good morning may it please the court i'd like to try to do three things and identify your name for modern maps of the resurrection thank you thank you thank you let's try to think three things this morning i'd like to first talk about the question what it is and was it what it isn't that needs to be resolved here today second i'd like to provide address the question and argue that the answer to the correct question is yes and then provide some policy reason support of that answer so except can be a powerful word c e p t can be a powerful word is the reason we're here today except as in except for planes causes of action or liabilities arising from the gross negligence willful misconduct fraud or breach of the fiduciary duty of loyalty of any exculpated party in each case subject to the determination of such by a final order of a court of competent jurisdiction so those forty five words are at the heart of this appeal and they're part of the plan and junction they are the exception to the plan injunction now was that really were those words written into the injunction yes your honor it's in excerpts of record at three eighty six and because a competent counsel could make a good faith argument that those words apply to the allegations of perjury wire and tax fraud against mr meyers and his advisor the district court err doesn't matter of law and therefore necessarily abused its discretion what it impose sanctions and therefore we ask the court to reverse and vacate the two sanctions orders that issue here now and nearing the question for review the question to result today is not whether this council namely mr acton made a good faith argument or whether you've been made a persuasive argument it's not a personal wise or subjective test it's an objective test and the district court judge will wrote the question is whether the filing is unreasonable when viewed from the perspective of a competent attorney admitted to practice before the district court he noted that it is an objective test but he only provided part of the rule from saldivar the district court left out the good faith argument part whether competent counsel could make a good faith argument and because it applied the wrong legal standard it necessarily abused its discretion imposing sanctions here saying it's not whether the complaint was ultimately dismissed as it wasn't it was dismissed here but that has no bearing on the objective test as this court rodin's out of order and addressing this question we do not examine the complaint in the same manner as a court considering a rule twelve b six motion under the appropriate legal standard we are concerned only with whether the complaint asserts a good faith argument even if that legal argument may ultimately fail it's not whether there was a basis for a motion to dismiss we're not here appealing a motion to dismiss we're here appealing to motions for sanctions it is not whether the complaint fail to state a claim under rico although the other side's briefing tries mightily to bootstrap their motion to dismiss arguments here they want the court to know that mr acton was wrong he was wrong but in the district court expressly found that mr acton had carefully researched the b concluded that he could properly plead a section one hundred fifty nine a exception so there was a reasonable inquiry here but then it added he was wrong that's and accept the record at twenty but it's not whether mr ackerman was wrong on the issue we don't sanction every attorney who has a case dismissed or loses a motion or has a request for reconsideration that's tonight the no question for review here is whether a competent counsel could make a good faith argument that the seven the plaintiff in that case contended that the bankruptcy reform act of one nine hundred seventy eight abrogated the barton rule and thus the rule should not prevent him from suing the trustees in federal court now the district court in that case disagreed and dismissed the plaintiff's complaint but it did not sanction the attorney who filed the complaint that was out of our is our case i think  discretion standard interviewing all aspects of a district courts rule of a determination and i think that's where if i can interrupt for just a moment as ron ruhleben has had a kind of a checkered  history at the beginning there were several circuits and several judges on some of the other circuits that were extremely enthusiastic about sanctioning people under rule eleven if you had the misfortune to practice in front of the seventh circuit  eleven was a terrorizing rule but partly the rule makers backed off and probably the judges backed off on a rule eleven sanctions actually as i'm sure you know now fairly rare and i think we understand very well what the governing standard is today so i'm not sure i need a lot of educational that my problem is the barton rule as i read the barn rule you had to go to court asked permission and you did well rather hear your client right and then and that's it for me that's the beginning of the end of it and and i think that brings up the issue of personal versus official capacity because the barn rule requires permission to sue and trustees official capacity section nine fifty nine provides an ultra the your eyes of your is exception to that the exception of the plan injunction here that i've quoted makes no such distinction it talks about gross negligence willful misconduct address that distinction that you rely on between personal compared to official capacity and says there's nothing in the law that different allows that differentiation under barton what's your response to their response is that really the issue between personal and official capacity is who is liable and who pays because under barton a bankruptcy judge is overseeing the bankruptcy and the trustees actions and the trust would be liable if you sue the trustee in his official capacity and so the bankruptcy court ought to have authority over that say but you cannot but does the barton doctrine distinguish between the two he talks about in an official capacity talks about if if you are going to sue the bankruptcy trustee and his official capacity you a bankruptcy trustee in his personal capacity because then he's liable and he's the one who would be paying the damages it shouldn't be the the trust that pays and that's why i think that's why there is an exception the plan injunction and it doesn't so in each case subject to a determination by the bankruptcy court it says such by final order of a court of competent jurisdiction it could have said otherwise let me just turn to the policy reasons if this court affirms the district court's sanction orders but will send a message to bankruptcy trustee or advisor are above the law and you can never saw a bankruptcy trustee for anything ever that would have the very chilling effect that theater and yell expressly caution against so short of being dissed by or being sanctioned  under rule eleven is one of the worst things you can do to an attorney as this court says in its extraordinary remedy only to be exercising extreme caution because the court failed to follow the correct standard in this case necessarily abuse its discretion we've asked the court to reverse and vacate the sanctions orders ok well let's hear from the other side and you save some time and that is