appellate creditor p h h mortgage corporation the cases on appeal before this court concern a combined three hundred thousand dollars in sanctions issued against a mortgage servicer that cause no harm engage in no bad faith and was sanctioned for more than the entire mortgage balances in all three cases primarily for the mailing of the single informational mortgage statement in two cases this appeal is only before this court because the appellee seeks to make new law on the authority of bankruptcy courts to impose punitive non contempt sanction and any amount they feel is commensurate to the violation of hands as we discussed at length in our briefing this while the a tele seeks to create has been rejected by every circuit court in the country has actually been presented with the constitutional article three article one issue that presents more fundamentally be a tele has selected the worst vehicle to attempt to create that mean law for at least four distinct reasons first he failed to preserve his ability to argue the issue and challenge the law the case to stablish by the district courts mandate on appeal from the  st sanctions or nd the sanctions imposed here were clearly contempt sanctions so the apologies questions themselves invite dicta rd two hundred and twenty five thousand dollars of the three hundred thousand dollars and sanctions were imposed based on an sanctioning powers including obviously it's an opinion not compensatory sanctions so we're not making it to that extent at least i know there are other aspects to the sanctions here that you're challenging but in terms of the bankruptcy courts inherent power to do this isn't already established in the circuit well your honor the sanchez decision did not establish that that power fully for the was a fine i don't remember there being a contempt a civil contempt sanction and the language of that was not let me to a contempt being the only sanction available so i just think that's a misreading the case but only you just focus you  vindicate the authority of the courts of the bankruptcy code of that provision to sanction inherently and then the question is well what what's the amount what's the limit of that and what the courts have determined non serious sanction that would otherwise warn a jury trial for a serious and for guidance i think in this circuit we would look to th century fox where we've said for a corporation that that could go to the right one that was  one hundred thousand dollars and make clear that you know if you consider the impact on a particular organization its size so my question to you would be if you combine sanchez and th century fox  bankruptcy court why wouldn't seventy five thousand dollars obviously i don't think you can argue given the size of your client that that seventy five thousand dollars is so devastating would require a jury trial for contempt or something similar to that so why doesn't that control at least the seventy five thousand dollars part of the case so ms respecting the seventy five thousand dollars are part of the case that that is that has a stronger argument there certainly not because the amount of sanction isn't as much as it as it is in the the nature of federal courts charged with traditional function specifically addressed the article three arguments so it's completely on point as relates to whether or not it's a good sound article three and judge jacobs i think you're referencing ruhleben you know there was more of a discussion about the will thirty seven i think it's well accepted that magistrate judges have the same power right so the the the the power it is is constrained by the constitution and the problem that we have and there are a lot of decisions like this where where i see your honor has been so issue quite a few decisions referencing the inherent power of federal courts and the trouble that happens with with these cases is sort of a shorthand reference to federal courts having this power but as justice roberts explained in the strand the marshall decision and also in his dissent in the wallace decision that that that has to be more precisely looked at because the article one article three now says if you don't i wonder when the going down the rabbit hole i didn't i don't i don't understand the judge to a school on the basis of inherent power understood the judge to rule on the basis of power granted in two thousand rule three thousand  primary argument against the two hundred and twenty five thousand dollar component of the sanctions and the reason why is because this court has been very clear that there must be a clear and unambiguous order in order to sanction a party for violating it and the tagger case which dealt with civil contempt sanctions which we don't have here but we do have instructed language that i believe helps in this situation because what the tiger decision said was that you can only hold somebody in civil contempt for violating a discharge order if quote if there is no fairground of doubt as to whether the order barred the creditors conduct and they also further explained that the test is that there is no objective lee reasonable basis for concluding that the creditors conduct might be lawful and what we have here as you explained in detail in our brief is we have an a generous current order that precludes ph age from disputing that the debtors are current as set forth hearing and any other proceeding and if we explain the black's law dictionary at the st word proceeding is the business servicing requirement to keep recording them and