellants, it may be warranted when a pro se appellant has already been warned that the suit is frivolous. In re Smith, 849 F. App'x 867, 872 (11th Cir. 2021). In fact, the Eleventh Circuit Court of Appeals has imposed sanctions on pro se appellants which had been explicitly warranted that their claims were frivolous.
That begs the question—how is one sufficiently warned? The Eleventh Circuit has found that a pro se appellants received sufficient notice when explicitly warned by the lower court that their claims were frivolous. Campbell v. Advanced Core Concepts LLC, No. 21-13182, 2022 WL 84158, at *4 (11th Cir. Marc. 22, 2022).
In this case, the pro se appellant was explicitly warned by the Bankruptcy Judge who stated “These circumstances not only compel the conclusion that the [Appellant and her husband] have failed to raise a genuine evidentiary question with regard to standing, but also beg the question of whether their conduct is sanction able. The [c]ourt cannot imagine that a competent, ethical attorney would dare to proceed in these repeated cases as [Appellant and her husband] have.”
When faced with a situation involving a pro se litigant who has filed a frivolous appeal, moving for sanctions is sometimes the best remedy for putting an end to the litigation. Creditors and their attorneys should not be afraid to flex their muscles when needed. Mr. Greenhill, whose practice is primarily focused on bankruptcy litigation, is licensed in Florida, Tennessee, and Ohio. He is a 2022 recipient of the American Legal & Financial Network's Outstanding Young Professionals in Default Servicing Award and is a regular contributor to legal education webinars, articles, and industry panels. He can be reached at firstname.lastname@example.org.