what's the question the question for this court is not whether a competent attorney can make a good faith argument the question for this court is whether chief judge when mel abused his discretion in finding in these circumstances in this case that no competent occurred tourney performing a reasonable inquiry could determine that filing this complaint against the trustees alleging these allegations in idaho without prior permission and it is in our brief the end of that provision that provision talks about what the trustee can be liable for can a trustee can be liable for willful misconduct and fraud but it can only be helped by a ball in a court of competent jurisdiction and barton is all about what court has jurisdiction this court cases medical development and in re crown advantage make clear that if you lodge a complaint in any court other than the appointing court without prior permission that court has no jurisdiction and that's exactly what mr ed can did here so the scope of the attorney's liability in that complaints that issue is not as settled under barton but what judgment will found is you can't just call an allegation in someone's personal care capacity to plead  barton he looked at the allegations and if the court looks at the allegations comparing the original complaint and the proposed amended complaint there is not a single substantive allegation that has changed judge when mel found that these allegations although they were labeled personal capacity when the complaint was filed in idaho were really alleging acts that were done not only in his capacity as a court appointed trustee but some of the  allegations go to things that he was specifically ordered and granted the rights to do so he said you can't just label it personal capacity just like you can't just label something fraud and come with an ex an exception and you have to make a the arguments are as sound this is a and this is no criticism of judge one male who is a very capable judge but as just as a matter of reading legal argument whenever i read a lawyer saying that the other side cattle whatever sort of pejorative phrases i begin to think that the lawyer doesn't trust the substance of his arguments so it doesn't help me very much the judge windmill might have used those words ok if you look at the original but when the found that he wasn't changing anything that's what was underlying those comments that that your honor refers to you know i know i read judge when mills order and understand exactly what he said and what he meant but i'm having a little trouble rejecting out of hand the distinction between personal and official capacity if i take it into an entirely different context say for example suing old state highway patrol and in  an excessive force case the suit is brought against the officer in his personal capacity rather than his fishel capacity because if you bring in his official capacity your suing the state of the or state of oregon and the   mr myers and mr rich deadwood in the course of just liquidating the assets and administering the estate were outside the scope of their authority but it again if you look back at the original complaint mr hanken wasn't making an argument that barton shouldn't apply the footnote in the original complaint admitted that barton did apply he wasn't arguing that you know as the eighth circuit case that our opposing counsel cited shouldn't apply anymore he admitted that barton is the rule of the day the official vs personal capacity has to be allegations have do meet the designation of personal capacity and that's the thrust of judge windmills he found that here they didn't what he what mr myers was accused of doing in his personal capacity was filing a tax return which he was supposed to do under the plan of trying to liquidate an equity interest in wave tronics which was precisely his duty under the plan and with the trying to recover notes payable again an asset that he was charged with liquidating under the plan so judge will found that none of those allegations came close to a good faith under the law of a personal capacity but again unless that decision is outside the scope of reasonable possibility use this court has to affirm the decision because of the standard of review which is the abuse of my recollection is that she said that bad faith is found with a reckless firing and we better read  she said a court may impose sanctions on attorneys who display recklessness she says of bad faith i believe that that's a typographical error a court may impose sanctions on attorneys who display recklessness or bad faith which i believe is consistent with the standard the recklessness in that sentence but this court has affirmed sanctions orders were those and said that that's not a magic word if you cite the correct standard and the rest of the opinion in the findings on the record as a whole supports the finding then the court can affirm i would direct the court's attention to in re peoria and pacific harbor pacific harbor in particular the court looked and said does the record support the conclusion given the fact that the court cited the correct standard and here certainly that's the case in the earlier part of the opinion judge beckman noted this was a motion for reconsideration filed research history with respect to these little guns or with respect to mr x come this was a very i'll say hotly litigated litigation under adversarial proceeding for years that did sort of heighten the there's mr of can have any history of rule eleven violations outside of this case for a member of the with a reef threats of sanctions in this litigation and i understand this is a complicated litigation a big filed so he wasn't involved in litigation in the prior two years thank you but i think judge will found that at the time at least there were no prior sanctions against mister no your overtime so if you just like s but just to sum up i would like to reiterate that the standard here is abuse of discretion not a dyno review whether this court finds that a good faith attorney could make the arguments thank you the confirmation order which incorporated the part which is absent of permission of the court no judicial administrative outer or other proceeding should be commenced in inform others in this court against the trustee or litigation trustee in their official capacity so that's where the distinction is in  the confirmation order itself second in terms of the language and fluff as the court has pointed out the insult of our district court use very expressive language that attorney sometimes use no reasonable person could ever come up with this argument and i've been in front of judges you say well i could say your that's not a very good argument counsel and it's all those are the court reversed sanctions or nine hundred twenty seven your  honor there was no express finding a bad faith i think that was what you were what the point i would try to make is that there was no express finding out pretty clearly implied i'm sorry but the argument made is pretty clearly implied because  the reason we're here is not about the money it's about this attorney's reputation so again the court understands the standard the correct standard is abuse of discretion or cooter and yell which includes abuse of which includes if there's an error of law we are given it's been that