keep keep track of them so they were included in the informational section and if you actually look in the records your honour's you can see that the actual statements that are that are there you see that they're listed only in the informational sections for informational purposes only and j six hundred and forty five and the response we get from the other side is we see cases like this all the time this is not in some to collect a debt but you're really trying to collect the debt so you can't just absolve yourself by saying this isn't something we're trying to collect but in this case that's not what we have in this case we have no informational section that these things happened to property inspection occurred what have you and then there is a request for payment for only the escrow amount the only of the interest and the principal balance and we know that that's how they were received because for twenty five statements at least the trustee didn't pay those fees and yet there was no indication in any subsequent statements that they were past due or oh so the trustee at himself received those statements and believe them to be not owed believe those fees not to be charged to the debtors and didn't pay them and then there was one statement was issued after each debtors current order and the trustee immediately filed a motion for contempt and sanctions because the bill itself says equally says the amount it's due and the amount that it it says it does not include those amounts but some of the principle and interest and  the mailing of the mortgage statement to be disputing that the debtors were current in a proceeding this didn't even dispute that they were current it shows that they were current on the statement so and certainly you know those no violation of the debt is current order but certainly at a minimum that that was the standard by which we judge that this bankruptcy court would know that and not only that but on remand when we came back we briefed this extensively and pointed out to the bankruptcy court notwithstanding the incredibly awkward position of being on remand and telling the bankruptcy court that there's a there's a problem with the consent non consent issue because their position is that these are non consent sanctions our position is that they were content sanctions because they were they were issued as a result of an alleged violation of an order so there's so that sort of musket the works a bit but our concern is that if this court doesn't doesn't do the constitutional avoidance practices that are traditionally practices that if there's a ruling on the constitutional issue that would be used for case in two thousand and six even when you have a complex and difficult non constitutional basis you have to consider st if it has the potential to fairly dispose of the case and that's our argument across three chapter thirteen cases and further violation of bankruptcy orders implementing bankruptcy rule three thousand and two point one h and two of these cases the only way the bankruptcy system works is if debtors and creditors play by the rules the bankruptcy system is responsible for tens of thousands of cases billions of dollars and filings too numerous to count the bankruptcy courts time and resources in turn are limited bankruptcy judges thus rely on debtors and creditors to follow the rules in the st instance and indeed that is what many mortgage creditors do but that is not d h h p i repeatedly breaks the rules even after they've been caught even after they've been told they can't do it anymore and even after they've promised they won't do it again the question then is to the bankruptcy court faced with egregious repeated non criminal violations of bankruptcy rules and orders impose a fitting penalty or is it the case that the greater the misconduct the less the bankruptcy court can do to ensure this doesn't happen again i think those questions answered themselves bankruptcy judges have to be trustee respectfully asked the court to join the st in the th circuit and holding that bankruptcy courts may impose punitive not contempt sanctions in any amount commensurate to the violation at hand and on that basis the bankruptcy court sanctions in this case should be a of the order and much of your letter to short order the st two are determinations they don't order anything they're determinations the rd front the rd subsection there says something about payment about the st mortgage and what the quoted on page five of the special appendix that the language is that orders declaration that the debtor buy their payment through the office of the chapter thirteen dollars trustee have made all payments due including all monthly payments and well your honor i think the other background principle that has to be factored into is that this declaration is coming under bankruptcy rule three thousand and two point one eight which specific lee requires the bankruptcy court to make a determination as to whether all payments do have been made the reason why that rule exists is to provide assurance to the debtors that they are current on their mortgages so this is a functional declaration it's meant to do something it's not merely an advisory opinion on the part of the district on the part of bankruptcy court the banks the court isn't just opining for the sake of opposing oh you're good on your mortgage you have nothing to worry about it is saying that for a specific reason and that the reason it's making this determination is because it's part order so we can't answer for that is different well your honor i don't think that's entirely correct and you know take for example the tagger case which opposing counsel raised during his argument i think you misquoted taggart tagore doesn't talk about orders what it says is we have said civil contempt should be should not be resorted to where there is a fair ground of doubt as to the wrongfulness of the defendant's conduct not you know the scope of the injunction but the wrong the defendant's conduct here the wrongfulness of the defendant's conduct is sending statements to debtors which say you owe money when the bankruptcy court pursuant to a rule that requires the bankruptcy court to make a determination on this front so that the parties relations are clear and the bankruptcy system can function and the debtors fresh start can be protected absolutely i was getting the debtor this is your changes i mean you said that the bankruptcy court  because the relevant local bankruptcy rules prescribe the sending of statements to debtors about what the current status of their mortgage is well if you look at what the local bankruptcy rules in force at that time had to say and these are quoted in the record at day four hundred and twenty six and i'm specifically speaking of local bankruptcy rule thirty thousand and seventy one dash one h they limit mortgage statement they require mortgage statements to be accurate in nature they have to have accurate information about what amounts are being assessed and they limit the statements to only amounts to so the only reason that he h h could put these amounts on the statement if they weren't immediately accepting it for that  the local bankruptcy rules establishing what a state and to a debtor regarding their mortgage has to say and one of the limits that it says is if you're going to list an amount on these statements then the only amount you can list or amount to do and the reason it has that rule is that when a debtor gets a statement from a mortgage servicer they can look at it and say to the extent there are a dollar amount here i know that there are there are things that i'm being asked to pay and there is no confusion on that front so that's one dollar aspect of this that i think we have to look at the other aspect of this that we have no you is the this is confusing well at a minimum they're creating confusion but they're violating the plan manned by mandate of bankruptcy rules in terms of listing amounts that are not only either they're asserting amounts that are due and that they intend to be paid or they're listing them out that are not due contrary to what the bankruptcy rules require out but any event the bankruptcy judge said ok well non serious has to be under one hundred thousand dollars for cooperation so i'm going to impose the maximum one hundred one hundred and ninety eight one million dollars or whatever it that i don't i don't see that well your honor let me let me provide additional explanation on this point and that dovetails into the nd point i was going to make to the court which is that this is about an ongoing course of conduct and i think one of the things we may have lost sight of here is the fact that this case did not begin and two thousand and sixteen this case effectively began and two thousand and fourteen when p h a started sending misleading or incorrect statements to debtors demanding amount that they did not go now in that instance they were doing it because they were misapplying the debtors mortgage payments but nevertheless they were sending misleading incorrect statements to debtors that you owe money that you don't owe and what the bankruptcy court did context was when d s h was called to the mat on it the bankruptcy court essentially said look i'll accept the consent sanction from you for nine thousand dollars and i'll accept it because you have promised to this court that you are going to fix these problems going forward and you have in fact told me that you will not have the defense in the future of being a st time violator if this happens again so then all of a sudden they start sending incorrect statements to debtors so it's not the case that these rules three thousand and two dollars violations fell out of the sky in two thousand and sixteen and the bankruptcy court decided to sanction th h out of the clear blue with a one hundred thousand dollars sanction for one misleading statement rather it was looking at an ongoing course of conduct that p h d in used to perpetrate even after it had told the bankruptcy court were taking corrective measures even after it i told the bankruptcy court you need to take us at our word that we're doing this and you know after it told the bankruptcy court sanctions should be progressive in nature and we will not have the defense the nd time around of being a st time violator but that's where the seriousness and the con due and to the extent you have property inspection fees or n s f that have not been properly noticed that they cannot be listed on the statement because a debtor looking at the statement is going to say the rules on the one hand say only amount due can be on a statement i'm looking at my statement it says fifty six dollars for a property inspection of the that must be an amount due and d s h can't kind of sweep that under the rug by saying well we didn't bring a collection action therefore we can kind of  escape the implication that we are providing every one of these statements that this is an amount for which the debtor will be held accountable maybe not maybe we're not initiating the collection in this particular statement but sometime down the road fifty six dollars is an amount we're going to demand that the debtor pay if the court kind of wants a ready analogy in that circumstance i encourage you to look at a case that we are briefed called in re child by the u s supreme court in that case you had the supreme court in one of its rare exercise the original jurisdiction and it's an old case for making seventy seven but you had the supreme court say that certain bonds were belonging to a particular party and a contract was void and what that party who is affected by the ordered then proceeded to do was stand communications to other people think we disagree we're going to continue to assert ownership of these bonds and what did the supreme court do in the face of that contravention of its declaration its sanction the party it said you can't go around telling parties that you own something that we've voided and that's situation ultimately is no different than the situation that we have here the deadly ration that is i'm sorry it says very clearly rather than argue a court may hold a creditor in civil contempt for violating a discharge order if there is and they even i tell aside that no fair ground of doubt as to whether the order barred the creditors conduct and then it goes on with the rest of the language that i accurately this case and the difference was that ph was actually misapplying mortgage payments and actually saying that amounts were due what happened here was completely different and distinct a totally separate issue and the way i like to think of it is an analogy if you have a person driving their car and they go to stop at a stop sign but they do one of those rolling stops that i'm sure we've all done and then they get a one hundred dollars ticket from the police officer now the next day they are months later actually in this case four years later they park in next to their office building on a two hour maximum zone they accidently stay two hours and fifteen minutes is a ben appropriate that that that the next line is three thousand three hundred and thirty three dollars because that's the escalation we're seeing now they're both involving a car so they do have some ten gentle relationship two to the same conduct but it's just not the same conduct and what they're trying to do is hope a change to a standard of perfection in each and everything that it doesn't bankruptcy court and if you do that if you force a mortgage servicer to get escalating sanctions each time and you're just going to make the the mortgage lending industry unprofitable and the last point if i can is to address your honest question on sanchez because i want to make sure i have that clear merging sanchez and th century fox i don't believe would be the correct and else for this court to undertake the sanchez decision makes it very clear that that the authority that this court recognized was the authority to impose relatively minor non compensatory sanctions on attorneys appearing before the court in appropriate circumstances now that has a lot of county outs to it the the idea of more substantial punitive sanctions would help fund other day but you see attorneys appearing before the court as we've seen in this court's precedent attorneys appearing before the court are held to an entirely different standard of sanction ability they don't need the procedural protections that a lot of people do because they're so you're suggesting that you're suggesting that bankruptcy court does not have the inherent power you know no your honor i'm sorry i don't mean to be unclear on that point what i'm saying is that the narrow holding on that relates d to the ability to impose minor non compulsory sanctions on a train so there's two layers to that now if we read that as any minor non compensatory sanction then i agree that sanchez does allow that but let's look at the actual sanctions here the three thousand and two point one thanks in in value was twenty five thousand dollars for the mailing of the mortgage payment that's just the three thousand and two dollars thing since if you look at the value mortgage as  in justifying that said it's in part without doing like a conscious analysis or any like that to compensate you know for the time in forcing the rule in this case and also just to why if it's something some form of compensation why does not run afoul of that section it does run afoul of that section your honor because section three hundred and sixty specifically says that the court may not allow compensation for services  you know you can't as a sanction reimburse a trustee or you're suggesting without violating that section you know your honor in this case it can't be done and the reason why it can't be done in this case is because the trustee didn't fire file a proper application  something whatever the amount of the cost would be to present a motion that would have been a compensable cost in the rule three thousand and two point one because it would have been presented to that particular authorities but under the way that the bankruptcy court did it was essentially just i think that these awards that are inherent  of problems with that the big problem is that we were it was broader than that she said for the time and effort devoted to detecting describing and acting on ph is failure to comply with with the rules so it wasn't like it wasn't hinged on you know i thank both of you for your arguments today and that completes the calendar we have no emotion there are no motions today so i ask